Edgar Filing: BB&T CORP

BB&T Third Quarter 2005 10-Q

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q

Quarterly Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934

For the quarterly period ended:

September 30, 2005

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	(Zip Code)
(Address of Principal Executive Offices)

(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 [ Ö ] No [__]

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). Yes [ Ö ] No [__]

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes [__] No [ Ö ]

At October 31, 2005, 542,296,433 shares of the registrant's common stock, $5 par value, were outstanding.

BB&T CORPORATION

FORM 10-Q

September 30, 2005

INDEX

	Page No.


Part I. FINANCIAL INFORMATION

Item 1. Financial Statements (Unaudited)	2

Notes to Consolidated Financial Statements	6

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations	26

Executive Summary	30

Analysis of Financial Condition	31

Analysis of Results of Operations	38

Market Risk Management	51

Capital Adequacy and Resources	56

Item 3. Quantitative and Qualitative Disclosures About Market Risk	59

Item 4. Controls and Procedures	59

Part II. OTHER INFORMATION

Item 1. Legal Proceedings	59

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	59

Item 6. Exhibits	60

SIGNATURES	61

EXHIBIT INDEX	62

CERTIFICATIONS	63

BB&T Corporation Page 1 Third Quarter 2005 10-Q

Item 1. Financial Statements

BB&T CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited)
(Dollars in thousands, except per share data)

	September 30,			December 31,
	2005			2004


Assets
Cash and due from banks	$	1,942,658		$	1,782,323
Interest-bearing deposits with banks		379,423			1,003,125
Federal funds sold, securities purchased under resale agreements
and other earning assets		330,055			240,387
Trading securities at fair value		433,652			334,256
Securities available for sale at fair value		19,817,145			18,838,196
Securities held to maturity at amortized cost (fair value $125 at December 31, 2004)		--			125
Loans held for sale		659,286			613,476
Loans and leases, net of unearned income of $2,490,727 at September 30, 2005 and
$2,540,201 at December 31, 2004		73,012,559			67,549,125
Allowance for loan and lease losses		(817,777	)		(804,932	)

Loans and leases, net		72,194,782			66,744,193

Premises and equipment, net of accumulated depreciation		1,269,224			1,283,546
Goodwill		4,237,451			4,124,241
Core deposit and other intangible assets		503,686			513,539
Other assets		5,312,791			5,031,234

Total assets	$	107,080,153		$	100,508,641



Liabilities and Shareholders' Equity
Deposits:
Noninterest-bearing deposits	$	13,499,106		$	12,246,248
Savings and interest checking		4,443,177			4,490,214
Money rate savings		23,655,727			23,427,797
Certificates of deposit and other time deposits		31,582,264			27,535,078

Total deposits		73,180,274			67,699,337

Federal funds purchased, securities sold under repurchase agreements
and short-term borrowed funds		6,533,455			6,687,872
Long-term debt		12,376,759			11,419,624
Accounts payable and other liabilities		3,793,747			3,827,334

Total liabilities		95,884,235			89,634,167



Commitments and contingencies (Note 6)
Shareholders' equity:
Preferred stock, $5 par, 5,000,000 shares authorized, none issued or
outstanding at September 30, 2005 or at December 31, 2004		--			--
Common stock, $5 par, 1,000,000,000 shares authorized;
548,051,351 issued and outstanding at September 30, 2005, and
550,406,287 issued and outstanding at December 31, 2004		2,740,257			2,752,032
Additional paid-in capital		3,023,116			3,121,716
Retained earnings		5,731,162			5,112,034
Unvested restricted stock		(12,061	)		(107	)
Accumulated other comprehensive loss, net of deferred income
taxes of $(168,202) at September 30, 2005, and $(66,662) at December 31, 2004		(286,556	)		(111,201	)

Total shareholders' equity		11,195,918			10,874,474

Total liabilities and shareholders' equity	$	107,080,153		$	100,508,641

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

BB&T Corporation Page 2 Third Quarter 2005 10-Q

BB&T CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
(Dollars in thousands, except per share data)

	For the Three Months Ended						For the Nine Months Ended
	September 30,						September 30,

	2005			2004			2005			2004

Interest Income
Interest and fees on loans and leases	$	1,220,102		$	983,904		$	3,401,254		$	2,841,621
Interest and dividends on securities		204,016			172,091			589,971			509,701
Interest on short-term investments		6,331			2,943			15,400			7,519

Total interest income		1,430,449			1,158,938			4,006,625			3,358,841

Interest Expense
Interest on deposits		343,489			181,790			864,071			521,256
Interest on federal funds purchased, securities sold under
repurchase agreements and short-term borrowed funds		58,169			25,948			159,181			61,311
Interest on long-term debt		129,799			95,544			358,233			274,092

Total interest expense		531,457			303,282			1,381,485			856,659

Net Interest Income		898,992			855,656			2,625,140			2,502,182
Provision for credit losses		57,465			57,165			147,934			184,116

Net Interest Income After Provision for Credit Losses		841,527			798,491			2,477,206			2,318,066

Noninterest Income
Service charges on deposits		141,072			135,521			401,010			389,729
Mortgage banking income		35,840			22,061			78,400			83,136
Trust revenue		36,552			28,862			103,681			90,366
Investment banking and brokerage fees and commissions		70,036			59,834			219,965			200,056
Insurance commissions		182,915			163,359			516,817			451,777
Bankcard fees and merchant discounts		29,229			26,649			82,403			74,779
Other nondeposit fees and commissions		67,979			56,125			186,745			159,094
Securities gains, net		193			6,590			194			6,081
Other income		41,304			33,828			117,445			116,074

Total noninterest income		605,120			532,829			1,706,660			1,571,092

Noninterest Expense
Personnel expense		451,260			404,999			1,317,106			1,248,261
Occupancy and equipment expense		105,656			104,469			359,480			308,044
Amortization of intangibles		26,540			24,280			83,253			77,006
Professional services		23,278			18,226			62,161			56,982
Loss on early extinguishment of debt		--			--			2,943			--
Merger-related and restructuring (gains) charges		(1,824	)		(3,059	)		(4,785	)		7,382
Other expense		181,566			161,493			528,312			487,349

Total noninterest expense		786,476			710,408			2,348,470			2,185,024

Earnings
Income before income taxes		660,171			620,912			1,835,396			1,704,134
Provision for income taxes		218,165			208,027			611,201			562,643

Net income	$	442,006		$	412,885		$	1,224,195		$	1,141,491



Per Common Share
Net income:
Basic	$	.81		$	.75		$	2.23		$	2.07



Diluted	$	.80		$	.74		$	2.22		$	2.05



Cash dividends paid	$	.38		$	.35		$	1.08		$	.99



Weighted Average Shares Outstanding
Basic		547,467,864			553,944,042			547,939,700			551,529,609



Diluted		552,058,757			558,576,819			552,313,670			555,547,611

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

BB&T Corporation Page 3 Third Quarter 2005 10-Q

BB&T CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
For the Nine Months Ended September 30, 2005 and 2004
(Unaudited)
(Dollars in thousands)

													Accumulated
	Shares of						Additional			Retained			Other			Total
	Common			Common			Paid-In			Earnings			Comprehensive			Shareholders'
	Stock			Stock			Capital			and Other (1)			Income (Loss)			Equity

Balance, January 1, 2004		541,942,987		$	2,709,715		$	2,893,812		$	4,309,325		$	21,879		$	9,934,731
Add (Deduct):
Comprehensive income (loss):
Net income		--			--			--			1,141,491			--			1,141,491
Unrealized holding gains (losses) arising during the period
on securities available for sale, net of tax of $(29,733)		--			--			--			--			(55,798	)		(55,798	)
Reclassification adjustment for losses (gains)
on securities available for sale included in net
income, net of tax of $(2,372)		--			--			--			--			(3,709	)		(3,709	)

Change in unrealized gains (losses) on securities, net of tax		--			--			--			--			(59,507	)		(59,507	)
Change in unrecognized gains (losses) on cash flow hedges,
net of tax of $(18,400)														(28,202	)		(28,202	)
Change in minimum pension liability, net of tax of $(1,625)		--			--			--			--			(3,019	)		(3,019	)

Total comprehensive income (loss)		--			--			--			1,141,491			(90,728	)		1,050,763

Common stock issued:
In purchase acquisitions		15,681,357			78,407			517,284			--			--			595,691
In connection with stock option exercises
and other employee benefits, net of cancellations		2,389,164			11,946			38,877			--			--			50,823
Redemption of common stock		(7,525,500	)		(37,628	)		(247,411	)		--			--			(285,039	)
Cash dividends declared on common stock, $1.02 per share		--			--			--			(563,056	)		--			(563,056	)
Other, net		--			--			10,832			136			--			10,968

Balance, September 30, 2004		552,488,008		$	2,762,440		$	3,213,394		$	4,887,896		$	(68,849	)	$	10,794,881




Balance, January 1, 2005		550,406,287		$	2,752,032		$	3,121,716		$	5,111,927		$	(111,201	)	$	10,874,474
Add (Deduct):
Comprehensive income (loss):
Net income		--			--			--			1,224,195			--			1,224,195
Unrealized holding gains (losses) arising during the
period on securities available for sale, net of tax of
$ (103,867)		--			--			--			--			(178,894	)		(178,894	)
Reclassification adjustment for losses (gains)
on securities available for sale included in net
income, net of tax of $128		--			--			--			--			(322	)		(322	)

Change in unrealized gains (losses) on securities, net of tax		--			--			--			--			(179,216	)		(179,216	)
Change in unrecognized gains (losses) on cash flow hedges,
net of tax of $3,771		--			--			--			--			5,999			5,999
Change in minimum pension liability, net of tax of $(1,572)		--			--			--			--			(2,138	)		(2,138	)

Total comprehensive income (loss)		--			--			--			1,224,195			(175,355	)		1,048,840

Common stock issued:
In purchase acquisitions		646,489			3,232			22,068			--			--			25,300
In connection with stock option exercises
and other employee benefits, net of cancellations		2,498,575			12,493			53,120			(12,176	)		--			53,437
Redemption of common stock		(5,500,000	)		(27,500	)		(185,855	)		--			--			(213,355	)
Cash dividends declared on common stock, $1.11 per share		--			--			--			(605,067	)		--			(605,067	)
Other, net		--			--			12,067			222			--			12,289

Balance, September 30, 2005		548,051,351		$	2,740,257		$	3,023,116		$	5,719,101		$	(286,556	)	$	11,195,918

(1)

Other includes unvested restricted stock.

