Form 10-Q

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

FORM 10-Q

 

 

Quarterly Report Pursuant to Section 13 or 15(d)

of the Securities Exchange Act of 1934

For the quarterly period ended: September 30, 2011

Commission file number: 1-10853

 

 

BB&T CORPORATION

(Exact name of registrant as specified in its charter)

 

 

 

North Carolina   56-0939887
(State of Incorporation)  

(I.R.S. Employer

Identification No.)

 

200 West Second Street

Winston-Salem, North Carolina

  27101
(Address of Principal Executive Offices)   (Zip Code)

(336) 733-2000

(Registrant’s Telephone Number, Including Area Code)

 

 

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  x    No  ¨

Indicate by check mark whether the Registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the Registrant was required to submit and post such files).    Yes  x    No  ¨

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer   x    Accelerated filer   ¨
Non-accelerated filer   ¨ (Do not check if a smaller reporting company)    Smaller reporting company   ¨

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ¨    No  x

At October 31, 2011, 697,120,362 shares of the Registrant’s common stock, $5 par value, were outstanding.

 

 

 


BB&T CORPORATION

FORM 10-Q

September 30, 2011

INDEX

 

          Page No.  

Part I. FINANCIAL INFORMATION

  

Item 1.

   Financial Statements (Unaudited)      3   
   Notes to Consolidated Financial Statements (Unaudited)      7   

Item 2.

   Management’s Discussion and Analysis of Financial Condition and Results of Operations      61   
   Executive Summary      66   
   Analysis of Financial Condition      68   
   Analysis of Results of Operations      89   
   Market Risk Management      100   
   Capital Adequacy and Resources      103   
   Liquidity      107   
   Segment Results      107   

Item 3.

   Quantitative and Qualitative Disclosures About Market Risk      110   

Item 4.

   Controls and Procedures      110   

Part II. OTHER INFORMATION

  

Item 1.

   Legal Proceedings      110   

Item 1A.

   Risk Factors      110   

Item 2.

   Unregistered Sales of Equity Securities and Use of Proceeds      110   

Item 6.

   Exhibits      111   

SIGNATURES

  

EXHIBIT INDEX

  


BB&T CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(Unaudited)

(Dollars in millions, except per share data, shares in thousands)

 

     September 30,
2011
    December 31,
2010
 

Assets

    

Cash and due from banks

   $ 1,312     $ 1,127  

Interest-bearing deposits with banks

     2,907       931  

Federal funds sold and securities purchased under resale agreements or similar arrangements

     185       327  

Segregated cash due from banks

     19       309  

Trading securities at fair value

     428       633  

Securities available for sale at fair value ($1,697 and $1,539 covered by FDIC loss share at September 30, 2011 and December 31, 2010, respectively)

     24,649       23,169  

Securities held to maturity ($8,168 fair value at September 30, 2011)

     8,135       —     

Loans held for sale ($2,720 and $3,176 at fair value at September 30, 2011 and December 31, 2010, respectively)

     2,746       3,697  

Loans and leases ($5,222 and $6,194 covered by FDIC loss share at September 30, 2011 and December 31, 2010, respectively)

     104,703       103,567  

Allowance for loan and lease losses

     (2,355     (2,708
  

 

 

   

 

 

 

Loans and leases, net of allowance for loan and lease losses

     102,348       100,859  
  

 

 

   

 

 

 

FDIC loss share receivable

     1,221       1,922  

Premises and equipment

     1,864       1,840  

Goodwill

     6,016       6,008  

Core deposit and other intangible assets

     433       508  

Residential mortgage servicing rights at fair value

     573       830  

Other assets ($387 and $360 of foreclosed property and other assets covered by FDIC loss share at September 30, 2011 and December 31, 2010, respectively)

     14,841       14,921  
  

 

 

   

 

 

 

Total assets

   $ 167,677     $ 157,081  
  

 

 

   

 

 

 

Liabilities and Shareholders’ Equity

    

Deposits:

    

Noninterest-bearing deposits

   $ 24,557     $ 20,637  

Interest-bearing deposits

     93,010       86,576  
  

 

 

   

 

 

 

Total deposits

     117,567       107,213  
  

 

 

   

 

 

 

Federal funds purchased, securities sold under repurchase agreements and short-term borrowed funds

     3,953       5,673  

Long-term debt

     22,153       21,730  

Accounts payable and other liabilities

     6,463       5,967  
  

 

 

   

 

 

 

Total liabilities

     150,136       140,583  
  

 

 

   

 

 

 

Commitments and contingencies (Note 13)

    

Shareholders’ equity:

    

Common stock, $5 par

     3,486       3,472  

Additional paid-in capital

     5,856       5,776  

Retained earnings

     8,493       7,935  

Accumulated other comprehensive loss, net of deferred income taxes

     (356     (747

Noncontrolling interests

     62       62  
  

 

 

   

 

 

 

Total shareholders’ equity

     17,541       16,498  
  

 

 

   

 

 

 

Total liabilities and shareholders’ equity

   $ 167,677     $ 157,081  
  

 

 

   

 

 

 

Common shares outstanding

     697,101       694,381  

Common shares authorized

     2,000,000       2,000,000  

Preferred shares authorized

     5,000       5,000  

The accompanying notes are an integral part of these consolidated financial statements.

 

3


BB&T CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)

(Dollars in millions, except per share data, shares in thousands)

 

    Three Months Ended
September 30,
    Nine Months Ended
September 30,
 
    2011     2010     2011     2010  

Interest Income

       

Interest and fees on loans and leases

  $ 1,546     $ 1,549     $ 4,589     $ 4,514  

Interest and dividends on securities

    199       207       512       834  

Interest on other earning assets

    5       6       15       12  
 

 

 

   

 

 

   

 

 

   

 

 

 

Total interest income

    1,750       1,762       5,116       5,360  
 

 

 

   

 

 

   

 

 

   

 

 

 

Interest Expense

       

Interest on deposits

    150       225       473       725  

Interest on federal funds purchased, securities sold under repurchase agreements and short-term borrowed funds

    3       5       10       16  

Interest on long-term debt

    181       218       578       631  
 

 

 

   

 

 

   

 

 

   

 

 

 

Total interest expense

    334       448       1,061       1,372  
 

 

 

   

 

 

   

 

 

   

 

 

 

Net Interest Income

    1,416       1,314       4,055       3,988  

Provision for credit losses

    250       770       918       1,995  
 

 

 

   

 

 

   

 

 

   

 

 

 

Net Interest Income After Provision for Credit Losses

    1,166       544       3,137       1,993  
 

 

 

   

 

 

   

 

 

   

 

 

 

Noninterest Income

       

Insurance income

    241       252       790       792  

Service charges on deposits

    141       147       421       475  

Mortgage banking income

    123       184       301       383  

Investment banking and brokerage fees and commissions

    81       85       258       255  

Checkcard fees

    78       70       229       201  

Other nondeposit fees and commissions

    71       74       204       202  

Bankcard fees and merchant discounts

    51       45       149       130  

Trust and investment advisory revenues

    43       40       131       117  

Income from bank-owned life insurance

    33       30       92       92  

FDIC loss share income, net

    (104     (43     (243     (116

Other income (loss), net

    (29     (13     (100     7  

Securities gains (losses), net

       

Realized gains, net

    —          241       37       468  

Other-than-temporary impairments

    (7     —          (18     (49

Non-credit portion recognized in other comprehensive income

    (32     (2     (60     36  
 

 

 

   

 

 

   

 

 

   

 

 

 

Total securities gains (losses), net

    (39     239       (41     455  
 

 

 

   

 

 

   

 

 

   

 

 

 

Total noninterest income

    690       1,110       2,191       2,993  
 

 

 

   

 

 

   

 

 

   

 

 

 

Noninterest Expense

       

Personnel expense

    671       642       2,048       1,937  

Foreclosed property expense

    168       167       456       585  

Occupancy and equipment expense

    151       157       457       453  

Professional services

    100       84       255       242  

Regulatory charges

    46       61       166       152  

Loan processing expenses

    48       53       150       135  

Amortization of intangibles

    24       30       75       94  

Software expense

    30       28       85       87  

Merger-related and restructuring charges, net

    —          10       —          65  

Other expenses

    179       176       492       499  
 

 

 

   

 

 

   

 

 

   

 

 

 

Total noninterest expense

    1,417       1,408       4,184       4,249  
 

 

 

   

 

 

   

 

 

   

 

 

 

Earnings

       

Income before income taxes

    439       246       1,144       737  

Provision for income taxes

    68       27       212       100  
 

 

 

   

 

 

   

 

 

   

 

 

 

Net income

    371       219       932       637  
 

 

 

   

 

 

   

 

 

   

 

 

 

Noncontrolling interests

    5       9       34       29  
 

 

 

   

 

 

   

 

 

   

 

 

 

Net income available to common shareholders

  $ 366     $ 210     $ 898     $ 608  
 

 

 

   

 

 

   

 

 

   

 

 

 

Earnings Per Common Share

       

Basic

  $ 0.52     $ 0.30     $ 1.29     $ 0.88  
 

 

 

   

 

 

   

 

 

   

 

 

 

Diluted

  $ 0.52     $ 0.30     $ 1.27     $ 0.87  
 

 

 

   

 

 

   

 

 

   

 

 

 

Cash dividends declared

  $ 0.16     $ 0.15     $ 0.49     $ 0.45  
 

 

 

   

 

 

   

 

 

   

 

 

 

Weighted Average Shares Outstanding

       

Basic

    697,052       693,017       696,335       691,982  
 

 

 

   

 

 

   

 

 

   

 

 

 

Diluted

    705,604       701,535       704,910       700,551  
 

 

 

   

 

 

   

 

 

   

 

 

 

The accompanying notes are an integral part of these consolidated financial statements.

