SunTrust 2015 Annual Report Download - page 174

Notes to Consolidated Financial Statements, continued
146
recoverable. Impairment is recognized if the carrying amount of
the property exceeds its fair value. During the year ended
December 31, 2015, the Company did not recognize impairment
or increased estimated net realizable values on any of its
affordable housing properties.
During the first quarter of 2014, the Company decided to
actively market for sale certain consolidated affordable housing
properties, and accordingly, recognized an initial impairment
charge of $36 million to adjust the carrying values of these
properties to their estimated net realizable values, which were
obtained from a third party broker opinion and were considered
level 3. Subsequently during 2014, the Company recognized
recoveries of $15 million on these affordable housing properties
as a result of increased estimated net realizable values.
Additionally, the Company recognized gains of $19 million
during the year ended December 31, 2015 on the sale of these
affordable housing investments.
Other Assets
Other assets consists of other repossessed assets, assets under
operating leases where the Company is the lessor, land held for
sale, and equity method investments.
Other repossessed assets comprises repossessed personal
property that is measured at fair value less cost to sell. These
assets are considered level 3 as their fair value is determined
based on a variety of subjective, unobservable factors. There
were no losses recognized by the Company on other repossessed
assets during the years ended December 31, 2015 and 2014, as
the impairment charges on repossessed personal property were
a component of the ALLL.
The Company monitors the fair value of assets under
operating leases where the Company is the lessor and recognizes
impairment on the leased asset to the extent the carrying value
is not recoverable and the fair value is less than its carrying value.
Fair value is determined using collateral specific pricing digests,
external appraisals, broker opinions, recent sales data from
industry equipment dealers, and the discounted cash flows
derived from the underlying lease agreement. As market data for
similar assets and lease arrangements is available and used in
the valuation, these assets are considered level 2. During the
years ended December 31, 2015 and 2014, the Company
recognized impairment charges of $6 million and $59 million,
respectively, attributable to the fair value of various personal
property under operating leases.
Land held for sale is recorded at the lesser of carrying value
or fair value less cost to sell. Land held for sale is considered
level 2 as its fair value is determined based on market
comparables and broker opinions. Impairment charges the
Company recognized on land held for sale was immaterial and
$5 million during the years ended December 31, 2015 and 2014,
respectively.
Fair Value of Financial Instruments
The measured amounts and fair values of the Company’s financial instruments are as follows:
December 31, 2015 Fair Value Measurements
(Dollars in millions)
Measured
Amount
Fair
Value Level 1 Level 2 Level 3
Financial assets:
Cash and cash equivalents $5,599 $5,599 $5,599 $— $— (a)
Trading assets and derivative instruments 6,119 6,119 866 5,143 110 (b)
Securities AFS 27,825 27,825 3,542 23,727 556 (b)
LHFS 1,838 1,842 — 1,803 39 (c)
LHFI, net 134,690 131,178 — 397 130,781 (d)
Financial liabilities:
Deposits 149,830 149,889 — 149,889 — (e)
Short-term borrowings 4,627 4,627 — 4,627 — (f)
Long-term debt 8,462 8,374 — 7,772 602 (f)
Trading liabilities and derivative instruments 1,263 1,263 664 593 6 (b)