SunTrust 2015 Annual Report Download - page 136

Notes to Consolidated Financial Statements, continued
108
no substantive power to direct the significant activities of the
VIEs, and therefore, the VIEs are not consolidated.
The outstanding notional amounts of the VIE-facing TRS
contracts and the Company's related senior financing
outstanding to VIEs were $2.2 billion and $2.3 billion at
December 31, 2015 and 2014, respectively. These financings
were classified within trading assets and derivative instruments
on the Consolidated Balance Sheets and were measured at fair
value. The Company entered into client-facing TRS contracts of
the same outstanding notional amounts. The notional amounts
of the TRS contracts with VIEs represent the Company’s
maximum exposure to loss, although this exposure has been
mitigated via the TRS contracts with third parties. For additional
information on the Company’s TRS contracts and its
involvement with these VIEs, see Note 17, “Derivative Financial
Instruments.”
Community Development Investments
As part of its community reinvestment initiatives, the Company
invests in multi-family affordable housing developments and
other community development entities as a limited and/or
general partner and/or a debt provider. The Company receives
tax credits for its limited partner investments. The Company has
determined that the vast majority of the related partnerships are
VIEs.
In limited circumstances, the Company owns both the
limited partner and general partner interests, in which case the
related partnerships are not considered VIEs and are
consolidated by the Company. The Company sold properties
with a carrying value of $72 million for gains of $19 million
during the year ended December 31, 2015, and the remaining
properties held for sale at December 31, 2015 were immaterial.
One property was sold during the year ended December 31, 2014
for an immaterial gain. During 2013, the Company sold
properties resulting in an aggregate gain of $17 million.
The Company has concluded that it is not the primary
beneficiary of affordable housing partnerships when it invests
as a limited partner and there is a third party general partner. The
investments are accounted for in accordance with the accounting
guidance for investments in affordable housing projects. The
general partner, or an affiliate of the general partner, often
provides guarantees to the limited partner, which protects the
Company from construction and operating losses and tax credit
allocation deficits. Assets of $1.6 billion and $1.4 billion in these
and other community development partnerships were not
included in the Consolidated Balance Sheets at December 31,
2015 and 2014, respectively. The Company's limited partner
interests had carrying values of $672 million and $363 million
at December 31, 2015 and 2014, respectively, and are recorded
in other assets on the Company’s Consolidated Balance Sheets.
The Company’s maximum exposure to loss for these investments
totaled $1.1 billion and $776 million at December 31, 2015 and
2014, respectively. The Company’s maximum exposure to loss
would result from the loss of its limited partner investments along
with $268 million and $278 million of loans, interest-rate swap
fair value exposures, or letters of credit issued by the Company
to the entities at December 31, 2015 and 2014, respectively. The
remaining exposure to loss is primarily attributable to unfunded
equity commitments that the Company is required to fund if
certain conditions are met.
The Company also owns noncontrolling interests in funds
whose purpose is to invest in community developments. At
December 31, 2015 and 2014, the Company's investment in these
funds totaled $132 million and $113 million, respectively, and
the Company's maximum exposure to loss on its equity
investments, which is comprised of its investments in the funds
plus any additional unfunded equity commitments, was $321
million and $236 million, respectively.
During the year ended December 31, 2015, 2014, and 2013,
the Company recognized $68 million, $66 million, and $64
million of tax credits for qualified affordable housing projects,
and $66 million, $61 million, and $49 million of amortization
on qualified affordable housing projects in the provision for
income taxes, respectively.
During the year ended December 31, 2015, the Company
recorded $35 million of expense related to community
development investments not within the scope of the accounting
guidance for investments in qualified affordable housing
projects. During the year ended December 31, 2014, the
Company recorded $19 million of amortization related to these
non-qualified investments ($5 million of which was recorded
within other noninterest expense and $14 million was recorded
within amortization expense in the Company's Consolidated
Statements of Income). No amortization was recorded for these
non-qualified investments during the year ended December 31,
2013.
NOTE 11 - BORROWINGS AND CONTRACTUAL COMMITMENTS
Other short-term borrowings
Other short-term borrowings at December 31 were as follows:
2015 2014
(Dollars in millions) Balance Interest Rate Balance Interest Rate
FHLB advances $— —% $4,000 0.23%
Master notes 582 0.20 1,280 0.15
Dealer collateral 442 0.20 354 0.13
Total other short-term borrowings $1,024 $5,634