 

4


BB&T CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY

(Unaudited)

Nine Months Ended September 30, 2011 and 2010

(Dollars in millions, except per share data, shares in thousands)

 

    Shares of
Common
Stock
    Common
Stock
    Additional
Paid-In
Capital
    Retained
Earnings
    Accumulated
Other
Comprehensive
Income (Loss)
    Noncontrolling
Interests
    Total
Shareholders’
Equity
 

Balance, January 1, 2010

    689,750     $ 3,449     $ 5,620     $ 7,539     $ (417   $ 50     $ 16,241  

Add (Deduct):

             

Comprehensive income (loss):

             

Net income

    —          —          —          608       —          29       637  

Net change in other comprehensive income (loss)

    —          —          —          —          82       —          82  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total comprehensive income (loss) (Note 10)

    —          —          —          608       82       29       719  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Stock transactions:

             

In purchase acquisitions

    57       —          2       —          —          —          2  

In connection with equity awards, net of repurchases

    1,610       8       23       —          —          —          31  

In connection with dividend reinvestment plan

    803       4       19       —          —          —          23  

In connection with 401(k) plan

    1,340       7       31       —          —          —          38  

Cash dividends declared on common stock, $0.45 per share

    —          —          —          (312     —          —          (312

Equity-based compensation expense

    —          —          58       —          —          —          58  

Other, net

    —          —          —          (2     —          (11     (13
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Balance, September 30, 2010

    693,560     $ 3,468     $ 5,753     $ 7,833     $ (335   $ 68     $ 16,787  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Balance, January 1, 2011

    694,381     $ 3,472     $ 5,776     $ 7,935     $ (747   $ 62     $ 16,498  

Add (Deduct):

             

Comprehensive income (loss):

             

Net income

    —          —          —          898       —          34       932  

Net change in other comprehensive income (loss)

    —          —          —          —          391       —          391  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total comprehensive income (loss) (Note 10)

    —          —          —          898       391       34       1,323  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Stock transactions:

             

In purchase acquisitions

    26       —          1       —          —          —          1  

In connection with equity awards

    1,918       10       (9     —          —          —          1  

Shares repurchased in connection with equity awards

    (642     (3     (15     —          —          —          (18

In connection with dividend reinvestment plan

    580       3       13       —          —          —          16  

In connection with 401(k) plan

    838       4       19       —          —          —          23  

Cash dividends declared on common stock, $0.49 per share

    —          —          —          (341     —          —          (341

Equity-based compensation expense

    —          —          73       —          —          —          73  

Other, net

    —          —          (2     1       —          (34     (35
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Balance, September 30, 2011

    697,101     $ 3,486     $ 5,856     $ 8,493     $ (356   $ 62     $ 17,541  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

The accompanying notes are an integral part of these consolidated financial statements.

 

5


BB&T CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(Dollars in millions)

 

     Nine Months Ended
September 30,
 
     2011     2010  

Cash Flows From Operating Activities:

    

Net income

   $ 932     $ 637  

Adjustments to reconcile net income to net cash from operating activities:

    

Provision for credit losses

     918       1,995  

Depreciation

     196       194  

Amortization of intangibles

     75       94  

Equity-based compensation

     73       58  

(Gain) loss on securities, net

     41       (455

Net write-downs/losses on foreclosed property

     337       457  

Net change in operating assets and liabilities:

    

Segregated cash due from banks

     290       1  

Trading securities

     144       68  

Loans held for sale

     426       (407

FDIC loss share receivable

     629       865  

Other assets

     126       (1,840

Accounts payable and other liabilities

     263       741  

Other, net

     (102     (64
  

 

 

   

 

 

 

Net cash from operating activities

     4,348       2,344  
  

 

 

   

 

 

 

Cash Flows From Investing Activities:

    

Proceeds from sales of securities available for sale

     401       24,737  

Proceeds from maturities, calls and paydowns of securities available for sale

     2,395       4,279  

Purchases of securities available for sale

     (11,605     (19,001

Proceeds from maturities, calls and paydowns of securities held to maturity

     730       —     

Purchases of securities held to maturity

     (523     —     

Originations and purchases of loans and leases, net of principal collected

     (2,865     (2,542

Net cash paid for divestitures

     —          (832

Purchases of premises and equipment

     (176     (370

Proceeds from sales of foreclosed property or other real estate held for sale

     735       716  

Other, net

     70       63  
  

 

 

   

 

 

 

Net cash from investing activities

     (10,838     7,050  
  

 

 

   

 

 

 

Cash Flows From Financing Activities:

    

Net change in deposits

     10,427       (7,641

Net change in federal funds purchased, securities sold under repurchase agreements and short-term borrowed funds

     (1,720     (2,287

Proceeds from issuance of long-term debt

     1,999       500  

Repayment of long-term debt

     (1,862     (83

Net proceeds from common stock issued

     22       92  

Cash dividends paid on common stock

     (334     (311

Other, net

     (23     141  
  

 

 

   

 

 

 

Net cash from financing activities

     8,509       (9,589
  

 

 

   

 

 

 

Net Change in Cash and Cash Equivalents

     2,019       (195

Cash and Cash Equivalents at Beginning of Period

     2,385       2,649  
  

 

 

   

 

 

 

Cash and Cash Equivalents at End of Period

   $ 4,404     $ 2,454  
  

 

 

   

 

 

 

Supplemental Disclosure of Cash Flow Information:

    

Cash paid (received) during the period for:

    

Interest

   $ 1,047     $ 1,408  

Income taxes

     (209     873  

Noncash investing and financing activities:

    

Transfer of securities available for sale to securities held to maturity

     8,341       —     

Transfers of loans to foreclosed property

     856       1,132  

Transfers of loans held for investment to loans held for sale

     226       1,284  

The accompanying notes are an integral part of these consolidated financial statements.

 

6


BB&T Corporation and Subsidiaries

Notes to Consolidated Financial Statements (Unaudited)

   Third Quarter 2011

NOTE 1. Basis of Presentation

General

In the opinion of management, the accompanying unaudited Consolidated Balance Sheets, Consolidated Statements of Income, Consolidated Statements of Changes in Shareholders’ Equity, and Consolidated Statements of Cash Flows of BB&T Corporation and subsidiaries (“BB&T”, the “Corporation” or the “Company”), are fair statements of BB&T’s financial position at September 30, 2011 and December 31, 2010, BB&T’s results of operations for the three and nine months ended September 30, 2011 and 2010, and BB&T’s changes in shareholders’ equity and cash flows for the nine months ended September 30, 2011 and 2010. In the opinion of management, all normal recurring adjustments necessary for a fair statement of the consolidated financial position and consolidated results of operations have been made.

These consolidated financial statements and notes are presented in accordance with the instructions for Form 10-Q. The information contained in the financial statements and footnotes included in BB&T’s Annual Report on Form 10-K for the year ended December 31, 2010 should be referred to in connection with these unaudited interim consolidated financial statements.

The accounting and reporting policies of BB&T and its subsidiaries are in accordance with accounting principles generally accepted in the United States of America (“GAAP”). Additionally, where applicable, the policies conform to the accounting and reporting guidelines prescribed by bank regulatory authorities.

Nature of Operations

BB&T is a financial holding company organized under the laws of North Carolina. BB&T conducts operations through its principal bank subsidiary, Branch Banking and Trust Company (“Branch Bank”), BB&T Financial, FSB (“BB&T FSB”), a federally chartered thrift institution, and its nonbank subsidiaries. Branch Bank has offices in North Carolina, South Carolina, Virginia, Maryland, Georgia, West Virginia, Tennessee, Kentucky, Florida, Alabama, Indiana, Texas and Washington, D.C. Branch Bank provides a wide range of banking services to individuals and businesses, and offers a variety of loans to businesses and consumers. Such loans are made primarily to individuals residing in the market areas described above or to businesses located within BB&T’s geographic footprint. Branch Bank also markets a wide range of deposit services to individuals, businesses and public entities. Branch Bank offers, either directly, or through its subsidiaries, lease financing to businesses and municipal governments; factoring; discount brokerage services, annuities and mutual funds; life insurance, property and casualty insurance, health insurance and commercial general liability insurance on an agency basis and through a wholesale insurance brokerage operation; insurance premium financing; permanent financing arrangements for commercial real estate; loan servicing for third-party investors; direct consumer finance loans to individuals; trust and comprehensive wealth advisory services and association services. BB&T FSB and the direct nonbank subsidiaries of BB&T provide a variety of financial services including credit card lending, automobile lending, equipment financing, full-service securities brokerage, asset management and capital markets services.

