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: June 30, 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   27101

Winston-Salem, North Carolina

(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 July 31, 2012, 699,128,360 shares of the Registrant’s common stock, $5 par value, were outstanding.

 

 

 


Table of Contents

BB&T CORPORATION

FORM 10-Q

June 30, 2012

INDEX

 

            Page No.  

PART I

  

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

   53

Item 3.

  

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

   90

Item 4.

   Controls and Procedures    90

PART II

  

Item 1.

   Legal Proceedings    90

Item 1A.

   Risk Factors    90

Item 2.

   Unregistered Sales of Equity Securities and Use of Proceeds    90

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    91

 

2


Table of Contents

BB&T CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(Unaudited)

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

 

    June 30,
2012
    December 31,
2011
 

Assets

   

Cash and due from banks

  $ 1,409      $ 1,562   

Interest-bearing deposits with banks

    2,246        2,646   

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

    212        136   

Segregated cash due from banks

          20   

Trading securities at fair value

    533        534   

Securities available for sale at fair value ($1,578 and $1,577 covered by FDIC loss share at June 30, 2012 and December 31, 2011, respectively)

    25,067        22,313   

Securities held to maturity (fair value of $12,744 and $14,098 at June 30, 2012 and December 31, 2011, respectively)

    12,576        14,094   

Loans held for sale at fair value

    2,736        3,736   

Loans and leases ($3,955 and $4,867 covered by FDIC loss share at June 30, 2012 and December 31, 2011, respectively)

    111,075        107,469   

Allowance for loan and lease losses

    (2,126)        (2,256)   
 

 

 

   

 

 

 

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

    108,949        105,213   
 

 

 

   

 

 

 

FDIC loss share receivable

    831        1,100   

Premises and equipment

    1,816        1,855   

Goodwill

    6,428        6,078   

Core deposit and other intangible assets

    683        444   

Residential mortgage servicing rights at fair value

    578        563   

Other assets ($349 and $415 of foreclosed property and other assets covered by FDIC loss share at June 30, 2012 and December 31, 2011, respectively)

    14,461        14,285   
 

 

 

   

 

 

 

Total assets

  $ 178,529      $ 174,579   
 

 

 

   

 

 

 

Liabilities and Shareholders’ Equity

   

Deposits:

   

Noninterest-bearing deposits

  $ 28,664      $ 25,684   

Interest-bearing deposits

    97,395        99,255   
 

 

 

   

 

 

 

Total deposits

    126,059        124,939   
 

 

 

   

 

 

 

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

    3,196        3,566   

Long-term debt

    22,561        21,803   

Accounts payable and other liabilities

    7,787        6,791   
 

 

 

   

 

 

 

Total liabilities

    159,603        157,099   
 

 

 

   

 

 

 

Commitments and contingencies (Note 13)

   

Shareholders’ equity:

   

Preferred stock, liquidation preference of $25,000 per share

    559        —    

Common stock, $5 par

    3,494        3,486   

Additional paid-in capital

    5,914        5,873   

Retained earnings

    9,433        8,772   

Accumulated other comprehensive loss, net of deferred income taxes

    (541)        (713)   

Noncontrolling interests

    67        62   
 

 

 

   

 

 

 

Total shareholders’ equity

    18,926        17,480   
 

 

 

   

 

 

 

Total liabilities and shareholders’ equity

  $ 178,529      $ 174,579   
 

 

 

   

 

 

 

Common shares outstanding

    698,795        697,143   

Common shares authorized

        2,000,000            2,000,000   

Preferred shares outstanding

    23        —    

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
June  30,
    Six Months Ended
June 30,
 
    2012     2011     2012     2011  

Interest Income

       

Interest and fees on loans and leases

  $ 1,492      $ 1,523      $ 2,994      $ 3,043   

Interest and dividends on securities

    230        163        464        313   

Interest on other earning assets

                13        10   
 

 

 

   

 

 

   

 

 

   

 

 

 

Total interest income

    1,728        1,690        3,471        3,366   
 

 

 

   

 

 

   

 

 

   

 

 

 

Interest Expense

       

Interest on deposits

    107        152        228        323   

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

                       

Interest on long-term debt

    157        181        342        397   
 

 

 

   

 

 

   

 

 

   

 

 

 

Total interest expense

    266        336        573        727   
 

 

 

   

 

 

   

 

 

   

 

 

 