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

BB&T Corporation Page 4 Third Quarter 2005 10-Q

BB&T CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(Dollars in thousands)

	For the Nine Months Ended
	September 30,

	2005			2004

Cash Flows From Operating Activities:
Net income	$	1,224,195		$	1,141,491
Adjustments to reconcile net income to net cash provided by operating activities:
Provision for credit losses		147,934			184,116
Depreciation		147,086			120,789
Amortization of intangibles		83,253			77,006
Amortization of purchase accounting mark-to-market adjustments		22,035			20,329
Discount accretion and premium amortization on long-term debt, net		84,827			77,171
Discount accretion and premium amortization on securities, net		32,776			39,939
Net (increase) decrease in trading account securities		(99,396	)		360,699
Gain on sales of securities, net		(194	)		(6,081	)
Gain on sales of loans held for sale, net		(57,614	)		(50,337	)
Gain on disposals of premises and equipment, net		(859	)		(1,233	)
Proceeds from sales of loans held for sale		3,849,056			4,206,517
Purchases of loans held for sale		(570,007	)		(831,753	)
Origination of loans held for sale, net of principal collected		(3,267,245	)		(3,176,130	)
Tax benefit from exercise of stock options		11,966			10,832
(Decrease) increase in other assets, net		(289,693	)		49,737
Increase in accounts payable and other liabilities, net		4,900			357,889
Other, net		(10,907	)		(144	)

Net cash provided by operating activities		1,312,113			2,580,837


Cash Flows From Investing Activities:
Proceeds from sales of securities available for sale		1,332,590			1,173,586
Proceeds from maturities, calls and paydowns of securities available for sale		2,423,622			3,209,699
Purchases of securities available for sale		(5,050,643	)		(5,503,104	)
Proceeds from maturities, calls and paydowns of securities held to maturity		125			59,997
Leases made to customers		(188,199	)		(183,784	)
Principal collected on leases		134,309			119,129
Loan originations, net of principal collected		(4,871,438	)		(3,995,071	)
Purchases of loans		(735,516	)		(127,064	)
Net cash (paid) acquired in business combinations		(128,461	)		10,680
Purchases and originations of mortgage servicing rights		(84,150	)		(66,900	)
Proceeds from disposals of premises and equipment		21,383			45,347
Purchases of premises and equipment		(135,846	)		(211,486	)
Proceeds from sales of foreclosed property		50,557			50,567
Proceeds from sales of other real estate held for development or sale		11,087			29,492

Net cash used in investing activities		(7,220,580	)		(5,388,912	)


Cash Flows From Financing Activities:
Net increase in deposits		5,485,403			3,868,261
Net decrease in federal funds purchased, securities sold under repurchase agreements
and short-term borrowed funds		(154,417	)		(953,454	)
Proceeds from issuance of long-term debt		1,842,533			2,697,760
Repayment of long-term debt		(918,870	)		(2,503,921	)
Net proceeds from common stock issued		53,437			50,823
Redemption of common stock		(213,355	)		(285,039	)
Cash dividends paid on common stock		(592,654	)		(545,616	)

Net cash provided by financing activities		5,502,077			2,328,814


Net Decrease in Cash and Cash Equivalents		(406,390	)		(479,261	)
Cash and Cash Equivalents at Beginning of Period		3,025,835			2,821,967

Cash and Cash Equivalents at End of Period	$	2,619,445		$	2,342,706





Supplemental Disclosure of Cash Flow Information:

Cash paid during the period for:
Interest	$	1,302,282		$	835,600
Income taxes		618,969			154,190
Noncash investing and financing activities:
Transfer of loans to foreclosed property		42,047			60,473
Transfer of fixed assets to other real estate owned		7,628			6,199
Securitization of mortgage loans		--			999,699
Common stock issued in purchase accounting transactions		25,300			595,691

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

Back to Index

BB&T Corporation Page 5 Third Quarter 2005 10-Q

BB&T CORPORATION AND SUBSIDIARIESNOTES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2005
(Unaudited)

NOTE 1. Basis of Presentation

General

In the opinion of management, the accompanying unaudited consolidated balance sheets, consolidated statements of income, consolidated statements of changes in shareholders’ equity, and consolidated statements of cash flows of BB&T Corporation and subsidiaries (referred to herein as “BB&T”, “the Corporation” or “the Company”), present fairly, in all material respects, BB&T’s financial position at September 30, 2005 and December 31, 2004; BB&T’s results of operations for the three months and nine months ended September, 2005 and 2004; and BB&T’s cash flows for the nine months ended September 30, 2005 and 2004. In the opinion of management, all adjustments necessary to fairly present the consolidated financial position and consolidated results of operations have been made.

During the second quarter of 2005, BB&T recorded an adjustment to correct the accounting for property and equipment leases to reflect rent expense on leases with escalating payments on a straight-line basis and to depreciate certain leasehold improvements over the appropriate term. The cumulative impact of the adjustment increased occupancy and equipment expense by $44.0 million, increased other income by $1.0 million, and increased goodwill by $5.4 million, resulting in a net pretax impact of $43.0 million, or a net after-tax impact of $26.6 million. This adjustment results in differences in the timing of expense and revenue recognition and had no impact on the Company’s consolidated cash flows. In addition, the adjustment was not material to any prior periods or to BB&T’s consolidated financial position or projected annual consolidated results of operations. All other adjustments during the first nine months of 2005 were of a normal recurring nature.

These consolidated financial statements and notes are presented in accordance with the instructions for Form 10-Q. The information contained in the footnotes included in BB&T’s 2004 Annual Report on Form 10-K should be referred to in connection with these unaudited interim consolidated financial statements.

Nature of Operations

BB&T is a financial holding company headquartered in Winston-Salem, North Carolina. BB&T conducts its operations primarily through its subsidiary banks, which have branches in North Carolina, South Carolina, Virginia, Maryland, Georgia, West Virginia, Tennessee, Kentucky, Florida, Alabama, Indiana and Washington, D.C. BB&T’s subsidiary banks provide a wide range of banking services to individuals and businesses. BB&T’s subsidiary banks offer a variety of loans to businesses and consumers, including mortgage loans. Such loans are made primarily to individuals residing in the market areas described above or to businesses located within BB&T’s geographic footprint. BB&T’s subsidiary banks also market a wide range of deposit services to individuals and businesses. BB&T’s subsidiary banks offer, either directly, or through their subsidiaries, lease financing to businesses and municipal governments; 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; and trust services. The direct nonbank subsidiaries of BB&T provide a variety of financial services including automobile lending, equipment financing, factoring, full-service securities brokerage, payroll processing, asset management and capital markets services.

BB&T Corporation Page 6 Third Quarter 2005 10-Q

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 or over which BB&T exercises control. In consolidation, all significant intercompany accounts and transactions have been eliminated. The results of operations of companies acquired in transactions accounted for as purchases are included only from the dates of acquisition. All material wholly-owned and majority-owned subsidiaries are consolidated unless accounting principles generally accepted in the United States of America require otherwise.

BB&T evaluates variable interests in entities for which voting interests are not an effective means of identifying controlling financial interests. Variable interests are those in which the value of the interest changes with the fair value of the net assets of the entity exclusive of variable interests. If the results of the evaluation indicate the existence of a primary beneficiary and the entity does not effectively disperse risks among the parties involved, that primary beneficiary is required to consolidate the entity. Likewise, if the evaluation indicates that the requirements for consolidation are not met and the entity has previously been consolidated, then the entity would be deconsolidated.

BB&T has variable interests in certain entities including affordable housing partnership interests, historic tax credit partnerships, other partnership interests and trusts that have issued capital securities, none of which were required to be consolidated.

BB&T generally accounts for unconsolidated partnership 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 entities, small business investment companies 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 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 on the Consolidated Statements of Income. BB&T periodically evaluates these investments for impairment.

BB&T Corporation Page 7 Third Quarter 2005 10-Q

Reclassifications

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

Use of Estimates in the Preparation of Financial Statements

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America 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 relate to the determination of the allowance for loan and lease losses and the reserve for unfunded lending commitments, valuation of mortgage servicing rights, valuation of goodwill, intangible assets and other purchase accounting related adjustments, benefit plan obligations and expenses, and tax assets, liabilities and expenses.

Stock-Based Compensation

BB&T maintains various stock-based compensation plans. These plans provide for the granting of stock options (incentive and nonqualified), stock appreciation rights, restricted stock, performance units and performance shares to selected BB&T employees and directors. All of BB&T’s stock-based compensation plans, except for plans assumed in connection with the First Virginia Banks, Inc. merger, have been presented to, and approved by BB&T’s shareholders. As permitted by Statement of Financial Accounting Standards (“SFAS”) No. 123, “Accounting for Stock-Based Compensation” (“SFAS No. 123”), BB&T currently accounts for share-based payments to employees using the intrinsic value method prescribed by Accounting Principles Board Opinion No. 25 (“APB 25”), “Accounting for Stock Issued to Employees,” and related interpretations. As a result, no compensation cost has been recognized for any of the periods presented, except with respect to restricted stock awards.

In December 2004, the FASB issued SFAS No. 123 (revised 2004), "Share-Based Payment" ("SFAS No. 123(R)"), which is a revision of SFAS No. 123. SFAS No. 123(R) supersedes APB 25 and amends SFAS No. 95, "Statement of Cash Flows." Generally, the approach in SFAS No. 123(R) is similar to the approach described in SFAS No. 123. However, SFAS No. 123(R) requires all share-based payments to employees, including grants of employee stock options, to be expensed based on their fair values.

BB&T plans to adopt SFAS No. 123(R) on January 1, 2006, using the modified-prospective method, which requires the recognition of compensation costs beginning with the effective date (a) based on the requirements of SFAS No. 123(R) for all share-based payments granted after the effective date and (b) based on the requirements of SFAS No. 123 for all awards granted to employees prior to the effective date of SFAS No. 123(R) that remain unvested on the effective date.

BB&T Corporation Page 8 Third Quarter 2005 10-Q

The adoption of the fair value method in SFAS No. 123(R) will have an impact on BB&T’s result of operations, although it will have no impact on BB&T’s overall financial position. The impact of adoption of SFAS No. 123(R) on BB&T’s result of operations cannot be predicted at this time because it will depend on levels of share-based payments granted in the future. Additionally, BB&T’s stock option grants contain a provision that accelerates vesting of options for holders that retire and have met retirement eligibility requirements. Currently, as part of the pro forma disclosures required by SFAS No. 123, BB&T reports a pro forma expense for the unrecognized compensation cost in the period that the accelerated vesting occurs. However, upon adoption of SFAS No. 123(R), BB&T will recognize compensation expense based on retirement eligibility dates for all options granted after the adoption of SFAS No. 123(R) that contain an accelerated vesting provision. SFAS No. 123(R) also requires the benefits of tax deductions in excess of recognized compensation cost to be reported as a financing cash flow, rather than as an operating cash flow. This requirement will reduce net operating cash flows and increase net financing cash flows in periods after adoption. While BB&T cannot estimate what those amounts will be in the future (because they depend on, among other things, when employees exercise stock options), the amounts of operating cash flows recognized for such tax deductions for the first nine months of 2005 and 2004, were $12.0 million and $10.8 million, respectively.

The following table presents BB&T’s net income, basic earnings per share and diluted earnings per share as reported, and pro forma net income and pro forma earnings per share assuming compensation cost for BB&T’s stock option plans had been determined based on the fair value at the grant dates for awards under those plans granted after December 31, 1994, consistent with the method prescribed by SFAS No. 123.


	For the Three Months Ended						For the Nine Months Ended
	September 30,						September 30,

	2005			2004			2005			2004

	(Dollars in thousands, except per share data)
Net income:
Net income as reported	$	442,006		$	412,885		$	1,224,195		$	1,141,491
Add: Stock-based compensation expense
included in reported net income, net of tax		79			92			135			334
Deduct: Total stock-based employee
compensation expense determined under
fair value based method for all awards,
net of tax		(3,581	)		(4,183	)		(14,221	)		(15,038	)

Pro forma net income	$	438,504		$	408,794		$	1,210,109		$	1,126,787



Basic EPS:
As reported	$	.81		$	.75		$	2.23		$	2.07
Pro forma		.80			.74			2.21			2.04
Diluted EPS:
As reported		.80			.74			2.22			2.05
Pro forma		.80			.73			2.19			2.03

BB&T Corporation Page 9 Third Quarter 2005 10-Q

The fair value of each option grant was estimated as of the date of grant using the Black-Scholes option-pricing model, with the following weighted-average assumptions used for grants in 2005 and 2004, respectively:

	For the Three Months Ended						For the Nine Months Ended
	September 30,						September 30,

	2005			2004			2005			2004

Weighted-average assumptions:
Risk-free interest rate		4.2	%		4.0	%		4.1	%		3.5	%
Dividend yield		3.5			3.0			3.5			3.0
Volatility factor		20.0			27.0			20.0			27.0
Expected life		6.5	yrs		6.6	yrs		6.5	yrs		6.0	yrs
Fair value of options per share	$	7.22		$	9.83		$	6.51		$	8.24

Changes in Accounting Principles and Effects of New Accounting Pronouncements

In December 2003, the Accounting Standards Executive Committee of the American Institute of Certified Public Accountants issued Statement of Position 03-3, “Accounting for Certain Loans or Debt Securities Acquired in a Transfer” (“SOP 03-3”). SOP 03-3 addresses accounting for differences between contractual cash flows and cash flows expected to be collected from an investor’s initial investment in loans or debt securities (loans) acquired in a transfer if those differences are attributable, at least in part, to credit quality. It includes loans purchased by BB&T or acquired in business combinations. SOP 03-3 does not apply to loans originated by BB&T. BB&T adopted the provisions of SOP 03-3 effective January 1, 2005. The initial implementation had no effect on BB&T’s consolidated financial position or consolidated results of operations, but affects BB&T’s accounting for impaired loans purchased or acquired in business combinations.