Principles of Consolidation

The consolidated financial statements of BB&T include the accounts of BB&T Corporation and those subsidiaries that are majority owned by BB&T and over which BB&T exercises control. In consolidation, all significant intercompany accounts and transactions are eliminated. The results of operations of companies or assets acquired are included only from the dates of acquisition. All material wholly-owned and majority-owned subsidiaries are consolidated unless GAAP requires otherwise.

 

7


BB&T Corporation and Subsidiaries

Notes to Consolidated Financial Statements (Unaudited)

   Third Quarter 2011

 

BB&T holds investments in certain legal entities that are considered variable interest entities (“VIE’s”). VIE’s are legal entities in which equity investors do not have sufficient equity at risk for the entity to independently finance its activities, or as a group, the holders of the equity investment at risk lack the power through voting or similar rights to direct the activities of the entity that most significantly impact its economic performance, or do not have the obligation to absorb the expected losses of the entity or the right to receive expected residual returns of the entity. Consolidation of a VIE is considered appropriate if a reporting entity holds a controlling financial interest in the VIE.

BB&T evaluates its investments in VIE’s to determine if a controlling financial interest is held. This evaluation gives appropriate consideration to the design of the entity and the variability that the entity was designed to pass along, the relative power of each of the parties to the VIE, and to BB&T’s relative obligation to absorb losses or receive residual returns of the entity, in relation to such obligations and rights held by other parties to the VIE. BB&T has variable interests in certain entities that were not required to be consolidated, including affordable housing partnership interests, historic tax credit partnerships, and other partnership interests. Refer to Note 13 for additional disclosures regarding BB&T’s significant variable interest entities.

BB&T accounts for unconsolidated partnership and similar investments using the equity method of accounting. In addition to affordable housing partnerships, which represent the majority of unconsolidated investments in variable interest entities, BB&T also has investments and future funding commitments to venture capital and other entities. The maximum potential exposure to losses relative to investments in variable interest entities is generally limited to the sum of the outstanding balance, future funding commitments and any related loans to the entity. Loans to these entities are underwritten in substantially the same manner as are other loans and are generally secured.

BB&T has investments in certain entities for which BB&T does not have the controlling interest. For these investments, the Company records its interest using the equity method with its portion of income or loss being recorded in other noninterest income in the Consolidated Statements of Income. BB&T periodically evaluates these investments for impairment.

Reclassifications

In certain instances, amounts reported in prior periods’ consolidated financial statements have been reclassified to conform to the current presentation. Such reclassifications had no effect on previously reported cash flows, shareholders’ equity or net income.

Use of Estimates in the Preparation of Financial Statements

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates. Material estimates that are particularly susceptible to significant change include the determination of the allowance for credit losses, determination of fair value for financial instruments, valuation of goodwill, intangible assets and other purchase accounting related adjustments, benefit plan obligations and expenses, and tax assets, liabilities and expense.

Changes in Accounting Principles and Effects of New Accounting Pronouncements

In February 2010, the Financial Accounting Standards Board (“FASB”) issued new guidance impacting Fair Value Measurements and Disclosures. The new guidance requires a gross presentation of purchases and sales of

 

8


BB&T Corporation and Subsidiaries

Notes to Consolidated Financial Statements (Unaudited)

   Third Quarter 2011

 

Level 3 activities and adds a new requirement to disclose transfers in and out of Level 1 and Level 2 measurements. The guidance related to the transfers between Level 1 and Level 2 measurements was effective for BB&T on January 1, 2010. The guidance that requires increased disaggregation of the Level 3 activities was effective for BB&T on January 1, 2011. The new disclosures required by this guidance are included in Note 14 to these consolidated financial statements.

In July 2010, the FASB issued new guidance impacting Receivables. The new guidance requires additional disclosures that will allow users to understand the nature of credit risk inherent in a company’s loan portfolios, how that risk is analyzed and assessed in arriving at the allowance for loan and lease losses, and changes and reasons for those changes in the allowance for loan and lease losses. The new disclosures required by this guidance are included in Note 4 to these consolidated financial statements.

In April 2011, the FASB issued new guidance impacting Receivables. The new guidance amended existing guidance for assisting a creditor in determining whether a loan modification is a troubled debt restructuring. The amendments clarify the guidance for a creditor’s evaluation of whether it has granted a concession and whether a debtor is experiencing financial difficulties. This guidance was effective for interim reporting periods that began after June 15, 2011, and was applied retrospectively to the beginning of 2011. The new disclosures required by this guidance are included in Note 4 to these consolidated financial statements.

In May 2011, the FASB issued new guidance impacting Fair Value Measurements and Disclosures. The new guidance creates a uniform framework for applying fair value measurement principles for companies around the world. It eliminates differences between GAAP and International Financial Reporting Standards issued by the International Accounting Standards Board. New disclosures required by the guidance include: quantitative information about the significant unobservable inputs used for Level 3 measurements; a qualitative discussion about the sensitivity of recurring Level 3 measurements to changes in the unobservable inputs disclosed, including the interrelationship between inputs; and a description of the company’s valuation processes. This guidance is effective for interim and annual periods beginning after December 15, 2011, and all amendments will be applied prospectively with any changes in measurements recognized in income in the period of adoption. BB&T is currently evaluating the impact the standard will have on the consolidated financial statements.

In June 2011, the FASB issued new guidance impacting Comprehensive Income. The new guidance amends disclosure requirements for the presentation of comprehensive income. The amended guidance eliminates the option to present components of other comprehensive income (“OCI”) as part of the statement of changes in shareholders’ equity. All changes in OCI will be presented either in a single continuous statement of comprehensive income or in two separate but consecutive financial statements. The guidance does not change the items that must be reported in OCI. This guidance is effective for fiscal years and interim reporting periods within those years beginning after December 15, 2011 with early adoption permitted. The adoption of this guidance will not impact BB&T’s consolidated financial position, results of operations or cash flows and will only impact the presentation of OCI in the consolidated financial statements.

In September 2011, the FASB issued new guidance impacting Intangibles. The new guidance permits an entity to first assess qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount. To the extent that an entity determines that it is not more likely than not that the fair value of a reporting unit is less than its carrying amount, then performance of the two step impairment test is not required. This guidance is effective for annual and interim goodwill impairment tests performed for fiscal years beginning after December 15, 2011 with early adoption permitted. The adoption of this guidance is not expected to be material to BB&T’s consolidated financial statements.

 

9


BB&T Corporation and Subsidiaries

Notes to Consolidated Financial Statements (Unaudited)

   Third Quarter 2011

 

NOTE 2. Securities

The amortized cost, gross unrealized gains and losses and approximate fair values of securities available for sale and held to maturity were as follows:

 

     September 30, 2011  
     Amortized
Cost
     Gross Unrealized      Fair
Value
 
      Gains      Losses     
     (Dollars in millions)  

Securities available for sale:

           

U.S. government-sponsored entities (“GSE”)

   $ 286      $ 1      $ —         $ 287  

Mortgage-backed securities issued by GSE

     19,959        411        2        20,368  

States and political subdivisions

     1,976        80        157        1,899  

Non-agency mortgage-backed securities

     469        —           79        390  

Other securities

     8        —           —           8  

Covered securities

     1,253        448        4        1,697  
  

 

 

    

 

 

    

 

 

    

 

 

 

Total securities available for sale

   $ 23,951      $ 940      $ 242      $ 24,649  
  

 

 

    

 

 

    

 

 

    

 

 

 
     September 30, 2011  
     Amortized
Cost
     Gross Unrealized      Fair
Value
 
      Gains      Losses     
     (Dollars in millions)  

Securities held to maturity:

           

Mortgage-backed securities issued by GSE

   $ 7,553      $ 34      $ 4      $ 7,583  

States and political subdivisions

     35        5        —           40  

Other securities

     547        1        3        545  
  

 

 

    

 

 

    

 

 

    

 

 

 

Total securities held to maturity

   $ 8,135      $ 40      $ 7      $ 8,168  
  

 

 

    

 

 

    

 

 

    

 

 

 
     December 31, 2010  
     Amortized
Cost
     Gross Unrealized      Fair
Value
 
      Gains      Losses     
     (Dollars in millions)  

Securities available for sale:

           

GSE securities

   $ 102      $ 1      $ —         $ 103  

Mortgage-backed securities issued by GSE

     18,663        42        361        18,344  

States and political subdivisions

     2,051        19        161        1,909  

Non-agency mortgage-backed securities

     635        —           120        515  

Other securities

     734        27        2        759  

Covered securities

     1,234        307        2        1,539  
  

 

 

    

 

 

    

 

 

    

 

 

 

Total securities available for sale

   $ 23,419      $ 396      $ 646      $ 23,169  
  

 

 

    

 

 

    

 

 

    

 

 

 

During the first quarter of 2011, BB&T reclassified approximately $8.3 billion of securities available for sale to securities held to maturity. Management determined that it has both the positive intent and ability to hold these securities to maturity. The reclassification of these securities was accounted for at fair value. On the date of transfer, the difference between the par value and the fair value of these securities resulted in a premium or discount that is amortized as a yield adjustment to interest income using the interest method. The unrealized holding gains or losses at the date of transfer will continue to be reported as part of other, net in accumulated other comprehensive income, and is also amortized over the remaining life of the securities as a yield adjustment to interest income using the interest method. There were no gains or losses recognized as a result of this transfer.

