SunTrust 2015 Annual Report Download - page 137

Notes to Consolidated Financial Statements, continued
109
Long-term debt
Long-term debt at December 31 consisted of the following:
2015 2014
(Dollars in millions) Maturity Date(s) Interest Rate(s) Balance Balance
Parent Company Only:
Senior, fixed rate 2016 - 2028 2.35% - 6.00% $3,614 $3,630
Senior, variable rate 2016 - 2019 0.48 - 1.86 331 358
Subordinated, fixed rate 2026 6.00 200 200
Junior subordinated, variable rate 2027 - 2028 1.03 - 1.31 627 627
Total Parent Company debt 4,772 4,815
Subsidiaries 1:
Senior, fixed rate 22016 - 2053 0.80 - 9.65 1,620 5,682
Senior, variable rate 2016 - 2043 0.44 - 2.23 1,097 742
Subordinated, fixed rate 32017 - 2020 5.20 - 7.25 973 1,283
Subordinated, variable rate —500
Total subsidiaries debt 3,690 8,207
Total long-term debt $8,462 $13,022
1 81% and 90% of total subsidiary debt was issued by the Bank as of December 31, 2015 and 2014, respectively.
2 Includes leases and other obligations that do not have a stated interest rate.
3 Debt recorded at fair value.
The Company had no foreign denominated debt outstanding at
December 31, 2015 or 2014. Maturities of long-term debt at
December 31, 2015 were as follows:
(Dollars in millions)
Parent
Company Subsidiaries
2016 $1,038 $73
2017 1,232 1,711
2018 874 502
2019 792 33
2020 — 226
Thereafter 836 1,145
Total $4,772 $3,690
During 2015, the Bank terminated $3.8 billion of FHLB
advances. These early terminations were related to a
repositioning of the balance sheet and resulted in the recognition
of $24 million in debt extinguishment costs, net of related hedges,
recorded in other noninterest expense in the Consolidated
Statement of Income. Additionally during 2015, $1.0 billion of
the Bank's long-term FHLB advances matured and another $1.2
billion were added. Furthermore, the Bank had variable rate and
fixed rate subordinated debt of $500 million and $269 million,
respectively, that matured during 2015. The Company had no
additional material issuances, advances, repurchases,
terminations, or extinguishments of long-term debt during the
year.
Restrictive provisions of several long-term debt agreements
prevent the Company from creating liens on, disposing of, or
issuing (except to related parties) voting stock of subsidiaries.
Furthermore, there are restrictions on mergers, consolidations,
certain leases, sales or transfers of assets, minimum shareholders’
equity, and maximum borrowings by the Company. At
December 31, 2015, the Company was in compliance with all
covenants and provisions of long-term debt agreements.
As currently defined by federal bank regulators, long-term
debt of $157 million and $627 million qualified as Tier 1 capital
at December 31, 2015 and 2014, and long-term debt of $1.0
billion and $792 million qualified as Tier 2 capital at December
31, 2015 and 2014, respectively. Beginning January 1, 2016, the
long-term debt that qualified as Tier 1 capital at December 31,
2015 will be completely phased-out of Tier 1 capital and will be
classified as Tier 2 capital, using the methodology specified
under Basel III. See Note 13, "Capital," for additional
information regarding regulatory capital adequacy requirements
for the Company and the Bank.
The Company does not consolidate certain wholly-owned
trusts which were formed for the sole purpose of issuing trust
preferred securities. The proceeds from the trust preferred
securities issuances were invested in junior subordinated
debentures of the Parent Company. The obligations of these
debentures constitute a full and unconditional guarantee by the
Parent Company of the trust preferred securities.
Contractual Commitments
In the normal course of business, the Company enters into certain
contractual commitments. These commitments include
obligations to make future payments on lease agreements,
contractual commitments for capital expenditures, and service
contracts.
The following table presents the Company's significant
contractual commitments at December 31, 2015, except for
long-term debt, operating leases, and pension and other
postretirement benefit plans. Information on those obligations is
included above, in Note 8, "Premises and Equipment," and in
Note 15, "Employee Benefit Plans." Capital lease obligations
and foreign time deposits were immaterial at December 31, 2015
and are not presented in the table.