In December 2004, the Financial Accounting Standards Board ("FASB") issued SFAS No. 153, "Exchanges of Nonmonetary Assets--an amendment of APB Opinion No. 29" ("SFAS No. 153"). SFAS No. 153 requires that exchanges of nonmonetary assets be accounted for at fair value unless the exchange lacks commercial substance. A nonmonetary exchange has commercial substance when the future cash flows of an entity are expected to change significantly as a result of the exchange. SFAS No. 153 also eliminates a provision in APB Opinion No. 29 that exempted nonmonetary exchanges of similar productive assets from fair value accounting. SFAS No. 153 is effective for nonmonetary asset exchanges occurring in periods beginning after June 15, 2005. Management currently does not anticipate that the effects of SFAS No. 153 will materially affect BB&T's consolidated financial position or consolidated results of operations.

In March 2005, the FASB issued FASB Interpretation No. 47, “Accounting for Conditional Asset Retirement Obligations” (“FIN 47”). This Interpretation clarifies that the term “conditional asset retirement obligation” as used in SFAS No. 143, “Accounting for Asset Retirement Obligations,” refers to a legal obligation to perform an asset retirement activity in which the timing and (or) method of settlement are conditional on a future event that may or may not be within the control of the entity. According to FIN 47, an entity is required to recognize a liability for the fair value of a conditional asset retirement obligation when incurred if the liability’s fair value can be reasonably estimated. The provisions of FIN 47 are effective for fiscal years ending after December 15, 2005. Management currently does not anticipate that the implementation of FIN 47 will materially affect BB&T’s consolidated financial position or consolidated results of operations.

BB&T Corporation Page 10 Third Quarter 2005 10-Q

In May 2005, the FASB issued SFAS No. 154, “Accounting Changes and Error Corrections,” (“SFAS No. 154”), which requires retrospective application for reporting a voluntary change in accounting principle, unless it is impracticable to do so. SFAS No. 154 provides guidance for determining whether retrospective application of a change in accounting principle is impracticable and also addresses the reporting of a correction of error by restating previously issued financial statements. SFAS No. 154 is effective for accounting changes and corrections of errors made in fiscal years beginning after December 15, 2005. Management does not believe the adoption of SFAS No. 154 will have a material effect on the Company’s results of operations or financial position.

In July 2005, the FASB issued Proposed FASB Staff Position (“FSP”) FAS 13-a “Accounting for a Change or Projected Change in the Timing of Cash Flows Relating to Income Taxes Generated by a Leveraged Lease”, which proposes to amend SFAS No. 13, “Accounting for Leases.” The proposed FSP would require recalculations of leveraged leases for changes that affect the timing of cash flows, even if the total amount of cash flows is not affected. If the FSP is finalized as currently proposed, it would require a one-time non-cash charge to be recorded as a cumulative effect of a change in accounting principle on December 31, 2005. The amount of the charge related to the previously recognized lease income, if any, would then be recognized into income over the remaining lives of the respective leases. While BB&T has entered into leveraged lease transactions in prior years that may require recalculations, any impact on BB&T’s consolidated financial position or consolidated results of operations cannot currently be predicted with certainty, because the final timing and provisions of the proposal have yet to be determined.

In July 2005, the FASB issued a Proposed Interpretation of SFAS No. 109 “Accounting for Income Taxes” entitled “Accounting for Uncertain Tax Positions”. The proposed Interpretation would clarify the criteria under which tax benefits could be recognized under SFAS No. 109. The initial proposed effective date for the Interpretation is December 31, 2005, with a cumulative effect of a change in accounting principle to be recorded upon adoption of the Interpretation. While BB&T is currently evaluating the potential impact of this proposed Interpretation, any impact on BB&T’s consolidated financial position or consolidated results of operations cannot currently be predicted with certainty, because the final timing and provisions of the proposal have yet to be determined.

BB&T Corporation Page 11 Third Quarter 2005 10-Q

NOTE 2. Business Combinations

The following table presents summary information with respect to significant mergers and acquisitions of financial institutions and other significant financial services companies completed by BB&T Corporation during 2004. There have been no significant mergers completed during the first nine months of 2005.

Summary of Significant Mergers and Acquisitions

									BB&T Common
							Total		Shares Issued
Date of			Total		Intangibles		Purchase		to Complete
Acquisition	Acquired Company	Headquarters	Assets		Recorded		Price		Transaction

April 14, 2004	Republic Bancshares Inc.	St. Petersburg, Fla.	$	2.9 billion	$	260.5 million	$	433.4 million (1)		6.5 million
February 1, 2004	McGriff, Seibels &
	Williams, Inc.	Birmingham, Al.		226.6 million		417.0 million		371.3 million (2)		8.2 million

(1)

Includes cash consideration totaling $171.1 million

(2)

Includes cash consideration at the time of acquisition and certain contingent consideration payments totaling $70.5 million

Insurance and Other Nonbank Acquisitions

During the first nine months of 2005, BB&T acquired four insurance businesses and three nonbank financial services companies, including the acquisition of a 70% ownership interest in Sterling Capital Management LLC, an investment management services company based in Charlotte, North Carolina. In conjunction with these transactions, BB&T issued approximately 638 thousand shares of common stock and paid approximately $134.6 million in cash. BB&T acquired eight insurance agencies and three nonbank financial service companies during 2004. In conjunction with these transactions, BB&T issued approximately 1.4 million shares of common stock and paid approximately $74.2 million in cash. BB&T also acquires client relationships, primarily from insurance companies. Such acquisitions have not been material to BB&T’s financial condition or results of operations.

Merger-Related and Restructuring Activities

BB&T has incurred certain expenses in connection with business combinations. The following table presents the components of merger-related and restructuring charges included in noninterest expenses. This table includes changes to previously recorded merger-related accruals and period expenses for merger-related items that must be expensed as incurred. Items that are required to be expensed as incurred include certain expenses associated with systems conversions, data processing, training, travel and other costs.

BB&T Corporation Page 12 Third Quarter 2005 10-Q

Summary of Merger-Related and Restructuring Charges (Gains)
(Dollars in thousands)

	For the Three Months						For the Nine Months
	Ended September 30,						Ended September 30,

	2005			2004			2005			2004


Severance and personnel-related items	$	(21	)	$	(237	)	$	(1,419	)	$	7,591
Occupancy and equipment		(1,584	)		(3,777	)		(3,338	)		(9,667	)
Systems conversions and related items		--			(278	)		3			524
Marketing and public relations		--			298			--			4,009
Other merger-related items		(219	)		935			(31	)		4,925

Total	$	(1,824	)	$	(3,059	)	$	(4,785	)	$	7,382

In conjunction with the consummation of an acquisition and completion of other requirements, BB&T typically accrues certain merger-related expenses related to estimated severance costs and other personnel-related costs, costs to terminate lease contracts, costs related to the disposal of duplicate facilities and equipment, costs to terminate data processing contracts and other costs associated with the acquisition. The following table presents a summary of BB&T's merger accrual activity for 2005.

	Merger Accrual Activity

	(Dollars in thousands)

					Merger-related
	Balance				and								Balance
	January 1,		Accrued at		restructuring								September 30,
	2005		acquisition		charges (gains)			Utilized			Other, net (1)		2005


Severance and personnel-related items	$	14,658	$	75	$	(1,419	)	$	(2,142	)	$	333	$	11,505
Occupancy and equipment		15,554		170		(3,338	)		(2,726	)		593		10,253
Systems conversions and related items		--		--		3			(3	)		--		--
Other merger-related items		4,284		1,390		(31	)		(2,508	)		294		3,429

Total	$	34,496	$	1,635	$	(4,785	)	$	(7,379	)	$	1,220	$	25,187

(1) Other, net is primarily composed of adjustments resulting from changes to original estimates of merger-related accruals.

NOTE 3. Securities

The amortized cost and approximate fair values of securities held to maturity and available for sale were as follows:

BB&T Corporation Page 13 Third Quarter 2005 10-Q

	September 30, 2005

							Estimated
	Amortized		Gross Unrealized				Fair

	Cost		Gains		Losses		Value

	(Dollars in thousands)
Securities available for sale:
U.S. Treasuries	$	119,045	$	4	$	1,761	$	117,288
U.S. government entities		11,333,001		1,208		340,471		10,993,738
Mortgage-backed securities		6,861,376		4,867		107,310		6,758,933
States and political subdivisions		681,993		18,353		1,269		699,077
Equity and other securities		1,244,180		15,019		11,090		1,248,109

Total securities available for sale	$	20,239,595	$	39,451	$	461,901	$	19,817,145

	December 31, 2004

							Estimated
	Amortized		Gross Unrealized				Fair

	Cost		Gains		Losses		Value

	(Dollars in thousands)
Securities held to maturity:
U.S. Treasuries	$	125	$	--	$	--	$	125

Total securities held to maturity		125		--		--		125

Securities available for sale:
U.S. Treasuries		122,183		1,009		737		122,455
U.S. government entities		12,817,387		16,756		194,078		12,640,065
Mortgage-backed securities		4,537,855		26,664		34,093		4,530,426
States and political subdivisions		754,093		31,241		955		784,379
Equity and other securities		746,168		17,761		3,058		760,871
Total securities available for sale		18,977,686		93,431		232,921		18,838,196

Total	$	18,977,811	$	93,431	$	232,921	$	18,838,321

BB&T evaluates each available-for-sale security in a loss position for other-than-temporary impairment. In its evaluation BB&T considers such factors as the length of time and the extent to which the market value has been below cost, the financial condition of the issuer, and BB&T’s ability and intent to hold the security until its market value recovers. BB&T has not recognized any other-than-temporary impairment related to securities.

The following table reflects the gross unrealized losses and fair values of BB&T’s investments at September 30, 2005, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position.

BB&T Corporation Page 14 Third Quarter 2005 10-Q

	Less than 12 months				12 months or more				Total


	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
	Value		Losses		Value		Losses		Value		Losses

	(Dollars in thousands)
Securities:
U.S. Treasuries	$	95,385	$	1,491	$	15,658	$	270	$	111,043	$	1,761
U.S. government entities		3,347,870		58,399		7,416,718		282,072		10,764,588		340,471
Mortgage-backed securities		4,939,989		67,878		1,363,086		39,432		6,303,075		107,310
States and political subdivisions		11,579		197		80,172		1,072		91,751		1,269
Equity and other securities		595,711		6,960		128,177		4,130		723,888		11,090

Total temporarily impaired securities	$	8,990,534	$	134,925	$	9,003,811	$	326,976	$	17,994,345	$	461,901

NOTE 4. Goodwill and Other Intangible Assets

The changes in the carrying amount of goodwill attributable to each of BB&T’s operating segments for the nine months ended September 30, 2005, and the year ended December 31, 2004, are as follows:

	Goodwill Activity by Operating Segment


											Investment
	Banking			Mortgage		Trust			Insurance		Banking and		Specialized
	Network			Banking		Services			Services		Brokerage		Lending		Total

	(Dollars in thousands)

Balance, December 31, 2003	$	3,212,517		$	7,459	$	27,330		$	269,252	$	70,255	$	29,713	$	3,616,526
Acquired goodwill, net		213,980			--		4,380			278,477		--		7,930		504,767
Adjustments to goodwill		(19,616	)		--		(369	)		21,385		894		654		2,948

Balance, December 31, 2004		3,406,881			7,459		31,341			569,114		71,149		38,297		4,124,241
Acquired goodwill, net		--			--		45,276			37,730		1,966		126		85,098
Adjustments to goodwill		1,967			--		8,096			15,364		2,031		654		28,112

Balance, September 30, 2005	$	3,408,848		$	7,459	$	84,713		$	622,208	$	75,146	$	39,077	$	4,237,451

The adjustments to goodwill recorded during the first nine months of 2005 include $23.2 million of contingent consideration paid to acquired companies subsequent to the date of acquisition based on the terms of the purchase agreements and $5.4 million related to the accounting for property and equipment leases of acquired companies. The adjustments to goodwill recorded during 2004 primarily reflect reallocations of purchase price subsequent to the dates of acquisition.

