Form 10-Q
Table of Contents

 

 

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: March 31, 2012

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 April 30, 2012, 698,639,304 shares of the Registrant’s common stock, $5 par value, were outstanding.

 

 

 


Table of Contents

BB&T CORPORATION

FORM 10-Q

March 31, 2012

INDEX

 

    PART I        Page No.      
    

Item 1.

  Financial Statements   
  Consolidated Balance Sheets (Unaudited)      3   
  Consolidated Statements of Income (Unaudited)      4  
  Consolidated Statements of Comprehensive Income (Unaudited)      5  
  Consolidated Statements of Changes in Shareholders’ Equity (Unaudited)      6  
  Consolidated Statements of Cash Flows (Unaudited)      7  
  Notes to Consolidated Financial Statements (Unaudited)      8   

Item 2.

  Management’s Discussion and Analysis of Financial Condition and Results of Operations      51   

Item 3.

  Quantitative and Qualitative Disclosures About Market Risk (see Market Risk Management)      80   

Item 4.

  Controls and Procedures      80   
  PART II   

Item 1.

  Legal Proceedings      80   

Item 1A.

  Risk Factors      80   

Item 2.

  Unregistered Sales of Equity Securities and Use of Proceeds      80   

Item 3.

  Defaults Upon Senior Securities - (not applicable.)   

Item 4.

  Mine Safety Disclosures - (not applicable.)   

Item 5.

  Other Information - (none to be reported.)   

Item 6.

  Exhibits      81   

 

2


Table of Contents

BB&T CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(Unaudited)

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

 

     March  31,
2012
    December  31,
2011
 
      

Assets

    

Cash and due from banks

   $ 1,336     $ 1,562  

Interest-bearing deposits with banks

     2,464       2,646  

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

     252       136  

Segregated cash due from banks

     20       20  

Trading securities at fair value

     589       534  

Securities available for sale at fair value ($1,621 and $1,577 covered by FDIC loss share at March 31, 2012 and December 31, 2011, respectively)

     24,380       22,313  

Securities held to maturity (fair value of $13,507 and $14,098 at March 31, 2012 and December 31, 2011, respectively)

     13,485       14,094  

Loans held for sale

     2,525       3,736  

Loans and leases ($4,532 and $4,867 covered by FDIC loss share at March 31, 2012 and December 31, 2011, respectively)

     108,161       107,469  

Allowance for loan and lease losses

     (2,181     (2,256
  

 

 

   

 

 

 

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

     105,980       105,213  
  

 

 

   

 

 

 

FDIC loss share receivable

     949       1,100  

Premises and equipment

     1,822       1,855  

Goodwill

     6,077       6,078  

Core deposit and other intangible assets

     422       444  

Residential mortgage servicing rights at fair value

     696       563  

Other assets ($403 and $415 of foreclosed property and other assets covered by FDIC loss share at March 31, 2012 and December 31, 2011, respectively)

     13,755       14,285  
  

 

 

   

 

 

 

Total assets

   $ 174,752     $ 174,579  
  

 

 

   

 

 

 

Liabilities and Shareholders’ Equity

    

Deposits:

    

Noninterest-bearing deposits

   $ 27,410     $ 25,684  

Interest-bearing deposits

     96,747       99,255  
  

 

 

   

 

 

 

Total deposits

     124,157       124,939  
  

 

 

   

 

 

 

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

     3,436       3,566  

Long-term debt

     22,768       21,803  

Accounts payable and other liabilities

     6,509       6,791  
  

 

 

   

 

 

 

Total liabilities

     156,870       157,099  
  

 

 

   

 

 

 

Commitments and contingencies (Note 13)

    

Shareholders’ equity:

    

Common stock, $5 par

     3,492       3,486  

Additional paid-in capital

     5,880       5,873  

Retained earnings

     9,064       8,772  

Accumulated other comprehensive loss, net of deferred income taxes

     (616     (713

Noncontrolling interests

     62       62  
  

 

 

   

 

 

 

Total shareholders’ equity

     17,882       17,480  
  

 

 

   

 

 

 

Total liabilities and shareholders’ equity

   $ 174,752     $ 174,579  
  

 

 

   

 

 

 

Common shares outstanding

     698,454       697,143  

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


Table of Contents

BB&T CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)

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

 

     Three Months Ended
March 31,
 
     2012     2011  

Interest Income

    

Interest and fees on loans and leases

   $ 1,502     $ 1,520  

Interest and dividends on securities

     234       150  

Interest on other earning assets

     7       6  
  

 

 

   

 

 

 

Total interest income

     1,743       1,676  
  

 

 

   

 

 

 

Interest Expense

    

Interest on deposits

     121       171  

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

     1       4  

Interest on long-term debt

     185       216  
  

 

 

   

 

 

 

Total interest expense

     307       391  
  

 

 

   

 

 

 

Net Interest Income

     1,436       1,285  

Provision for credit losses

     288       340  
  

 

 

   

 

 

 

Net Interest Income After Provision for Credit Losses

     1,148       945  
  

 

 

   

 

 

 

Noninterest Income

    

Insurance income

     271       250  

Service charges on deposits

     137       135  

Mortgage banking income

     216       95  

Investment banking and brokerage fees and commissions

     89       87  

Checkcard fees

     43       72  

Bankcard fees and merchant discounts

     54       46  

Trust and investment advisory revenues

     45       43  

Income from bank-owned life insurance

     30       30  

FDIC loss share income, net

     (57     (58

Other income

     52       14  

Securities gains (losses), net

    

Realized gains (losses), net

     (4     21  

Other-than-temporary impairments

     (3     (1

Non-credit portion recognized in other comprehensive income

     (2     (20
  

 

 

   

 

 

 

Total securities gains (losses), net

     (9       
  

 

 

   

 

 

 

Total noninterest income

     871       714  
  

 

 

   

 

 

 

Noninterest Expense

    

Personnel expense

     730       694  

Foreclosed property expense

     92       143  

Occupancy and equipment expense

     153       154  

Loan processing expenses

     63       56  

Regulatory charges

     41       61  

Professional services

     35       31  

Software expense

     32       26  

Amortization of intangibles

     22       26  

Merger-related and restructuring charges, net

     12       (2

Other expenses

     205       183  
  

 

 

   

 

 

 

Total noninterest expense

     1,385       1,372  
  

 

 

   

 

 

 

Earnings

    

Income before income taxes

     634       287  

Provision for income taxes

     189       53  
  

 

 

   

 

 

 

Net income

     445       234  
  

 

 

   

 

 

 

Noncontrolling interests

     14       9  
  

 

 

   

 

 

 

Net income available to common shareholders

   $ 431     $ 225  
  

 

 

   

 

 

 

Earnings Per Common Share

    

Basic

   $ 0.62     $ 0.32  
  

 

 

   

 

 

 

Diluted

   $ 0.61     $ 0.32  
  

 

 

   

 

 

 

Cash dividends declared

   $ 0.20     $ 0.17  
  

 

 

   

 

 

 

