BB&T 2014 Annual Report Download - page 77

Table of Contents
Branch Bank
BB&T carefully manages liquidity risk at Branch Bank. Branch Bank’s primary source of funding is customer deposits. Continued access to customer
deposits is highly dependent on the confidence the public has in the stability of the bank and its ability to return funds to the client when requested. BB&T
maintains a strong focus on its reputation in the market to ensure continued access to client deposits. BB&T integrates its risk appetite into its overall risk
management framework to ensure the bank does not exceed its risk tolerance through its lending and other risk taking functions and thus risk becoming
undercapitalized. BB&T believes that sufficient capital is paramount to maintaining the confidence of its depositors and other funds providers. BB&T has
extensive capital management processes in place to ensure it maintains sufficient capital to absorb losses and maintain a highly capitalized position that will
instill confidence in the bank and allow continued access to deposits and other funding sources. Branch Bank monitors many liquidity metrics at the bank
including funding concentrations, diversification, maturity distribution, contingent funding needs and ability to meet liquidity requirements under times of
stress.
Branch Bank has several major sources of funding to meet its liquidity requirements, including access to capital markets through issuance of senior or
subordinated bank notes and institutional CDs, access to the FHLB system, dealer repurchase agreements and repurchase agreements with commercial clients,
access to the overnight and term Federal funds markets, use of a Cayman branch facility, access to retail brokered CDs and a borrower in custody program
with the FRB for the discount window. As of December 31, 2014, BB&T has approximately $68.4 billion of secured borrowing capacity, which represents
approximately 686% of one year wholesale funding maturities.
The ability to raise funding at competitive prices is affected by the rating agencies’ views of the Parent Company’s and Branch Bank’s credit quality,
liquidity, capital and earnings. Management meets with the rating agencies on a regular basis to discuss current outlooks. The ratings for BB&T and Branch
Bank by the major rating agencies are detailed in the table below:



   
BB&T Corporation:
Commercial Paper A-2 P-1 F1 R-1(low)
Issuer A- A2 A+ A(high)
LT/Senior debt A- A2 A+ A(high)
Subordinated debt BBB+ A3 A A
Branch Bank:
Bank financial strength N/A B- a+ N/A
Long term deposits N/A A1 AA- AA(low)
LT/Senior unsecured bank notes A A1 A+ AA(low)
Other long term senior obligations A A1 A+ AA(low)
Other short term senior obligations A-1 P-1 F1 R-1(middle)
Short term bank notes A-1 P-1 F1 R-1(middle)
Short term deposits N/A P-1 F1+ R-1(middle)
Subordinated bank notes A- A2 A A(high)
Ratings Outlook:
Credit Trend Stable Negative Stable Stable
BB&T and Branch Bank have Contingency Funding Plans designed to ensure that liquidity sources are sufficient to meet their ongoing obligations and
commitments, particularly in the event of a liquidity contraction. These plans are designed to examine and quantify the organization’s liquidity under
various “stress” scenarios. Additionally, the plans provide a framework for management and other critical personnel to follow in the event of a liquidity
contraction or in anticipation of such an event. The plans address authority for activation and decision making, liquidity options and the responsibilities of
key departments in the event of a liquidity contraction. The liquidity options available to management could include seeking secured funding, asset sales,
and under the most extreme scenarios, curtailing new loan originations.
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Source: BB&T CORP, 10-K, February 25, 2015 Powered by Morningstar® Document Research℠
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