BB&T 2015 Annual Report Download - page 11

TableofContents
BB&T’s earnings are affected by general economic conditions, management policies, changes in state and federal laws and regulations and actions of various
regulatory authorities, including those referred to in this section. Proposals to change the laws and regulations to which BB&T is subject are frequently
introduced at both the federal and state levels. The likelihood and timing of any such changes and the impact such changes may have on BB&T is impossible
to determine with any certainty. The description herein summarizes the significant state and federal laws to which BB&T currently is subject. To the extent
statutory or regulatory provisions are described in this section, such descriptions are qualified in their entirety by reference to the particular statutory or
regulatory provisions.
Financial Regulatory Reform
During the past several years, there has been a significant increase in regulation and regulatory oversight for U.S. financial services firms, primarily resulting
from the Dodd-Frank Act. The Dodd-Frank Act is extensive, complex and comprehensive legislation that impacts practically all aspects of a banking
organization, representing a significant overhaul of many aspects of the regulation of the financial services industry. The Dodd-Frank Act implements
numerous and far-reaching changes that affect financial companies, including banks, BHCs and FHCs such as BB&T.
Many of the provisions of the Dodd-Frank Act and other laws are subject to further rulemaking, guidance and interpretation by the applicable federal
regulators. BB&T will continue to evaluate the impact of any new regulations so promulgated, including changes in regulatory costs and fees, modifications
to consumer products or disclosures required by the CFPB and the requirements of the enhanced supervision provisions, among others.
As a BHC and a FHC under federal law, BB&T is subject to regulation under the BHCA and the examination and reporting requirements of the FRB. Branch
Bank, a North Carolina state-chartered commercial bank, is subject to regulation, supervision and examination by the North Carolina Commissioner of
Banks, the FDIC and the CFPB.
State and federal law govern the activities in which Branch Bank engages, the investments it makes and the aggregate amount of loans that may be granted to
one borrower. Various consumer and compliance laws and regulations also affect its operations. Branch Bank is also affected by the actions of the FRB as it
implements monetary policy.
In addition to federal and state banking laws and regulations, BB&T and certain of its subsidiaries and affiliates, including those that engage in securities
underwriting, dealing, brokerage, investment advisory and insurance activities, are subject to other federal and state laws and regulations as well as
supervision and examination by other state and federal regulatory agencies and other regulatory authorities, including the SEC, FINRA, NYSE and various
state insurance and securities regulators.
FHC Regulation
Under current federal law, as a BHC, BB&T has elected to become a FHC, which allows it to offer customers virtually any type of service that is financial in
nature or incidental thereto, including banking and activities closely related thereto, securities underwriting, insurance and merchant banking. In order to
maintain its status as a FHC, BB&T and all of its affiliated IDIs must be well-capitalized and well-managed and have at least a satisfactory CRA rating. The
FRB has responsibility for overseeing compliance with these requirements. If the FRB determines that a FHC is not well-capitalized or well-managed, the
FHC has a period of time to comply, but during the period of noncompliance, the FRB can place any limitations on the FHC that it believes to be appropriate.
Furthermore, if the FRB determines that a FHC has not maintained a satisfactory CRA rating, the FHC would not be able to commence any new financial
activities or acquire a company that engages in such activities, although the FHC would still be allowed to engage in activities closely related to banking
and make investments in the ordinary course of conducting banking activities.
Most of the financial activities that are permissible for FHCs also are permissible for a bank’s “financial subsidiary,” except for insurance underwriting,
insurance company portfolio investments, real estate investments and development, and merchant banking, which must be conducted by a FHC. In order for a
financial subsidiary of a bank to engage in permissible financial activities, federal law requires the parent bank (and its sister-bank affiliates) to be well-
capitalized and well-managed; the aggregate consolidated assets of all of that bank’s financial subsidiaries may not exceed the lesser of 45% of its
consolidated total assets or $50 billion; the bank must have at least a satisfactory CRA rating; and, if that bank is one of the 100 largest national banks, it
must meet certain financial rating or other comparable requirements.
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Source: BB&T CORP, 10-K, February 25, 2016 Powered by Morningstar® Document Research℠
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