Weighted Average Shares Outstanding

    

Basic

     697,685       695,309  
  

 

 

   

 

 

 

Diluted

     707,369       704,101  
  

 

 

   

 

 

 

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

 

4


Table of Contents

BB&T CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)

(Dollars in millions)

 

     Three Months Ended
March 31,
 
         2012              2011      

Net income

   $ 445      $ 234  

Other comprehensive income, net of tax:

     

Unrealized net holding gains (losses) arising during the period on securities available for sale, net of taxes of $74 and $49 for 2012 and 2011, respectively

     119        83  

Reclassification adjustment for (gains) losses on securities available for sale included in net income, net of taxes of $3 and $0 for 2012 and 2011, respectively

     6          

Change in amounts attributable to the FDIC under the loss share agreements, net of taxes of $(26) and $(34) for 2012 and 2011, respectively

     (42      (57

Change in unrecognized gains (losses) on cash flow hedges, net of taxes of $0 and $6 for 2012 and 2011, respectively

     1        9  

Change in pension and postretirement liability, net of taxes of $7 and $3 for 2012 and 2011, respectively

     11        5  

Other, net of taxes of $0 and $(1) for 2012 and 2011, respectively

     2        1  
  

 

 

    

 

 

 

Total other comprehensive income

     97        41  
  

 

 

    

 

 

 

Total comprehensive income

   $ 542      $ 275  
  

 

 

    

 

 

 

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

 

5


Table of Contents

BB&T CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY

(Unaudited)

Three Months Ended March 31, 2012 and 2011

(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, 2011

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

Add (Deduct):

             

Net income

                         225              9       234  

Net change in other comprehensive income (loss)

                                41              41  

Stock transactions:

             

In connection with equity awards

    1,763       9       (8                          1  

Shares repurchased in connection with equity awards

    (595     (3     (14                          (17

In connection with dividend reinvestment plan

    274       1       6                            7  

In connection with 401(k) plan

    462       2       11                            13  

Cash dividends declared on common stock

                         (118                   (118

Equity-based compensation expense

                  24                            24  

Other, net

                  (1                   (12     (13
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Balance, March 31, 2011

    696,285     $ 3,481     $ 5,794     $ 8,042     $ (706   $ 59     $ 16,670  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Balance, January 1, 2012

    697,143     $ 3,486     $ 5,873     $ 8,772     $ (713   $ 62     $ 17,480  

Add (Deduct):

             

Net income

                         431              14       445  

Net change in other

comprehensive income (loss)

                                97              97  

Stock transactions:

             

In connection with equity awards

    1,794       9       (3                          6  

Shares repurchased in connection with equity awards

    (497     (3     (12                          (15

In connection with dividend reinvestment plan

    14                                            

Cash dividends declared on common stock

                         (140                   (140

Equity-based compensation expense

                  25                            25  

Other, net

                  (3     1              (14     (16
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Balance, March 31, 2012

    698,454     $ 3,492     $ 5,880     $ 9,064     $ (616   $ 62     $ 17,882  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

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

 

6


Table of Contents

BB&T CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(Dollars in millions)

 

     Three Months Ended
March 31,
 
         2012             2011      

Cash Flows From Operating Activities:

    

Net income

   $ 445     $ 234  

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

    

Provision for credit losses

     288       340  

Depreciation

     64       65  

Amortization of intangibles

     22       26  

Equity-based compensation

     25       24  

(Gain) loss on securities, net

     9         

Net write-downs/losses on foreclosed property

     59       103  

Net change in operating assets and liabilities:

    

Segregated cash due from banks

            156  

Trading securities

     (55     (158

Loans held for sale

     1,214       1,089  

FDIC loss share receivable

     105       263  

Other assets

     52       126  

Accounts payable and other liabilities

     (288     (273

Other, net

     (67     36  
  

 

 

   

 

 

 

Net cash from operating activities

     1,873       2,031  
  

 

 

   

 

 

 

Cash Flows From Investing Activities:

    

Proceeds from sales of securities available for sale

     109       115  

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

     851       1,105  

Purchases of securities available for sale

     (2,859     (4,165

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

     1,021         

Purchases of securities held to maturity

     (412       

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

     (1,196     509  

Purchases of premises and equipment

     (21     (48

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

     238       192  

Other, net

     14       17  
  

 

 

   

 

 

 

Net cash from investing activities

     (2,255     (2,275
  

 

 

   

 

 

 

Cash Flows From Financing Activities:

    

Net change in deposits

     (782     (229

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

     (130     (487

Proceeds from issuance of long-term debt

     1,058       999  

Repayment of long-term debt

     (9     (127

Net cash from common stock transactions

     (9     4  

Cash dividends paid on common stock

     (112     (104

Other, net

     74       3  
  

 

 

   

 

 

 

Net cash from financing activities

     90       59  
  

 

 

   

 

 

 

Net Change in Cash and Cash Equivalents

     (292     (185

Cash and Cash Equivalents at Beginning of Period

     4,344       2,385  
  

 

 

   

 

 

 

Cash and Cash Equivalents at End of Period

   $ 4,052     $ 2,200  
  

 

 

   

 

 

 

Supplemental Disclosure of Cash Flow Information:

    

Cash paid (received) during the period for:

    

Interest

   $ 310     $ 370  

Income taxes

     60       5  

Noncash investing and financing activities:

    

Transfer of securities available for sale to securities held to maturity

     1       8,341  

Transfers of loans to foreclosed property

     149       304  

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

 

7


Table of Contents

BB&T Corporation and Subsidiaries

Notes to Consolidated Financial Statements (Unaudited)

   First Quarter 2012

NOTE 1. Basis of Presentation

General

In the opinion of management, the accompanying unaudited Consolidated Balance Sheets, Consolidated Statements of Income, Consolidated Statements of Comprehensive 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 March 31, 2012 and December 31, 2011, BB&T’s results of operations for the three months ended March 31, 2012 and 2011, and BB&T’s changes in shareholders’ equity and cash flows for the three months ended March 31, 2012 and 2011. 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, 2011 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.

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

 

8


Table of Contents

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 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. The adoption of this guidance, which occurred effective January 1, 2012, had no impact on BB&T’s consolidated financial position, results of operations or cash flows. The new disclosures required by this guidance are included in Note 14 to these consolidated financial statements.

 

9


Table of Contents

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 must 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. BB&T adopted this guidance effective January 1, 2012, and has elected to present two separate but consecutive financial statements.

In December 2011, the FASB issued new guidance impacting the presentation of certain items on the Balance Sheet. The new guidance requires an entity to disclose both gross and net information about both instruments and transactions that are eligible for offset in the statement of financial position and instruments and transactions subject to an agreement similar to a master netting arrangement. This guidance is effective for annual periods beginning on or after January 1, 2013 and interim periods within those annual periods. The adoption of this guidance will not impact BB&T’s consolidated financial position, results of operations or cash flows, but may result in certain additional disclosures.