Net Interest Income

    1,462        1,354        2,898        2,639   

Provision for credit losses

    273        328        561        668   
 

 

 

   

 

 

   

 

 

   

 

 

 

Net Interest Income After Provision for Credit Losses

    1,189        1,026        2,337        1,971   
 

 

 

   

 

 

   

 

 

   

 

 

 

Noninterest Income

       

Insurance income

    393        299        664        549   

Service charges on deposits

    138        145        275        280   

Mortgage banking income

    182        83        398        178   

Investment banking and brokerage fees and commissions

    88        90        177        177   

Checkcard fees

    45        79        88        151   

Bankcard fees and merchant discounts

    59        52        113        98   

Trust and investment advisory revenues

    46        45        91        88   

Income from bank-owned life insurance

    27        29        57        59   

FDIC loss share income, net

    (74)        (81)        (131)        (139)   

Other income

    64        48        116        62   

Securities gains (losses), net

       

Realized gains (losses), net

           16        (4)        37   

Other-than-temporary impairments

    (2)        (10)        (5)        (11)   

Non-credit portion recognized in other comprehensive income

           (8)        (2)        (28)   
 

 

 

   

 

 

   

 

 

   

 

 

 

Total securities gains (losses), net

    (2)        (2)        (11)        (2)   
 

 

 

   

 

 

   

 

 

   

 

 

 

Total noninterest income

    966        787        1,837        1,501   
 

 

 

   

 

 

   

 

 

   

 

 

 

Noninterest Expense

       

Personnel expense

    775        683        1,505        1,377   

Foreclosed property expense

    72        145        164        288   

Occupancy and equipment expense

    159        152        312        306   

Loan processing expenses

    62        57        125        113   

Regulatory charges

    43        59        84        120   

Professional services

    39        38        74        69   

Software expense

    32        29        64        55   

Amortization of intangibles

    29        25        51        51   

Merger-related and restructuring charges, net

                14          

Other expenses

    213        205        418        388   
 

 

 

   

 

 

   

 

 

   

 

 

 

Total noninterest expense

    1,426        1,395        2,811        2,767   
 

 

 

   

 

 

   

 

 

   

 

 

 

Earnings

       

Income before income taxes

    729        418        1,363        705   

Provision for income taxes

    191        91        380        144   
 

 

 

   

 

 

   

 

 

   

 

 

 

Net income

    538        327        983        561   
 

 

 

   

 

 

   

 

 

   

 

 

 

Noncontrolling interests

    20        20        34        29   

Preferred stock dividends

                         
 

 

 

   

 

 

   

 

 

   

 

 

 

Net income available to common shareholders

  $ 510      $ 307      $ 941      $ 532   
 

 

 

   

 

 

   

 

 

   

 

 

 

Earnings Per Common Share

       

Basic

  $ 0.73      $ 0.44      $ 1.35      $ 0.76   
 

 

 

   

 

 

   

 

 

   

 

 

 

Diluted

  $ 0.72      $ 0.44      $ 1.33      $ 0.76   
 

 

 

   

 

 

   

 

 

   

 

 

 

Cash dividends declared

  $ 0.20      $ 0.16      $ 0.40      $ 0.33   
 

 

 

   

 

 

   

 

 

   

 

 

 

Weighted Average Shares Outstanding

       

Basic

            698,579                696,625                698,132                695,971   
 

 

 

   

 

 

   

 

 

   

 

 

 

Diluted

    708,454        704,969        707,990        704,583   
 

 

 

   

 

 

   

 

 

   

 

 

 

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
June 30,
    Six Months Ended
June 30,
 
    2012     2011     2012     2011  

Net Income

  $         538      $         327      $         983      $         561   

Other Comprehensive Income, Net of Tax:

       

Unrealized net holding gains (losses) arising during the period on securities available for sale

    66        174        185        257   

Reclassification adjustment for (gains) losses on securities available for sale included in net income

                       

Change in amounts attributable to the FDIC under the loss share agreements

    14              (28)        (53)   

Change in unrecognized gains (losses) on cash flow hedges

    (16)        (51)        (15)        (42)   

Change in pension and postretirement liability

    11              22         

Other, net

    (1)                      
 

 

 

   

 

 

   

 

 

   

 

 

 

Total other comprehensive income

    75        132        172        173   
 

 

 

   

 

 

   

 

 

   

 

 

 

Total comprehensive income

  $ 613      $ 459      $ 1,155      $ 734   
 

 