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

BB&T Corporation Page 15 Third Quarter 2005 10-Q

	Identifiable Intangible Assets

	As of September 30, 2005							As of December 31, 2004

	Gross					Net		Gross					Net
	Carrying		Accumulated			Carrying		Carrying		Accumulated			Carrying
	Amount		Amortization			Amount		Amount		Amortization			Amount

	(Dollars in thousands)

Identifiable intangible assets:
Core deposit intangibles	$	364,937	$	(173,165	)	$	191,772	$	364,937	$	(134,214	)	$	230,723
Other (1)		435,900		(123,986	)		311,914		362,500		(79,684	)		282,816

Totals	$	800,837	$	(297,151	)	$	503,686	$	727,437	$	(213,898	)	$	513,539

(1) Other amortizing identifiable intangibles are primarily composed of customer relationship intangibles.

The following table presents estimated amortization expense for the full year 2005 and each of the next four years:

Estimated Amortization Expense
of Identifiable Intangible Assets
(Dollars in thousands)

For the Year Ending December 31:
2005	$	111,041
2006		95,775
2007		83,556
2008		70,074
2009		56,627

BB&T Corporation Page 16 Third Quarter 2005 10-Q

NOTE 5. Long-Term Debt

Long-term debt is summarized as follows:

	September 30,		December 31,
	2005		2004

	(Dollars in thousands)
Parent Company
7.25% Subordinated Notes Due 2007	$	249,377	$	249,122
6.375% Subordinated Notes Due 2025 (1)		--		351,111
6.50% Subordinated Notes Due 2011 (2,4)		646,228		645,841
4.75% Subordinated Notes Due 2012 (2,4)		495,136		494,707
5.20% Subordinated Notes Due 2015 (2,4)		996,466		996,274
4.90% Subordinated Notes Due 2017 (2,4)		359,091		--
5.25% Subordinated Notes Due 2019 (2,4)		599,758		599,750

Branch Bank

Floating Rate Secured Borrowings Due 2007 (6)		1,500,000		1,500,000
Floating Rate Senior Notes Due 2007 (7)		499,864		499,806
Floating Rate Senior Notes Due 2008 (7)		499,825		--
4.875% Subordinated Notes Due 2013 (2,4)		249,183		249,099

Federal Home Loan Bank Advances to the Subsidiary Banks
Varying maturities to 2025 with interest rates from 1.00% to 8.50% (5)		5,650,181		5,572,685

Capitalized Leases
Varying maturities to 2028 with interest rates from 8.90% to 15.78%		1,961		1,966

Junior Subordinated Debt to Unconsolidated Trusts (3)		615,866		193,558

Other Long-Term Debt		2,618		2,952

Hedging Gains on Long-Term Debt		11,205		62,753


Total Long-Term Debt	$	12,376,759	$	11,419,624

(1)

These subordinated notes were exchanged by BB&T on June 30, 2005 for the 4.90% subordinated notes due 2017.

(2)

Subordinated notes that qualify under the risk-based capital guidelines as Tier 2 supplementary capital, subject to certain limitations.

(3)

Securities that qualify under the risk-based capital guidelines as Tier 1 capital, subject to certain limitations. At September 30, 2005, the interest rates ranged from 5.85% to 10.07%.

(4)

These fixed rate notes were swapped to floating rates based on LIBOR. At September 30, 2005, the effective interest rates ranged from 3.99% to 4.45%.

(5)

At September 30, 2005, the weighted average cost of these advances was 5.3% and the weighted average maturity was 10.9 years.

(6)

These borrowings are secured primarily by automobile loans and have variable rates based on LIBOR.

(7)

These notes pay interest at rates based on LIBOR. At September 30, 2005, the interest rates were 3.47%.

BB&T Corporation Page 17 Third Quarter 2005 10-Q

On June 30, 2005, BB&T exchanged $350 million of subordinated notes maturing in 2025 and bearing an interest rate of 6.375% for $400 million aggregate principal amount of subordinated global notes maturing in 2017 and bearing an interest rate of 4.90%. This exchange was accounted for in accordance with Emerging Issues Task Force 96-19, “Debtor’s Accounting for a Modification or Exchange of Debt Instruments” (“EITF 96-19”). The transaction gave rise to substantially similar debt as defined by EITF 96-19 and; therefore resulted in no immediate gain or loss. The financing costs relating to this exchange were deferred and will be amortized over the life of the $400 million subordinated global note offering.

In August 2005, BB&T Capital Trust I (“BBTCT”) issued $500 million of 5.85% Capital Securities. BBTCT, a statutory business trust created under the laws of the State of Delaware, was formed by BB&T for the sole purpose of issuing the Capital Securities and investing the proceeds thereof in 5.85% Junior Subordinated Debentures issued by BB&T. BB&T is the sole owner of the common securities of BBTCT and has made guarantees which, taken collectively, fully, irrevocably, and unconditionally guarantee, on a subordinated basis, all of BBTCT’s obligations under the Trust and Capital Securities. BBTCT’s sole asset is the Junior Subordinated Debentures issued by BB&T, which mature August 18, 2035, but are subject to early redemption (i) in whole or in part at any time at the option of BB&T pursuant to the optional redemption provisions of such security, or (ii) in whole, but not in part, under certain prescribed limited circumstances. The Capital Securities of BBTCT are subject to mandatory redemption in whole or in part, upon repayment of the Junior Subordinated Debentures at maturity or their earlier redemption.

NOTE 6. Contractual Obligations, Commitments, Contingent Liabilities, and Off-Balance Sheet Arrangements

BB&T’s significant commitments include certain investments in affordable housing and historic building rehabilitation projects throughout its market area. BB&T enters into such arrangements as a means of supporting local communities and recognizes tax credits relating to its investments. At September 30, 2005, BB&T’s investments in such projects totaled $237.5 million, which include outstanding commitments of $134.4 million. At December 31, 2004, BB&T’s investments in such projects totaled $257.7 million, which include outstanding commitments of $215.2 million. BB&T typically acts as a limited partner in these investments and does not have control over the operating or financial policies of the partnerships. BB&T’s subsidiary banks typically provide financing during the construction and development of the properties; however, permanent financing is generally obtained from independent third parties upon completion of a project. BB&T’s risk exposure relating to such commitments is generally limited to the amount of investments made.

Standby letters of credit and financial guarantees written are unconditional commitments issued by BB&T to guarantee the performance of a customer to a third party. These guarantees are primarily issued to support public and private borrowing arrangements, including commercial paper issuance, bond financing and similar transactions. The credit risk involved in the issuance of these guarantees is essentially the same as that involved in extending loans to clients and as such, the instruments are collateralized when necessary. As of September 30, 2005, BB&T had issued a total of $2.4 billion in standby letters of credit. The carrying amount of the liability for such guarantees was $8.6 million at September 30, 2005.

BB&T Corporation Page 18 Third Quarter 2005 10-Q

In the ordinary course of business, BB&T indemnifies its officers and directors to the fullest extent permitted by law against liabilities arising from litigation. BB&T also issues standard representations and warranties in underwriting agreements, merger and acquisition agreements, loan sales, brokerage activities and other similar arrangements. Counterparties in many of these indemnifications provide similar indemnifications to BB&T. Although these agreements often do not specify limitations, BB&T has not been required to act on any such indemnities or warranties and does not believe that any payments pursuant to them would materially change the financial condition or results of operations of BB&T.

Merger and acquisition agreements of businesses other than financial institutions occasionally include additional incentives to the acquired entities to offset the loss of future cash flows previously received through ownership positions. Typically, these incentives are based on the acquired entity’s contribution to BB&T’s earnings compared to agreed-upon amounts. When offered, these incentives are typically issued for terms of three to eight years. As certain provisions of these agreements do not specify dollar limitations, it is not possible to quantify the maximum exposure resulting from these agreements.

NOTE 7. Benefit Plans

BB&T provides various benefit plans to substantially all employees, including employees of acquired entities. Employees of acquired entities generally participate in existing BB&T plans after consummation of the business combinations. The plans of acquired institutions are typically merged into the BB&T plans after consummation of the mergers, and, under these circumstances, credit is usually given to these employees for years of service at the acquired institution for vesting and eligibility purposes. Please refer to BB&T’s Annual Report on Form 10-K for the year ended December 31, 2004, for descriptions and disclosures about the various benefit plans offered by BB&T.

The following table summarizes the components of net periodic benefit cost recognized for the three-month and nine-month periods ended September 30, 2005 and 2004, respectively:

BB&T Corporation Page 19 Third Quarter 2005 10-Q

	Pension Plans												Other Postretirement

	Qualified						Nonqualified						Benefit Plans

	For the						For the						For the
	Three Months ended						Three Months ended						Three Months ended
	September 30,						September 30,						September 30,

	2005			2004			2005			2004			2005			2004

	(Dollars in thousands)

Service cost	$	11,141		$	11,036		$	845		$	916		$	--		$	824
Interest cost		13,028			12,000			1,379			1,489			310			1,410
Estimated return on plan assets		(20,049	)		(19,262	)		--			--			--			--
Amortization of unrecognized
transition obligation		--			--			--			15			--			53
Amortization of prior service cost		(1,147	)		(1,147	)		(8	)		(1,146	)		(1,177	)		191
Amortization of net loss		2,155			(588	)		327			544			100			(199	)

Net periodic benefit cost (income)	$	5,128		$	2,039		$	2,543		$	1,818		$	(767	)	$	2,279




	Pension Plans												Other Postretirement

	Qualified						Nonqualified						Benefit Plans

	For the						For the						For the
	Nine Months ended						Nine Months ended						Nine Months ended
	September 30,						September 30,						September 30,

	2005			2004			2005			2004			2005			2004

	(Dollars in thousands)

Service cost	$	43,003		$	38,094		$	2,788		$	2,460		$	--		$	2,809
Interest cost		39,755			37,306			4,435			4,369			1,006			5,230
Estimated return on plan assets		(60,243	)		(53,210	)		--			--			--			--
Amortization of unrecognized
transition obligation		--			--			--			45			--			163
Amortization of prior service cost		(3,442	)		(3,443	)		(22	)		1,320			(3,777	)		575
Amortization of net loss		7,421			7,292			1,467			1,218			464			--

Net periodic benefit cost (income)	$	26,494		$	26,039		$	8,668		$	9,412		$	(2,307	)	$	8,777

Management elected to make a discretionary contribution of $30.0 million to the qualified pension plan in the first quarter of 2005. Management does not anticipate that any additional contributions will be made in 2005.

BB&T Corporation Page 20 Third Quarter 2005 10-Q

NOTE 8. Computation of Earnings per Share

BB&T’s basic and diluted earnings per share amounts for the three and nine month periods ended September 30, 2005 and 2004, respectively, were calculated as follows:

	For the Three Months				For the Nine Months
	Ended September 30,				Ended September 30,

	2005		2004		2005		2004

	(Dollars in thousands, except per share data)
Basic Earnings Per Share:
Weighted average number of common shares		547,467,864		553,944,042		547,939,700		551,529,609



Net income	$	442,006	$	412,885	$	1,224,195	$	1,141,491



Basic earnings per share	$	.81	$	.75	$	2.23	$	2.07



Diluted Earnings Per Share:
Weighted average number of common shares		547,467,864		553,944,042		547,939,700		551,529,609
Add:
Effect of dilutive stock options		4,590,893		4,632,777		4,373,970		4,018,002

Weighted average number of diluted common shares		552,058,757		558,576,819		552,313,670		555,547,611



Net income	$	442,006	$	412,885	$	1,224,195	$	1,141,491



Diluted earnings per share	$	.80	$	.74	$	2.22	$	2.05

For the quarters ended September 30, 2005 and 2004, respectively, antidilutive options to purchase 93 thousand shares and 94 thousand shares of common stock were outstanding. For the first nine months of 2005 and 2004, respectively, antidilutive options to purchase 108 thousand shares and 412 thousand shares of common stock were outstanding. Antidilutive options outstanding were not included in the computation of diluted earnings per share.

