BBT » Topics » The Treasury Departments investment in BB&T imposes restrictions and obligations limiting BB&Ts ability to increase dividends, repurchase common stock or preferred stock and access the equity capital markets.

These excerpts taken from the BBT 10-K filed Feb 27, 2009.

The Treasury Department’s investment in BB&T imposes restrictions and obligations limiting BB&T’s ability to increase dividends, repurchase common stock or preferred stock and access the equity capital markets.

 

In November 2008, BB&T issued preferred stock and a warrant to purchase common stock to the Treasury Department under the CPP. Prior to November 14, 2011, unless BB&T has redeemed all of the preferred stock, or the Treasury Department has transferred all of the preferred stock to a third party, the consent of the Treasury Department will be required for BB&T to, among other things, increase common stock dividends or effect repurchases of common stock or other preferred stock (with certain exceptions, including the repurchase of BB&T common stock to offset share dilution from equity-based employee compensation awards). BB&T has also granted registration rights to the Treasury Department pursuant to which BB&T has agreed to lock-up periods prior to and following the effective date of an underwritten offering of the preferred stock, the warrant or the underlying common stock held by the Treasury Department, during such time when BB&T would be unable to issue equity securities.

 

The Treasury Department’s investment in BB&T imposes
restrictions and obligations limiting BB&T’s ability to increase dividends, repurchase common stock or preferred stock and access the equity capital markets.

 

In November 2008, BB&T issued preferred stock and a warrant to purchase common stock to the Treasury Department under the CPP. Prior to
November 14, 2011, unless BB&T has redeemed all of the preferred stock, or the Treasury Department has transferred all of the preferred stock to a third party, the consent of the Treasury Department will be required for BB&T to, among
other things, increase common stock dividends or effect repurchases of common stock or other preferred stock (with certain exceptions, including the repurchase of BB&T common stock to offset share dilution from equity-based employee compensation
awards). BB&T has also granted registration rights to the Treasury Department pursuant to which BB&T has agreed to lock-up periods prior to and following the effective date of an underwritten offering of the preferred stock, the warrant or
the underlying common stock held by the Treasury Department, during such time when BB&T would be unable to issue equity securities.

 

STYLE="margin-top:0px;margin-bottom:0px">BB&T’s liquidity could be impaired by an inability to access the capital markets or an unforeseen outflow of cash.

STYLE="margin-top:0px;margin-bottom:-6px"> 

Liquidity is essential to BB&T’s businesses. Due to circumstances
that BB&T may be unable to control, such as a general market disruption or an operational problem that affects third parties or BB&T, BB&T’s liquidity could be impaired by an inability to access the capital markets or an unforeseen
outflow of cash. BB&T’s credit ratings are important to its liquidity. A reduction in BB&T’s credit ratings could adversely affect its liquidity and competitive position, increase its borrowing costs, limit its access to the
capital markets or trigger unfavorable contractual obligations.

 

SIZE="2">BB&T’s reported financial results depend on management’s selection of accounting methods and certain assumptions and estimates.

 


BB&T’s accounting policies and methods are fundamental to the methods by which the Company records and reports its financial condition and
results of operations. The Company’s management must exercise judgment in selecting and applying many of these accounting policies and methods so they comply with generally accepted accounting principles and reflect management’s judgment
of the most appropriate manner to report BB&T’s financial condition and results. In some cases, management must select the accounting policy or method to apply from two or more alternatives, any of which may be reasonable under the
circumstances, yet may result in the Company reporting materially different results than would have been reported under a different alternative.

 

STYLE="margin-top:0px;margin-bottom:0px; text-indent:4%">Certain accounting policies are critical to presenting BB&T’s financial condition and results. They require management to make difficult,
subjective or complex judgments about matters that are uncertain. Materially different amounts could be reported under different conditions or using different assumptions or estimates. These critical accounting policies include: the allowance for
credit losses; the determination of fair value for financial instruments; the valuation of goodwill and other intangible assets; the accounting for pension and postretirement benefits and the accounting for income taxes. Because of the uncertainty
of estimates involved in these matters, the Company may be required to do one or more of the following: significantly increase the allowance for credit losses and/or sustain credit losses that are significantly higher than the reserve provided;
recognize significant impairment on its goodwill and other intangible asset balances; or significantly increase its accrued taxes liability.

 

STYLE="margin-top:0px;margin-bottom:0px">BB&T’s business could suffer if it fails to attract and retain skilled people.

SIZE="1"> 

BB&T’s success depends, in large part, on its ability to attract and retain key people. Competition for the best
people in most activities in which the Company engages can be intense. As a result of BB&T’s participation

 


9







Table of Contents



in the CPP, BB&T is required to meet certain standards for executive compensation as set forth under the EESA, and related interim regulations. The
recently enacted ARRA requires the Treasury Department to adopt additional standards with respect to executive compensation and governance that may impact certain of BB&T’s executive officers and employees. Such restrictions imposed as a
result of the Treasury Department’s investment in BB&T, in addition to other competitive pressures, may have an adverse effect on the ability of BB&T to attract and retain skilled personnel, resulting in BB&T not being able to hire
the best people or to retain them.

 

EXCERPTS ON THIS PAGE:

10-K (2 sections)
Feb 27, 2009
Wikinvest © 2006, 2007, 2008, 2009, 2010, 2011, 2012. Use of this site is subject to express Terms of Service, Privacy Policy, and Disclaimer. By continuing past this page, you agree to abide by these terms. Any information provided by Wikinvest, including but not limited to company data, competitors, business analysis, market share, sales revenues and other operating metrics, earnings call analysis, conference call transcripts, industry information, or price targets should not be construed as research, trading tips or recommendations, or investment advice and is provided with no warrants as to its accuracy. Stock market data, including US and International equity symbols, stock quotes, share prices, earnings ratios, and other fundamental data is provided by data partners. Stock market quotes delayed at least 15 minutes for NASDAQ, 20 mins for NYSE and AMEX. Market data by Xignite. See data providers for more details. Company names, products, services and branding cited herein may be trademarks or registered trademarks of their respective owners. The use of trademarks or service marks of another is not a representation that the other is affiliated with, sponsors, is sponsored by, endorses, or is endorsed by Wikinvest.
Powered by MediaWiki