 

   

 

 

   

 

 

   

 

 

 

Income Tax Effect of Items Included in Other Comprehensive Income:

       

Unrealized net holding gains (losses) arising during the period on securities available for sale

  $ 38      $ 103      $ 112      $ 152   

Reclassification adjustment for (gains) losses on securities available for sale included in net income

                       

Change in amounts attributable to the FDIC under the loss share agreements

                (18)        (31)   

Change in unrecognized gains (losses) on cash flow hedges

    (10)        (31)        (10)        (25)   

Change in pension and postretirement liability

                14         

Other, net

                       (1)   

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)

Six Months Ended June 30, 2012 and 2011

(Dollars in millions, shares in thousands)

 

    Shares of
Common
Stock
    Preferred
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

                                532               29        561   

Net change in other comprehensive income (loss)

                                       173               173   

Stock transactions:

               

In purchase acquisitions

    26                                                  

In connection with equity awards

    1,838                     (9)                               

Shares repurchased in connection with equity awards

    (617)               (3)        (14)                             (17)   

In connection with dividend reinvestment plan

    563                     12                             15   

In connection with 401(k) plan

    703                     16                             19   

Cash dividends declared on common stock

                                (226)                      (226)   

Equity-based compensation expense

                         49                             49   

Other, net

                         (1)                      (23)        (24)   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Balance, June 30, 2011

    696,894      $      $ 3,484      $ 5,830      $ 8,241      $ (574)      $ 68      $ 17,049   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Balance, January 1, 2012

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

Add (Deduct):

               

Net income

                                949               34        983   

Net change in other comprehensive income (loss)

                                       172               172   

Stock transactions:

               

In purchase acquisitions

    28                                                  

In connection with equity awards

    2,143               11                                   13   

Shares repurchased in connection with equity awards

    (534)               (3)        (13)                             (16)   

In connection with dividend reinvestment plan

    15                                                    

In connection with preferred stock offering

           559                                           559   

Cash dividends declared on common stock

                                (280)                      (280)   

Cash dividends declared on preferred stock

                                (8)                      (8)   

Equity-based compensation expense

                         51                             51   

Other, net

                                         (29)        (29)   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Balance, June 30, 2012

      698,795      $        559      $     3,494      $ 5,914      $     9,433      $ (541)      $ 67      $ 18,926   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

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)

 

    Six Months Ended
June 30,
 
    2012     2011  

Cash Flows From Operating Activities:

   

Net income

  $ 983      $ 561   

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

   

Provision for credit losses

    561        668   

Depreciation

    131        129   

Amortization of intangibles

    51        51   

Equity-based compensation

    51        49   

(Gain) loss on securities, net

    11         

Net write-downs/losses on foreclosed property

    120        208   

Net change in operating assets and liabilities:

   

Segregated cash due from banks

    16        290   

Loans held for sale

    579        1,294   

FDIC loss share receivable

    269        427   

Other assets

    (677)        214   

Accounts payable and other liabilities

    699        (57)   

Other, net

    (159)        17   
 

 

 

   

 

 

 

Net cash from operating activities

    2,635        3,853   
 

 

 

   

 

 

 

Cash Flows From Investing Activities:

   

Proceeds from sales of securities available for sale

    153        330   

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

    1,782        1,728   

Purchases of securities available for sale

    (4,400)        (6,250)   

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

    2,138        312   

Purchases of securities held to maturity

    (619)        (523)   

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

    (4,115)        (965)   

Net cash paid for acquisitions

    (555)          

Purchases of premises and equipment

    (61)        (104)   

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

    500        480   

Other, net

    78        53   
 

 

 

   

 

 

 

Net cash from investing activities

    (5,099)        (4,939)   
 

 

 

   

 

 

 

Cash Flows From Financing Activities:

   

Net change in deposits

    1,120        924   

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

    (370)        (831)   

Proceeds from issuance of long-term debt

    1,072        1,999   

Repayment of long-term debt

    (197)        (392)   

Net cash from common stock transactions

    (3)        17   

Net cash from preferred stock transactions

    559          

Cash dividends paid on common stock

    (251)        (223)   

Other, net

    57        (7)   
 

 

 

   

 

 

 

Net cash from financing activities

    1,987        1,487   
 

 

 

   

 

 

 

Net Change in Cash and Cash Equivalents

    (477)        401   

Cash and Cash Equivalents at Beginning of Period

    4,344        2,385   
 

 