NOTE 9. Comprehensive Income (Loss)

The balances in accumulated other comprehensive loss for the periods indicated are shown in the following tables:

Accumulated Other Comprehensive Loss
September 30, 2005

	Before-Tax			Tax			After-Tax
	Amount			Benefit			Amount

	(Dollars in thousands)

Unrealized losses on securities available for sale	$	(422,448	)	$	(155,758	)	$	(266,690	)
Unrealized losses on cash flow hedges		(23,956	)		(9,247	)		(14,709	)
Minimum pension liability		(8,354	)		(3,197	)		(5,157	)

Total	$	(454,758	)	$	(168,202	)	$	(286,556	)

BB&T Corporation Page 21 Third Quarter 2005 10-Q

Accumulated Other Comprehensive Loss
December 31, 2004

	Before-Tax			Tax			After-Tax
	Amount			Benefit			Amount

	(Dollars in thousands)

Unrealized losses on securities available for sale	$	(139,493	)	$	(52,019	)	$	(87,474	)
Unrealized losses on cash flow hedges		(33,726	)		(13,018	)		(20,708	)
Minimum pension liability		(4,644	)		(1,625	)		(3,019	)

Total	$	(177,863	)	$	(66,662	)	$	(111,201	)

The following table summarizes total comprehensive income for the three and nine-month periods ended September 30, 2005 and 2004, respectively:

	For the Three Months Ended						For the Nine Months Ended
	September 30,						September 30,

	2005			2004			2005			2004

	(Dollars in thousands)
Comprehensive income:
Net income	$	442,006		$	412,885		$	1,224,195		$	1,141,491
Other comprehensive income:
Net unrealized holding (losses) gains on securities		(157,251	)		180,072			(179,216	)		(59,507	)
Net unrealized (losses) gains on cash flow hedges		(694	)		(6,491	)		5,999			(28,202	)
Net change in minimum pension liability		--			(1	)		(2,138	)		(3,019	)

Total comprehensive income	$	284,061		$	586,465		$	1,048,840		$	1,050,763

NOTE 10. Operating Segments

BB&T’s operations are divided into seven reportable business segments: the Banking Network, Mortgage Banking, Trust Services, Insurance Services, Specialized Lending, Investment Banking and Brokerage, and Treasury. These operating segments have been identified based on BB&T’s management reporting structure. The segments require unique technology and marketing strategies and offer different products and services. While BB&T is managed as an integrated organization, individual executive managers are held accountable for the operations of these business segments.

BB&T emphasizes revenue growth by focusing on client service, sales effectiveness and relationship management. The segment results contained herein are presented based on internal management accounting policies that were designed to support these strategic objectives. Unlike financial accounting, there is no comprehensive authoritative body of guidance for management accounting equivalent to generally accepted accounting principles. The performance of the segments is not comparable with BB&T’s consolidated results or with similar information presented by any other financial institution. Additionally, because of the interrelationships of the various segments, the information presented is not indicative of how the segments would perform if they operated as independent entities.

BB&T Corporation Page 22 Third Quarter 2005 10-Q

Please refer to BB&T’s Annual Report on Form 10-K for the year ended December 31, 2004, for a description of internal accounting policies and the basis of segmentation, including a description of the segments presented in the accompanying tables.

The following tables disclose selected financial information with respect to BB&T’s reportable business segments for the periods indicated:

BB&T Corporation Page 23 Third Quarter 2005 10-Q

BB&T Corporation
Reportable Segments
For the Three Months Ended September 30, 2005 and 2004


	Banking Network				Mortgage Banking						Trust Services						Insurance Services						Specialized Lending

	2005		2004		2005			2004			2005			2004			2005			2004			2005		2004

	(Dollars in thousands)

Net interest income (expense)	$	645,498	$	530,374	$	191,083		$	174,620		$	(789	)	$	(501	)	$	3,258		$	1,257		$	78,444	$	80,391
Net intersegment interest income (expense)		251,862		261,075		(129,689	)		(93,609	)		2,012			2,145			--			--			--		--

Total net interest income		897,360		791,449		61,394			81,011			1,223			1,644			3,258			1,257			78,444		80,391

Provision for loan and lease losses		64,161		60,898		2,472			2,228			--			--			--			--			26,107		27,404
Noninterest income		233,338		214,045		41,070			22,493			40,449			32,060			176,683			161,049			17,281		13,235
Intersegment noninterest income		107,430		87,504		--			--			--			--			--			--			--		--
Noninterest expense		311,193		314,680		13,554			11,521			32,165			24,490			140,042			114,681			36,640		35,022
Allocated corporate expenses		156,816		138,259		8,890			4,828			4,208			2,637			7,092			4,798			4,475		4,313

Income before income taxes		705,958		579,161		77,548			84,927			5,299			6,577			32,807			42,827			28,503		26,887
Income tax provision (benefit)		233,256		191,686		25,694			28,112			1,981			2,250			12,788			16,784			9,124		7,943

Segment net income (loss)	$	472,702	$	387,475	$	51,854		$	56,815		$	3,318		$	4,327		$	20,019		$	26,043		$	19,379	$	18,944



Identifiable segment assets (period end)	$	55,167,379	$	51,236,515	$	14,350,595		$	12,103,231		$	214,836		$	102,234		$	1,976,874		$	1,676,502		$	3,098,746	$	2,460,591



	Investment Banking										All Other						Intersegment
	and Brokerage				Treasury						Segments (1)						Eliminations						Total Segments

	2005		2004		2005			2004			2005			2004			2005			2004			2005		2004

Net interest income (expense)	$	2,270	$	2,270	$	(3,632	)	$	74,208		$	47,301		$	44,178		$	--		$	--		$	963,433	$	906,797
Net intersegment interest income (expense)		--		--		22,527			11,273			--			--			(146,712	)		(180,884	)		--		--

Total net interest income		2,270		2,270		18,895			85,481			47,301			44,178			(146,712	)		(180,884	)		963,433		906,797

Provision for loan and lease losses		--		--		--			--			10,418			10,255			--			--			103,158		100,785
Noninterest income		80,217		64,979		17,263			21,254			35,220			32,419			--			--			641,521		561,534
Intersegment noninterest income		--		--		--			--			--			--			(107,430	)		(87,504	)		--		--
Noninterest expense		68,090		56,539		1,687			1,953			20,485			17,962			--			--			623,856		576,848
Allocated corporate expenses		3,603		3,500		149			420			4,851			3,751			--			--			190,084		162,506

Income before income taxes		10,794		7,210		34,322			104,362			46,767			44,629			(254,142	)		(268,388	)		687,856		628,192
Income tax provision (benefit)		3,891		2,738		6,134			29,184			19,416			15,595			(84,116	)		(88,181	)		228,168		206,111

Segment net income (loss)	$	6,903	$	4,472	$	28,188		$	75,178		$	27,351		$	29,034		$	(170,026	)	$	(180,207	)	$	459,688	$	422,081



Identifiable segment assets (period end)	$	1,032,240	$	951,513	$	21,786,283		$	22,701,265		$	4,973,089		$	4,354,605		$	--		$	--		$	102,600,042	$	95,586,456

(1)

Includes financial data from subsidiaries below the quantitative and qualitative thresholds requiring disclosure.

BB&T Corporation Page 24 Third Quarter 2005 10-Q

BB&T Corporation
Reportable Segments
For the Nine Months Ended September 30, 2005 and 2004


	Banking Network				Mortgage Banking						Trust Services						Insurance Services						Specialized Lending

	2005		2004		2005			2004			2005			2004			2005			2004			2005		2004

	(Dollars in thousands)

Net interest income (expense)	$	1,834,193	$	1,526,935	$	540,555		$	533,704		$	(2,336	)	$	(2,105	)	$	7,186		$	3,009		$	221,465	$	208,844
Net intersegment interest income (expense)		782,792		746,958		(348,191	)		(274,804	)		5,867			6,617			--			--			--		--

Total net interest income		2,616,985		2,273,893		192,364			258,900			3,531			4,512			7,186			3,009			221,465		208,844

Provision for loan and lease losses		181,908		185,788		6,955			6,664			--			--			--			--			73,319		69,052
Noninterest income		653,968		608,484		91,594			92,852			115,444			97,898			500,401			439,124			49,550		38,113
Intersegment noninterest income		296,557		272,583		--			--			--			--			--			--			--		--
Noninterest expense		949,503		951,245		38,084			35,013			93,488			74,557			406,641			339,809			104,482		97,178
Allocated corporate expenses		463,153		406,856		26,674			14,506			12,027			6,483			21,279			14,368			13,370		11,545

Income before income taxes		1,972,946		1,611,071		212,245			295,569			13,460			21,370			79,667			87,956			79,844		69,182
Income tax provision (benefit)		658,964		530,049		70,995			97,382			5,049			7,182			31,200			34,623			25,719		20,509

Segment net income (loss)	$	1,313,982	$	1,081,022	$	141,250		$	198,187		$	8,411		$	14,188		$	48,467		$	53,333		$	54,125	$	48,673



Identifiable segment assets (period end)	$	55,167,379	$	51,236,515	$	14,350,595		$	12,103,231		$	214,836		$	102,234		$	1,976,874		$	1,676,502		$	3,098,746	$	2,460,591



	Investment Banking										All Other						Intersegment
	and Brokerage				Treasury						Segments (1)						Eliminations						Total Segments

	2005		2004		2005			2004			2005			2004			2005			2004			2005		2004

Net interest income (expense)	$	6,781	$	5,605	$	(1,623	)	$	151,515		$	141,998		$	124,389		$	--		$	--		$	2,748,219	$	2,551,896
Net intersegment interest income (expense)		--		--		54,547			23,705			--			--			(495,015	)		(502,476	)		--		--

Total net interest income		6,781		5,605		52,924			175,220			141,998			124,389			(495,015	)		(502,476	)		2,748,219		2,551,896

Provision for loan and lease losses		--		--		--			--			27,130			39,915			--			--			289,312		301,419
Noninterest income		237,468		207,508		47,491			51,274			97,898			101,809			--			--			1,793,814		1,637,062
Intersegment noninterest income		--		--		--			--			--			--			(296,557	)		(272,583	)		--		--
Noninterest expense		206,971		176,405		4,650			4,616			60,906			49,072			--			--			1,864,725		1,727,895
Allocated corporate expenses		10,801		10,507		244			422			14,669			11,520			--			--			562,217		476,207

Income before income taxes		26,477		26,201		95,521			221,456			137,191			125,691			(791,572	)		(775,059	)		1,825,779		1,683,437
Income tax provision (benefit)		10,020		10,105		15,961			57,184			57,153			40,583			(264,647	)		(251,455	)		610,414		546,162

Segment net income (loss)	$	16,457	$	16,096	$	79,560		$	164,272		$	80,038		$	85,108		$	(526,925	)	$	(523,604	)	$	1,215,365	$	1,137,275



Identifiable segment assets (period end)	$	1,032,240	$	951,513	$	21,786,283		$	22,701,265		$	4,973,089		$	4,354,605		$	--		$	--		$	102,600,062	$	95,586,456

(1)

Includes financial data from subsidiaries below the quantitative and qualitative thresholds requiring disclosure.

BB&T Corporation Page 25 Third Quarter 2005 10-Q

The following table presents a reconciliation of segment results to consolidated results:

	For the Three Months Ended						For the Nine Months Ended
	September 30,						September 30,

	2005			2004			2005			2004

	(Dollars in thousands)						(Dollars in thousands)
Net Interest Income
Net interest income from segments	$	963,433		$	906,797		$	2,748,219		$	2,551,896
Other net interest income (1)		(8,213	)		42,364			168,296			227,465
Elimination of management accounting practices (2)		(134,464	)		(104,237	)		(365,438	)		(301,390	)
Other, net (3)		78,236			10,732			74,063			24,211

Consolidated net interest income	$	898,992		$	855,656		$	2,625,140		$	2,502,182




Net income
Net income from segments	$	459,688		$	422,081		$	1,215,365		$	1,137,275
Other net income (1)		48,190			40,506			204,663			167,819
Elimination of management accounting practices (2)		(28,284	)		(21,263	)		(65,232	)		(50,556	)
Other, net (3)		(37,588	)		(28,439	)		(130,601	)		(113,047	)

Consolidated net income	$	442,006		$	412,885		$	1,224,195		$	1,141,491




							September 30,			September 30,
							2005			2004

							(Dollars in thousands)
Total Assets
Total assets from segments							$	102,600,042		$	95,586,456
Other, net (1,3)								4,480,111			2,293,941

Consolidated total assets							$	107,080,153		$	97,880,397

(1)

Other net interest income, other net income and other, net, include amounts applicable to BB&T’s support functions that are not allocated to the reported segments.

