BB&T 2014 Annual Report Download - page 79

Table of Contents
BB&T holds public funds in certain states that do not require 100% collateralization on public fund bank deposits. In these states, should the failure of
another public fund depository institution result in a loss for the public entity, the resulting shortfall would have to be absorbed on a pro-rata basis by the
remaining financial institutions holding public funds in that state.
As a member of the FHLB, BB&T is required to maintain a minimum investment in capital stock. The board of directors of the FHLB can increase the
minimum investment requirements in the event it has concluded that additional capital is required to allow it to meet its own regulatory capital requirements.
Any increase in the minimum investment requirements outside of specified ranges requires the approval of the Federal Housing Finance Agency. Because the
extent of any obligation to increase BB&T’s investment in the FHLB depends entirely upon the occurrence of a future event, potential future payments to the
FHLB are not determinable.
In the normal course of business, BB&T is also a party to financial instruments to meet the financing needs of clients and to mitigate exposure to interest rate
risk. Such financial instruments include commitments to extend credit and certain contractual agreements, including standby letters of credit and financial
guarantee arrangements. Further discussion of BB&T’s commitments is included in Note 15 “Commitments and Contingencies” and Note 18 “Fair Value
Disclosures” in the “Notes to Consolidated Financial Statements.”
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Balance, at beginning of period $ 72 $ 71 $ 35
Payments (23) (27) (27)
Expense 45 28 63
Balance, at end of period $ 94 $ 72 $ 71
(1) Excludes the FHA-insured mortgage loan reserve of $85 million established during the second quarter of 2014.
Related Party Transactions
The Company may extend credit to its officers and directors in the ordinary course of business. These loans are made under substantially the same terms as
comparable third-party lending arrangements and are in compliance with applicable banking regulations.
Capital
The maintenance of appropriate levels of capital is a management priority and is monitored on a regular basis. BB&T’s principal goals related to the
maintenance of capital are to provide adequate capital to support BB&T’s risk profile consistent with the Board-approved risk appetite, provide financial
flexibility to support future growth and client needs, comply with relevant laws, regulations, and supervisory guidance, achieve optimal credit ratings for
BB&T and its subsidiaries and provide a competitive return to shareholders.
Management regularly monitors the capital position of BB&T on both a consolidated and bank level basis. In this regard, management’s overriding policy is
to maintain capital at levels that are in excess of the operating capital guidelines, which are above the regulatory “well capitalized” levels. Management has
implemented stressed capital ratio minimum guidelines to evaluate whether capital ratios calculated with planned capital actions are likely to remain above
minimums specified by the FRB for the annual CCAR. Breaches of stressed minimum guidelines prompt a review of the planned capital actions included in
BB&T’s capital plan.
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Source: BB&T CORP, 10-K, February 25, 2015 Powered by Morningstar® Document Research℠
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