 

   

 

 

 

Cash and Cash Equivalents at End of Period

  $       3,867      $       2,786   
 

 

 

   

 

 

 

Supplemental Disclosure of Cash Flow Information:

   

Cash paid (received) during the period for:

   

Interest

  $ 579      $ 719   

Income taxes

    317        (236)   

Noncash investing and financing activities:

   

Transfer of securities available for sale to securities held to maturity

          8,341   

Transfers of loans to foreclosed property

    269        641   

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

 

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BB&T Corporation and Subsidiaries

Notes to Consolidated Financial Statements (Unaudited)

NOTE 1.  Basis of Presentation

BB&T Corporation and subsidiaries (“BB&T,” the “Corporation” or the “Company”) is a financial holding company organized under the laws of North Carolina.

General

These consolidated financial statements and notes are presented in accordance with the instructions for Form 10-Q and, therefore, do not include all information and notes necessary for a complete presentation of financial position, results of operations and cash flow activity required in accordance with accounting principles generally accepted in the United States of America (“GAAP”). 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. 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.

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.

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.

 

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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     Gross Unrealized     Fair
Value
 

June 30, 2012

  Cost     Gains     Losses    
    (Dollars in millions)  

Securities available for sale:

       

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

  $ 348      $ —       $ —       $ 348   

Mortgage-backed securities issued by GSE

    20,484        380                    20,856   

States and political subdivisions

    1,982        120        120        1,982   

Non-agency mortgage-backed securities

    333              33        302   

Other securities

          —         —          

Covered securities

    1,190        388        —         1,578   
 

 

 

   

 

 

   

 

 

   

 

 

 

Total securities available for sale

  $ 24,338      $ 890      $          161      $ 25,067   
 

 

 

   

 

 

   

 

 

   

 

 

 

Securities held to maturity:

       

GSE securities

  $ 500      $     $ —       $ 502   

Mortgage-backed securities issued by GSE

    11,326        172              11,497   

States and political subdivisions

    34              —         35   

Other securities

    716                    710   
 

 

 

   

 

 

   

 

 

   

 

 

 

Total securities held to maturity

  $       12,576      $          176      $     $ 12,744   
 

 

 

   

 

 

   

 

 

   

 

 

 

 

    Amortized     Gross Unrealized     Fair
Value
 

December 31, 2011

  Cost     Gains     Losses    
    (Dollars in millions)  

Securities available for sale:

       

GSE securities

  $ 305      $     $ —       $ 306   

Mortgage-backed securities issued by GSE

    17,940        199              18,132   

States and political subdivisions

    1,977        91        145        1,923   

Non-agency mortgage-backed securities

    423        —         55        368   

Other securities

          —         —          

Covered securities

    1,240        343              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        —               33   

Other securities

    531                    528   
 

 

 

   

 

 

   

 

 

   

 

 

 

Total securities held to maturity

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

 

 

   

 

 

   

 

 

   

 

 

 

 

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As of June 30, 2012 and 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.

At June 30, 2012 and December 31, 2011, securities with carrying values of approximately $13.3 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.

BB&T had certain investments in marketable debt securities and mortgage-backed securities issued by Fannie Mae and Freddie Mac that exceeded ten percent of shareholders’ equity at June 30, 2012. The Fannie Mae investments had total amortized cost and fair value of $10.4 billion and $10.6 billion, respectively, at June 30, 2012. The Freddie Mac investments had total amortized cost and fair value of $8.6 billion and $8.7 billion, respectively.

At June 30, 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
June 30,
    Six Months Ended
June 30,
 
    2012     2011     2012     2011  
    (Dollars in millions)  

Gross gains

  $       —      $ 17      $ —       $ 38   

Gross losses

                 (1)              (4)              (1)   
 

 

 

   

 

 

   

 

 

   

 

 

 

Net realized gains (losses)

  $      $ 16      $ (4)      $ 37   
 

 

 

   

 

 

   

 

 

   

 

 

 

The following table reflects activity during the three and six months ended June 30, 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. There was $4 million of other-than-temporary impairment (“OTTI”) related to covered securities during the six months ended June 30, 2012 that is not reflected in this table.