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:

 

     Amortized
Cost
     Gross Unrealized     

Fair

    Value    

 

March 31, 2012

      Gains      Losses     
     (Dollars in millions)  

Securities available for sale:

           

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

   $ 341      $       $       $ 341  

Mortgage-backed securities issued by GSE

         19,903        262        7        20,158  

States and political subdivisions

     1,951        102        104        1,949  

Non-agency mortgage-backed securities

     346                41        305  

Other securities

     6                        6  

Covered securities

     1,210        411                1,621  
  

 

 

    

 

 

    

 

 

    

 

 

 

Total securities available for sale

   $ 23,757      $         775      $         152      $     24,380  
  

 

 

    

 

 

    

 

 

    

 

 

 

Securities held to maturity:

           

GSE securities

   $ 500      $       $ 2      $ 498  

Mortgage-backed securities issued by GSE

     12,429        45        16        12,458  

States and political subdivisions

     35                        35  

Other securities

     521        1        6        516  
  

 

 

    

 

 

    

 

 

    

 

 

 

Total securities held to maturity

   $ 13,485      $ 46      $ 24      $ 13,507  
  

 

 

    

 

 

    

 

 

    

 

 

 

 

10


Table of Contents
     Amortized
Cost
     Gross Unrealized      Fair
Value
 

December 31, 2011

      Gains      Losses     
     (Dollars in millions)  

Securities available for sale:

           

GSE securities

   $ 305      $ 1      $       $ 306  

Mortgage-backed securities issued by GSE

     17,940        199        7        18,132  

States and political subdivisions

     1,977        91        145        1,923  

Non-agency mortgage-backed securities

     423                55        368  

Other securities

     7                        7  

Covered securities

     1,240        343        6        1,577  
  

 

 

    

 

 

    

 

 

    

 

 

 

Total securities available for sale

   $     21,892      $         634      $         213      $     22,313  
  

 

 

    

 

 

    

 

 

    

 

 

 

Securities held to maturity:

           

GSE securities

   $ 500      $       $       $ 500  

Mortgage-backed securities issued by GSE

     13,028        32        23        13,037  

States and political subdivisions

     35                2        33  

Other securities

     531        1        4        528  
  

 

 

    

 

 

    

 

 

    

 

 

 

Total securities held to maturity

   $ 14,094      $ 33      $ 29      $ 14,098  
  

 

 

    

 

 

    

 

 

    

 

 

 

As of March 31, 2012, the fair value of covered securities included $1.3 billion of non-agency mortgage-backed securities and $324 million of municipal securities. As of December 31, 2011, the fair value of covered securities included $1.3 billion of non-agency mortgage-backed securities and $326 million of municipal securities. All covered securities are subject to loss sharing agreements with the FDIC and cannot be sold without their prior approval.

At March 31, 2012 and December 31, 2011, securities with carrying values of approximately $14.5 billion and $15.5 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.

Investments in marketable debt securities and mortgage-backed securities issued by Fannie Mae had total amortized cost and fair value of $11.3 billion and $11.4 billion, respectively, at March 31, 2012. Investments in securities issued by Freddie Mac had total amortized cost and fair value of $9.4 billion and $9.5 billion, respectively.

At March 31, 2012 and December 31, 2011, non-agency mortgage-backed securities consisted of residential mortgage-backed securities.

The gross realized gains and losses are reflected in the following table:

 

     Three Months Ended
March 31,
 
     2012     2011  
     (Dollars in millions)  

Gross gains

   $         —      $         21  

Gross losses

     (4       
  

 

 

   

 

 

 

Net realized gains (losses)

     (4     21  
  

 

 

   

 

 

 

For the three months ended March 31, 2011, all other-than-temporary impairment (“OTTI”) recognized into net income was from non-agency mortgage-backed securities. For the three months ended March 31, 2012, $4 million of the OTTI was related to covered securities.

 

11


Table of Contents

The following table reflects activity during the three months ended March 31, 2012 and 2011 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
March 31,
 
     2012     2011  
     (Dollars in millions)  

Balance at beginning of period

   $         129     $         30  

Credit losses on securities for which OTTI was previously recognized

     1       21  

Reductions for securities sold/settled during the period

     (16       
  

 

 

   

 

 

 

Balance at end of period

   $ 114     $ 51  
  

 

 

   

 

 

 

The amortized cost and estimated fair value of the debt securities portfolio at March 31, 2012, 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.

 

     Available for Sale      Held to Maturity  

March 31, 2012

   Amortized
Cost
     Fair Value      Amortized
Cost
     Fair Value  
     (Dollars in millions)  

Due in one year or less

   $ 179      $ 179      $ 1      $ 1  

Due after one year through five years

     186        188                  

Due after five years through ten years

     652        685        501        499  

Due after ten years

     22,734        23,322        12,983        13,007  
  

 

 

    

 

 

    

 

 

    

 

 

 

Total debt securities

     23,751        24,374        13,485        13,507  

Total securities with no stated maturity

     6        6                  
  

 

 

    

 

 

    

 

 

    

 

 

 

Total securities

   $     23,757      $     24,380      $     13,485      $     13,507  
  

 

 

    

 

 

    

 

 

    

 

 

 

 

12


Table of Contents

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:

 

    Less than 12 months     12 months or more     Total  

March 31, 2012

  Fair
Value
    Unrealized
Losses
    Fair
Value
    Unrealized
Losses
    Fair
Value
    Unrealized
Losses
 
    (Dollars in millions)  

Securities available for sale:

           

GSE securities

  $ 230     $      $      $      $ 230     $   

Mortgage-backed securities issued by GSE

    1,680       7       1              1,681       7  

States and political subdivisions

    70       5       551       99       621       104  

Non-agency mortgage-backed securities

                  305       41       305       41  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total

  $ 1,980     $ 12     $         857     $         140     $     2,837     $         152  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Securities held to maturity:

           

GSE securities

  $ 498     $ 2     $      $      $ 498     $ 2  

Mortgage-backed securities issued by GSE

    4,678       16                     4,678       16  

States and political subdivisions

    1              7              8         

Other securities

    512       6                     512       6  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total

  $     5,689     $         24     $ 7     $      $ 5,696     $ 24  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
    Less than 12 months     12 months or more     Total  

December 31, 2011

  Fair
Value
    Unrealized
Losses
    Fair
Value
    Unrealized
Losses
    Fair
Value
    Unrealized
Losses
 
    (Dollars in millions)  

Securities available for sale:

           

GSE securities

  $ 24     $      $      $      $ 24     $   

Mortgage-backed securities issued by GSE

    3,098       7                     3,098       7  

States and political subdivisions

    453       68       265       77       718       145  

Non-agency mortgage-backed securities

                  368       55       368       55  

Covered securities

    29       6                     29       6  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total

  $ 3,604     $ 81     $ 633     $ 132     $ 4,237     $ 213  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Securities held to maturity:

           

GSE securities

  $ 250     $      $      $      $ 250     $   

Mortgage-backed securities issued by GSE

    7,770       23                     7,770       23  

States and political subdivisions

    33       2                     33       2  

Other securities

    207       4                     207       4  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total

  $ 8,260     $ 29     $      $      $ 8,260     $ 29  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

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.