 

10


BB&T Corporation and Subsidiaries

Notes to Consolidated Financial Statements (Unaudited)

   Third Quarter 2011

 

As of September 30, 2011, the fair value of covered securities included $1.4 billion of non-agency mortgage-backed securities and $318 million of municipal securities. As of December 31, 2010, the fair value of covered securities included $1.2 billion of non-agency mortgage-backed securities and $304 million of municipal securities. All covered securities were acquired from Colonial Bank (“Colonial”) and are covered by one of the Federal Deposit Insurance Corporation (“FDIC”) loss sharing agreements. BB&T is restricted from selling these securities without prior approval from the FDIC. Refer to BB&T’s Annual Report on Form 10-K for the year ended December 31, 2010 for additional information.

At September 30, 2011 and December 31, 2010, securities with carrying values of approximately $13.9 billion and $19.3 billion, respectively, were pledged to secure municipal deposits, securities sold under agreements to repurchase, other borrowings, and for other purposes as required or permitted by law.

BB&T had certain investments in marketable debt securities and mortgage-backed securities issued by the Federal National Mortgage Association (“Fannie Mae”) and the Federal Home Loan Mortgage Corporation (“Freddie Mac”) that exceeded ten percent of shareholders’ equity at September 30, 2011. The Fannie Mae investments had total amortized cost and fair values of $7.9 billion and $8.0 billion, respectively, at September 30, 2011, while Freddie Mac investments had total amortized cost and fair values of $10.3 billion and $10.4 billion, respectively. These securities are carried at amortized cost in the held to maturity portfolio or fair value in the available for sale portfolio.

At September 30, 2011 and December 31, 2010, non-agency mortgage-backed securities primarily consisted of residential mortgage-backed securities.

The gross realized gains and losses and other-than-temporary impairments recognized in income during the three and nine months ended September 30, 2011 and 2010 are reflected in the following table:

 

     Three Months Ended
September 30,
    Nine Months Ended
September 30,
 
         2011             2010             2011             2010      
     (Dollars in millions)  

Gross gains

   $ —        $ 241     $ 38     $ 472  

Gross losses

     —          —          (1     (4
  

 

 

   

 

 

   

 

 

   

 

 

 

Net realized gains (losses)

     —          241       37       468  
  

 

 

   

 

 

   

 

 

   

 

 

 

Other-than-temporary impairment (“OTTI”) recognized on non-agency mortgage-backed securities:

        

Total OTTI on non-agency mortgage-backed securities

     (7     —          (18     (49

Non-credit portion recognized in other comprehensive income (1)

     (32     (2     (60     36  
  

 

 

   

 

 

   

 

 

   

 

 

 

Total OTTI on non-agency mortgage-backed securities recognized in net income

     (39     (2     (78     (13
  

 

 

   

 

 

   

 

 

   

 

 

 

Net securities gains (losses)

   $ (39   $ 239     $ (41   $ 455  
  

 

 

   

 

 

   

 

 

   

 

 

 

 

(1) A negative balance is the result of additional credit losses currently recognized in earnings that were previously recognized in other comprehensive income.

 

11


BB&T Corporation and Subsidiaries

Notes to Consolidated Financial Statements (Unaudited)

   Third Quarter 2011

 

The following table reflects activity during the three and nine months ended September 30, 2011 and 2010 related to credit losses on other-than-temporarily impaired non-agency mortgage-backed securities where a portion of the unrealized loss was recognized in other comprehensive income:

 

     Three Months  Ended
September 30,
     Nine Months  Ended
September 30,
 
         2011             2010              2011             2010      
     (Dollars in millions)  

Balance at beginning of period

   $ 63     $ 13      $ 30     $ 2  

Credit losses on securities not previously considered other-than-temporarily impaired

     —          —           —          2  

Credit losses on securities for which OTTI was previously recognized

     39       2        78       11  

Reductions for securities sold/settled during the period

     (2     —           (8     —     
  

 

 

   

 

 

    

 

 

   

 

 

 

Balance at end of period

   $ 100     $ 15      $ 100     $ 15  
  

 

 

   

 

 

    

 

 

   

 

 

 

The amortized cost and estimated fair value of the debt securities portfolio at September 30, 2011, by contractual maturity, are shown in the accompanying table. The expected life of mortgage-backed securities will differ from contractual maturities because borrowers may have the right to call or prepay the underlying mortgage loans with or without call or prepayment penalties. For purposes of the maturity table, mortgage-backed securities, which are not due at a single maturity date, have been included in maturity groupings based on the contractual maturity.

 

     September 30, 2011  
     Available for Sale      Held to Maturity  
     Amortized
Cost
     Fair
Value
     Amortized
Cost
     Fair
Value
 
     (Dollars in millions)  

Due in one year or less

   $ 211      $ 212      $ —         $ —     

Due after one year through five years

     101        103        —           —     

Due after five years through ten years

     617        642        —           —     

Due after ten years

     23,016        23,686        8,135        8,168  
  

 

 

    

 

 

    

 

 

    

 

 

 

Total debt securities

     23,945        24,643        8,135        8,168  

Total securities with no stated maturity

     6        6        —           —     
  

 

 

    

 

 

    

 

 

    

 

 

 

Total securities

   $ 23,951      $ 24,649      $ 8,135      $ 8,168  
  

 

 

    

 

 

    

 

 

    

 

 

 

 

12


BB&T Corporation and Subsidiaries

Notes to Consolidated Financial Statements (Unaudited)

   Third Quarter 2011

 

The following tables reflect the gross unrealized losses and fair values of BB&T’s investments, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position, at the dates presented:

 

     September 30, 2011  
     Less than 12 months      12 months or more      Total  
     Fair
Value
     Unrealized
Losses
     Fair
Value
     Unrealized
Losses
     Fair
Value
     Unrealized
Losses
 
     (Dollars in millions)  

Securities available for sale:

                 

GSE securities

   $ 74      $ —         $ —         $ —         $ 74      $ —     

Mortgage-backed securities issued by GSE

     322        —           693        2        1,015        2  

States and political subdivisions

     19        —           710        157        729        157  

Non-agency mortgage-backed securities

     —           —           390        79        390        79  

Other securities

     1        —           —           —           1        —     

Covered securities

     23        4        —           —           23        4  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total

   $ 439      $ 4      $ 1,793      $ 238      $ 2,232      $ 242  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 
     September 30, 2011  
     Less than 12 months      12 months or more      Total  
     Fair
Value
     Unrealized
Losses
     Fair
Value
     Unrealized
Losses
     Fair
Value
     Unrealized
Losses
 
     (Dollars in millions)  

Securities held to maturity:

                 

Mortgage-backed securities issued by GSE

   $ 2,245      $ 4      $ —         $ —         $ 2,245      $ 4  

States and political subdivisions

     7        —           —           —           7        —     

Other securities

     209        3        —           —           209        3  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total

   $ 2,461      $ 7      $ —         $ —         $ 2,461      $ 7  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 
     December 31, 2010  
     Less than 12 months      12 months or more      Total  
     Fair
Value
     Unrealized
Losses
     Fair
Value
     Unrealized
Losses
     Fair
Value
     Unrealized
Losses
 
     (Dollars in millions)  

Securities available for sale:

                 

GSE securities

   $ 50      $ —         $ —         $ —         $ 50      $ —     

Mortgage-backed securities issued by GSE

     15,438        361        —           —           15,438        361  

States and political subdivisions

     694        21        735        140        1,429        161  

Non-agency mortgage-backed securities

     —           —           506        120        506        120  

Other securities

     535        2        2        —           537        2  

Covered securities

     79        2        —           —           79        2  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total

   $ 16,796      $ 386      $ 1,243      $ 260      $ 18,039      $ 646  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

BB&T conducts periodic reviews to identify and evaluate each investment that has an unrealized loss for other-than-temporary impairment. An unrealized loss exists when the current fair value of an individual security is less than its amortized cost basis. Unrealized losses that are determined to be temporary in nature are recorded, net of tax, in accumulated other comprehensive income for available-for-sale securities.

