Consolidated Balance Sheets
Consolidated Balance Sheets (USD $) | ||
In Millions | Jun. 30, 2009
| Dec. 31, 2008
|
Assets | ||
Cash and due from banks | $1,571 | $1,639 |
Interest-bearing deposits with banks | 416 | 751 |
Federal funds sold and securities purchased under resale agreements or similar arrangements | 247 | 350 |
Segregated cash due from banks | 267 | 379 |
Trading securities at fair value | 522 | 376 |
Securities available for sale at fair value | 31,033 | 32,843 |
Loans held for sale ($3,974 and $1,396 at fair value at June 30, 2009 and December 31, 2008, respectively) | 3,982 | 1,424 |
Loans and leases | 96,352 | 97,245 |
Allowance for loan and lease losses | (2,110) | (1,574) |
Loans and leases, net of allowance for loan and lease losses | 94,242 | 95,671 |
Premises and equipment | 1,577 | 1,580 |
Goodwill | 5,491 | 5,483 |
Core deposit and other intangible assets | 497 | 542 |
Residential mortgage servicing rights at fair value | 615 | 370 |
Other assets | 11,938 | 10,607 |
Total assets | 152,398 | 152,015 |
Liabilities and Shareholders' Equity | ||
Noninterest-bearing deposits | 16,054 | 13,649 |
Interest checking | 3,181 | 2,576 |
Other client deposits | 43,632 | 39,413 |
Client certificates of deposit | 25,472 | 27,937 |
Other interest-bearing deposits | 13,825 | 15,038 |
Total deposits | 102,164 | 98,613 |
Federal funds purchased, securities sold under repurchase agreements and short-term borrowed funds | 12,631 | 10,788 |
Long-term debt | 18,110 | 18,032 |
Accounts payable and other liabilities | 4,701 | 8,501 |
Total liabilities | 137,606 | 135,934 |
Shareholders' equity | ||
Preferred stock, liquidation preference of $1,000,000 per share | 0 | 3,082 |
Common stock, $5 par | 3,240 | 2,796 |
Additional paid-in capital | 4,828 | 3,510 |
Retained earnings | 7,409 | 7,381 |
Accumulated other comprehensive loss, net of deferred income taxes of $(441) at June 30, 2009 and $(438) at December 31, 2008 | (730) | (732) |
Noncontrolling interest | 45 | 44 |
Total shareholders' equity | 14,792 | 16,081 |
Total liabilities and shareholders' equity | $152,398 | $152,015 |
Consolidated Balance Sheets [Pa
Consolidated Balance Sheets [Parenthetical] (USD $) | ||
In Millions, unless otherwise specified | Jun. 30, 2009
| Dec. 31, 2008
|
Consolidated Balance Sheets [Parenthethical] | ||
Loans held for sale at fair value | $3,974 | $1,396 |
Preferred stock liquidation preference | 1,000,000 | 1,000,000 |
Preferred shares issued | 0 | 3 |
Preferred shares authorized | 5,000 | 5,000 |
Common stock par value | 5 | 5 |
Common shares outstanding | 648,068 | 559,248 |
Common shares authorized | 1,000,000 | 1,000,000 |
Deferred income taxes on other comprehensive loss | $441 | $438 |
Consolidated Statements of Inco
Consolidated Statements of Income (USD $) | ||||
In Millions | 3 Months Ended
Jun. 30, 2009 | 3 Months Ended
Jun. 30, 2008 | 6 Months Ended
Jun. 30, 2009 | 6 Months Ended
Jun. 30, 2008 |
Interest Income | ||||
Interest and fees on loans and leases | $1,336 | $1,501 | $2,658 | $3,096 |
Interest and dividends on securities | 302 | 283 | 657 | 572 |
Interest on short-term investments | 2 | 6 | 4 | 17 |
Total interest income | 1,640 | 1,790 | 3,319 | 3,685 |
Interest Expense | ||||
Interest on deposits | 320 | 455 | 666 | 1,019 |
Interest on federal funds purchased, securities sold under repurchase agreements and short-term borrowed funds | 17 | 59 | 40 | 147 |
Interest on long-term debt | 165 | 208 | 329 | 434 |
Total interest expense | 502 | 722 | 1,035 | 1,600 |
Net Interest Income | 1,138 | 1,068 | 2,284 | 2,085 |
Provision for credit losses | 701 | 330 | 1,377 | 553 |
Net Interest Income After Provision for Credit Losses | 437 | 738 | 907 | 1,532 |
Noninterest Income | ||||