Factors considered in determining whether a loss is temporary include:

 

  l   

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

 

  l   

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;

 

  l   

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

 

13


Table of Contents
  l   

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

 

  l   

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

 

  l   

Whether the financial condition of the issuer has deteriorated;

 

  l   

The seniority of the security;

 

  l   

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

 

  l   

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 non-agency mortgage-backed securities through the use of cash flow modeling. These models give consideration to long-term macroeconomic factors applied to current security default rates, prepayment rates and recovery rates and security-level performance.

During 2012, BB&T realized principal losses on certain other-than-temporarily impaired securities. These realized losses were a factor in evaluating the level of OTTI necessary to address future projected losses.

At March 31, 2012, 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 March 31, 2012, 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 one municipal bond with an amortized cost of $3 million and seven non-agency mortgage-backed securities with an adjusted amortized cost of $346 million. All of these non-investment grade securities were initially investment grade and have been downgraded since purchase. Based on its evaluation at March 31, 2012, BB&T determined that certain of the non-investment grade non-agency mortgage-backed securities had credit losses evident and recognized OTTI related to these securities. At March 31, 2012, the total unrealized loss on these non-investment grade securities was $41 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:

 

March 31, 2012

   Amortized
Cost
     Cumulative
Credit Loss
Recognized
    Adjusted
Amortized Cost
     Fair Value      Unrealized
Loss
 
     (Dollars in millions)  

Security:

             

RMBS 1

   $         129      $         (34   $         95      $         80      $         (15

RMBS 2

     100        (17     83        73        (10

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.

 

14


Table of Contents

NOTE 3. Loans and Leases

The following table provides a breakdown of BB&T’s loan portfolio:

 

    March 31,
2012
    December 31,
2011
 
    (Dollars in millions)  

Loans and leases, net of unearned income:

   

Commercial:

   

Commercial and industrial

  $ 36,156     $ 36,415  

Commercial real estate - other

    10,543       10,689  

Commercial real estate - residential ADC (1)

    1,823       2,061  

Direct retail lending

    14,862       14,467  

Sales finance

    7,587       7,401  

Revolving credit

    2,159       2,212  

Residential mortgage

    21,513       20,581  

Other lending subsidiaries

    8,951       8,737  

Other acquired

    35       39  
 

 

 

   

 

 

 

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

    103,629       102,602  

Covered

    4,532       4,867  
 

 

 

   

 

 

 

Total loans and leases held for investment

    108,161       107,469  

Loans held for sale

    2,525       3,736  
 

 

 

   

 

 

 

Total loans and leases

  $     110,686     $     111,205  
 

 

 

   

 

 

 

 

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

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 amount of all purchased impaired and nonimpaired loans and the related allowance:

 

     March 31, 2012     December 31, 2011  
     Purchased
Impaired
Loans
    Purchased
Nonimpaired
Loans
    Total     Purchased
Impaired
Loans
    Purchased
Nonimpaired
Loans
    Total  
     (Dollars in millions)  

Residential mortgage

   $ 630     $ 582     $ 1,212     $ 647     $ 617     $ 1,264  

Commercial real estate

     1,280       1,495       2,775       1,407       1,597       3,004  

Commercial

     58       487       545       68       531       599  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total covered

     1,968       2,564       4,532       2,122       2,745       4,867  

Other acquired

     2       33       35       2       37       39  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total

     1,970       2,597       4,567       2,124       2,782       4,906  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Allowance for loan losses

     (101     (36     (137     (113     (36     (149
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net

   $     1,869     $     2,561     $     4,430     $     2,011     $     2,746     $     4,757  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

15


Table of Contents

Changes in the carrying amount and accretable yield for purchased impaired and nonimpaired loans were as follows:

 

    Three Months Ended March 31, 2012     Year Ended December 31, 2011  
    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

  $     521     $     2,124     $     1,239     $     2,782     $ 835     $ 2,858     $ 1,611     $ 3,394  

Accretion

    (72     72       (155     155       (359     359       (706     706  

Payments received, net

           (226            (340            (1,093            (1,318

Other, net

    (69            (62            45              334         
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Balance at end of period

  $ 380     $ 1,970     $ 1,022     $ 2,597     $     521     $     2,124     $     1,239     $     2,782  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

The outstanding unpaid principal balance for all purchased impaired loans as of March 31, 2012 and December 31, 2011 was $3.0 billion and $3.3 billion, respectively. The outstanding unpaid principal balance for all purchased nonimpaired loans as of March 31, 2012 and December 31, 2011 was $3.6 billion and $3.9 billion, respectively.

At March 31, 2012 and December 31, 2011, 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.

The following table provides a summary of BB&T’s nonperforming assets and loans 90 days or more past due and still accruing:

 

    March 31,
2012
    December 31,
2011
 
    (Dollars in millions)  

Nonaccrual loans and leases held for investment

  $     1,843     $     1,872  

Foreclosed real estate (1)

    378       536  

Other foreclosed property

    35       42  
 

 

 

   

 

 

 

Total nonperforming assets (excluding covered assets) (1)

  $ 2,256     $ 2,450  
 

 

 

   

 

 

 

Loans 90 days or more past due and still accruing (excluding covered loans) (2)(3)(4)

  $ 157     $ 202  

 

(1) Excludes foreclosed real estate totaling $364 million and $378 million as of March 31, 2012 and December 31, 2011, respectively, that is covered by FDIC loss sharing agreements.
(2) Excludes mortgage loans guaranteed by GNMA that BB&T does not have the obligation to repurchase totaling $439 million and $426 million as of March 31, 2012 and December 31, 2011, respectively.
(3) Excludes loans 90 days or more past due that are covered by FDIC loss sharing agreements totaling $677 million and $736 million as of March 31, 2012 and December 31, 2011, respectively.
(4) Excludes mortgage loans 90 days or more past due that are government guaranteed totaling $218 million and $206 million as of March 31, 2012 and December 31, 2011, respectively.

 

16


Table of Contents

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”):

 

     March 31,
2012
     December 31,
2011
 
     (Dollars in millions)  

Performing restructurings:

     

Commercial:

     

Commercial and industrial

   $ 76      $ 74  

Commercial real estate - other

     82        117  

Commercial real estate - residential ADC

     30        44  

Direct retail lending

     117        146  

Sales finance

     7        8  

Revolving credit

     61        62  

Residential mortgage (1)(2)

     589        608  

Other lending subsidiaries

     53        50  
  

 

 

    

 

 

 

Total performing restructurings (1)(2)

     1,015        1,109  

Nonperforming restructurings (3)

     263        280  
  

 

 

    

 

 

 

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

   $     1,278      $     1,389  
  

 

 

    

 

 

 

 

(1) Excludes restructured mortgage loans held for investment that are government guaranteed totaling $237 million and $232 million at March 31, 2012 and December 31, 2011, respectively.
(2) Excludes restructured mortgage loans held for sale that are government guaranteed totaling $5 million and $4 million at March 31, 2012 and December 31, 2011, respectively.
(3) Nonperforming restructurings are included in nonaccrual loan disclosures.
(4) All restructurings are considered impaired. The allowance for loan and lease losses attributable to these restructured loans totaled $216 million and $266 million at March 31, 2012 and December 31, 2011, respectively.