 

13


BB&T Corporation and Subsidiaries

Notes to Consolidated Financial Statements (Unaudited)

   Third Quarter 2011

 

Factors considered in determining whether a loss is temporary include:

 

   

The financial condition and near-term prospects of the issuer, including any specific events that may influence the operations of the issuer;

 

   

BB&T’s intent to sell and whether it is more likely than not that the Company will be required to sell these debt securities before the anticipated recovery of the amortized cost basis;

 

   

The length of time and the extent to which the market value has been less than cost;

 

   

Whether the decline in fair value is attributable to specific conditions, such as conditions in an industry or in a geographic area;

 

   

Whether a debt security has been downgraded by a rating agency;

 

   

Whether the financial condition of the issuer has deteriorated;

 

   

The seniority of the security;

 

   

Whether dividends have been reduced or eliminated, or scheduled interest payments on debt securities have not been made; and

 

   

Any other relevant available information.

If an unrealized loss is considered other-than-temporary, the credit component of the unrealized loss is recognized in earnings and the non-credit component is recognized in accumulated other comprehensive income, to the extent that BB&T does not intend to sell the security and it is more likely than not that BB&T will not be required to sell the security prior to recovery.

BB&T evaluates credit impairment related to mortgage-backed securities using a number of different expected cash flow models. These models reflect differing approaches to estimating the expected future cash flows associated with a given security, with certain models giving greater consideration to long-term macroeconomic factors that are applied to current security default rates, prepayment rates and recovery rates, and other models produce results that are more heavily influenced by current security-level performance. All of these models provide estimates of the expected cash flows on the underlying mortgage pools using security-specific structure information over the expected life of the security. These models estimate cash flows from the underlying mortgage loan pools and distribute those cash flows to the various tranches within the securitization considering the transaction structure, which may include subordination features and/or credit enhancements. Management reviews the results of these cash flow models and assigns probability weightings to each model based on an assessment of the current performance of the underlying securities, prevailing economic conditions and historical payment experience.

During the three and nine months ended September 30, 2011, BB&T realized principal losses on certain other-than-temporarily impaired securities totaling approximately $2 million and $8 million, respectively. Based on its consideration of the timing and extent of these losses, combined with prevailing economic conditions, BB&T determined that its cash flow modeling should give greater weighting to current security-level performance and give less weighting to modeling that relies more heavily on long-term economic factors. This change in probability-weighting resulted in the majority of the credit losses recognized on securities.

On September 30, 2011, BB&T held certain investment securities having continuous unrealized loss positions for more than 12 months. The vast majority of these losses were in non-agency mortgage-backed and municipal securities. At September 30, 2011, all of the available-for-sale debt securities in an unrealized loss position for more than 12 months, excluding those covered by FDIC loss sharing agreements, were investment grade with the exception of two municipal bonds with an amortized cost of $8 million and ten non-agency mortgage-backed securities with an adjusted amortized cost of $469 million.

 

14


BB&T Corporation and Subsidiaries

Notes to Consolidated Financial Statements (Unaudited)

   Third Quarter 2011

 

All of the non-investment grade securities referenced above were initially investment grade and have been downgraded since purchase. Based on its evaluation at September 30, 2011, BB&T determined that certain of the non-investment grade non-agency mortgage-backed securities had credit losses evident and recognized other-than-temporary impairments related to these securities. At September 30, 2011, the total unrealized loss on these non-investment grade securities was $79 million.

The following table presents non-investment grade securities with significant unrealized losses that are not covered by a loss sharing arrangement and the credit loss component of OTTI recognized to date:

 

     September 30, 2011  
     Amortized
Cost
     Cumulative
Credit Loss
Recognized
    Adjusted
Amortized
Cost
     Fair
Value
     Unrealized
Loss
 
     (Dollars in millions)  

Security:

             

RMBS 1

   $ 98      $ (24   $ 74      $ 54      $ (20

RMBS 2

     139        (29     110        94        (16

RMBS 3

     103        (13     90        77        (13

BB&T’s evaluation of the other debt securities with continuous unrealized losses indicated that there were no credit losses evident. Furthermore, as of the date of the evaluation, BB&T did not intend to sell, and it was more likely than not that the Company would not be required to sell, these debt securities before the anticipated recovery of the amortized cost basis. In making this determination, BB&T considers its expected liquidity and capital needs, including its asset/liability management needs, forecasts, strategies and other relevant information.

NOTE 3. Loans and Leases

The following table provides a breakdown of BB&T’s loan portfolio as of September 30, 2011 and December 31, 2010:

 

     September 30,
2011
     December 31,
2010
 
     (Dollars in millions)  

Loans and leases, net of unearned income:

     

Commercial:

     

Commercial and industrial

   $ 34,817      $ 34,050  

Commercial real estate—other

     10,931        11,439  

Commercial real estate—residential ADC (1)

     2,414        3,397  

Direct retail lending

     13,882        13,749  

Sales finance

     7,265        7,050  

Revolving credit

     2,128        2,127  

Residential mortgage

     19,361        17,550  

Specialized lending

     8,636        7,953  

Other acquired

     47        58  
  

 

 

    

 

 

 

Total loans and leases held for investment (excluding covered loans)

     99,481        97,373  

Covered

     5,222        6,194  
  

 

 

    

 

 

 

Total loans and leases held for investment

     104,703        103,567  

Loans held for sale

     2,746        3,697  
  

 

 

    

 

 

 

Total loans and leases

   $ 107,449      $ 107,264  
  

 

 

    

 

 

 

 

(1) Commercial real estate—residential ADC represents residential acquisition, development and construction loans.

 

15


BB&T Corporation and Subsidiaries

Notes to Consolidated Financial Statements (Unaudited)

   Third Quarter 2011

 

Covered loans represent loans acquired from the FDIC subject to one of the loss sharing agreements. Other acquired loans represent consumer loans acquired from the FDIC that are not subject to one of the loss sharing agreements.

The following table reflects the carrying value of all purchased impaired and nonimpaired loans, and the related allowance, as of September 30, 2011 and December 31, 2010:

 

     September 30, 2011     December 31, 2010  
     Purchased
Impaired

Loans
    Purchased
Nonimpaired

Loans
    Total     Purchased
Impaired
Loans
    Purchased
Nonimpaired
Loans
    Total  
     (Dollars in millions)  

Residential mortgage

   $ 676     $ 646     $ 1,322     $ 733     $ 713     $ 1,446  

Commercial real estate

     1,587       1,742       3,329       2,031       1,982       4,013  

Commercial

     62       509       571       91       644       735  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total covered

     2,325       2,897       5,222       2,855       3,339       6,194  

Other acquired

     2       45       47       3       55       58  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total

     2,327       2,942       5,269       2,858       3,394       6,252  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Allowance for loan losses

     (64     (49     (113     (90     (54     (144
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net

   $ 2,263     $ 2,893     $ 5,156     $ 2,768     $ 3,340     $ 6,108  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Changes in the carrying amount and accretable yield for purchased impaired and nonimpaired loans were as follows for the nine months ended September 30, 2011 and the year ended December 31, 2010:

 

    September 30, 2011     December 31, 2010  
    Purchased Impaired     Purchased Nonimpaired     Purchased Impaired     Purchased Nonimpaired  
    Accretable
Yield
    Carrying
Amount
of Loans
    Accretable
Yield
    Carrying
Amount

of Loans
    Accretable
Yield
    Carrying
Amount
of Loans
    Accretable
Yield
    Carrying
Amount

of Loans
 
    (Dollars in millions)  

Balance at beginning of period

  $ 835     $ 2,858     $ 1,611     $ 3,394     $ 889     $ 3,666     $ 1,301     $ 4,476  

Additions

    —          —          —          —          —          —          —          —     

Accretion

    (279     279       (540     540       (459     459       (483     483  

Reclassifications from nonaccretable balance, net

    114       —          372       —          405       —          793       —     

Payments received, net

    —          (810     —          (992     —          (1,267     —          (1,565
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Balance at end of period

  $ 670     $ 2,327     $ 1,443     $ 2,942     $ 835     $ 2,858     $ 1,611     $ 3,394  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

The outstanding unpaid principal balance for all purchased impaired loans as of September 30, 2011 and December 31, 2010 was $3.6 billion and $4.7 billion, respectively. The outstanding unpaid principal balance for all purchased nonimpaired loans as of September 30, 2011 and December 31, 2010 was $4.3 billion and $5.2 billion, respectively.

At September 30, 2011 and December 31, 2010, none of the purchased loans were classified as nonperforming assets. Therefore, interest income, through accretion of the difference between the carrying amount of the loans and the expected cash flows, is being recognized on all purchased loans. The allowance for loan losses related to the purchased loans results from decreased expectations of future cash flows due to increased credit losses for certain acquired loan pools.

