BB&T 2007 Annual Report Download - page 114

BB&T CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Legal Proceedings
The nature of the business of BB&T’s banking and other subsidiaries ordinarily results in a certain amount of
litigation. The subsidiaries of BB&T are involved in various legal proceedings, all of which are considered incidental to
the normal conduct of business. Based on information currently available, advice of counsel, available insurance
coverage and established reserves, BB&T’s management believes that the liabilities, if any, arising from these
proceedings will not have a materially adverse effect on the consolidated financial position, consolidated results of
operations or consolidated cash flows of BB&T. However, in the event of unexpected future developments, it is
possible that the ultimate resolution of these matters, if unfavorable, may be material to BB&T’s consolidated financial
position, consolidated results of operations or consolidated cash flows.
NOTE 16. Regulatory Requirements and Other Restrictions
Branch Bank is required by the Board of Governors of the Federal Reserve System to maintain reserve
balances in the form of vault cash or deposits with the Federal Reserve Bank based on specified percentages of
certain deposit types, subject to various adjustments. At December 31, 2007, the net reserve requirement
amounted to $589 million.
Branch Bank is subject to laws and regulations that limit the amount of dividends it can pay. In addition,
both BB&T and Branch Bank are subject to various regulatory restrictions relating to the payment of dividends,
including requirements to maintain capital at or above regulatory minimums, and to remain “well-capitalized”
under the prompt corrective action regulations. BB&T does not expect that any of these laws, regulations or
policies will materially affect the ability of Branch Bank to pay dividends. At December 31, 2007, subject to
restrictions imposed by state law, the Board of Directors of Branch Bank could have declared dividends from its
retained earnings up to $3.4 billion; however, to remain well-capitalized under federal guidelines, Branch Bank
would have limited total additional dividends to $1.0 billion.
BB&T is subject to various regulatory capital requirements administered by the Federal banking agencies.
Failure to meet minimum capital requirements can initiate certain mandatory—and possibly additional
discretionary—actions by regulators that, if undertaken, could have a direct material effect on BB&T’s financial
statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the
Corporation must meet specific capital guidelines that involve quantitative measures of BB&T’s assets, liabilities and
certain off-balance-sheet items calculated pursuant to regulatory directives. BB&T’s capital amounts and classification
are also subject to qualitative judgments by the regulators about components, risk weightings and other factors.
BB&T is in full compliance with these requirements. Banking regulations also identify five capital categories for
insured depository institutions: well-capitalized, adequately capitalized, undercapitalized, significantly undercapitalized
and critically undercapitalized. At December 31, 2007 and 2006, BB&T and Branch Bank were classified as “well
capitalized”.
Quantitative measures established by regulation to ensure capital adequacy require BB&T to maintain
minimum amounts and ratios of total and Tier 1 capital (as defined in the regulations) to risk-weighted assets (as
defined), and of Tier 1 capital to average tangible assets (leverage ratio).
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