 

    Three Months Ended
June 30,
    Six Months Ended
June 30,
 
    2012     2011     2012     2011  
    (Dollars in millions)  

Balance at beginning of period

  $     114      $ 51      $ 129      $ 30   

Credit losses on securities for which OTTI was previously recognized

          18              39   

Reductions for securities sold/settled during the period

    (4)        (6)        (20)        (6)   
 

 

 

   

 

 

   

 

 

   

 

 

 

Balance at end of period

  $ 112      $      63      $      112      $      63   
 

 

 

   

 

 

   

 

 

   

 

 

 

The amortized cost and estimated fair value of the debt securities portfolio at June 30, 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 prepay the underlying mortgage loans with or without 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  

June 30, 2012

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

Due in one year or less

  $ 185      $ 185      $     $  

Due after one year through five years

    195        199        —         —    

Due after five years through ten years

    635        668        501        502   

Due after ten years

    23,323        24,015        12,074        12,241   
 

 

 

   

 

 

   

 

 

   

 

 

 

Total debt securities

  $       24,338      $       25,067      $       12,576      $       12,744   
 

 

 

   

 

 

   

 

 

   

 

 

 

 

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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  

June 30, 2012

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

Securities available for sale:

           

GSE securities

  $ 215      $ —       $ —       $ —       $ 215      $ —    

Mortgage-backed securities issued by GSE

    2,453                    —         2,454         

States and political subdivisions

    69              536        117        605        120   

Non-agency mortgage-backed securities

    —         —         244        33        244        33   

Covered securities

    13        —         —         —         13        —    
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total

  $   2,750      $ 11      $ 781      $ 150      $ 3,531      $ 161   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Securities held to maturity:

           

Mortgage-backed securities issued by GSE

  $ 1,048      $     $ 254      $ —       $ 1,302      $  

States and political subdivisions

          —               —               —    

Other securities

    557              —         —         557         
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total

  $ 1,606      $     $   256      $ —       $   1,862      $  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

    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              —         —         3,098         

States and political subdivisions

    16              702        142        718        145   

Non-agency mortgage-backed securities

    —         —         368        55        368        55   

Covered securities

    29              —         —         29         
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total

  $   3,167      $ 16      $   1,070      $ 197      $   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              —         —         33         

Other securities

    207              —         —         207         
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

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:

 

   

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;

 

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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 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.

At June 30, 2012, BB&T held certain securities which were non-investment grade and had continuous unrealized loss positions for more than 12 months. These securities consisted of one municipal bond and six non-agency mortgage-backed securities which had a total adjusted amortized cost of $27 million and $277 million, respectively. The unrealized loss on these securities was $2 million and $33 million, respectively. All of these non-investment grade securities were initially investment grade and have been downgraded since purchase.

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:

 

June 30, 2012

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

Security:

         

RMBS 1

  $           124     $           (33)      $ 91     $           76     $           (15)   

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.

 

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NOTE 3.  Loans and Leases

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

 

    June 30,     December 31,  
    2012     2011  
    (Dollars in millions)  

Loans and leases, net of unearned income:

   

Commercial:

   

Commercial and industrial

  $ 36,938      $ 36,415   

Commercial real estate - other

    10,457        10,689   

Commercial real estate - residential ADC (1)

    1,590        2,061   

Direct retail lending

    15,155        14,467   

Sales finance

    7,794        7,401   

Revolving credit

    2,206        2,212   

Residential mortgage

    23,117        20,581   

Other lending subsidiaries

    9,835        8,737   

Other acquired

    28        39   
 

 

 

   

 

 

 

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

    107,120        102,602   

Covered

    3,955        4,867   
 

 

 

   

 

 

 

Total loans and leases held for investment

    111,075        107,469   

Loans held for sale

    2,736        3,736   
 

 

 

   

 

 

 

Total loans and leases

  $     113,811      $     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:

 

    June 30, 2012     December 31, 2011  
    Purchased
Impaired
Loans
    Purchased
Nonimpaired
Loans
    Total     Purchased
Impaired
Loans
    Purchased
Nonimpaired
Loans
    Total  
    (Dollars in millions)  

Residential mortgage

  $ 611      $ 548      $ 1,159      $ 647      $ 617      $ 1,264   

Commercial real estate

    1,079        1,264        2,343        1,407        1,597        3,004   

Commercial

    56        397        453        68        531        599   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total covered

    1,746        2,209        3,955        2,122        2,745        4,867   

Other acquired

          27        28              37        39   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total

    1,747        2,236        3,983        2,124        2,782        4,906   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Allowance for loan losses