BB&T had commitments totaling $37 million and $32 million at March 31, 2012 and December 31, 2011, respectively, to lend additional funds to clients with loans whose terms have been modified in restructurings.

 

17


Table of Contents

NOTE 4. Allowance for Credit Losses

An analysis of the allowance for credit losses is presented in the following tables:

 

Three Months Ended March 31, 2012

  Beginning
Balance
    Charge-
Offs
    Recoveries     Provision     Ending
Balance
 
    (Dollars in millions)  

Commercial:

         

Commercial and industrial

  $ 433     $ (63   $ 4     $ 152     $ 526  

Commercial real estate - other

    334       (73     3       30       294  

Commercial real estate - residential ADC

    286       (54     8       (34     206  

Other lending subsidiaries

    11       (3     1       4       13  

Retail:

         

Direct retail lending

    232       (57     10       116       301  

Revolving credit

    112       (22     5       (1     94  

Residential mortgage

    365       (42     1       (23     301  

Sales finance

    38       (7     3       (2     32  

Other lending subsidiaries

    186       (57     6       47       182  

Covered and other acquired

    149       (15            3       137  

Unallocated

    110                     (15     95  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Allowance for loan and lease losses

    2,256       (393     41       277       2,181  

Reserve for unfunded lending commitments

    29                     11       40  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Allowance for credit losses

  $     2,285     $     (393   $         41     $         288     $     2,221  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

Three Months Ended March 31, 2011

  Beginning
Balance
    Charge-
Offs
    Recoveries     Provision     Ending
Balance
 
    (Dollars in millions)  

Commercial:

         

Commercial and industrial

  $ 621     $ (78   $ 4     $ (12   $ 535  

Commercial real estate - other

    446       (68     3       116       497  

Commercial real estate - residential ADC

    469       (71     4       19       421  

Other lending subsidiaries

    21       (2     1       (2     18  

Retail:

         

Direct retail lending

    246       (78     9       68       245  

Revolving credit

    109       (27     5       18       105  

Residential mortgage

    298       (54     1       83       328  

Sales finance

    47       (10     2       4       43  

Other lending subsidiaries

    177       (50     5       43       175  

Covered and other acquired

    144                            144  

Unallocated

    130                            130  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Allowance for loan and lease losses

    2,708       (438     34       337       2,641  

Reserve for unfunded lending commitments

    47                     3       50  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Allowance for credit losses

  $     2,755     $     (438   $         34     $         340     $     2,691  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

18


Table of Contents

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:

 

     Allowance for Loan and Lease Losses  

March 31, 2012

   Individually
Evaluated
for
Impairment
     Collectively
Evaluated

for
Impairment
     Loans
Acquired
With
Deteriorated
Credit
Quality
     Total  
     (Dollars in millions)  

Commercial:

           

Commercial and industrial

   $ 91      $ 435      $       $ 526  

Commercial real estate - other

     54        240                294  

Commercial real estate - residential ADC

     42        164                206  

Other lending subsidiaries

     3        10                13  

Retail:

           

Direct retail lending

     31        270                301  

Revolving credit

     26        68                94  

Residential mortgage

     102        199                301  

Sales finance

     1        31                32  

Other lending subsidiaries

     22        160                182  

Covered and other acquired

             36        101        137  

Unallocated

             95                95  
  

 

 

    

 

 

    

 

 

    

 

 

 

Total

   $         372      $     1,708      $         101      $     2,181  
  

 

 

    

 

 

    

 

 

    

 

 

 

 

     Loans and Leases  

March 31, 2012

   Individually
Evaluated
for
Impairment
     Collectively
Evaluated

for
Impairment
     Loans
Acquired
With
Deteriorated
Credit
Quality
     Total  
     (Dollars in millions)  

Commercial:

           

Commercial and industrial

   $ 769      $ 35,387      $       $ 36,156  

Commercial real estate - other

     418        10,125                10,543  

Commercial real estate - residential ADC

     345        1,478                1,823  

Other lending subsidiaries

     11        3,705                3,716  

Retail:

           

Direct retail lending

     160        14,702                14,862  

Revolving credit

     61        2,098                2,159  

Residential mortgage

     958        20,555                21,513  

Sales finance

     18        7,569                7,587  

Other lending subsidiaries

     55        5,180                5,235  

Covered and other acquired

             2,597        1,970        4,567  
  

 

 

    

 

 

    

 

 

    

 

 

 

Total

   $     2,795      $     103,396      $     1,970      $     108,161  
  

 

 

    

 

 

    

 

 

    

 

 

 

 

19


Table of Contents
    Allowance for Loan and Lease Losses  

December 31, 2011

  Individually
Evaluated

for
Impairment
    Collectively
Evaluated

for
Impairment
    Loans
Acquired
With
Deteriorated
Credit
Quality
    Total  
    (Dollars in millions)  

Commercial:

       

Commercial and industrial

  $ 77     $ 356     $      $ 433  

Commercial real estate - other

    69       265              334  

Commercial real estate - residential ADC

    50       236              286  

Other lending subsidiaries

    1       10              11  

Retail:

       

Direct retail lending

    35       197              232  

Revolving credit

    27       85              112  

Residential mortgage

    152       213              365  

Sales finance

    1       37              38  

Other lending subsidiaries

    20       166              186  

Covered and other acquired

           36       113       149  

Unallocated

           110              110  
 

 

 

   

 

 

   

 

 

   

 

 

 

Total

  $         432     $     1,711     $         113     $     2,256  
 

 

 

   

 

 

   

 

 

   

 

 

 

 

    Loans and Leases  

December 31, 2011

  Individually
Evaluated

for
Impairment
    Collectively
Evaluated

for
Impairment
    Loans
Acquired
With
Deteriorated
Credit
Quality
    Total  
    (Dollars in millions)  

Commercial:

       

Commercial and industrial

  $ 656     $ 35,759     $      $ 36,415  

Commercial real estate - other

    511       10,178              10,689  

Commercial real estate - residential ADC

    420       1,641              2,061  

Other lending subsidiaries

    5       3,621              3,626  

Retail:

       

Direct retail lending

    165       14,302              14,467  

Revolving credit

    62       2,150              2,212  

Residential mortgage

    931       19,650              20,581  

Sales finance

    10       7,391              7,401  

Other lending subsidiaries

    49       5,062              5,111  

Covered and other acquired

           2,782       2,124       4,906  
 

 

 

   

 

 

   

 

 

   

 

 

 

Total

  $         2,809     $     102,536     $     2,124     $     107,469  
 

 

 

   

 

 

   

 

 

   

 

 

 

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 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.