 

16


BB&T Corporation and Subsidiaries

Notes to Consolidated Financial Statements (Unaudited)

   Third Quarter 2011

 

The following table provides a summary of BB&T’s nonperforming assets and loans 90 days or more past due and still accruing as of September 30, 2011 and December 31, 2010:

 

    September 30,
2011
    December 31,
2010
 
    (Dollars in millions)  

Nonaccrual loans and leases:

   

Held for investment (1)

  $ 1,957     $ 2,149  

Held for sale

    26       521  
 

 

 

   

 

 

 

Total nonaccrual loans and leases (1)

    1,983       2,670  
 

 

 

   

 

 

 

Foreclosed real estate (2)

    950       1,259  

Other foreclosed property

    36       42  
 

 

 

   

 

 

 

Total foreclosed property (2)

    986       1,301  
 

 

 

   

 

 

 

Total nonperforming assets (excluding covered assets) (1)(2)

  $ 2,969     $ 3,971  
 

 

 

   

 

 

 

Loans 90 days or more past due and still accruing (excluding covered loans) (3)(4)(5)

  $ 187     $ 295  

 

(1) Covered and other acquired loans are considered to be performing due to the application of the accretion method. Covered loans that are contractually 90 days or more past due and still accruing are noted below.
(2) Excludes foreclosed real estate totaling $355 million and $313 million as of September 30, 2011 and December 31, 2010, respectively, that is covered by FDIC loss sharing agreements.
(3) Excludes mortgage loans guaranteed by GNMA that BB&T does not have the obligation to repurchase totaling $389 million and $425 million as of September 30, 2011 and December 31, 2010, respectively.
(4) Excludes loans 90 days or more past due that are covered by FDIC loss sharing agreements totaling $872 million and $1.1 billion as of September 30, 2011 and December 31, 2010, respectively.
(5) Excludes mortgage loans 90 days or more past due that are government guaranteed totaling $185 million and $153 million as of September 30, 2011 and December 31, 2010, respectively.

The following table provides a summary of loans that continue to accrue interest under restructured terms (“performing restructurings”) and restructured loans that have been placed in nonaccrual status (“nonperforming restructurings”) as of September 30, 2011 and December 31, 2010:

 

     September 30,
2011
     December 31,
2010
 
     (Dollars in millions)  

Performing restructurings:

     

Commercial:

     

Commercial and industrial

   $ 64      $ 205  

Commercial real estate—other

     124        280  

Commercial real estate—residential ADC

     55        172  

Direct retail lending

     141        141  

Sales finance

     6        5  

Revolving credit

     63        62  

Residential mortgage (1)(2)

     568        585  

Specialized lending

     46        26  
  

 

 

    

 

 

 

Total performing restructurings (1)(2)

     1,067        1,476  

Nonperforming restructurings (3)(4)

     319        479  
  

 

 

    

 

 

 

Total restructurings (1)(2)(3)(4)(5)

   $ 1,386      $ 1,955  
  

 

 

    

 

 

 

 

17


BB&T Corporation and Subsidiaries

Notes to Consolidated Financial Statements (Unaudited)

   Third Quarter 2011

 

 

(1) Excludes restructured mortgage loans held for investment that are government guaranteed totaling $209 million and $115 million at September 30, 2011 and December 31, 2010, respectively.
(2) Excludes restructured mortgage loans held for sale that are government guaranteed totaling $6 million and $14 million at September 30, 2011 and December 31, 2010, respectively.
(3) Nonperforming restructurings are included in nonaccrual loan disclosures.
(4) Includes approximately $4 million and $110 million of nonperforming restructurings included in loans held for sale at September 30, 2011 and December 31, 2010, respectively.
(5) All restructurings are considered impaired. The allowance for loan and lease losses attributable to these restructured loans totaled $273 million and $324 million at September 30, 2011 and December 31, 2010, respectively.

BB&T had commitments totaling $33 million and $64 million at September 30, 2011 and December 31, 2010, respectively, to lend additional funds to clients with loans whose terms have been modified in restructurings.

NOTE 4. Allowance for Credit Losses

An analysis of the allowance for credit losses for the three and nine months ended September 30, 2011 is presented in the following tables:

 

     Three Months Ended September 30, 2011  
     Beginning
Balance
     Charge-
Offs
    Recoveries      Provision     Ending
Balance
 
     (Dollars in millions)  

Commercial:

            

Commercial and industrial

   $ 474      $ (102   $ 9      $ 55     $ 436  

Commercial real estate—other

     462        (64     6        26       430  

Commercial real estate—residential ADC

     382        (61     9        (2     328  

Specialized lending

     13        (2     1        1       13  

Retail:

            

Direct retail lending

     233        (74     10        51       220  

Revolving credit

     103        (23     4        21       105  

Residential mortgage

     347        (41     1        57       364  

Sales finance

     42        (7     2        2       39  

Specialized lending

     171        (40     6        40       177  

Covered and other acquired

     159        (53     —           7       113  

Unallocated

     130        —          —           —          130  
  

 

 

    

 

 

   

 

 

    

 

 

   

 

 

 

Allowance for loan and lease losses

     2,516        (467     48        258       2,355  

Reserve for unfunded lending commitments

     59        —          —           (8     51  
  

 

 

    

 

 

   

 

 

    

 

 

   

 

 

 

Allowance for credit losses

   $ 2,575      $ (467   $ 48      $ 250     $ 2,406  
  

 

 

    

 

 

   

 

 

    

 

 

   

 

 

 

 

18


BB&T Corporation and Subsidiaries

Notes to Consolidated Financial Statements (Unaudited)

   Third Quarter 2011

 

     Nine Months Ended September 30, 2011  
     Beginning
Balance
     Charge-
Offs
    Recoveries      Provision     Ending
Balance
 
     (Dollars in millions)  

Commercial:

            

Commercial and industrial

   $ 621      $ (242   $ 22      $ 35     $ 436  

Commercial real estate—other

     446        (213     15        182       430  

Commercial real estate—residential ADC

     469        (210     20        49       328  

Specialized lending

     21        (6     3        (5     13  

Retail:

            

Direct retail lending

     246        (218     27        165       220  

Revolving credit

     109        (74     14        56       105  

Residential mortgage

     298        (224     3        287       364  

Sales finance

     47        (24     7        9       39  

Specialized lending

     177        (131     17        114       177  

Covered and other acquired

     144        (53     —           22       113  

Unallocated

     130        —          —           —          130  
  

 

 

    

 

 

   

 

 

    

 

 

   

 

 

 

Allowance for loan and lease losses

     2,708        (1,395     128        914       2,355  

Reserve for unfunded lending commitments

     47        —          —           4       51  
  

 

 

    

 

 

   

 

 

    

 

 

   

 

 

 

Allowance for credit losses

   $ 2,755      $ (1,395   $ 128      $ 918     $ 2,406  
  

 

 

    

 

 

   

 

 

    

 

 

   

 

 

 

An analysis of the allowance for credit losses for the three and nine months ended September 30, 2010 is presented in the following tables:

 

     Three Months  Ended
September 30, 2010
    Nine Months  Ended
September 30, 2010
 
     (Dollars in millions)  

Beginning balance

   $ 2,753     $ 2,672  

Provision for credit losses

     770       1,995  

Loans and leases charged-off

     (901     (2,081

Recoveries of previous charge-offs

     28       91  
  

 

 

   

 

 

 

Net loans and leases charged-off

     (873     (1,990
  

 

 

   

 

 

 

Other changes, net

     —          (27
  

 

 

   

 

 

 

Ending balance

   $ 2,650     $ 2,650  
  

 

 

   

 

 

 

Allowance for loan and lease losses

   $ 2,611     $ 2,611  

Reserve for unfunded lending commitments

     39       39  
  

 

 

   

 

 

 

Allowance for credit losses

   $ 2,650     $ 2,650  
  

 

 

   

 

 

 

 

19


BB&T Corporation and Subsidiaries

Notes to Consolidated Financial Statements (Unaudited)

   Third Quarter 2011

 

The following tables provide a breakdown of the allowance for loan and lease losses and the recorded investment in loans based on the method for determining the allowance as of September 30, 2011 and December 31, 2010:

 

     September 30, 2011  
     Allowance for Loan and Lease Losses  
     Individually
Evaluated
for
Impairment
     Collectively
Evaluated
for
Impairment
     Loans
Acquired
With
Deteriorated
Credit
Quality
     Total  
     (Dollars in millions)  

Commercial:

           

Commercial and industrial

   $ 87      $ 349      $ —         $ 436  

Commercial real estate—other

     72        358        —           430  

Commercial real estate—residential ADC

     54        274        —           328  

Specialized lending

     1        12        —           13  

Retail:

           

Direct retail lending

     32        188        —           220  

Revolving credit

     26        79        —           105  

Residential mortgage

     148        216        —           364  

Sales finance

     1        38        —           39  

Specialized lending

     19        158        —           177  

Covered and other acquired

     —           49        64        113  

Unallocated

     —           130        —           130  
  

 