    (87)        (52)        (139)        (113)        (36)        (149)   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net

  $      1,660      $      2,184      $      3,844      $      2,011      $       2,746      $      4,757   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

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

 

    Six Months Ended June 30, 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

    (131)        131        (297)        297        (359)        359        (706)        706   

Payments received, net

    —         (508)        —         (843)        —           (1,093)        —         (1,318)   

Other, net

    (92)        —         (44)        —         45        —         334        —    
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Balance at end of period

  $ 298      $ 1,747      $ 898      $ 2,236      $ 521      $ 2,124      $ 1,239      $ 2,782   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

The outstanding unpaid principal balance for all purchased impaired loans as of June 30, 2012 and December 31, 2011 was $2.6 billion and $3.3 billion, respectively. The outstanding unpaid principal balance for all purchased nonimpaired loans as of June 30, 2012 and December 31, 2011 was $3.1 billion and $3.9 billion, respectively.

At June 30, 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:

 

     June 30,
2012
     December 31, 
2011
 
     (Dollars in millions)  

Nonaccrual loans and leases held for investment

   $ 1,647      $       1,872   

Foreclosed real estate (1)

     221        536   

Other foreclosed property

     29        42   
  

 

 

   

 

 

 

Total nonperforming assets (excluding covered assets) (1)

   $     1,897      $ 2,450   
  

 

 

   

 

 

 

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

   $ 147      $ 202   

 

(1) Excludes foreclosed real estate totaling $310 million and $378 million as of June 30, 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 $453 million and $426 million as of June 30, 2012 and December 31, 2011, respectively.
(3) Excludes loans 90 days or more past due that are covered by FDIC loss sharing agreements totaling $613 million and $736 million as of June 30, 2012 and December 31, 2011, respectively.
(4) Excludes mortgage loans 90 days or more past due that are government guaranteed totaling $217 million and $206 million as of June 30, 2012 and December 31, 2011, respectively.

 

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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”):

 

     June 30,
2012
    December 31,
2011
 
     (Dollars in millions)  

Performing restructurings:

    

Commercial:

    

Commercial and industrial

   $ 62      $ 74   

Commercial real estate - other

     78        117   

Commercial real estate - residential ADC

     28        44   

Direct retail lending

     114        146   

Sales finance

            

Revolving credit

     58        62   

Residential mortgage (1)(2)

     636        608   

Other lending subsidiaries

     69        50   
  

 

 

   

 

 

 

Total performing restructurings (1)(2)

     1,052        1,109   

Nonperforming restructurings (3)

     219        280   
  

 

 

   

 

 

 

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

   $         1,271      $         1,389   
  

 

 

   

 

 

 

 

(1) Excludes restructured mortgage loans held for investment that are government guaranteed totaling $264 million and $232 million at June 30, 2012 and December 31, 2011, respectively.
(2) Excludes restructured mortgage loans held for sale that are government guaranteed totaling $2 million and $4 million at June 30, 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 $220 million and $266 million at June 30, 2012 and December 31, 2011, respectively.

Commitments to lend additional funds to clients with loans whose terms have been modified in restructurings was immaterial at June 30, 2012 and December 31, 2011.

 

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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 June 30, 2012

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

Commercial:

         

Commercial and industrial

  $ 526      $ (92)      $     $ 87      $ 525   

Commercial real estate - other

    294        (51)              59        305   

Commercial real estate - residential ADC

    206        (74)        23              157   

Other lending subsidiaries

    13        (3)        —               13   

Retail:

         

Direct retail lending

    301        (56)              30        283   

Revolving credit

    94        (20)              12        90   

Residential mortgage

    301        (30)              37        309   

Sales finance

    32        (7)              (2)        25   

Other lending subsidiaries

    182        (44)              55        200   

Covered and other acquired

    137        (12)        —         14        139   

Unallocated

    95               —         (15)        80   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Allowance for loan and lease losses

    2,181        (389)        52        282        2,126   

Reserve for unfunded lending commitments

    40               —         (9)        31   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Allowance for credit losses

  $   2,221      $     (389)      $ 52      $   273      $   2,157   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

Three Months Ended June 30, 2011

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

Commercial:

         

Commercial and industrial

  $ 535      $ (62)      $     $ (8)      $ 474   

Commercial real estate - other

    497        (81)              40        462   

Commercial real estate - residential ADC

    421        (78)              32        382   

Other lending subsidiaries

    18        (2)              (4)        13   

Retail:

