BB&T 2014 Annual Report Download - page 14

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Table of Contents
Payment of Dividends; Capital Requirements
The Parent Company is a legal entity separate and distinct from Branch Bank and its subsidiaries. The majority of the Parent Company’s revenue is from
dividends paid by Branch Bank. Branch Bank is subject to laws and regulations that limit the amount of dividends it can pay. In addition, 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 summarized elsewhere in this section. Federal banking regulators
have indicated that banking organizations should generally pay dividends only if (1) the organization’s net income available to common shareholders over
the past year has been sufficient to fully fund the dividends and (2) the prospective rate of earnings retention appears consistent with the organization’s
capital needs, asset quality and overall financial condition. BB&T’s 2015 capital actions will depend on the FRB’s review of BB&T’s 2015 capital plan.
North Carolina law states that, provided a bank does not make distributions that reduce its capital below its applicable required capital, the board of directors
of a bank chartered under the laws of North Carolina may declare such distributions as the directors deem proper.
Capital Requirements
Information related to certain capital ratios is shown in the following table:








  
Risk-based capital ratios:
Tier 1 capital 4.0 % 6.0 % 12.4 % 11.7 %
Total risk-based capital 8.0 10.0 14.9 13.4
Tier 1 common capital N/A N/A 10.6 11.7
Tier 1 leverage capital ratio 3.0 5.0 9.9 9.3
The federal banking agencies, including the FRB and the FDIC, are required to take “prompt corrective action” in respect of depository institutions and their
BHCs that do not meet minimum capital requirements. The law establishes five capital categories for IDIs for this purpose: “well-capitalized,” “adequately
capitalized,” “undercapitalized,” “significantly undercapitalized” and “critically undercapitalized.” To be considered “well-capitalized” under these
standards, an institution must maintain the ratios shown above and must not be subject to any order or written directive to meet and maintain a specific
capital level for any capital measure.
Federal law also requires the bank regulatory agencies to implement systems for “prompt corrective action” for institutions that fail to meet minimum capital
requirements within the five capital categories, with progressively more severe restrictions on operations, management and capital distributions according to
the category in which an institution is placed. Additionally, failure to meet capital requirements may cause an institution to be directed to raise additional
capital. Federal law further mandates that the agencies adopt safety and soundness standards generally relating to operations and management, asset quality
and executive compensation, and authorizes administrative action against an institution that fails to meet such standards.
In addition to the “prompt corrective action” directives, failure to meet capital guidelines may subject a banking organization to a variety of other
enforcement remedies, including additional substantial restrictions on its operations and activities, termination of deposit insurance by the FDIC and, under
certain conditions, the appointment of a conservator or receiver.
13
Source: BB&T CORP, 10-K, February 25, 2015 Powered by Morningstar® Document Research℠
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