 

20


Table of Contents

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 loans and leases held for investment. 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.

 

March 31, 2012

   Commercial
& Industrial
     Commercial
Real Estate-
Other
     Commercial
Real Estate-
Residential
ADC
     Other
Lending
Subsidiaries
 
     (Dollars in millions)  

Commercial:

           

Pass

   $ 33,196      $ 8,669      $ 992      $ 3,664  

Special mention

     361        129        40        4  

Substandard - performing

     1,914        1,433        479        32  

Nonperforming

     685        312        312        16  
  

 

 

    

 

 

    

 

 

    

 

 

 

Total

   $     36,156      $     10,543      $     1,823      $     3,716  
  

 

 

    

 

 

    

 

 

    

 

 

 

 

     Direct Retail
Lending
     Revolving
Credit
     Residential
Mortgage
     Sales Finance      Other
Lending
Subsidiaries
 
     (Dollars in millions)  

Retail:

              

Performing

   $ 14,723      $ 2,159      $ 21,193      $ 7,572      $ 5,191  

Nonperforming

     139                320        15        44  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total

   $     14,862      $         2,159      $     21,513      $         7,587      $         5,235  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

 

December 31, 2011

   Commercial
& Industrial
     Commercial
Real Estate-
Other
     Commercial
Real Estate-
Residential
ADC
     Other
Lending
Subsidiaries
 
     (Dollars in millions)  

Commercial:

           

Pass

   $ 33,497      $ 8,568      $ 1,085      $ 3,578  

Special mention

     488        234        60        5  

Substandard - performing

     1,848        1,493        540        35  

Nonperforming

     582        394        376        8  
  

 

 

    

 

 

    

 

 

    

 

 

 

Total

   $     36,415      $     10,689      $         2,061      $         3,626  
  

 

 

    

 

 

    

 

 

    

 

 

 

 

     Direct Retail
Lending
     Revolving
Credit
     Residential
Mortgage
     Sales Finance      Other
Lending
Subsidiaries
 
     (Dollars in millions)  

Retail:

              

Performing

   $ 14,325      $ 2,212      $ 20,273      $ 7,394      $ 5,056  

Nonperforming

     142                308        7        55  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total

   $     14,467      $         2,212      $     20,581      $         7,401      $         5,111  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

 

21


Table of Contents

The following tables represent aging analyses of BB&T’s past due loans and leases held for investment. 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.

 

    Accruing Loans and Leases              

March 31, 2012

  Current     30-89 Days
Past Due
    90 Days Or
More Past
Due
    Nonaccrual
Loans And
Leases
    Total Loans And
Leases, Excluding
Covered Loans
 
    (Dollars in millions)  

Commercial:

         

Commercial and industrial

  $ 35,407     $ 62     $ 2     $ 685     $ 36,156  

Commercial real estate - other

    10,204       26       1       312       10,543  

Commercial real estate - residential ADC

    1,503       8              312       1,823  

Other lending subsidiaries

    3,681       14       5       16       3,716  

Retail:

         

Direct retail lending

    14,540       135       48       139       14,862  

Revolving credit

    2,125       20       14              2,159  

Residential mortgage (1)

    20,424       479       290       320       21,513  

Sales finance

    7,509       50       13       15       7,587  

Other lending subsidiaries

    5,032       158       1       44       5,235  

Other acquired

    34              1              35  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total (1)

  $     100,459     $         952     $         375     $         1,843     $     103,629  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

    Accruing Loans and Leases              

December 31, 2011

  Current     30-89 Days
Past Due
    90 Days Or
More Past
Due
    Nonaccrual
Loans And
Leases
    Total Loans And
Leases, Excluding
Covered Loans
 
    (Dollars in millions)  

Commercial:

         

Commercial and industrial

  $ 35,746     $ 85     $ 2     $ 582     $ 36,415  

Commercial real estate - other

    10,273       22              394       10,689  

Commercial real estate - residential ADC

    1,671       14              376       2,061  

Other lending subsidiaries

    3,589       25       4       8       3,626  

Retail:

         

Direct retail lending

    14,109       161       55       142       14,467  

Revolving credit

    2,173       22       17              2,212  

Residential mortgage (1)

    19,393       570       310       308       20,581  

Sales finance

    7,301       75       18       7       7,401  

Other lending subsidiaries

    4,807       248       1       55       5,111  

Other acquired

    37       1       1              39  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total (1)

  $     99,099     $         1,223     $         408     $         1,872     $     102,602  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

(1) Residential mortgage loans include $82 million and $91 million in government guaranteed loans 30-89 days past due, and $218 million and $206 million in government guaranteed loans 90 days or more past due as of March 31, 2012 and December 31, 2011, respectively.

 

22


Table of Contents

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 / For The Three Months Ended March 31, 2012

  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

  $ 128     $ 223     $      $ 126     $   

Commercial real estate - other

    104       159              101         

Commercial real estate - residential ADC

    108       213              110         

Retail:

         

Direct retail lending

    21       78              22         

Residential mortgage (1)

    84       141              82         

Sales finance

    1       2              1         

Other lending subsidiaries

    2       5              4         

With An Allowance Recorded:

         

Commercial:

         

Commercial and industrial

    641       650       91       470       1  

Commercial real estate - other

    314       329       54       272       1  

Commercial real estate - residential ADC

    237       247       42       198         

Other lending subsidiaries

    11       13       3       13         

Retail:

         

Direct retail lending

    139       146       31       137       2  

Revolving credit

    61       60       26       61       1  

Residential mortgage (1)

    637       652       91       596       7  

Sales finance

    17       17       1       9         

Other lending subsidiaries

    53       55       22       48         
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total (1)

  $     2,558     $     2,990     $         361     $     2,250     $             12  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

23


Table of Contents

As Of / For The Year Ended December 31, 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

  $ 114     $ 196     $      $ 102     $   

Commercial real estate - other

    102       163              94       1  

Commercial real estate - residential ADC

    153       289              145         

Retail:

         

Direct retail lending

    19       74              23       1  

Residential mortgage (1)

    46       85              55       2  

Sales finance

    1       1              1         

Other lending subsidiaries

    2       4              3         

With An Allowance Recorded:

         

Commercial:

         

Commercial and industrial

    542       552       77       300       1  

Commercial real estate - other

    409       433       69       278       5  

Commercial real estate - residential ADC

    267       298       50       164       1  

Other lending subsidiaries

    5       5       1       5         

Retail:

         

Direct retail lending

    146       153       35       128       8  

Revolving credit

    62       61       27       61       3  

Residential mortgage (1)

    653       674       125       562       26  

Sales finance

    9       10       1       6         

Other lending subsidiaries

    47       50       20       31       2  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total (1)

  $     2,577     $     3,048     $         405     $     1,958     $             50  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

(1) Residential mortgage loans exclude $237 million and $232 million in government guaranteed loans and related allowance of $11 million and $27 million as of March 31, 2012 and December 31, 2011, respectively.

 

24


Table of Contents

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:

 

    Three Months Ended March 31,  
    2012     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     $         28     $         —        $         12     $         13     $         1  

Commercial real estate - other

    4       9       1       19       13       1  

Commercial real estate - residential ADC

    —          13       —          12       9       3  

Retail:

           

Direct retail lending

    6       2       1       16       1       3  

Revolving credit

    8       —          2       11       —          2  

Residential mortgage

    55       9       3       32       5       5  

Sales finance

    2       —          —          1       2       —     

Other lending subsidiaries

    8       2       4       12       1       4  

 

           
(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.

Charge-offs recorded at the modification date were $4 million and $5 million for the three months ended March 31, 2012 and March 31, 2011, respectively. Modifications made to existing restructurings in the commercial portfolio segment approximated 11% and 29% of total commercial restructurings for the three months ended March 31, 2012 and March 31, 2011, respectively. The forgiveness of principal or interest for restructurings recorded during the three months ended March 31, 2012 and March 31, 2011 was immaterial.

The following table summarizes the pre-default balance for modifications that experienced a payment default 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 March 31,  
             2012                      2011          
     (Dollars in millions)  

Commercial:

     

Commercial and industrial

   $             2      $         13  

Commercial real estate - other

     1        30  

Commercial real estate - residential ADC

     8        41  

Retail:

     

Direct retail lending

     2        9  

Revolving credit

     3        5  

Residential mortgage

     17        13  

Sales finance

     —           1  

Other lending subsidiaries

     2        1  

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.

 

25


Table of Contents

NOTE 5. Goodwill and Other Intangible Assets

The changes in the carrying amounts of goodwill attributable to each of BB&T’s operating segments is reflected in the table below. To date, there have been no goodwill impairments recorded by BB&T.

 

     Community
Banking
     Residential
Mortgage
Banking
     Dealer
Financial
Services
     Specialized
Lending
     Insurance
Services
    Financial
Services
     Total  
     (Dollars in millions)  

Balance, January 1, 2012

   $ 4,542      $ 7      $ 111      $ 94      $ 1,132     $ 192      $ 6,078  

Other adjustments

                                     (1             (1
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

   

 

 

    

 

 

 

Balance, March 31, 2012

   $     4,542      $         7      $     111      $         94      $     1,131     $         192      $     6,077  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

   

 

 

    

 

 

 

The following table presents the gross carrying amounts and accumulated amortization for BB&T’s identifiable intangible assets subject to amortization:

 

    March 31, 2012     December 31, 2011  
    Gross
Carrying
Amount
    Accumulated
Amortization
    Net
Carrying
Amount
    Gross
Carrying
Amount
    Accumulated
Amortization
    Net
Carrying
Amount
 
    (Dollars in millions)  

Identifiable intangible assets:

           

Core deposit intangibles

  $ 626     $ (493   $ 133     $ 626     $ (484   $ 142  

Other (1)

    787       (498     289       787       (485     302  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Totals

  $     1,413     $     (991   $         422     $     1,413     $     (969   $     444  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

(1) Other identifiable intangibles are primarily customer relationship intangibles.

NOTE 6. Loan Servicing

Residential Mortgage Banking Activities

The following table includes a summary of residential mortgage loans managed or securitized and related delinquencies and net charge-offs:

 

     March 31,
2012
     December 31,
2011
 
     (Dollars in millions)  

Mortgage loans managed or securitized (1)

   $ 26,166      $ 26,559  

Less: Loans securitized and transferred to securities available for sale

     4        4  

Loans held for sale

     2,209        3,394  

Covered mortgage loans

     1,212        1,264  

Mortgage loans sold with recourse

     1,228        1,316  
  

 

 

    

 

 

 

Mortgage loans held for investment

   $     21,513      $     20,581  
  

 

 

    

 

 

 

Mortgage loans on nonaccrual status

   $ 320      $ 308  

Mortgage loans 90 days or more past due and still accruing interest (2)

     72        104  

Mortgage loans net charge-offs (3)

     41        264  

 

(1) Balances exclude loans serviced for others with no other continuing involvement.
(2) Includes amounts related to residential mortgage loans held for sale and excludes amounts related to government guaranteed loans and covered mortgage loans. Refer to Loans and Leases Note for additional disclosures related to past due government guaranteed loans.
(3) Net charge-offs for March 31, 2012 reflect three months.

 

26


Table of Contents

The unpaid principal balances of BB&T’s total residential mortgage servicing portfolio were $94.6 billion and $91.6 billion at March 31, 2012 and December 31, 2011, respectively. The unpaid principal balances of residential mortgage loans serviced for others consist primarily of agency conforming fixed-rate mortgage loans and totaled $70.3 billion and $67.1 billion at March 31, 2012 and December 31, 2011, respectively. Mortgage loans serviced for others are not included in loans and leases on the accompanying Consolidated Balance Sheets.

During the three months ended March 31, 2012 and 2011, BB&T sold residential mortgage loans from the held for sale portfolio with unpaid principal balances of $7.6 billion and $5.5 billion, respectively, and recognized pre-tax gains of $127 million and $35 million, respectively, including the impact of interest rate lock commitments. These gains are recorded in noninterest income as a component of mortgage banking income. BB&T retained the related mortgage servicing rights and receives servicing fees.

At March 31, 2012 and 2011, the approximate weighted average servicing fee was 0.33% and 0.35%, respectively, of the outstanding balance of the residential mortgage loans serviced for others. The weighted average coupon interest rate on the portfolio of mortgage loans serviced for others was 4.89% and 5.17% at March 31, 2012 and 2011, respectively. BB&T recognized servicing fees of $60 million and $58 million during the first three months of 2012 and 2011, respectively, as a component of mortgage banking income.

At March 31, 2012 and December 31, 2011, BB&T had $1.2 billion and $1.3 billion, respectively, of residential mortgage loans sold with recourse liability. In the event of nonperformance by the borrower, BB&T has maximum recourse exposure of approximately $502 million and $522 million as of March 31, 2012 and December 31, 2011, respectively. At both March 31, 2012 and December 31, 2011, BB&T has recorded $6 million of reserves related to these recourse exposures. Payments made to date have been immaterial.

BB&T also issues standard representations and warranties related to mortgage loan sales to government-sponsored entities. Although these agreements often do not specify limitations, BB&T does not believe that any payments related to these warranties would materially change the financial condition or results of operations of BB&T. BB&T has recorded $39 million and $29 million of reserves related to potential losses resulting from repurchases of loans sold at March 31, 2012 and December 31, 2011, respectively.

Residential mortgage servicing rights are recorded on the Consolidated Balance Sheets at fair value with changes in fair value recorded as a component of mortgage banking income in the Consolidated Statements of Income for each period. BB&T uses various derivative instruments to mitigate the income statement effect of changes in fair value due to changes in valuation inputs and assumptions of its residential mortgage servicing rights. The following is an analysis of the activity in BB&T’s residential mortgage servicing rights:

 

     Residential Mortgage Servicing Rights
Three Months Ended March 31,
 
             2012                     2011          
     (Dollars in millions)  

Carrying value, January 1,

   $         563     $         830  

Additions

     84       86  

Increase (decrease) in fair value:

    

Due to changes in valuation inputs or assumptions

     92       40  

Other changes (1)

     (43     (28
  

 

 

   

 

 

 

Carrying value, March 31,

   $ 696     $ 928  
  

 

 

   

 

 

 

 

(1) Represents the realization of expected net servicing cash flows, expected borrower payments and the passage of time.