         

Direct retail lending

    245        (66)              46        233   

Revolving credit

    105        (24)              17        103   

Residential mortgage

    328        (129)              147        347   

Sales finance

    43        (7)                    42   

Other lending subsidiaries

    175        (41)              31        171   

Covered and other acquired

    144        —         —         15        159   

Unallocated

    130        —         —                130   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Allowance for loan and lease losses

    2,641        (490)        46        319        2,516   

Reserve for unfunded lending commitments

    50        —         —               59   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Allowance for credit losses

  $   2,691      $     (490)      $ 46      $   328      $   2,575   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

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Table of Contents

Six Months Ended June 30, 2012

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

Commercial:

         

Commercial and industrial

  $ 433      $ (155)      $     $ 239      $ 525   

Commercial real estate - other

    334        (124)              89        305   

Commercial real estate - residential ADC

    286        (128)        31        (32)        157   

Other lending subsidiaries

    11        (6)                    13   

Retail:

         

Direct retail lending

    232        (113)        18        146        283   

Revolving credit

    112        (42)              11        90   

Residential mortgage

    365        (72)              14        309   

Sales finance

    38        (14)              (4)        25   

Other lending subsidiaries

    186        (101)        13        102        200   

Covered and other acquired

    149        (27)               17        139   

Unallocated

    110                      (30)        80   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Allowance for loan and lease losses

    2,256        (782)        93        559        2,126   

Reserve for unfunded lending commitments

    29                            31   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Allowance for credit losses

  $   2,285      $     (782)      $ 93      $   561      $   2,157   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

Six Months Ended June 30, 2011

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

Commercial:

         

Commercial and industrial

  $ 621      $ (140)      $ 13      $ (20)      $ 474   

Commercial real estate - other

    446        (149)              156        462   

Commercial real estate - residential ADC

    469        (149)        11        51        382   

Other lending subsidiaries

    21        (4)              (6)        13   

Retail:

         

Direct retail lending

    246        (144)        17        114        233   

Revolving credit

    109        (51)        10        35        103   

Residential mortgage

    298        (183)              230        347   

Sales finance

    47        (17)                    42   

Other lending subsidiaries

    177        (91)        11        74        171   

Covered and other acquired

    144                      15        159   

Unallocated

    130                             130   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Allowance for loan and lease losses

    2,708        (928)        80        656        2,516   

Reserve for unfunded lending commitments

    47                      12        59   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Allowance for credit losses

  $   2,755      $     (928)      $ 80      $   668      $   2,575   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

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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  

June 30, 2012

  Individually
Evaluated
for
Impairment
    Collectively
Evaluated

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

Commercial:

       

Commercial and industrial

  $ 83      $ 442      $      $ 525   

Commercial real estate - other

    47        258               305   

Commercial real estate - residential ADC

    28        129               157   

Other lending subsidiaries

          11               13   

Retail:

       

Direct retail lending

    28        255               283   

Revolving credit

    25        65               90   

Residential mortgage

    127        182               309   

Sales finance

          22               25   

Other lending subsidiaries

    27        173               200   

Covered and other acquired

           52        87        139   

Unallocated

           80               80   
 

 

 

   

 

 

   

 

 

   

 

 

 

Total

  $ 370      $     1,669      $ 87      $     2,126   
 

 

 

   

 

 

   

 

 

   

 

 

 

 

    Loans and Leases  

June 30, 2012

  Individually
Evaluated
for
Impairment
    Collectively
Evaluated

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

Commercial:

       

Commercial and industrial

  $ 691      $ 36,247      $      $ 36,938   

Commercial real estate - other

    413        10,044               10,457   

Commercial real estate - residential ADC

    272        1,318               1,590   

Other lending subsidiaries

          4,143               4,151   

Retail:

       

Direct retail lending

    154        15,001               15,155   

Revolving credit

    58        2,148               2,206   

Residential mortgage

    998        22,119               23,117   

Sales finance

    17        7,777               7,794   

Other lending subsidiaries

    72        5,612               5,684   

Covered and other acquired

           2,236        1,747        3,983   
 

 

 

   

 

 

   

 

 

   

 

 

 

Total

  $  2,683      $   106,645      $ 1,747      $   111,075   
 

 

 

   

 

 

   

 

 

   

 

 

 

 

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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

          10               11   

Retail:

       

Direct retail lending

    35        197               232   

Revolving credit

    27        85               112   

Residential mortgage

    152        213               365   

Sales finance

          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

          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 for which 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.

 

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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.

 

                                                                                   

June 30, 2012

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

Commercial:

       

Pass

   $ 34,200       $ 8,848       $ 957       $ 4,110   

Special mention

    262        113        32         

Substandard - performing

    1,856        1,195        360        28   

Nonperforming

    620        301        241         
 

 

 

   

 

 

   

 

 

   

 

 

 

Total

   $ 36,938       $ 10,457       $ 1,590       $ 4,151   
 

 

 

   

 

 

   

 

 

   

 

 

 

 

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

Retail:

         

Performing

   $ 15,022       $ 2,206       $ 22,854       $ 7,781       $ 5,615   

Nonperforming

    133               263        13        69   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total

   $   15,155       $   2,206       $   23,117       $   7,794       $ 5,684   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

                                                                                   

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         

Substandard - performing

    1,848        1,493        540        35   

Nonperforming

    582        394        376         
 

 

 

   

 

 

   

 

 

   

 

 

 

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              55   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total

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

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

20


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              

June 30, 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

  $ 36,263      $ 53      $     $ 620      $ 36,938   

Commercial real estate - other

    10,140        16               301        10,457   

Commercial real estate - residential ADC

    1,340                     241        1,590   

Other lending subsidiaries

    4,126        14                    4,151   

Retail:

         

Direct retail lending

    14,865        119        38        133        15,155   

Revolving credit

    2,173        20        13               2,206   

Residential mortgage (1)

    21,609        495        292        263        22,659   

Sales finance

    7,721        49        11        13        7,794   

Other lending subsidiaries

    5,411        204               69        5,684   

Other acquired

    27                            28   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total (1)

  $   103,675      $ 979      $ 361      $ 1,647      $ 106,662   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

    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      $     $ 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                    3,626   

Retail:

         

Direct retail lending

    14,109        161        55        142        14,467   

Revolving credit

    2,173        22        17               2,212   

Residential mortgage (1)

    19,442        524        307        308        20,581   

Sales finance

    7,301        75        18              7,401   

Other lending subsidiaries

    4,807        248              55        5,111   

Other acquired

    37                           39   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total (1)

  $     99,148      $ 1,177      $ 405      $ 1,872      $ 102,602   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

(1) Residential mortgage loans include $84 million and $81 million in government guaranteed loans 30-89 days past due, and $214 million and $203 million in government guaranteed loans 90 days or more past due as of June 30, 2012 and December 31, 2011, respectively. Residential mortgage loans exclude $5 million and $453 million in loans guaranteed by GNMA that BB&T has the option, but not the obligation, to repurchase, which are past due 30-89 days and 90 days or more, respectively, at June 30, 2012.

 

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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 Six Months Ended June 30, 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

  $ 129      $ 236      $      $ 122      $   

Commercial real estate - other

    78        122               67          

Commercial real estate - residential ADC

    107        227               125          

Retail:

         

Direct retail lending

    18        75               20          

Residential mortgage (1)

    82        138               101         

Sales finance

                               

Other lending subsidiaries

                               

With An Allowance Recorded:

         

Commercial:

         

Commercial and industrial

    562        571        83        395         

Commercial real estate - other

    335        357        47        240         

Commercial real estate - residential ADC

    165        172        28        121          

Other lending subsidiaries

                             

Retail:

         

Direct retail lending

    136        145        28        130         

Revolving credit

    58        58        25        60         

Residential mortgage (1)

    652        672        114        616        13   

Sales finance

    15        17                      

Other lending subsidiaries

    70        72        27        51         
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total (1)

  $ 2,419      $   2,876      $ 357      $ 2,064      $ 24   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

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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         

Commercial real estate - residential ADC

    153        289               145          

Retail:

         

Direct retail lending

    19        74               23         

Residential mortgage (1)

    46        85               55         

Sales finance

                               

Other lending subsidiaries

                               

With An Allowance Recorded:

         

Commercial:

         

Commercial and industrial

    542        552        77        300         

Commercial real estate - other

    409        433        69        278         

Commercial real estate - residential ADC

    267        298        50        164         

Other lending subsidiaries

                              

Retail:

         

Direct retail lending

    146        153        35        128         

Revolving credit

    62        61        27        61         

Residential mortgage (1)

    653        674        125