Insurance income | 281 | 237 | 533 | 449 |
Service charges on deposits | 168 | 172 | 324 | 326 |
Investment banking and brokerage fees and commissions | 92 | 88 | 174 | 174 |
Mortgage banking income | 184 | 57 | 372 | 116 |
Checkcard fees | 57 | 53 | 106 | 99 |
Other nondeposit fees and commissions | 53 | 47 | 106 | 93 |
Trust and investment advisory revenues | 33 | 38 | 65 | 78 |
Bankcard fees and merchant discounts | 39 | 39 | 74 | 75 |
Income from bank-owned life insurance | 25 | 25 | 48 | 38 |
Other income | 42 | 61 | 53 | 97 |
Realized gains (losses), net | 20 | 10 | 206 | 53 |
Other-than-temporary impairments | (78) | 0 | (114) | 0 |
Less non-credit portion recognized in other comprehensive income | 77 | 0 | 77 | 0 |
Total securities gains (losses), net | 19 | 10 | 169 | 53 |
Total noninterest income | 993 | 827 | 2,024 | 1,598 |
Noninterest Expense | ||||
Personnel expense | 623 | 565 | 1,223 | 1,112 |
Occupancy and equipment expense | 128 | 124 | 257 | 247 |
Professional services | 64 | 48 | 117 | 85 |
Foreclosed property expense | 60 | 17 | 96 | 30 |
Regulatory charges | 106 | 4 | 139 | 9 |
Loan processing expenses | 34 | 33 | 63 | 64 |
Amortization of intangibles | 24 | 25 | 49 | 52 |
Merger-related and restructuring charges, net | (1) | 1 | 11 | 6 |
Other expenses | 143 | 142 | 295 | 289 |
Total noninterest expense | 1,181 | 959 | 2,250 | 1,894 |
Earnings | ||||
Income before income taxes | 249 | 606 | 681 | 1,236 |
Provision for income taxes | 41 | 175 | 155 | 376 |
Net income | 208 | 431 | 526 | 860 |
Noncontrolling interest | 4 | 3 | 10 | 4 |
Dividends and accretion on preferred stock | 83 | 0 | 124 | 0 |
Net income available to common shareholders | $121 | $428 | $392 | $856 |
Earnings Per Common Share | ||||
Earnings Per Common Share, Basic | 0.2 | 0.78 | 0.67 | 1.57 |
Earnings Per Common Share, Diluted | 0.2 | 0.78 | 0.67 | 1.56 |
Cash dividends paid | 0.47 | 0.46 | 0.94 | 0.92 |
Weighted Average Shares Outstanding | ||||
Weighted Average Shares, Basic | 602,726 | 546,628 | 581,382 | 546,421 |
Weighted Average Shares, Diluted | 608,797 | 549,758 | 586,256 | 549,344 |
Consolidated Statements Changes
Consolidated Statements Changes in Shareholders' Equity (USD $) | ||||||||
In Millions | Preferred Stock
| Common Stock
| Additional Paid-In Capital
| Retained Earnings
| Accumulated Other Comprehensive Income (Loss)
| Noncontrolling Interest
| Total
| |
Shares, Issued, Beginning Balance at Dec. 31, 2007 | 545,955 | |||||||
Beginning Balance at Dec. 31, 2007 | $2,730 | $3,087 | $6,919 | ($104) | $32 | $12,664 | ||
Add (Deduct): | ||||||||
Net income | 856 | 4 | 860 | |||||
Unrealized holding gains (losses) arising during the period on securities available for sale, net of tax | (213) | (213) | ||||||
Reclassification adjustment for losses (gains) on securities available for sale included in net income, net of tax | (33) | (33) | ||||||
Change in unrealized gains (losses) on securities, net of tax | (246) | (246) | ||||||
Change in unrecognized gains (losses) on cash flow hedges, net of tax | 13 | 13 | ||||||
Change in pension and postretirement liability, net of tax | (2) | (2) | ||||||
Foreign currency translation adjustment | 0 | 0 | ||||||
Total comprehensive income (loss) | 856 | (235) | 4 | 625 | ||||
Common stock issued: In connection with stock option exercises and other employee benefits, net of cancellations | 959 | 5 | 21 | 26 | ||||
Common stock issued: in connection with dividend reinvestment plan | 14 | |||||||
Cash dividends declared on common stock | (509) | (509) | ||||||
Cumulative effect of adoption of EITF 06-4 and EITF 06-10 | (8) | (8) | ||||||
Equity-based compensation expense | 38 | 38 | ||||||
Other, net | 2 | 2 | ||||||
Retained Earnings (Accumulated Deficit), