BB&T 2014 Annual Report Download - page 28

Table of Contents
Difficulty in integrating an acquired company may cause BB&T not to realize expected revenue increases, cost savings, increases in geographic or product
presence and/or other projected benefits from the acquisition. The integration could result in higher than expected deposit attrition, loss of key employees,
disruption of BB&T’s businesses or the businesses of the acquired company, or otherwise adversely affect BB&T’s ability to maintain relationships with
customers and employees or achieve the anticipated benefits of the acquisition. Also, the negative effect of any divestitures required by regulatory authorities
in acquisitions or business combinations may be greater than expected. As a result of these and other factors, BB&T could incur losses on acquired assets and
increased expenses resulting from the failure to successfully integrate an acquired company, which could adversely impact its financial condition or results of
operations.
BB&T may not be able to successfully implement a new ERP system, which could adversely affect BB&T’s business operations and profitability.
BB&T is investing significant resources in an enterprise-wide initiative aimed at implementing an integrated ERP financial platform, utilizing certain
modules of SAP software. The objective of the new ERP system is to modernize and consolidate many of the existing systems that are currently used for a
variety of functions throughout the Company, including both internal and external financial reporting. BB&T may not be able to successfully implement and
integrate the new ERP system, which could adversely impact the ability to provide timely and accurate financial information in compliance with legal and
regulatory requirements, which could result in sanctions from regulatory authorities. Such sanctions could include fines and suspension of trading in BB&T
stock, among others. In addition, a number of core business processes could be affected. The implementation could extend past the expected timing and/or
result in operating inefficiencies, which could increase the costs associated with the implementation as well as ongoing operations.
Failure to implement part or all of the ERP system could result in impairment charges that adversely impact BB&T’s financial condition and results of
operations and could result in significant costs to remediate or replace the defective components. In addition, BB&T may incur significant training,
licensing, maintenance, consulting and amortization expenses during and after the implementation, and any such costs may continue for an extended period
of time.
Strategic and Other Risk
BB&T may experience significant competition in its market area, which may reduce its customer base or cause it to lower prices for its products and services
in order to maintain market share.
There is intense competition among commercial banks in BB&T’s market area. In addition, BB&T competes with other providers of financial services, such
as savings and loan associations, credit unions, consumer finance companies, securities firms, insurance companies, commercial finance and leasing
companies, the mutual funds industry, full-service brokerage firms and discount brokerage firms, some of which are subject to less extensive regulations than
BB&T is with respect to the products and services they provide. BB&T’s success depends, in part, on its ability to adapt its products and services to evolving
industry standards and customer expectations. There is increasing pressure to provide products and services at lower prices. Lower prices can reduce BB&T’s
NIM and revenues from its fee-based products and services.
In addition, the adoption of new technologies by competitors, including internet banking services, mobile phone applications and advanced ATM
functionality could require BB&T to make substantial expenditures to modify or adapt its existing products and services. Also, these and other capital
investments in BB&T’s business may not produce expected growth in earnings anticipated at the time of the expenditure. BB&T may not be successful in
introducing new products and services, achieving market acceptance of its products and services, anticipating or reacting to consumers’ changing
technological preferences or developing and maintaining loyal customers.
Some of BB&T’s larger competitors, including certain national banks that have a significant presence in BB&T’s market area, may have greater capital and
resources than BB&T, may have higher lending limits and may offer products and services not offered by BB&T. Any potential adverse reactions to BB&T’s
financial condition or status in the marketplace, as compared to its competitors, could limit BB&T’s ability to attract and retain customers and to compete for
new business opportunities. The inability to attract and retain customers or to effectively compete for new business may have a material and adverse effect on
BB&T’s financial condition and results of operations.
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Source: BB&T CORP, 10-K, February 25, 2015 Powered by Morningstar® Document Research℠
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