BB&T 2009 Annual Report Download - page 10

Prior to the acquisition, Colonial was the subject of several regulatory investigations and a criminal
investigation in connection with accounting irregularities and these investigations may require significant
resources and management attention.
Prior to the acquisition, Colonial was the subject of a federal criminal investigation relating to the bank’s
mortgage warehouse lending division and related accounting irregularities. Colonial also received subpoenas from
the Special Inspector General for the Troubled Asset Relief Program and the SEC. Although the assets and
liabilities that the FDIC determines are related to alleged fraudulent or criminal activities were excluded from
the acquisition of Colonial, during the process of integrating Colonial with Branch Bank, BB&T may discover
other inconsistencies in standards, controls, procedures and policies that adversely affect BB&T’s ability to
achieve the anticipated benefits of the acquisition of Colonial. Additionally, BB&T will need to ensure that the
banking operations of Colonial that were acquired maintain effective disclosure controls as well as internal
controls and procedures for financial reporting, and such compliance efforts may be costly and may divert the
attention of management.
BB&T’s business could suffer if it fails to attract and retain skilled people.
BB&T’s success depends, in large part, on its ability to attract and retain key people. Competition for the
best people in most activities in which the Company engages can be intense. The federal government has
proposed significant additional standards with respect to executive compensation and governance at United
States financial institutions that may impact certain of BB&T’s executive officers and employees. If adopted, such
restrictions, in addition to other competitive pressures, may have an adverse effect on the ability of BB&T to
attract and retain skilled personnel, resulting in BB&T not being able to hire the best people or to retain them.
BB&T relies on other companies to provide key components of its business infrastructure.
Third party vendors provide key components of BB&T’s business infrastructure such as internet
connections, network access and mutual fund distribution. While BB&T has selected these third party vendors
carefully, its does not control their actions. Any problems caused by these third parties, including those which
result from their failure to provide services for any reason or their poor performance of services, could adversely
affect BB&T’s ability to deliver products and services to its customers and otherwise to conduct its business.
Replacing these third party vendors could also entail significant delay and expense.
Significant litigation could have a material adverse effect on BB&T.
BB&T faces legal risks in its business, and the volume of claims and amount of damages and penalties
claimed in litigation and regulatory proceedings against financial institutions remain high. Substantial legal
liability or significant regulatory action against BB&T may have material adverse financial effects or cause
significant reputational harm to BB&T, which in turn could seriously harm BB&T’s business prospects.
BB&T faces systems failure risks as well as security risks, including “hacking” and “identity theft.”
The computer systems and network infrastructure BB&T and others use could be vulnerable to unforeseen
problems. These problems may arise in both the Company’s internally developed systems and the systems of its
third-party service providers. The Company’s operations are dependent upon its ability to protect computer
equipment against damage from fire, power loss or telecommunication failure. Any damage or failure that causes
an interruption in the Company’s operations could adversely affect BB&T’s business and financial results. In
addition, the Company’s computer systems and network infrastructure present security risks, and could be
susceptible to hacking or identity theft.
Differences in interpretation of tax laws and regulations may adversely impact BB&T’s financial statements.
Local, state or federal tax authorities may interpret tax laws and regulations differently than BB&T and
challenge tax positions that BB&T has taken on its tax returns. This may result in the disallowance of deductions
or credits, and/or differences in the timing of deductions and result in the payment of additional taxes, interest or
penalties that could have a material adverse effect on BB&T’s performance.
10