Why is Branch Bank paying $230 million to terminate these agreements early?

The $230 million payment is the consideration Branch Bank is providing to the FDIC to exit the loss share agreements before their original scheduled termination. This payment allows both parties to fully resolve their remaining rights and obligations under these historical agreements.

What is the impact of this termination on Truist Financial's financials?

The primary impact is a one-time cash outflow of approximately $230 million. This settlement removes any ongoing contingent liabilities or potential future financial obligations related to the acquired Colonial Bank assets under the loss share agreements, thereby simplifying the company's financial structure.

Are there any remaining obligations related to the Colonial Bank acquisition after this termination?

Based on the filing, the termination agreement eliminates all rights and obligations of Branch Bank and the FDIC under the loss share agreements. This suggests that this specific aspect of the historical Colonial Bank acquisition is now fully resolved.

TRUIST FINANCIAL CORP 8-K: Material Agreements

Q: What are the loss share agreements being terminated?

The loss share agreements were established in 2009 between Branch Bank (a subsidiary of BB&T, now Truist) and the FDIC. They were put in place following Branch Bank's acquisition of certain assets and liabilities from Colonial Bank, which had failed. These agreements likely provided risk protection to Branch Bank on the acquired assets.

Summary

Truist Financial Corporation (TFC), formerly BB&T Corporation, announced on September 15, 2016, through a press release, the early termination of loss share agreements between its subsidiary, Branch Banking and Trust Company ("Branch Bank"), and the Federal Deposit Insurance Corporation (FDIC). These agreements were originally established in 2009 following Branch Bank's acquisition of certain assets and liabilities from the failed Colonial Bank. As part of the termination, Branch Bank will pay approximately $230 million to the FDIC. This payment effectively eliminates all remaining rights and obligations under the loss share agreements, providing a clear conclusion to a historical arrangement that originated from a past acquisition. Investors should note this as a one-time cash outflow to resolve these legacy agreements.

Key Highlights

1Branch Bank entered into an early termination agreement with the FDIC for loss share agreements.
2The termination resolves obligations stemming from the 2009 acquisition of Colonial Bank assets/liabilities.
3Branch Bank will pay approximately $230 million to the FDIC for this early termination.
4All rights and obligations under the loss share agreements are now eliminated.
5This action marks the conclusion of a material, albeit historical, financial arrangement.
6The announcement was made via press release on September 15, 2016.

TRUIST FINANCIAL CORP 8-K Report, Agreement Terminated (Sep 15, 2016)

Summary

Key Highlights

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