(2)

BB&T’s reconciliation of total segment results to consolidated results requires the elimination of internal management accounting practices. These adjustments include the elimination of the funds transfer pricing credits and charges, the elimination of the economic provision for loan and lease losses and the elimination of allocated corporate expenses.

(3)

Amounts include intercompany eliminations to arrive at consolidated results.

Back to Index

Item 2. Management’s Discussion and Analysis of Financial Condidion and Results of Operations

Forward-Looking Statements

This report on Form 10-Q contains forward-looking statements with respect to the financial condition, results of operations and business of BB&T. These forward-looking statements involve certain risks and uncertainties and are based on the beliefs and assumptions of the management of BB&T, and on the information available to management at the time that these disclosures were prepared. Factors that may cause actual results to differ materially from those contemplated by such forward-looking statements include, among others, the following possibilities:

competitive pressures among depository and other financial institutions may increase significantly;

BB&T Corporation Page 26 Third Quarter 2005 10-Q

changes in the interest rate environment may reduce net interest margins and/or the volumes and values of loans made or held as well as the value of other financial assets held;

general economic or business conditions, either nationally or regionally, may be less favorable than expected, resulting in, among other things, a deterioration in credit quality and/or a reduced demand for credit or other services;

legislative or regulatory changes, including changes in accounting standards, may adversely affect the businesses in which BB&T is engaged;

adverse changes may occur in the securities markets;

competitors of BB&T may have greater financial resources and develop products that enable them to compete more successfully than BB&T;

costs or difficulties related to the integration of the businesses of BB&T and its merger partners may be greater than expected;

expected cost savings associated with completed mergers may not be fully realized or realized within the expected time frames; and

deposit attrition, customer loss or revenue loss following completed mergers may be greater than expected.

Regulatory Considerations

BB&T and its subsidiaries and affiliates are subject to numerous federal and state laws and regulations, including federal and state banking laws and regulations, and supervision and examination by other state and federal regulatory agencies, including the Securities and Exchange Commission, the National Association of Securities Dealers, Inc., and various state insurance and securities regulators. BB&T and its subsidiaries have from time to time received requests for information from regulatory authorities in various states, including state insurance commissions and state attorneys general, securities regulators and other regulatory authorities, concerning their business practices. Such requests are considered incidental to the normal conduct of business. Please refer to BB&T’s Annual Report on Form 10-K for the year ended December 31, 2004 for additional disclosures with respect to laws and regulations affecting the Company’s businesses.

Critical Accounting Policies

The accounting and reporting policies of BB&T Corporation and its subsidiaries are in accordance with accounting principles generally accepted in the United States of America and conform to general practices within the banking industry. BB&T’s financial position and results of operations are affected by management’s application of accounting policies, including estimates, assumptions and judgments made to arrive at the carrying value of assets and liabilities and amounts reported for revenues and expenses. Different assumptions in the application of these policies could result in material changes in BB&T’s consolidated financial position and/or consolidated results of operations and related disclosures. The more critical accounting and reporting policies include BB&T’s accounting for the allowance for loan and lease losses and reserve for unfunded lending commitments, valuation of mortgage servicing rights, intangible assets and other purchase accounting related adjustments associated with mergers and acquisitions, costs and benefit obligations associated with BB&T’s pension and postretirement benefit plans, and income taxes. Understanding BB&T’s accounting policies is fundamental to understanding BB&T’s consolidated financial position and consolidated results of operations. Accordingly, BB&T’s significant accounting policies and changes in accounting principles are discussed in detail in Note 1 in the “Notes to Consolidated Financial Statements” in BB&T’s 2004 Annual Report on Form 10-K filed with the Securities and Exchange Commission.

BB&T Corporation Page 27 Third Quarter 2005 10-Q

The following is a summary of BB&T’s critical accounting policies that are highly dependent on estimates, assumptions and judgments. These critical accounting policies are reviewed with the Audit Committee of BB&T’s Corporate Board of Directors on a periodic basis.

Allowance for Loan and Lease Losses and Reserve for Unfunded Lending Commitments

It is the policy of BB&T to maintain an allowance for loan and lease losses and a reserve for unfunded lending commitments that equals management’s best estimate of probable credit losses that are inherent in the portfolio at the balance sheet date. Estimates for loan and lease losses are determined by analyzing historical loan and lease losses, current trends in delinquencies and charge-offs, plans for problem loan and lease administration, the results of regulatory examinations, and changes in the size, composition and risk assessment of the loan and lease portfolio. Also included in management’s estimates for loan and lease losses are considerations with respect to the impact of current economic events, the outcome of which is uncertain. These events may include, but are not limited to, fluctuations in overall interest rates, political conditions, legislation that may directly or indirectly affect the banking industry and economic conditions affecting specific geographical areas and industries in which BB&T conducts business. The methodology used to determine an estimate for the reserve for unfunded lending commitments is inherently similar to the methodology utilized in calculating the allowance for loans and leases adjusted for factors specific to binding commitments, including the probability of funding and exposure at the time of funding.

Valuation of Mortgage Servicing Rights

BB&T has a significant mortgage loan servicing portfolio and related mortgage servicing rights. Mortgage servicing rights represent the present value of the future net servicing fees from servicing mortgage loans acquired or originated by BB&T. The methodology used to determine the fair value of mortgage servicing rights is subjective and requires the development of a number of assumptions, including anticipated prepayments of loan principal. The value of mortgage servicing rights is significantly affected by mortgage interest rates available in the marketplace, which influence mortgage loan prepayment speeds. In general, during periods of declining interest rates, the value of mortgage servicing assets declines due to increasing prepayments attributable to increased mortgage refinance activity. Conversely, during periods of rising interest rates, the value of servicing assets generally increases due to reduced refinance activity. BB&T amortizes mortgage servicing rights over the estimated period that servicing income is expected to be received based on projections of the amount and timing of estimated future cash flows. The amount and timing of servicing asset amortization is updated based on actual results and updated projections.

BB&T Corporation Page 28 Third Quarter 2005 10-Q

Intangible Assets

BB&T’s growth in business, profitability and market share over the past several years has been enhanced significantly by mergers and acquisitions. BB&T’s mergers and acquisitions are accounted for using the purchase method of accounting. Under the purchase method, BB&T is required to record the assets acquired, including identified intangible assets and liabilities assumed at their fair value, which often involves estimates based on third party valuations, such as appraisals, or internal valuations based on discounted cash flow analyses or other valuation techniques, which are inherently subjective. The amortization of identified intangible assets is based upon the estimated economic benefits to be received, which is also subjective. These estimates also include the establishment of various accruals and allowances based on planned facility dispositions and employee severance considerations, among other acquisition-related items. In addition, purchase acquisitions typically result in goodwill, which is subject to ongoing periodic impairment tests based on the fair value of net assets acquired compared to the carrying value of goodwill. The major assumptions used in the impairment testing process include the estimated future cash flows of each business unit and discount rates. Discount rates are unique to each business unit and are based upon the cost of capital specific to the industry in which the business unit operates.

Pension and Postretirement Benefit Obligations

BB&T offers various pension plans and postretirement benefit plans to employees. The calculation of the obligations and related expenses under these plans requires the use of actuarial valuation methods and assumptions. Actuarial valuations and assumptions used in the determination of future values of plan assets and liabilities are subject to management judgment and may differ significantly if different assumptions are used.

Income Taxes

The calculation of BB&T’s income tax provision is complex and requires the use of estimates and judgments. As part of the Company’s analysis and implementation of business strategies, consideration is given to the tax laws and regulations that apply to the specific facts and circumstances for any transaction under evaluation. This analysis includes the amount and timing of the realization of income tax liabilities or benefits. Management closely monitors tax developments in order to evaluate the effect they may have on the Company’s overall tax position and the estimates and judgments utilized in determining the income tax provision and records adjustments as necessary.

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BB&T Corporation Page 29 Third Quarter 2005 10-Q

EXECUTIVE SUMMARY

BB&T's total assets at September 30, 2005, were $107.1 billion, an increase of $6.6 billion, or 6.5%, from December 31, 2004. The asset categories that experienced the largest increases were loans and leases, including loans held for sale, and securities available for sale, which grew $5.5 billion, or 8.1%, and $978.9 million, or 5.2%, respectively, during the first nine months of 2005.

Total deposits at September 30, 2005, were $73.2 billion, an increase of $5.5 billion, or 8.1%, from December 31, 2004. Long-term debt increased $957.1 million, or 8.4%, during the first nine months of 2005, while shorter-term borrowing decreased $154.4 million or 2.3% for the same period. Total shareholders’ equity increased $321.4 million, or 3.0%, from December 31, 2004.

Consolidated net income for the third quarter of 2005 totaled $442.0 million, an increase of 7.1% compared to $412.9 million earned during the third quarter of 2004. On a diluted per share basis, earnings for the three months ended September 30, 2005, were $.80, compared to $.74 for the same period in 2004, an increase of 8.1%. BB&T’s results of operations for the third quarter of 2005 produced an annualized return on average assets of 1.65% and an annualized return on average shareholders’ equity of 15.69% compared to prior year ratios of 1.69% and 15.42%, respectively.

Consolidated net income for the first nine months of 2005 totaled $1.22 billion, an increase of 7.2% compared to $1.14 billion earned during the same period in 2004. On a diluted per share basis, earnings for the first nine months of 2005 and 2004 were $2.22 and $2.05, respectively, which represents an increase of 8.3%. Net income for the first nine months of 2005 included a one-time, non-cash adjustment related to property and equipment leases, which totaled $26.6 million after-tax, or $.05 per diluted share. BB&T’s results of operations for the first nine months of 2005 produced an annualized return on average assets of 1.58% and an annualized return on average shareholders’ equity of 14.82% compared to prior year ratios of 1.60% and 14.53%, respectively.

Results during the third quarter of 2005 reflect further improvements in several key drivers of BB&T’s profitability. Among these were strong loan growth, which accelerated across all loan categories during the quarter, solid performance from noninterest generating businesses and continued excellent asset quality.

Please refer to BB&T’s Annual Report on Form 10-K for the year ended December 31, 2004, for additional information with respect to BB&T’s recent accomplishments and significant challenges. The factors causing the fluctuations in the major balance sheet and income statement categories for the third quarter and first nine months of 2005 are further discussed in the following sections.

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BB&T Corporation Page 30 Third Quarter 2005 10-Q

ANALYSIS OF FINANCIAL CONDITION

Securities

Securities available for sale totaled $19.8 billion at September 30, 2005, an increase of $978.9 million, or 5.2%, compared with December 31, 2004. Securities available for sale had net unrealized losses, net of deferred income taxes, of $266.7 million and $87.5 million at September 30, 2005 and December 31, 2004, respectively. Trading securities totaled $433.7 million, up $99.4 million or 29.7% compared to the balance at December 31, 2004. BB&T’s trading portfolio can fluctuate significantly from period to period based on market conditions, which affect the timing of purchases and sales of securities.

Average total securities for the first nine months of 2005 amounted to $20.4 billion, an increase of $2.4 billion, or 13.1%, compared to the average balance during the first nine months of 2004. Average total securities for the third quarter of 2005 amounted to $20.8 billion, an increase of $2.4 billion, or 13.1%, compared to the average balance for the third quarter of 2004. The increase in securities was the result of a combination of factors including the securitization of approximately $1.0 billion in residential mortgage loans during the third quarter of 2004 and the investment of excess funds generated by deposit growth.

The annualized fully taxable equivalent ("FTE") yield on the average securities portfolio for the third quarter of 2005 was 4.18%, which represents an increase of 16 basis points compared to the annualized yield earned during the third quarter of 2004. For the first nine months of 2005, the annualized FTE yield was 4.13%, which represents an increase of five basis points compared to the annualized yield earned during the same period of 2004. The fluctuations in the annualized FTE yield on the average securities portfolio were primarily the result of changes in the overall composition of the securities portfolio with a larger concentration of higher-yielding mortgage-backed securities.

