BB&T 2012 Annual Report Download - page 144

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available insurance coverage, BB&T’ s management believes that its established legal reserves are adequate and the liabilities
arising from BB&T’ s legal proceedings will not have a material 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 and BB&T FSB are required by the FRB to maintain reserve balances in the form of vault cash or deposits with
the FRB based on specified percentages of certain deposit types, subject to various adjustments. At December 31, 2012, the
net reserve requirement amounted to $266 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.
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 Company 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 also are 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, 2012 and 2011, 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).
Risk-based capital ratios, which include Tier 1 Capital, Total Capital and Tier 1 Common Equity, are calculated based on
regulatory guidance related to the measurement of capital and risk-weighted assets. BB&T reevaluated its process related to
calculating risk-weighted assets and determined that certain adjustments, primarily related to the presentation of certain
unfunded lending commitments, were required in order to conform to regulatory guidance. These adjustments resulted in an
increase to risk-weighted assets and a decrease in BB&T’ s risk-based capital ratios.
December 31, 2012 December 31, 2011
Actual Capital Capital Requirements Actual Capital Capital Requirements
Ratio Amount Minimum Well-Capitalized Ratio Amount Minimum Well-Capitalized
(Dollars in millions)
Tier 1 Capital (1):
BB&T 11.0 % $ 14,373 $ 5,244 $ 7,866 12.0 % $ 14,913 $ 4,980 $ 7,470
Branch Bank 11.6 14,587 5,011 7,516 12.8 15,274 4,759 7,138
Total Capital (1):
BB&T 13.9 18,204 10,488 13,110 15.1 18,862 9,961 12,451
Branch Bank 13.4 16,809 10,022 12,527 15.1 17,915 9,517 11,897
Leverage Capital:
BB&T 8.2 14,373 7,001 8,751 9.0 14,913 6,614 8,267
Branch Bank 8.6 14,587 5,086 8,476 9.5 15,274 4,801 8,002
(1) The Company has revised its calculation of risk-weighted assets and adjusted the applicable ratios.
As an approved seller/servicer, Branch Bank is required to maintain minimum levels of shareholders’ equity, as specified by
various agencies, including the United States Department of Housing and Urban Development, GNMA, FHLMC and FNMA.
At December 31, 2012 and 2011, Branch Bank’ s equity was above all required levels.
At December 31, 2012 and 2011, BB&T had segregated cash deposits totaling $36 million and $20 million, respectively.
These deposits relate to monies held for the exclusive benefit of clients, primarily at BB&T’ s broker/dealer subsidiaries.