STI 2018 Annual Report

65 Contingency Liquidity Sources Table 25 As of Average for the Year Ended ¹ (Dollars in billions) December 31, 2018 December 31, 2017 December 31, 2018 December 31, 2017 Excess reserves $2.9 $2.6 $2.6 $2.9 Free and liquid investment portfolio securities 28.0 26.8 27.5 27.4 Unused FHLB borrowing capacity 20.2 23.8 24.0 22.2 Unused discount window borrowing capacity 21.3 18.2 19.1 17.6 Total $72.4 $71.4 $73.2 $70.1 1 Average based upon month-end data, except excess reserves, which is based upon a daily average. Federal Home Loan Bank and Federal Reserve Bank Stock. We previously acquired capital stock in the FHLB of Atlanta as a precondition for becoming a member of that institution. As a member, we are able to take advantage of competitively priced advances as a wholesale funding source and to access grants and low-cost loans for affordable housing and community development projects, among other benefits. At December 31, 2018, we held $227 million of capital stock in the FHLB of Atlanta, an increase of $212 million compared to December 31, 2017 due to an increase in short-term FHLB advances over the same period. For each of the years ended December 31, 2018, 2017, and 2016, we recognized an immaterial amount of dividends related to FHLB capital stock. Similarly, to remain a member of the Federal Reserve System, we are required to hold a certain amount of capital stock, determined as either a percentage of the Bank’s capital or as a percentage of total deposit liabilities.At bothDecember 31, 2018 and December 31, 2017, we held $403 million of Federal Reserve Bank of Atlanta stock. For the years ended December 31, 2018, 2017, and 2016, we recognized dividends related to Federal Reserve Bank ofAtlanta stock of $12million, $9million, and $8 million, respectively. Parent Company Liquidity. Our primary measure of Parent Company liquidity is the length of time the Parent Company can meet its existing and forecasted obligations using its cash resources. We measure and manage this metric using forecasts from both normal and adverse conditions. Under adverse conditions, we measure how long the Parent Company can meet its capital and debt service obligations after experiencing material attrition of short-term unsecured funding and without the support of dividends from the Bank or access to the capital markets. Our ALCO and the Board have established risk limits against these metrics to manage the Parent Company’s liquidity by structuring its net maturity schedule to minimize the amount of debt maturing within a short period of time. Amajority of the Parent Company’s liabilities are long-term in nature, coming from the proceeds of issuances of our capital securities and long- term senior and subordinated notes. See the “Borrowings” section of this MD&A as well as Note 13, “Borrowings and Contractual Commitments,” to the Consolidated Financial Statements in this Form 10-K for further information regarding our debt. We manage the Parent Company to maintain most of its liquid assets in cash and securities that it can quickly convert into cash. Unlike the Bank, it is not typical for the Parent Company to maintain a material investment portfolio of publicly traded securities. We manage the Parent Company cash balance to provide sufficient liquidity to fund all forecasted obligations (primarily debt and capital service) for an extended period of months in accordance with our risk limits. The primary uses of Parent Company liquidity include debt service, dividends on capital instruments, the periodic purchase of investment securities, loans to our subsidiaries, and common share repurchases. See further details of the authorized common share repurchases in the “Capital Resources” section of this MD&A and in Part II, Item 5 of this Form 10-K. We fund corporate dividends with Parent Company cash, the primary sources of which are dividends from our banking subsidiary and proceeds from the issuance of debt and capital securities. We are subject to both state and federal banking regulations that limit our ability to pay common stock dividends in certain circumstances. The Bank is also subject to federal and state laws and regulations that limit the amount of dividends it can pay to the Parent Company, which could affect the Parent Company's ability to pay dividends to its shareholders. Other Liquidity Considerations. As presented in Table 26, we had an aggregate potential obligation of $93.0 billion to our clients in unused lines of credit at December 31, 2018. Commitments to extend credit are arrangements to lend to clients who have complied with predetermined contractual obligations. We also had $2.9 billion in letters of credit outstanding at December 31, 2018, most of which are standby letters of credit, which require that we provide funding if certain future events occur. Approximately $155 million of these letters were available to support variable rate demand obligations at December 31, 2018. Unused commercial lines of credit increased since December 31, 2017, driven by an increase in commercial line of credit commitments during the year ended December 31, 2018. Unused CRE lines of credit also increased since December 31, 2017, driven primarily by an increase in CRE line of credit commitments during the year endedDecember 31, 2018.