BB&T 2015 Annual Report Download - page 80

TableofContents
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 14 “Commitments and Contingencies” and Note 17 “Fair Value
Disclosures” in the “Notes to Consolidated Financial Statements.”
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

  

Balance, at beginning of period $ 94 $ 72 $ 71
Payments (5) (23) (27)
Expense (15) 45 28
Acquisitions 5 — —
Balance, at end of period $ 79 $ 94 $ 72
(1) Excludes the FHA-insured mortgage loan reserve of $85 million established during 2014.
Related Party Transactions
The Company may transact with its officers, directors and other related parties in the ordinary course of business. These transactions include substantially the
same terms as comparable third-party 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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
 
Tier 1 Capital Ratio 10.0 % 7.5 %
Total Capital Ratio 12.0 9.5
Tier 1 Leverage Capital Ratio 8.0 5.5
Tangible Common Equity Ratio 6.0 4.0
Tier 1 Common Equity Ratio 8.5 6.0
Payments of cash dividends and repurchases of common shares are the methods used to manage any excess capital generated. In addition, management
closely monitors the Parent Company’s double leverage ratio (investments in subsidiaries as a percentage of shareholders’ equity). The active management of
the subsidiaries’ equity capital, as described above, is the process used to manage this important driver of Parent Company liquidity and is a key element in
the management of BB&T’s capital position.
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Source: BB&T CORP, 10-K, February 25, 2016 Powered by Morningstar® Document Research℠
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