STI 2018 Annual Report

56 time. Significant and sustained declines in our market capitalization could be an indication of potential goodwill impairment. Multi-year financial forecasts are developed for each reporting unit by considering several key business drivers such as newbusiness initiatives, client service and retention standards, market share changes, anticipated loan and deposit growth, forward interest rates, historical performance, and industry and economic trends, among other considerations that a market participant would consider in valuing the reporting units. Discount rates are estimated based on the Capital Asset Pricing Model, which considers the risk-free interest rate, market risk premium, beta, size premiums, and idiosyncratic risk adjustments specific to a particular reporting unit. The discount rates are also calibrated based on risks related to the projected cash flows of each reporting unit. The estimated fair values of the reporting units are highly sensitive to changes in these estimates and assumptions; therefore, in some instances, changes in these assumptions could impact whether the fair value of a reporting unit is greater than its carrying amount. We perform sensitivity analyses around these assumptions in order to assess the reasonableness of the assumptions, and the resulting estimated fair values. Ultimately, potential future changes in these assumptions may impact the estimated fair value of a reporting unit and cause the fair value of the reporting unit to be below its carrying amount. Additionally, the carrying value of a reporting unit's equity could change based onmarket conditions, asset growth, preferred stock issuances, or the risk profile of those reporting units, which could impact whether or not the fair value of a reporting unit is less than carrying amount. Income Taxes We are subject to income tax laws of the U.S., its states, and the municipalities where we conduct business. We estimate income tax expense based on amounts expected to be owed to these various tax jurisdictions. The estimated income tax expense or benefit is reported in the Consolidated Statements of Income. Accrued taxes represent the net estimated amount due to or to be received from tax jurisdictions either currently or in the future and are reported in Other liabilities or Other assets on the Consolidated Balance Sheets. In estimating accrued taxes, we assess the appropriate tax treatment of transactions and filing positions after considering statutes, regulations, judicial precedent, and other pertinent information. The income tax laws are complex and subject to different interpretations by the taxpayer and the relevant government taxing authorities. Significant judgment is required in determining the tax accruals and in evaluating our tax positions, including evaluating uncertain tax positions. Changes in the estimate of accrued taxes occur periodically due to changes in tax rates, interpretations of tax laws and new judicial guidance, the status of examinations by the tax authorities, and newly enacted statutory and regulatory guidance that could impact the relative merits and risks of tax positions. These changes, when they occur, impact tax expense and can materially affect our operating results. We review our tax positions quarterly and make adjustments to accrued taxes as new information becomes available. Deferred income tax assets represent amounts available to reduce income taxes payable in future years. Such assets arise due to temporary differences between the financial reporting and the tax bases of assets and liabilities, as well as from NOL and tax credit carryforwards. We regularly evaluate the realizability of DTAs.Avaluation allowance is recognized for a DTAif, based on the weight of available evidence, it is more-likely-than-not that some portion or all of the DTA will not be realized. In determining whether a valuation allowance is necessary, we consider the level of taxable income in prior years to the extent that carrybacks are permitted under current tax laws, as well as estimates of future pre-tax and taxable income and tax planning strategies that would, if necessary, be implemented.We currently maintain a valuation allowance for certain state carryforwards and certain other state DTAs. Since we expect to realize our remaining federal and state DTAs, no valuation allowance is deemed necessary against these DTAs at December 31, 2018. For additional income tax information, refer to the "Provision for Income Taxes" section in this MD&A as well as Note 1, “Significant Accounting Policies,” and Note 16, “Income Taxes,” to the Consolidated Financial Statements in this Form 10-K. Employee Benefit Plans We maintain various pension and other postretirement benefit plans for employees who meet certain requirements. Changes in the size and characteristics of the workforce or changes in the plan's design could result in a partial settlement of one or more of our pension plans. If lump sum payments were to exceed the total of interest cost and service cost for the year, settlement accounting would require immediate recognition through earnings of any net actuarial gain or loss recorded inAOCI based on the fair value of plan assets and plan obligations prior to settlement, and recognition of any related settlement costs. During the fourth quarter of 2018, we reclassified $60 million of pre-tax deferred losses from AOCI into net income upon settlement of the NCF Retirement Plan. For additional information on our pension and other postretirement benefit plans as well as the NCF Retirement Plan settlement, see Note 17, “Employee Benefit Plans,” to the Consolidated Financial Statements in this Form 10-K. ENTERPRISE RISK MANAGEMENT In the normal course of business, we are exposed to various risks. We have established an enterprise risk framework to identify and manage these risks and support key business objectives. Underlying this framework are limits, metrics, policies, procedures, and processes designed to effectively identify, monitor, and manage risk in line with our overall risk appetite. Our risk management philosophy is not to eliminate risk entirely but rather to only accept risks that can be effectively managed and balanced with acceptable returns while also meeting regulatory objectives. The Board is responsible for establishing our desired overall risk appetite and for oversight of risk management processes through the BRC. The BRC reports to and assists the Board in