 

    

 

 

    

 

 

    

 

 

 

Total

   $ 440      $ 1,851      $ 64      $ 2,355  
  

 

 

    

 

 

    

 

 

    

 

 

 

 

     September 30, 2011  
     Loans and Leases  
     Individually
Evaluated
for
Impairment
     Collectively
Evaluated
for
Impairment
     Loans
Acquired
With
Deteriorated
Credit
Quality
     Total  
     (Dollars in millions)  

Commercial:

           

Commercial and industrial

   $ 643      $ 34,174      $ —         $ 34,817  

Commercial real estate—other

     562        10,369        —           10,931  

Commercial real estate—residential ADC

     483        1,931        —           2,414  

Specialized lending

     5        3,590        —           3,595  

Retail:

           

Direct retail lending

     164        13,718        —           13,882  

Revolving credit

     63        2,065        —           2,128  

Residential mortgage

     845        18,516        —           19,361  

Sales finance

     8        7,257        —           7,265  

Specialized lending

     44        4,997        —           5,041  

Covered and other acquired

     —           2,942        2,327        5,269  
  

 

 

    

 

 

    

 

 

    

 

 

 

Total

   $ 2,817      $ 99,559      $ 2,327      $ 104,703  
  

 

 

    

 

 

    

 

 

    

 

 

 

 

20


BB&T Corporation and Subsidiaries

Notes to Consolidated Financial Statements (Unaudited)

   Third Quarter 2011

 

     December 31, 2010  
     Allowance for Loan and Lease Losses  
     Individually
Evaluated
for
Impairment
     Collectively
Evaluated
for
Impairment
     Loans
Acquired
With
Deteriorated
Credit
Quality
     Total  
     (Dollars in millions)  

Commercial:

           

Commercial and industrial

   $ 96      $ 525      $ —         $ 621  

Commercial real estate—other

     63        383        —           446  

Commercial real estate—residential ADC

     75        394        —           469  

Specialized lending

     1        20        —           21  

Retail:

           

Direct retail lending

     26        220        —           246  

Revolving credit

     25        84        —           109  

Residential mortgage

     167        131        —           298  

Sales finance

     1        46        —           47  

Specialized lending

     2        175        —           177  

Covered and other acquired

     —           54        90        144  

Unallocated

     —           130        —           130  
  

 

 

    

 

 

    

 

 

    

 

 

 

Total

   $ 456      $ 2,162      $ 90      $ 2,708  
  

 

 

    

 

 

    

 

 

    

 

 

 

 

     December 31, 2010  
     Loans and Leases  
     Individually
Evaluated
for
Impairment
     Collectively
Evaluated
for
Impairment
     Loans
Acquired
With
Deteriorated
Credit
Quality
     Total  
     (Dollars in millions)  

Commercial:

           

Commercial and industrial

   $ 708      $ 33,342      $ —         $ 34,050  

Commercial real estate—other

     691        10,748        —           11,439  

Commercial real estate—residential ADC

     684        2,713        —           3,397  

Specialized lending

     4        3,399        —           3,403  

Retail:

           

Direct retail lending

     177        13,572        —           13,749  

Revolving credit

     62        2,065        —           2,127  

Residential mortgage

     803        16,747        —           17,550  

Sales finance

     5        7,045        —           7,050  

Specialized lending

     24        4,526        —           4,550  

Covered and other acquired

     —           3,394        2,858        6,252  
  

 

 

    

 

 

    

 

 

    

 

 

 

Total

   $ 3,158      $ 97,551      $ 2,858       $ 103,567  
  

 

 

    

 

 

    

 

 

    

 

 

 

BB&T monitors the credit quality of its commercial portfolio segment using internal risk ratings. These risk ratings are based on established regulatory guidance. Loans with a Pass rating represent those not considered as a problem credit. Special mention loans are those that have a potential weakness deserving management’s close

 

21


BB&T Corporation and Subsidiaries

Notes to Consolidated Financial Statements (Unaudited)

   Third Quarter 2011

 

attention. Substandard loans are those where a well-defined weakness has been identified that may put full collection of contractual cash flows at risk. Substandard loans are placed in nonaccrual status when BB&T believes it is no longer probable it will collect all contractual cash flows.

BB&T assigns an internal risk rating at loan origination and reviews the relationship again on an annual basis or at any point management becomes aware of information affecting the borrower’s ability to fulfill their obligations.

BB&T monitors the credit quality of its retail portfolio segment based primarily on delinquency status, which is the primary factor considered in determining whether a retail loan should be classified as nonaccrual.

The following tables illustrate the credit quality indicators associated with BB&T’s loans and leases held for investment as of September 30, 2011 and December 31, 2010. Covered and other acquired loans are excluded from this analysis because their related allowance is determined by loan pool performance due to the application of the accretion method.

 

     September 30, 2011  
     Commercial  
     Commercial
& Industrial
     Commercial
Real Estate-
Other
     Commercial
Real Estate-
Residential
ADC
     Specialized
Lending
 
     (Dollars in millions)  

Pass

   $ 31,742      $ 8,693      $ 1,188      $ 3,548  

Special mention

     527        210        61        3  

Substandard—performing

     1,969        1,590        737        34  

Nonperforming

     579        438        428        10  
  

 

 

    

 

 

    

 

 

    

 

 

 

Total (1)

   $ 34,817      $ 10,931      $ 2,414      $ 3,595  
  

 

 

    

 

 

    

 

 

    

 

 

 

 

     September 30, 2011  
     Retail  
     Direct Retail
Lending
     Revolving
Credit
     Residential
Mortgage
     Sales
Finance
     Specialized
Lending
 
     (Dollars in millions)  

Performing

   $ 13,731      $ 2,128      $ 19,063      $ 7,258      $ 4,995  

Nonperforming

     151        —           298        7        46  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total

   $ 13,882      $ 2,128      $ 19,361      $ 7,265      $ 5,041  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

 

     December 31, 2010  
     Commercial  
     Commercial
& Industrial
     Commercial
Real Estate-
Other
     Commercial
Real Estate-
Residential
ADC
     Specialized
Lending
 
     (Dollars in millions)  

Pass

   $ 30,774      $ 9,095      $ 1,587      $ 3,348  

Special mention

     554        306        108        30  

Substandard—performing

     2,214        1,633        1,189        14  

Nonperforming

     508        405        513        11  
  

 

 

    

 

 

    

 

 

    

 

 

 

Total (1)

   $ 34,050      $ 11,439      $ 3,397      $ 3,403  
  

 

 

    

 

 

    

 

 

    

 

 

 

 

22


BB&T Corporation and Subsidiaries

Notes to Consolidated Financial Statements (Unaudited)

   Third Quarter 2011

 

     December 31, 2010  
     Retail  
     Direct Retail
Lending
     Revolving
Credit
     Residential
Mortgage
     Sales
Finance
     Specialized
Lending
 
     (Dollars in millions)  

Performing

   $ 13,558      $ 2,127      $ 17,084      $ 7,044      $ 4,501  

Nonperforming

     191        —           466        6        49  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total

   $ 13,749      $ 2,127      $ 17,550      $ 7,050      $ 4,550  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

 

(1) Excludes nonperforming commercial loans held for sale of $26 million and $521 million as of September 30, 2011 and December 31, 2010, respectively.

The following tables represent aging analyses of BB&T’s past due loans and leases held for investment as of September 30, 2011 and December 31, 2010:

 

     September 30, 2011  
     Loans and Leases Excluding Covered (1)  
     Accruing Loans and Leases                
     Current      30-89 Days
Past Due
     90 Days Or
More Past
Due
     Nonaccrual
Loans And
Leases (2)
     Total Loans And
Leases, Excluding
Covered Loans
 
     (Dollars in millions)  

Commercial:

              

Commercial and industrial

   $ 34,161      $ 76      $ 1      $ 579      $ 34,817  

Commercial real estate—other

     10,464        27        2        438        10,931  

Commercial real estate—residential ADC

     1,959        27        —           428        2,414  

Specialized lending

     3,568        14        3        10        3,595  

Retail:

              

Direct retail lending

     13,531        148        52        151        13,882  

Revolving credit

     2,090        23        15        —           2,128  

Residential mortgage (3)

     18,260        527        276        298        19,361  

Sales finance

     7,172        67        19        7        7,265  

Specialized lending

     4,764        229        2        46        5,041  

Other acquired

     44        1        2        —           47  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total (3)

   $ 96,013      $ 1,139      $ 372      $ 1,957      $ 99,481  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

 

23


BB&T Corporation and Subsidiaries

Notes to Consolidated Financial Statements (Unaudited)

   Third Quarter 2011

 

     December 31, 2010  
     Loans and Leases Excluding Covered (1)  
     Accruing Loans and Leases                
     Current      30-89 Days
Past Due
     90 Days Or
More Past
Due
     Nonaccrual
Loans And
Leases (2)
     Total Loans And
Leases, Excluding
Covered Loans
 