The increase in the fair value of mortgage servicing rights due to changes in valuation inputs during the first three months of 2012, was primarily a result of updated prepayment speed forecast assumptions.

 

27


Table of Contents

Refer to Note 14 for additional disclosures related to the assumptions and estimates used in determining the fair value of residential mortgage servicing rights. The sensitivity of the current fair value of the residential mortgage servicing rights to immediate 10% and 20% adverse changes in key economic assumptions is included in the accompanying table:

 

     Residential
Mortgage Servicing Rights
March 31, 2012
 
     (Dollars in millions)  

Fair value of residential mortgage servicing rights

   $         696  

Composition of residential loans serviced for others:

  

Fixed-rate mortgage loans

     99

Adjustable-rate mortgage loans

     1  
  

 

 

 

Total

     100
  

 

 

 

Weighted average life

     4.5 yrs 

Prepayment speed

     16.5

Effect on fair value of a 10% increase

   $ (39

Effect on fair value of a 20% increase

     (73

Weighted average discount rate

     9.8

Effect on fair value of a 10% increase

   $ (25

Effect on fair value of a 20% increase

     (48

The sensitivity calculations above are hypothetical and should not be considered to be predictive of future performance. As indicated, changes in fair value based on adverse changes in assumptions generally cannot be extrapolated because the relationship of the change in assumption to the change in fair value may not be linear. Also, in this table, the effect of an adverse variation in a particular assumption on the fair value of the mortgage servicing rights is calculated without changing any other assumption; while in reality, changes in one factor may result in changes in another (for example, increases in market interest rates may result in lower prepayments), which may magnify or counteract the effect of the change.

Commercial Mortgage Banking Activities

BB&T also arranges and services commercial real estate mortgages through Grandbridge Real Estate Capital, LLC (“Grandbridge”) the commercial mortgage banking subsidiary of Branch Bank. During the three months ended March 31, 2012 and 2011, Grandbridge originated $1.3 billion and $930 million, respectively, of commercial real estate mortgages, the majority of which were arranged for third party investors. As of March 31, 2012 and December 31, 2011, Grandbridge’s portfolio of commercial real estate mortgages serviced for others totaled $25.8 billion and $25.4 billion, respectively. Commercial real estate mortgage loans serviced for others are not included in loans and leases on the accompanying Consolidated Balance Sheets. Grandbridge had $4.8 billion and $4.5 billion in loans serviced for others that were covered by recourse provisions at March 31, 2012 and December 31, 2011, respectively. As of March 31, 2012 and December 31, 2011, Grandbridge’s maximum exposure to loss for these loans was approximately $1.3 billion and $1.2 billion, respectively. BB&T has recorded $16 million and $15 million of reserves related to these recourse exposures at March 31, 2012 and December 31, 2011, respectively.

 

28


Table of Contents

NOTE 7. Deposits

A summary of BB&T’s deposits is presented in the accompanying table:

 

     March 31,
2012
     December 31,
2011
 
     (Dollars in millions)  

Noninterest-bearing deposits

   $ 27,410      $ 25,684  

Interest checking

     20,318        20,701  

Money market and savings

     46,759        44,618  

Certificates and other time deposits

     29,648        33,899  

Foreign office deposits - interest-bearing

     22        37  
  

 

 

    

 

 

 

Total deposits

   $     124,157      $     124,939  
  

 

 

    

 

 

 

Time deposits that are $100,000 and greater totaled $16.5 billion and $19.8 billion at March 31, 2012 and December 31, 2011, respectively.

NOTE 8. Long-Term Debt

Long-term debt comprised the following:

 

     March 31,
2012
     December 31,
2011
 
     (Dollars in millions)  

BB&T Corporation:

     

3.85% Senior Notes Due 2012

   $ 1,000      $ 1,000  

3.38% Senior Notes Due 2013

     500        500  

5.70% Senior Notes Due 2014

     510        510  

2.05% Senior Notes Due 2014

     700        700  

Floating Rate Senior Notes Due 2014 (1)

     300        300  

3.95% Senior Notes Due 2016

     499        499  

3.20% Senior Notes Due 2016

     999        999  

2.15% Senior Notes Due 2017

     748          

6.85% Senior Notes Due 2019

     539        538  

4.75% Subordinated Notes Due 2012 (2)

     490        490  

5.20% Subordinated Notes Due 2015 (2)

     933        933  

4.90% Subordinated Notes Due 2017 (2)

     343        342  

5.25% Subordinated Notes Due 2019 (2)

     586        586  

3.95% Subordinated Notes Due 2022 (2)

     298          

Branch Bank:

     

Floating Rate Subordinated Notes Due 2016 (2)(3)

     350        350  

Floating Rate Subordinated Notes Due 2017 (2)(3)

     262        262  

4.875% Subordinated Notes Due 2013 (2)

     222        222  

5.625% Subordinated Notes Due 2016 (2)

     386        386  

Federal Home Loan Bank Advances to Branch Bank: (4)

     

Varying maturities to 2034

     8,996        8,998  

Junior Subordinated Debt to Unconsolidated Trusts (5)

     3,271        3,271  

Other Long-Term Debt

     95        83  

Fair value hedge-related basis adjustments

     741        834  
  

 

 

    

 

 

 

Total Long-Term Debt

   $         22,768      $         21,803  
  

 

 

    

 

 

 

 

(1) These floating-rate senior notes are based on LIBOR and had an effective rate of 1.25% at March 31, 2012.
(2) Subordinated notes that qualify under the risk-based capital guidelines as Tier 2 supplementary capital, subject to certain limitations.

 

29


Table of Contents
(3) These floating-rate securities are based on LIBOR, but the majority of the cash flows have been swapped to a fixed rate. The effective rate paid on these securities including the effect of the swapped portion was 3.26% at March 31, 2012.
(4) Certain of these advances have been swapped to floating rates from fixed rates and from fixed rates to floating rates. At March 31, 2012, the weighted average rate paid on these advances including the effect of the swapped portion was 3.61%, and the weighted average maturity was 7.3 years.
(5) Securities that qualify under the risk-based capital guidelines as Tier 1 capital, subject to certain limitations. Refer to BB&T’s Annual Report on Form 10-K for the year ended December 31, 2011 for additional information.

In March 2011, BB&T made the decision to retire all of its junior subordinated debt to unconsolidated trusts through the exercise of certain early redemption provisions. BB&T determined that it was appropriate to amortize the remaining debt issuance costs and related discounts or premiums, including fair value hedge adjustments, over the period from March 2011 to the current expected redemption date for each of t