NOTE 13 – CAPITAL

During 2015, pursuant to the Federal Reserve's non-objection to the Company's capital plan in conjunction with the 2015 CCAR, the Company increased its quarterly common stock dividend from $0.20 to $0.24 per share beginning in the second quarter of 2015, maintained dividend payments on its preferred stock, and repurchased $525 million of its outstanding common stock at market value (approximately 12.7 million shares) under the 2015 plan. During the first quarter of 2015, the Company also repurchased $115 million of its outstanding common stock at market value, which completed the repurchase of shares pursuant to its 2014 CCAR capital plan, which effectively expired on March 31, 2015. At December 31, 2015, the Company had capacity under its 2015 capital plan to purchase an additional $350 million of its outstanding common stock through June 30, 2016. In December 2015, the Company repurchased an additional $39 million of its outstanding common stock at market value, which was incremental to and separate from the existing availability under the 2015 CCAR capital plan.

During the years ended December 31, 2015, 2014, and 2013, the Company declared and paid common dividends of $475 million, or $0.92 per common share, $371 million, or $0.70 per common share, and $188 million, or $0.35 per common share, respectively. The Company also recognized dividends on perpetual preferred stock of $64 million, $42 million, and $37 million during the years ended December 31, 2015, 2014, and 2013, respectively. During 2015, both the Series A and Series B Perpetual Preferred Stock dividend was $4,056 per share, the Series E Perpetual Preferred Stock dividend was $5,875 per share, and the Series F Perpetual Preferred Stock dividend was $6,219 per share.

The Company remains subject to certain restrictions on its ability to increase the dividend on common shares as a result of participating in the U.S. Treasury’s CPP. If the Company increases its dividend above $0.54 per share per quarter prior to the tenth anniversary of its participation in the CPP, then the anti-dilution provision within the warrants issued in connection with the Company’s participation in the CPP will require the exercise price and number of shares to be issued upon exercise to be proportionately adjusted. The amount of such adjustment is determined by a formula and depends in part on the extent to which the Company raises its dividend. The formulas are contained in the warrant agreements which were filed as exhibits to Form 8-K filed on September 23, 2011.

Substantially all of the Company’s retained earnings are undistributed earnings of the Bank, which are restricted by various regulations administered by federal and state bank regulatory authorities. At December 31, 2015 and 2014, retained earnings of the Bank available for payment of cash dividends to the Parent Company under these regulations totaled approximately $2.7 billion and $2.9 billion, respectively. Additionally, the Federal Reserve requires the Company to maintain cash reserves. At December 31, 2015 and 2014, these reserve requirements totaled $1.0 billion and $1.5 billion, respectively, and were fulfilled with a combination of cash on hand and deposits at the Federal Reserve.

Regulatory Capital

The Company is subject to various regulatory capital requirements that involve quantitative measures of the Company’s assets. The following table presents regulatory capital metrics for SunTrust and the Bank at December 31:



	Under Basel III ¹				Under Basel I ¹
	2015				2014
(Dollars in millions)	Amount		Ratio		Amount		Ratio
SunTrust Banks, Inc.
CET1		$16,421	9.96	%	N/A		N/A
Tier 1 common equity	N/A		N/A			$15,594	9.60	%
Tier 1 capital		$17,804	10.80	%	17,554		10.80
Total capital	20,668		12.54		20,338		12.51
Leverage			9.69				9.64
SunTrust Bank
CET1		$17,859	11.02	%	N/A		N/A
Tier 1 capital	17,908		11.05			$17,036	10.67	%
Total capital	20,101		12.40		19,619		12.29
Leverage			9.96				9.57

¹Basel III Final Rules became effective on January 1, 2015; thus, CET1 is not applicable ("N/A") in periods ending prior to January 1, 2015 and Basel I Tier 1 common equity is N/A in periods ending after January 1, 2015. Tier 1 capital, Total capital, and Leverage ratio for periods ended prior to January 1, 2015 were calculated under Basel I.

On October 11, 2013, the Federal Reserve published final rules in the Federal Register implementing Basel III. These rules, which became effective for the Company and the Bank on January 1, 2015, include the following minimum capital requirements: CET1 ratio of 4.5%; Tier 1 capital ratio of 6%; Total capital ratio of 8%; Leverage ratio of 4%; and a capital conservation buffer of 2.5% of RWA. The capital conservation buffer is applicable beginning on January 1, 2016 and will be phased-in through December 31, 2018.

At December 31, 2015, the Company had $627 million in principal amount of trust preferred securities outstanding. The Basel III rules require the phase-out of non-qualifying Tier 1 capital instruments such as trust preferred securities. Accordingly, on January 1, 2015, the Company began phasing-out of Tier 1 capital its trust preferred and other hybrid capital securities, and instead began treating them as qualifying Tier 2 capital. Beginning January 1, 2016, these securities will be completely phased-out of Tier 1 capital and will be classified as Tier 2 capital, using the methodology specified under Basel III.