On September 30, 2005, BB&T held certain investments having continuous unrealized loss positions for more than 12 months totaling $327.0 million. The majority of these investments were in U.S. government sponsored entity securities and it is expected that the securities will not be settled at a price less than their amortized cost. Therefore, BB&T has not recognized any other-than-temporary impairment in connection with these investments.

Loans and Leases

BB&T emphasizes commercial lending to small and medium-sized businesses, consumer lending and mortgage lending with an overall goal of maximizing the profitability of the loan portfolio, maintaining strong asset quality and achieving an equal mix of consumer and commercial loans. For the first nine months of 2005, average total loans were $70.6 billion, an increase of $4.9 billion, or 7.5%, compared to the same period in 2004. During the first nine months of 2005, average commercial loans, including lease receivables, increased $2.8 billion, or 8.5%, compared to the same period in 2004 and comprised 50.2% of the loan portfolio compared to 49.7% for the first nine months of 2004. Average consumer loans, which include sales finance, revolving credit and direct retail, totaled $22.0 billion during the first nine months of 2005, an increase of $1.7 billion, or 8.1%, compared to the same period in 2004. During the first nine months of 2005, consumer loans comprised 31.2% of average loans compared to 31.0% for the same period of 2004. Average mortgage loans totaled $13.1 billion for the first nine months of 2005, an increase of 3.9% compared to the same period of 2004. Mortgage loans comprised the remaining 18.6% of the loan and lease portfolio for the first nine months of 2005 compared to 19.3% for the first nine months of 2004.

BB&T Corporation Page 31 Third Quarter 2005 10-Q

For the third quarter of 2005, average total loans were $72.7 billion, an increase of $5.8 billion, or 8.7%, compared to the same period in 2004. Average commercial loans and leases for the third quarter of 2005 increased $2.8 billion, or 8.5% compared to the same period in 2004 and comprised 50.0% of the loan portfolio compared to 50.1% for the third quarter of 2004. Average consumer loans totaled $22.5 billion during the third quarter of 2005, an increase of $1.6 billion, or 7.6%, compared to the same period in 2004 and comprised 31.0% of average loans compared to 31.3% for the third quarter of 2004. Average mortgage loans totaled $13.9 billion for the third quarter of 2005, an increase of $1.4 billion, or 11.3%, from the 2004 average and comprised the remaining 19.0% of the loan and lease portfolio for the third quarter of 2005 compared to 18.6% for the same period of 2004.

The slight fluctuations in the mix of the loan portfolio during the third quarter and first nine months of 2005 compared to the same periods of 2004 were primarily caused by the securitization of residential mortgage loans. In particular, during the third quarter of 2004, BB&T securitized $1.0 billion in residential mortgage loans and transferred the related mortgage-backed securities to the available-for-sale securities portfolio.

During the third quarter of 2005, BB&T's average loan portfolio grew 13.1% on an annualized basis compared to the second quarter of 2005. The acceleration in loan growth was spread across all major loan categories and included average commercial loans, which grew 10.5% on an annualized basis compared to the second quarter. Average consumer loans grew 10.4% on an annualized basis compared to the second quarter of 2005, with average direct retail loans and average revolving credit accounts increasing at annualized rates of 8.1% and 10.7%, respectively. Sales finance loans improved substantially compared to recent trends, increasing an annualized 15.6% on average compared to the second quarter of 2005. BB&T also benefited significantly from growth of average mortgage loans, which increased 24.8% on an annualized basis compared to the second quarter of 2005.

The annualized FTE yields on commercial, consumer and mortgage loans for the first nine months of 2005 were 6.40%, 7.24%, and 5.43%, respectively, resulting in an annualized yield on the total loan portfolio of 6.48%. The FTE yields on commercial, consumer and mortgage loans for the first nine months of 2004 were 5.31%, 6.77%, and 5.60%, respectively, resulting in an annualized yield on the total loan portfolio of 5.82%. This reflects an increase of 66 basis points in the annualized yield on the total loan portfolio during the first nine months of 2005 in comparison to 2004. For the third quarter of 2005, the annualized yield on the total loan portfolio was 6.71%, reflecting an increase of 81 basis points compared to the third quarter of 2004. The primary reason for the increases in yields for both the nine months and the third quarter was the higher interest rate environment that existed during the first nine months of 2005 compared to 2004. Starting in the second half of 2004, the Federal Reserve Board increased the intended Federal funds rate in response to a pick up in economic activity and concerns over inflation and as a result, the prime rate, which is the basis for pricing many commercial and consumer loans, increased to 6.75% at September 30, 2005 compared to 4.75% at the end of the third quarter of 2004. Therefore, the overall yield of the loan portfolio increased because commercial and consumer loans were repricing at higher rates. The rise in short-term interest rates, however, was not matched by a similar rise in long-term interest rates. Therefore, mortgage rates, which are influenced by long-term interest rates in the marketplace, remained relatively unchanged compared to last year. As a result, older higher-yielding mortgage loans, which matured or were refinanced, were replaced with lower-yielding mortgage loans, resulting in a 17 basis point decrease in the overall yield of the mortgage loan portfolio for the first nine months of 2005 compared to the same period in 2004.

BB&T Corporation Page 32 Third Quarter 2005 10-Q

Other Interest Earning Assets

Federal funds sold, securities purchased under resale agreements and other earning assets totaled $330.1 million at September 30, 2005, an increase of $89.7 million, or 37.3%, compared to December 31, 2004. Interest-bearing deposits with banks decreased $623.7 million, or 62.2%, compared to year-end 2004. These categories of earning assets are subject to large daily fluctuations based on the availability of these types of funds. The average yield on other interest earning assets was 2.98% for the first nine months of 2005 compared to 1.65% for the same period in 2004. For the third quarter of 2005, the average yield on other interest-earning assets was 3.16%, up from 2.05% in the third quarter last year. These higher yields were the result of the increase in the Federal funds target rate as previously discussed.

Goodwill and Other Assets

BB&T’s other noninterest-earning assets, excluding premises and equipment and noninterest-bearing cash and due from banks, increased $384.9 million from December 31, 2004, to September 30, 2005. The increase was due primarily to an increase in goodwill and other intangible assets of $103.4 million, which resulted from several insurance and nonbank acquisitions, net of amortization, as well as an increase in the cash surrender value of bank-owned life insurance of $64.4 million.

Other noninterest-earning assets also include commercial mortgage servicing rights totaling $16.6 million and residential mortgage servicing rights totaling $397.9 million, net of an allowance for impairment, which totaled $50.0 million at September 30, 2005. The carrying value of mortgage servicing rights increased $73.7 million compared to December 31, 2004 primarily as a result of a $56.6 million recapture of the valuation allowance.

BB&T Corporation Page 33 Third Quarter 2005 10-Q

Deposits

Client deposits generated through the BB&T branch network are the largest source of funds used to support asset growth. Deposits totaled $73.2 billion at September 30, 2005, an increase of $5.5 billion, or 8.1%, from December 31, 2004. Average deposits for the first nine months of 2005 increased $5.2 billion, or 8.1%, to $69.5 billion compared to the first nine months of 2004. The categories of deposits with the highest average rates of growth were noninterest-bearing deposits, which increased $1.3 billion, or 11.3%, and certificates of deposit and other time deposits, which increased $2.2 billion, or 8.5%. Money rate savings, including investor deposit accounts, increased $1.6 billion, or 7.2% compared to the same period of 2004.

For the third quarter of 2005, average deposits increased $6.8 billion, or 10.5%, compared to the third quarter of 2004. The categories of deposits with the highest average rates of growth were certificates of deposit and other time deposits, which increased $4.9 billion, or 18.9%, and noninterest-bearing deposits, which increased $1.3 billion, or 10.7%.

Average noninterest-bearing accounts comprised 18.3% of total average deposits for the first nine months of 2005, compared to 17.8% for the same period of 2004. This increase primarily resulted from a shift from savings and interest checking, which comprised 7.1% of total average deposits for the first nine months of 2005, compared to 7.5% for the same period of 2004. However, more recently there has been a shift from money rate savings accounts and savings and interest checking to certificates of deposits and other time deposits. The recent change in the deposit mix is the result of the bank decreasing its reliance on federal funds purchased and securities sold under repurchase agreements, and instead relying to a greater degree on wholesale certificate of deposit products. The decision to use wholesale certificates of deposit is primarily due to more attractive pricing of these types of funding sources.

The annualized average rate paid on total interest-bearing deposits during the first nine months of 2005 was 2.04%, an increase of 72 basis points compared to 2004. For the third quarter of 2005, the annualized average rate paid on total interest-bearing deposits was 2.31%, an increase of 95 basis points compared to the third quarter of 2004. These increases in the average rates paid resulted primarily from the higher interest rate environment that existed during 2005 compared to 2004, and competition in the pricing of deposit products.

Borrowings

While client deposits remain the primary source for funding loan originations and other balance sheet growth, management uses shorter-term borrowings as a supplementary funding source for loan growth. Shorter-term borrowings utilized by BB&T include Federal funds purchased, securities sold under repurchase agreements, master notes, U.S. Treasury tax and loan deposit notes, short-term bank notes, and short-term Federal Home Loan Bank advances. At September 30, 2005, shorter-term borrowings totaled $6.5 billion, a decrease of $154.4 million, or 2.3%, compared to December 31, 2004. For the third quarter of 2005, average shorter-term borrowed funds were $7.1 billion, a slight increase compared to the same period of 2004. For the nine months ended September 30, 2005, average shorter-term borrowed funds increased $705.1 million, or 10.4%, compared to the same period in 2004. The decrease in these funds compared to December 31, 2004 was primarily due to the decision to utilize wholesale certificate of deposit products rather than federal funds purchased and securities sold under repurchase agreements as previously discussed.

BB&T Corporation Page 34 Third Quarter 2005 10-Q

The average annualized rate paid on shorter-term borrowed funds was 2.85% for the first nine months of 2005, an increase of 164 basis points from the average rate of 1.21% paid in the comparable period of 2004. The average annualized rate paid on shorter-term borrowed funds was 3.24% for the third quarter of 2005, an increase of 177 basis points from the average rate of 1.47% paid in the comparable period of 2004. The higher rates paid on shorter-term borrowed funds mirror the increases in the Federal funds rate over the same time periods.

BB&T also utilizes long-term debt for a variety of funding needs, including the repurchase of common stock, and, to a lesser extent, regulatory capital. Long-term debt consists primarily of Federal Home Loan Bank (“FHLB”) advances to BB&T’s banking subsidiaries and corporate subordinated notes. Long-term debt totaled $12.4 billion at September 30, 2005, up $957.1 million, or 8.4%, from the balance at December 31, 2004, primarily due to the issuance of $500 million of capital securities by BB&T Corporation and $500 million of senior floating rate debt issued by Branch Banking and Trust Company during the third quarter of 2005. For the third quarter of 2005, average long-term debt totaled $12.1 billion, an increase of $1.4 billion, or 12.6%, compared to the third quarter of 2004. For the nine months ended September 30, 2005, average long-term borrowed funds were $11.7 billion, up $1.0 billion, or 9.5%, compared to the first nine months of 2004. The increases in average long-term debt were primarily caused by the issuances during the third quarter of 2005 described above and issuances of $500 million of senior floating-rate debt issued by Branch Banking and Trust Company in the third quarter of 2004 and $600 million of subordinated global notes issued by BB&T Corporation in the fourth quarter of 2004.

During the second quarter of 2005, BB&T redeemed $89.0 million of trust preferred securities. These trust preferred securities were assumed by BB&T through various acquisitions. The average interest rate paid on such securities was approximately 8.5%, which was significantly higher than BB&T’s current borrowing rates. BB&T recorded a $2.9 million loss on early extinguishment of debt in connection with the redemption, which is reflected in BB&T’s Consolidated Statements of Income as a category of noninterest expenses.

BB&T Corporation Page 35 Third Quarter 2005 10-Q

The average annualized rate paid on long-term debt for the third quarter of 2005 was 4.26%, an increase of 72 basis points compared to the third quarter of 2004. The average annualized rate paid on long-term borrowed funds was 4.09% for the first nine months of 2005, an increase of 66 basis points compared to the average rate of 3.43% paid during the first nine months of 2004. The increase in the cost of long-term funds resulted because most of BB&T’s long-term borrowings were either issued as floating rate instruments or BB&T elected to swap their long-term fixed rates to floating.

