BB&T 2015 Annual Report Download - page 21

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The following discussion sets forth some of the more important risk factors that could materially affect BB&T’s financial condition and operations. When a
risk factor spans several risk categories, the below risks have been listed by their primary risk category. Other factors that could affect the Company’s
financial condition and operations are discussed in the “Forward-Looking Statements” section above. However, there may be additional risks that are not
presently material or known, and factors besides those discussed below, or elsewhere in this or other reports that BB&T filed or furnished with the SEC, that
also could adversely affect the Company.
Compliance Risk
Changes in banking laws could have a material adverse effect on BB&T.
BB&T is extensively regulated under federal and state banking laws and regulations that are intended primarily for the protection of depositors, federal DIFs
and the banking system as a whole. In addition, BB&T is subject to changes in federal and state laws as well as changes in banking and credit regulations and
governmental economic and monetary policies. Any of these changes could adversely and materially affect BB&T. The current regulatory environment for
financial institutions entails significant potential increases in compliance requirements and associated costs, including those related to consumer credit, with
a focus on mortgage lending.
Federal and state banking regulators also possess broad powers to take supervisory actions as they deem appropriate. These supervisory actions may result in
higher capital requirements, higher deposit insurance premiums and limitations on BB&T’s activities that could have a material adverse effect on its business
and profitability.
The ongoing implementation of the Dodd-Frank Act, and its related rulemaking activities, may result in lower revenues, higher costs and ratings
downgrades. In addition, failure to meet the FRB’s capital planning and adequacy requirements and liquidity requirements under the Dodd-Frank Act and
other banking laws may limit the ability to pay dividends, pursue acquisitions and repurchase common stock.
The Dodd-Frank Act represents a significant overhaul of many aspects of the regulation of the financial services industry, addressing, among other things,
systemic risk, capital adequacy, deposit insurance assessments, consumer financial protection, interchange fees, derivatives, lending limits, and changes
among the bank regulatory agencies. Under Dodd-Frank, BB&T is deemed to be a “systemically important” institution. Federal agencies continue to
implement the provisions of the Dodd-Frank Act. Many of these provisions remain subject to further rulemaking, guidance, and interpretation by the
applicable federal regulators, such as the Council, which will regulate the systemic risk of the financial system. Additionally, the CFPB has finalized a
number of significant rules that impact nearly every aspect of the lifecycle of a residential mortgage. These rules implement the Dodd-Frank Act amendments
to the Equal Credit Opportunity Act, the Truth in Lending Act and the Real Estate Settlement Procedures Act. These rules have a direct impact on BB&T’s
operations, as BB&T is both a mortgage originator and a servicer.
Due to BB&T’s size, it is subject to additional regulations such as the “living will” requirements relating to the rapid and orderly resolution of systemically
important financial institutions in the event of material financial distress or failure. BB&T cannot predict the additional effects that compliance with the
Dodd-Frank Act or any regulations will have on BB&T’s businesses or its ability to pursue future business opportunities. Additional regulations resulting
from the Dodd-Frank Act may materially adversely affect BB&T’s business, financial condition or results of operations. See “Regulatory Considerations” for
additional information regarding the Dodd-Frank Act and its impact upon BB&T.
In addition, BB&T has been subject to assessment by the FRB as part of the CCAR program. CCAR is an annual exercise by the FRB to ensure that
institutions have forward-looking capital planning processes that account for their risks and sufficient capital to continue operations throughout times of
economic and financial stress. BB&T cannot be certain that the FRB will have no objections to BB&T’s future capital plans submitted through the CCAR
program. Failure to pass the CCAR review could adversely affect BB&T’s ability to pay dividends, enter into acquisitions and repurchase common stock.
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Source: BB&T CORP, 10-K, February 25, 2016 Powered by Morningstar® Document Research℠
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