BB&T 2014 Annual Report Download - page 13

Table of Contents
The Dodd-Frank Act also requires the FDIC to conduct an annual supervisory stress test for FDIC-insured state nonmember banks such as Branch Bank with
$50 billion or more of total consolidated assets and requires such institutions to conduct annual company-run stress tests. The results of the annual
supervisory stress test are included in the annual capital plan submitted to the FDIC.
The FDIC published rulemaking that revises FDIC rules and regulations regarding the annual stress testing requirements for state non-member banks and state
savings associations with total consolidated assets of more than $10 billion. FDIC regulations, which implement section 165(i)(2) of the Dodd-Frank Act,
require covered banks to conduct annual stress tests and report the results of such stress tests to the FDIC and the FRB and publicly disclose a summary of the
results of the required stress tests. The FDIC modified the “as-of” dates for financial data that covered banks will use to perform their stress tests as well as the
reporting dates and public disclosure dates of the annual stress tests. The revisions to the regulations will become effective January 1, 2016.
Acquisitions
BB&T complies with numerous laws related to its acquisition activity. Under the BHCA, a BHC may not directly or indirectly acquire ownership or control
of more than 5% of the voting shares or substantially all of the assets of any BHC or bank or merge or consolidate with another BHC without the prior
approval of the FRB.
Current federal law authorizes interstate acquisitions of banks and BHCs without geographic limitation. Furthermore, a bank headquartered in one state is
authorized to merge with a bank headquartered in another state, subject to market share limitations and any state requirement that the target bank shall have
been in existence and operating for a minimum period of time. After a bank has established branches in a state through an interstate merger transaction, the
bank may establish and acquire additional branches at any location in the state where a bank headquartered in that state could have established or acquired
branches under applicable federal or state law. These regulatory considerations are applicable to privately negotiated acquisition transactions.
During 2014, the FRB issued a final rule to implement section 622 of the Dodd-Frank Act, which generally prohibits a financial company from combining
with another company if the ratio of the resulting company's liabilities exceeds 10 percent of the aggregate consolidated liabilities of all financial companies.
Other Safety and Soundness Regulations
The FRB has enforcement powers over BHCs and their nonbanking subsidiaries. The FRB has authority to prohibit activities that represent unsafe or
unsound practices or constitute violations of law, rule, regulation, administrative order or written agreement with a federal regulator. These powers may be
exercised through the issuance of cease and desist orders, civil money penalties or other actions.
There also are a number of obligations and restrictions imposed on BHCs and their depository institution subsidiaries by federal law and regulatory policy
that are designed to reduce potential loss exposure to the depositors of such depository institutions and to the FDIC insurance fund in the event the
depository institution is insolvent or is in danger of becoming insolvent. For example, under requirements of the FRB with respect to BHC operations, a BHC
is required to serve as a source of financial strength to its subsidiary depository institutions and to commit financial resources to support such institutions in
circumstances where it might not do so otherwise. In addition, the “cross-guarantee” provisions of federal law require IDIs under common control to
reimburse the FDIC for any loss suffered or reasonably anticipated by the DIF as a result of the insolvency of commonly controlled IDIs or for any assistance
provided by the FDIC to commonly controlled IDIs in danger of failure. The FDIC’s claim for reimbursement under the cross-guarantee provisions is superior
to claims of shareholders of the IDI or its holding company but is subordinate to claims of depositors, secured creditors and nonaffiliated holders of
subordinated debt of the commonly controlled IDI.
Federal and state banking regulators also have broad enforcement powers over Branch Bank, including the power to impose fines and other civil and criminal
penalties, and to appoint a receiver in order to conserve the assets of Branch Bank for the benefit of depositors and other creditors. The North Carolina
Commissioner of Banks also has the authority to take possession of a North Carolina state bank in certain circumstances, including, among other things,
when it appears that such bank has violated its charter or any applicable laws, is conducting its business in an unauthorized or unsafe manner, is in an unsafe
or unsound condition to transact its business or has an impairment of its capital stock.
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Source: BB&T CORP, 10-K, February 25, 2015 Powered by Morningstar® Document Research℠
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