Asset Quality

During the last eight quarters, BB&T’s credit quality has steadily improved as demonstrated by successive quarterly declines in the level of nonperforming assets. Nonperforming assets, composed of foreclosed real estate, repossessions, nonaccrual loans and restructured loans, totaled $304.3 million at September 30, 2005, compared to $358.1 million at December 31, 2004. As a percentage of loans and leases plus foreclosed property, nonperforming assets were .41% at September 30, 2005, down from .52% at December 31, 2004. Loans 90 days or more past due and still accruing interest totaled $84.6 million at September 30, 2005, compared to $100.2 million at year-end 2004.

BB&T’s net charge-offs totaled $54.4 million for the third quarter and amounted to .30% of average loans and leases, on an annualized basis, compared to $56.6 million, or .34% of average loans and leases, on an annualized basis, in the corresponding period in 2004. Net charge-offs for the third quarter of 2005 declined compared to the prior year’s third quarter, but were up compared to the second quarter of 2005. For the nine months ended September 30, 2005 and 2004, net charge-offs totaled $145.9 million and $171.0 million, respectively, and represented .28% and .35%, respectively, of average loans and leases on an annualized basis.

The allowance for credit losses, which totaled $830.3 million and $828.3 million at September 30, 2005 and December 31, 2004, respectively, consists of the allowance for loan and lease losses, which is presented on the Consolidated Balance Sheets, and the reserve for unfunded lending commitments, which is included in other liabilities on the Consolidated Balance Sheets. The allowance for loan and lease losses totaled $817.8 million at September 30, 2005, compared to $804.9 million at December 31, 2004. This amounted to 1.11% of loans and leases outstanding at September 30, 2005, compared to 1.18% at year-end 2004. The reserve for unfunded lending commitments totaled $12.6 million and $23.4 million at September 30, 2005 and December 31, 2004, respectively. The relative decrease in the allowance for loan and lease losses as a percentage of outstanding loans resulted because of the improved credit quality as described above.

Asset quality statistics for the last five calendar quarters are presented in the accompanying tables.

BB&T Corporation Page 36 Third Quarter 2005 10-Q

ASSET QUALITY ANALYSIS
(Dollars in thousands)

	For the Three Months Ended

	9/30/05			6/30/05			3/31/05			12/31/04			9/30/04


Allowance For Credit Losses
Beginning balance	$	827,325		$	822,464		$	828,301		$	825,665		$	825,242
Allowance for acquired (sold) loans, net		--			--			--			1,795			(170	)
Provision for credit losses		57,465			49,424			41,045			65,153			57,165
Charge-offs
Commercial loans and leases		(19,414	)		(17,572	)		(12,892	)		(30,668	)		(23,858	)
Direct retail loans		(16,131	)		(12,368	)		(11,484	)		(13,149	)		(12,170	)
Sales finance loans		(22,517	)		(16,792	)		(21,689	)		(23,479	)		(22,225	)
Revolving credit loans		(13,179	)		(12,552	)		(12,693	)		(13,149	)		(12,383	)
Mortgage loans		(1,502	)		(1,728	)		(1,476	)		(1,352	)		(1,207	)

Total charge-offs		(72,743	)		(61,012	)		(60,234	)		(81,797	)		(71,843	)

Recoveries
Commercial loans and leases		8,863			6,626			4,043			7,788			6,210
Direct retail loans		2,381			2,714			2,399			2,566			2,090
Sales finance loans		3,973			4,333			4,275			4,559			4,317
Revolving credit loans		2,740			2,737			2,540			2,489			2,555
Mortgage loans		340			39			95			83			99

Total recoveries		18,297			16,449			13,352			17,485			15,271

Net charge-offs		(54,446	)		(44,563	)		(46,882	)		(64,312	)		(56,572	)

Ending balance	$	830,344		$	827,325		$	822,464		$	828,301		$	825,665



Nonperforming Assets
Nonaccrual loans and leases
Commercial loans and leases	$	111,954		$	115,367		$	127,220		$	143,420		$	173,303
Direct retail loans		46,668			44,672			47,194			46,187			48,792
Sales finance loans		20,463			17,237			17,306			14,670			15,484
Revolving credit loans		304			348			266			349			374
Mortgage loans		51,183			52,130			62,476			64,010			62,871

Total nonaccrual loans and leases		230,572			229,754			254,462			268,636			300,824

Foreclosed real estate		51,504			62,036			60,147			69,324			67,329
Other foreclosed property		21,692			16,550			18,199			19,579			20,821
Restructured loans		523			531			537			555			563

Total nonperforming assets	$	304,291		$	308,871		$	333,345		$	358,094		$	389,537



Loans 90 days or more past due
and still accruing
Commercial loans and leases	$	11,532		$	10,821		$	15,036		$	9,986		$	11,463
Direct retail loans		18,197			14,718			13,857			19,917			22,382
Sales finance loans		16,661			16,398			18,864			21,205			20,766
Revolving credit loans		4,840			3,886			4,067			4,837			4,797
Mortgage loans		33,385			33,494			31,432			44,225			40,397

Total loans 90 days or more past due
and still accruing	$	84,615		$	79,317		$	83,256		$	100,170		$	99,805

BB&T Corporation Page 37 Third Quarter 2005 10-Q

ASSET QUALITY RATIOS

	For the Three Months Ended

	9/30/05			6/30/05			3/31/05			12/31/04			9/30/04

Loans 90 days or more past due and still
accruing as a percentage of total loans
and leases		.11	%		.11	%		.12	%		.15	%		.15	%
Nonaccrual and restructured loans and leases
as a percentage of total loans and leases		.31			.32			.37			.39			.45
Total nonperforming assets as a percentage of:
Total assets		.28			.29			.33			.36			.40
Loans and leases plus foreclosed property		.41			.43			.48			.52			.58
Net charge-offs as a percentage of
average loans and leases		.30			.25			.28			.38			.34
Allowance for loan and lease losses as a
percentage of loans and leases		1.11			1.13			1.16			1.18			1.22
Allowance for loan and lease losses as a
percentage of loans and leases
held for investment		1.12			1.14			1.17			1.19			1.23
Ratio of allowance for loan and lease losses to:
Net charge-offs		3.79	x		4.53	x		4.22	x		3.15	x		3.63	x
Nonaccrual and restructured loans and leases		3.54			3.51			3.14			2.99			2.71

Note: All items referring to loans and leases include loans held for sale and are net of unearned income. Applicable ratios are annualized.

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ANALYSIS OF RESULTS OF OPERATIONS

Consolidated net income for the third quarter of 2005 totaled $442.0 million, an increase of $29.1 million, or 7.1%, compared to $412.9 million earned during the third quarter of 2004. On a diluted per share basis, earnings for the three months ended September 30, 2005 were $.80, compared to $.74 for the same period in 2004. BB&T’s results of operations for the third quarter of 2005 produced an annualized return on average assets of 1.65% and an annualized return on average shareholders’ equity of 15.69% compared to prior year ratios of 1.69% and 15.42%, respectively.

Consolidated net income for the first nine months of 2005 totaled $1.22 billion, an increase of 7.2% compared to $1.14 billion earned during the same period in 2004. On a diluted per share basis, earnings for the first nine months of 2005 and 2004 were $2.22 and $2.05, respectively, which represents an increase of 8.3%. Net income for the first nine months of 2005 included a one-time, non-cash adjustment related to property and equipment leases, which totaled $26.6 million after-tax, or $.05 per diluted share. BB&T’s results of operations for the first nine months ended September 30, 2005 produced an annualized return on average assets of 1.58% and an annualized return on average shareholders’ equity of 14.82% compared to prior year ratios of 1.60% and 14.53%, respectively.

BB&T Corporation Page 38 Third Quarter 2005 10-Q

The following table sets forth selected financial ratios for the last five calendar quarters:

ANNUALIZED
PROFITABILITY MEASURES

	2005									2004

	Third			Second			First			Fourth			Third
	Quarter			Quarter			Quarter			Quarter			Quarter

Return on average assets		1.65	%		1.50	%		1.60	%		1.68	%		1.69	%
Return on average shareholders' equity		15.69			14.04			14.70			15.21			15.42
Net interest margin (taxable equivalent)		3.88			3.92			3.95			3.97			4.07

Merger-Related and Restructuring Activities

Mergers and acquisitions have played an important role in the development of BB&T’s franchise. BB&T has been an active acquirer of financial institutions, insurance agencies and other nonbank fee income producing businesses for many years. BB&T recorded certain merger-related items and restructuring costs during both 2005 and 2004. During the third quarter of 2005, BB&T recorded $1.1 million in net after-tax gains primarily associated with the sale of duplicate facilities and the finalization of severance and other personnel-related liabilities associated with recent acquisitions. During the third quarter of 2004, BB&T recorded $2.0 million in net after-tax gains primarily associated with the sale of duplicate facilities, which were partially offset by charges primarily related to the acquisitions of First Virginia and Republic. For the nine months ended September 30, 2005 and 2004, BB&T recognized $3.0 million in net after-tax gains and $4.5 million in net after-tax charges, respectively, primarily due to the same reasons that affected the respective third quarters of 2005 and 2004. The above expenses are reflected in BB&T’s Consolidated Statements of Income as a category of noninterest expense.

Merger-related charges and expenses include personnel-related expenses such as staff relocation costs, severance benefits, early retirement packages and contract settlements. They also include furniture, equipment and occupancy costs related to department and branch consolidations as well as costs related to converting the data processing systems of the acquired companies to BB&T’s automation platform. Merger-related charges also include professional fees, advertising and asset write-offs incurred in connection with the mergers.

The following table presents the components of merger-related and restructuring charges included in noninterest expenses. This table includes changes to previously recorded merger-related accruals and period expenses for merger-related items that must be expensed as incurred. Items that are required to be expensed as incurred include certain expenses associated with systems conversions, data processing, training, travel and other costs.

BB&T Corporation Page 39 Third Quarter 2005 10-Q

Summary of Merger-Related and Restructuring Charges (Gains)
(Dollars in thousands)

	For the Three Months						For the Nine Months
	Ended September 30,						Ended September 30,

	2005			2004			2005			2004


Severance and personnel-related items	$	(21	)	$	(237	)	$	(1,419	)	$	7,591
Occupancy and equipment		(1,584	)		(3,777	)		(3,338	)		(9,667	)
Systems conversions and related items		--			(278	)		3			524
Marketing and public relations		--			298			--			4,009
Other merger-related items		(219	)		935			(31	)		4,925

Total	$	(1,824	)	$	(3,059	)	$	(4,785	)	$	7,382

Severance and personnel-related costs include severance, employee retention, payments related to change-in-control provisions of employment contracts, outplacement services and other benefits associated with employee termination, which typically occur in corporate support and data processing functions.

Occupancy and equipment charges or credits represent merger-related costs or gains associated with lease terminations, obsolete equipment write-offs and the sale of duplicate facilities and equipment. Credits may result when obsolete properties or equipment are sold for more than originally estimated. Systems conversions and related charges include expenses necessary to convert and combine the acquired branches and operations of merged companies. Marketing and public relations costs represent direct media advertising related to the acquisitions. The other merger-related charges are comprised of asset and supply inventory write-offs, litigation accruals and other similar charges.

In conjunction with the consummation of an acquisition and the completion of other requirements, BB&T typically accrues certain merger-related expenses related to estimated severance and other personnel costs, costs to terminate lease contracts, costs related to the disposal of duplicate facilities and equipment, costs to terminate data processing contracts and other costs associated with the acquisition. The following tables present a summary of activity with respect to BB&T’s merger and restructuring accruals, with the more significant merger (First Virginia) presented separately. These tables include costs reflected as expenses, as presented in the table above, and accruals recorded through purchase accounting adjustments.

BB&T Corporation Page 40 Third Quarter 2005 10-Q

First Virginia Banks, Inc

(Dollars in thousands)

		Merger-related
Balance		and			Balance
January 1,	Accrued at	restructuring			September 30,
2005	acquisition	charges (gains)	Utilized	Other, net (1)