BB&T 2008 Annual Report Download - page 15

Challenges
BB&T’s business has become more dynamic and complex in recent years. Consequently, management has
annually evaluated and, as necessary, adjusted the Corporation’s business strategy in the context of the current
operating environment. During this process, management considers the current financial condition and
performance of the Company and its expectations for future economic activity, both on a national and local
market scale. The achievement of BB&T’s key strategic objectives and established long-term financial goals is
subject to many uncertainties and challenges. In the opinion of management, the challenges that are most
relevant and likely to have a near term impact on performance are presented below:
ŠDownturn in the residential real estate market
ŠEffectively managing through the credit cycle
ŠUnprecedented disruption and significantly increased risk in financial markets
ŠCost and risk associated with the current heightened regulatory environment
ŠIntense competition within the financial services industry
Competition
The financial services industry is highly competitive and dramatic change continues to occur in all aspects of
the Company’s business. The ability of nonbank financial entities to provide services previously reserved for
commercial banks has intensified competition. BB&T’s subsidiaries compete actively with national, regional and
local financial services providers, including banks, thrifts, securities dealers, mortgage bankers, finance
companies and insurance companies. Competition among providers of financial products and services continues to
increase, with consumers having the opportunity to select from a growing variety of traditional and
nontraditional alternatives. The industry continues to consolidate, which affects competition by eliminating some
regional and local institutions, while strengthening the franchises of acquirers. In addition, many financial
services are experiencing significant challenges as a result of the economic crisis, resulting in bank and thrift
failures and significant intervention from the U.S. Government. For additional information concerning markets,
BB&T’s competitive position and business strategies, and recent government interventions see “Market Area”,
“General Business Development” and “Regulatory Considerations” below.
Market Area
BB&T’s primary market area consists of North and South Carolina, Virginia, Maryland, Georgia, eastern
Tennessee, West Virginia, Kentucky, Florida and Washington, D.C. This area’s employment base is diverse and
primarily consists of manufacturing, general services, agricultural, wholesale/retail trade, technology and
financial services. BB&T believes its current market area will support growth in assets and deposits in the
future. Management strongly believes that BB&T’s community bank approach to providing client service is a
competitive advantage that strengthens the Corporation’s ability to effectively provide financial products and
services to businesses and individuals in its markets.
General Business Development
BB&T is a regional financial holding company. BB&T has maintained a long-term focus on a strategy that
includes expanding and diversifying the BB&T franchise in terms of revenues, profitability and asset size. During
the 1990’s and the first part of this decade, BB&T’s growth resulted largely from mergers and acquisitions as the
economics of business combinations were compelling. Recently, BB&T has focused more on organic growth.
Tangible evidence of this focus is the growth in average total assets, loans and deposits, which have increased
over the last five years at compound annual rates of 9.9%, 10.5%, and 9.3%, respectively.
Merger Strategy
BB&T’s growth in business, profitability and market share has historically been enhanced by strategic
mergers and acquisitions. Management intends to remain disciplined and focused with regard to future merger
15