     (Dollars in millions)  

Commercial:

              

Commercial and industrial

   $ 33,371      $ 163      $ 8      $ 508      $ 34,050  

Commercial real estate—other

     10,962        68        4        405        11,439  

Commercial real estate—residential ADC

     2,792        84        8        513        3,397  

Specialized lending

     3,358        29        5        11        3,403  

Retail:

              

Direct retail lending

     13,293        189        76        191        13,749  

Revolving credit

     2,079        28        20        —           2,127  

Residential mortgage (3)

     16,173        615        296        466        17,550  

Sales finance

     6,922        95        27        6        7,050  

Specialized lending

     4,281        219        1        49        4,550  

Other acquired

     54        1        3        —           58  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total (3)

   $ 93,285      $ 1,491      $ 448      $ 2,149      $ 97,373  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

 

(1) Covered loans have been excluded from this aging analysis because they are covered by FDIC loss sharing agreements, and their related allowance is determined by loan pool performance due to the application of the accretion method.
(2) Excludes nonperforming commercial loans held for sale of $26 million and $521 million as of September 30, 2011 and December 31, 2010, respectively.
(3) Residential mortgage loans include $82 million and $83 million in government guaranteed loans 30-89 days past due, and $185 million and $153 million in government guaranteed loans 90 days or more past due as of September 30, 2011 and December 31, 2010, respectively.

 

24


BB&T Corporation and Subsidiaries

Notes to Consolidated Financial Statements (Unaudited)

   Third Quarter 2011

 

The following tables set forth certain information regarding BB&T’s impaired loans, excluding acquired impaired loans and loans held for sale, that were evaluated for specific reserves as of September 30, 2011 and December 31, 2010. The average balance of impaired loans and the interest income recognized while on impaired status are reported for the nine months ended September 30, 2011.

 

     September 30, 2011  
     Recorded
Investment
     Unpaid
Principal
Balance
     Related
Allowance
     Average
Recorded
Investment
     Interest
Income
Recognized
 
     (Dollars in millions)  

With No Related Allowance Recorded:

              

Commercial:

              

Commercial and industrial

   $ 149      $ 225      $ —         $ 119      $ —     

Commercial real estate—other

     149        194        —           105        —     

Commercial real estate—residential ADC

     182        342        —           186        —     

Specialized lending

     —           —           —           —           —     

Retail:

              

Direct retail lending

     23        80        —           27        1  

Residential mortgage (1)

     28        55        —           33        1  

Sales finance

     1        1        —           1        —     

Specialized lending

     2        3        —           2        —     

With An Allowance Recorded:

              

Commercial:

              

Commercial and industrial

     494        513        87        343        1  

Commercial real estate—other

     413        456        72        348        4  

Commercial real estate—residential ADC

     301        339        54        232        2  

Specialized lending

     5        5        1        4        —     

Retail:

              

Direct retail lending

     141        148        32        127        6  

Revolving credit

     63        62        26        61        2  

Residential mortgage (1)

     608        625        126        582        20  

Sales finance

     7        10        1        5        —     

Specialized lending

     42        45        19        15        1  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total (1)

   $ 2,608      $ 3,103      $ 418      $ 2,190      $ 38  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

 

25


BB&T Corporation and Subsidiaries

Notes to Consolidated Financial Statements (Unaudited)

   Third Quarter 2011

 

     December 31, 2010  
     Recorded
Investment
     Unpaid
Principal
Balance
     Related
Allowance
 
     (Dollars in millions)  

With No Related Allowance Recorded:

        

Commercial:

        

Commercial and industrial

   $ 196      $ 267      $ —     

Commercial real estate—other

     175        246        —     

Commercial real estate—residential ADC

     200        300        —     

Retail:

        

Direct retail lending

     22        69        —     

Residential mortgage (1)

     25        50        —     

With An Allowance Recorded:

        

Commercial:

        

Commercial and industrial

     512        534        96  

Commercial real estate—other

     516        565        63  

Commercial real estate—residential ADC

     484        556        75  

Specialized lending

     4        4        1  

Retail:

        

Direct retail lending

     155        161        26  

Revolving credit

     62        61        25  

Residential mortgage (1)

     663        690        153  

Sales finance

     5        5        1  

Specialized lending

     24        24        2  
  

 

 

    

 

 

    

 

 

 

Total (1)

   $ 3,043      $ 3,532      $ 442  
  

 

 

    

 

 

    

 

 

 

 

(1) Residential mortgage loans exclude $209 million and $115 million in government guaranteed loans and related allowance of $22 million and $14 million as of September 30, 2011 and December 31, 2010, respectively.

Modifications to a borrower’s debt agreement are considered troubled debt restructurings (“restructurings”) if a concession is granted for economic or legal reasons related to a borrower’s financial difficulties that otherwise would not be considered. Restructurings are undertaken in order to improve the likelihood of recovery on the loan and may take the form of modifications made with the stated interest rate lower than the current market rate for new debt with similar risk, other modifications to the structure of the loan that fall outside of normal underwriting policies and procedures, or in certain limited circumstances forgiveness of principal or interest. Modifications of covered and other acquired loans that are part of a pool accounted for as a single asset are not considered restructurings.

 

26


BB&T Corporation and Subsidiaries

Notes to Consolidated Financial Statements (Unaudited)

   Third Quarter 2011

 

The following table provides a summary of the primary reason loan modifications were classified as restructurings and their estimated impact on the allowance for loan and lease losses during the three and nine months ended September 30, 2011:

 

    Three Months Ended
September 30, 2011
    Nine Months  Ended
September 30, 2011
 
    Types of
Modifications (1)
    Increase  To
Allowance
    Types of
Modifications (1)
    Increase  To
Allowance
 
    Rate (2)     Structure       Rate (2)     Structure    
    (Dollars in millions)  

Commercial:

           

Commercial and industrial

  $ 5     $ 9     $ 1     $ 26     $ 36     $ 3  

Commercial real estate—other

    9       22       2       35       45       5  

Commercial real estate—residential ADC

    7       14       1       23       37       8  

Specialized lending

    1       1       —          1       1       —     

Retail:

           

Direct retail lending

    10       1       2       42       4       7  

Revolving credit

    10       —          2       31       —          6  

Residential mortgage

    23       2       2       77       7       10  

Sales finance

    2       —          —          4       3       1  

Specialized lending

    8       2       4       30       5       12  

 

(1) Includes modifications made to existing restructurings, as well as new modifications that are considered restructurings. Balances represent the recorded investment as of the end of the period in which the modification was made.
(2) Includes restructurings made with a below market interest rate that also includes a modification of loan structure.

There was no forgiveness of principal or interest for restructurings recorded during the three and nine months ended September 30, 2011. Charge-offs recorded at the modification date were $6 million and $29 million for the three and nine months ended September 30, 2011, respectively. Modifications made to existing restructurings in the commercial portfolio segment approximated 19% and 28% of total commercial restructurings for the three and nine months ended September 30, 2011, respectively.

The allowance for nonperforming commercial restructurings for relationships with outstanding debt of $2 million or more are determined using a discounted expected cash flow approach and/or the value of collateral. The allowance for other commercial restructurings and all retail restructurings are determined using a discounted expected cash flow approach.

 

27


BB&T Corporation and Subsidiaries

Notes to Consolidated Financial Statements (Unaudited)

   Third Quarter 2011

 

The following table provides a summary of the pre-default balance for modifications that experienced a payment default during the three and nine months ended September 30, 2011, respectively, that had been classified as restructurings during the previous 12 months. BB&T defines payment default as movement of the restructuring to nonaccrual status, foreclosure or charge-off, whichever occurs first.

 

     Three Months  Ended
September 30, 2011
     Nine Months  Ended
September 30, 2011
 
     (Dollars in millions)  

Commercial:

     

Commercial and industrial

   $ 5      $ 38  

Commercial real estate—other

     4        79  

Commercial real estate—residential ADC

     11        73  

Specialized lending

     —           —     

Retail:

     

Direct retail lending

     1        14  

Revolving credit

     3        11  

Residential mortgage

     5        23  

Sales finance

     —           1  

Specialized lending

     2        4  

If a restructuring subsequently defaults, BB&T evaluates the restructuring for possible impairment. As a result, the related allowance may be increased or charge-offs may be taken to reduce the carrying value of the loan.

NOTE 5. Goodwill and Other Intangible Assets

The changes in the carrying amounts of goodwill attributable to each of BB&T’s operating segments for the nine months ended September 30, 2011 are reflected in the table below. To date, there have been no goodwill impairments recorded by BB&T.

 

    Community
Banking
    Residential
Mortgage
Banking
    Sales
Finance
    Specialized
Lending
    Insurance
Services
    Financial
Services
    All
Other
    Total  
    (Dollars in millions)  

Balance, January 1, 2011

  $ 4,519     $ 7     $ 93     $ 104