BB&T 2015 Annual Report Download - page 12

TableofContents
Current federal law also establishes a system of functional regulation under which the FRB is the umbrella regulator for BHCs, but BHC affiliates are
principally regulated by functional regulators such as the FDIC for state nonmember bank affiliates, the SEC for securities affiliates and state insurance
regulators for insurance affiliates. Certain specific activities, including traditional bank trust and fiduciary activities, may be conducted in the bank without
the bank being deemed a “broker” or a “dealer” in securities for purposes of functional regulation. Although states generally must regulate bank insurance
activities in a nondiscriminatory manner, states may continue to adopt and enforce rules that specifically regulate bank insurance activities in certain
identifiable areas.
The Dodd-Frank Act also imposed new prudential regulation on depository institutions and their holding companies. As such, BB&T is subject to more
stringent standards and requirements with respect to (1) bank and nonbank acquisitions and mergers, (2) the “financial activities” in which it engages as a
FHC, (3) affiliate transactions and (4) proprietary trading, among other provisions.
Resolution Planning and Regulation QQ
FRB and FDIC regulations require “covered companies” such as BB&T and systemically important financial institutions such as Branch Bank to file,
maintain and update plans for a rapid and orderly resolution in the event of material financial distress or failure (a “living will”). Both the FRB and the FDIC
must review and evaluate BB&T’s and Branch Bank’s living wills and are authorized to impose restrictions on BB&T’s and Branch Bank’s growth and
activities or operations if deemed necessary. The public portions of BB&T’s and Branch Bank’s resolution plans are available in the Additional Disclosures
section of the Investor Relations site at www.bbt.com.
CCAR and Stress Test Requirements
Current FRB rules require BB&T and other BHCs with $50 billion or more of total consolidated assets to submit annual capital plans based on pre-defined
stress scenarios. BB&T and other such BHCs are also required to collect and report certain related data on a quarterly basis to allow the FRB to monitor
progress against the BHCs’ annual capital plans. Covered BHCs, including BB&T, may pay dividends and repurchase stock only in accordance with a capital
plan that has been reviewed by the FRB and as to which the FRB has not objected. The rules also require, among other things, that a covered BHC may not
make a capital distribution unless, after giving effect to the distribution, it will meet all minimum regulatory capital ratios. See Table 3 for additional
information about capital requirements. The FRB did not object to BB&T’s 2015 capital plan, and the 2016 capital plan is expected to be submitted during
April 2016.
The Dodd-Frank Act requires the FRB to conduct an annual supervisory stress test for BHCs, such as BB&T, with $50 billion or more of total consolidated
assets. The FRB’s stress test rules also require BB&T and other covered BHCs to conduct a separate mid-year stress test, file the results of such test with the
FRB and publicly disclose details of the scenario and the impact on its capital. BB&T’s annual and midcycle stress test results are available in the Additional
Disclosures section of the Investor Relations site on www.bbt.com.
Effective for 2015, the FRB amended the capital plan and stress test rules to modify the start date of the capital plan and stress test cycles from October 1 to
January 1 of the following calendar year. The FRB also amended the capital plan rule to limit a BHC’s ability to make capital distributions to the extent the
BHC’s actual capital issuances are less than the amount indicated in its capital plan under baseline conditions, measured on a quarterly basis.
The Dodd-Frank Act also requires the FDIC to conduct an annual supervisory stress test for FDIC-insured state nonmember banks such as Branch Bank with
$50 billion or more of total consolidated assets and requires such institutions to conduct annual company-run stress tests. The results of the annual
supervisory stress test are included in the annual capital plan submitted to the FDIC.
The FDIC has modified the “as-of” dates for financial data that covered banks with more than $10 billion in assets will use to perform their stress tests as well
as the reporting dates and public disclosure dates of the annual stress tests. The revisions to the regulations became effective on January 1, 2016.
Acquisitions
BB&T complies with numerous laws related to its acquisition activity. Under the BHCA, a BHC may not directly or indirectly acquire ownership or control
of more than 5% of the voting shares or substantially all of the assets of any BHC or bank or merge or consolidate with another BHC without the prior
approval of the FRB.
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Source: BB&T CORP, 10-K, February 25, 2016 Powered by Morningstar® Document Research℠
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