Preferred Stock

Preferred stock at December 31 consisted of the following:



(Dollars in millions)	2015		2014		2013
Series A (1,725 shares outstanding)		$172		$172		$172
Series B(1,025 shares outstanding)	103		103		103
Series E (4,500 shares outstanding)	450		450		450
Series F (5,000 shares outstanding)	500		500		—
Total preferred stock		$1,225		$1,225		$725

In September 2006, the Company authorized and issued depositary shares representing ownership interests in 5,000 shares of Perpetual Preferred Stock, Series A, no par value and $100,000 liquidation preference per share (the Series A Preferred Stock). The Series A Preferred Stock has no stated maturity and will not be subject to any sinking fund or other obligation of the Company. Dividends on the Series A Preferred Stock, if declared, will accrue and be payable quarterly at a rate per annum equal to the greater of three-month LIBOR plus 0.53%, or 4.00%. Dividends on the shares are noncumulative. Shares of the Series A Preferred Stock have priority over the Company’s common stock with regard to the payment of dividends and, as such, the Company may not pay dividends on or repurchase, redeem, or otherwise acquire for consideration shares of its common stock unless dividends for the Series A Preferred Stock have been declared for that period and sufficient funds have been set aside to make payment. During 2009, the Company repurchased 3,275 shares of the Series A Preferred Stock. In September 2011, the Series A Preferred Stock became redeemable at the Company’s option at a redemption price equal to $100,000 per share, plus any declared and unpaid dividends. Except in certain limited circumstances, the Series A Preferred Stock does not have any voting rights.

In December 2011, the Company authorized 5,010 shares and issued 1,025 shares of Perpetual Preferred Stock, Series B, no par value and $100,000 liquidation preference per share (the Series B Preferred Stock). The Series B Preferred Stock has no stated maturity and will not be subject to any sinking fund or other obligation of the Company. Dividends on the shares are noncumulative and, if declared, will accrue and be payable quarterly at a rate per annum equal to the greater of three-month LIBOR plus 0.65%, or 4.00%. Shares of the Series B Preferred Stock have priority over the Company's common stock with regard to the payment of dividends and, as such, the Company may not pay dividends on or repurchase, redeem, or otherwise acquire for consideration shares of its common stock unless dividends for the Series B Preferred Stock have been declared for that period and sufficient funds have been set aside to make payment. The Series B Preferred Stock was immediately redeemable upon issuance at the Company's option at a redemption price equal to $100,000 per share, plus any declared and unpaid dividends. Except in certain limited circumstances, the Series B Preferred Stock does not have any voting rights.

In December 2012, the Company authorized 5,000 shares and issued 4,500 shares of Perpetual Preferred Stock, Series E, no par value and $100,000 liquidation preference per share (the Series E Preferred Stock). The Series E Preferred Stock has no stated maturity and will not be subject to any sinking fund or other obligation of the Company to redeem, repurchase, or retire the shares. Dividends on the shares are noncumulative and, if declared, will accrue and be payable quarterly at a rate per annum of 5.875%. Shares of the Series E Preferred Stock have priority over the Company's common stock with regard to the payment of dividends and rank equally with the Company's outstanding Perpetual Preferred Stock, Series A and Series B and, as such, the Company may not pay dividends on or repurchase, redeem, or otherwise acquire for consideration shares of its common stock unless dividends for the Series E Preferred Stock have been declared for that period and sufficient funds have been set aside to make payment. The Series E Preferred Stock is redeemable, at the option of the Company, on any dividend payment date occurring on or after March 15, 2018, at a redemption price equal to $100,000 per share, plus any declared and unpaid dividends, without regard to any undeclared dividends. Except in certain limited circumstances, the Series E Preferred Stock does not have any voting rights.

In November 2014, the Company issued depositary shares representing ownership interest in 5,000 shares of Perpetual Preferred Stock, Series F, with no par value and $100,000 liquidation preference per share (the "Series F Preferred Stock"). As a result of this issuance, the Company received net proceeds of $496 million after the underwriting discount, but before expenses, and used the net proceeds for general corporate purposes. The Series F Preferred Stock has no stated maturity and will not be subject to any sinking fund or other obligation of the Company to redeem, repurchase, or retire the shares. Dividends for the shares are noncumulative and, if declared, will be payable semi-annually beginning on June 15, 2015 through December 15, 2019 at a rate per annum of 5.625%, and payable quarterly beginning on March 15, 2020 at a rate per annum equal to the three-month LIBOR plus 3.86%. By its terms, the Company may redeem the Series F Preferred Stock on any dividend payment date occurring on or after December 15, 2019 or at any time within 90 days following a regulatory capital event, at a redemption price of $100,000 per share plus any declared and unpaid dividends. Except in certain limited circumstances, the Series F Preferred Stock does not have any voting rights.

In 2008, the Company issued to the U.S. Treasury as part of the CPP, Series C and D Fixed Rate Cumulative Perpetual Preferred Stock and Series A and B warrants to purchase a total of 17.9 million shares of the Company's common stock. The Series A warrants entitle the holder to purchase 6 million shares of the Company's common stock at an exercise price of $33.70 per share, while the Series B warrants entitle the holder to purchase 11.9 million shares of the Company's common stock at an exercise price of $44.15 per share. The Series A and B warrants have expiration dates of December 2018 and November 2018, respectively.

In March 2011, the Company repurchased its Series C and D Preferred Stock from the U.S. Treasury. In September 2011, the U.S. Treasury held a public auction to sell the warrants to purchase the 17.9 million shares of the Company's common stock. In conjunction with the U.S. Treasury's auction, the Company acquired 4 million of the stock purchase warrants, Series A, for $11 million, which were then retired.

At December 31, 2015, 13.9 million warrants remained outstanding and the Company had authority from its Board to repurchase all of these outstanding stock purchase warrants; however, any such repurchase would be subject to the non-objection of the Federal Reserve through the capital planning and stress testing process.