BB&T 2009 Annual Report Download - page 75

In the ordinary course of business, BB&T indemnifies its officers and directors to the fullest extent
permitted by law against liabilities arising from litigation. BB&T also issues standard representation and
warranties in underwriting agreements, merger and acquisition agreements, loan sales, brokerage activities and
other similar arrangements. Counterparties in many of these indemnifications provide similar indemnifications to
BB&T. Although these agreements often do not specify limitations, BB&T does not believe that any payments
related to these guarantees would materially change the financial condition or results of operations of BB&T.
BB&T holds public funds in certain states that do not require 100% collateralization on public fund bank
deposits. In these states, should the failure of another public fund depository institution result in a loss for the
public entity, the resulting shortfall would have to be absorbed on a pro-rata basis by the remaining financial
institutions holding public funds in that state.
BB&T has investments and future funding commitments to certain venture capital funds. As of December 31,
2009, BB&T had investments of $281 million related to these ventures and future funding commitments of $183
million. BB&T’s risk exposure relating to such commitments is generally limited to the amount of investments
and future funding commitments made.
Merger and acquisition agreements of businesses other than financial institutions occasionally include
additional incentives to the acquired entities to offset the loss of future cash flows previously received through
ownership positions. Typically, these incentives are based on the acquired entity’s contribution to BB&T’s
earnings compared to agreed-upon amounts. When offered, these incentives are typically issued for terms of
three to five years. As certain provisions of these agreements do not specify dollar limitations, it is not possible to
quantify the maximum exposure resulting from these agreements.
As a member of the Federal Home Loan Bank of Atlanta (“FHLB”), BB&T is required to maintain a
minimum investment in capital stock. The board of directors of the FHLB can increase the minimum investment
requirements in the event it has concluded that additional capital is required to allow it to meet its own
regulatory capital requirements. Any increase in the minimum investment requirements outside of specified
ranges requires the approval of the Federal Housing Finance Board. Because the extent of any obligation to
increase BB&T’s investment in the FHLB depends entirely upon the occurrence of a future event, potential
future payments to the FHLB are not determinable.
In the normal course of business, BB&T is also a party to financial instruments to meet the financing needs of
clients and to mitigate exposure to interest rate risk. Such financial instruments include commitments to extend
credit and certain contractual agreements, including standby letters of credit and financial guarantee
arrangements. Further discussion of these commitments is included in Note 15 “Commitments and
Contingencies” in the “Notes to Consolidated Financial Statements.”
BB&T’s significant commitments and obligations are summarized in the accompanying table. Not all of the
commitments presented in the table will be used thus the actual cash requirements are likely to be significantly
less than the amounts reported.
Table 27
Summary of Significant Commitments
December 31, 2009
(Dollars in millions)
Lines of credit $15,322
Letters of credit and financial guarantees written 7,999
Other commitments (1) 20,808
Total significant commitments $44,129
(1) Other commitments include unfunded business loan commitments, unfunded overdraft protection on demand
deposit accounts and other unfunded commitments to lend.
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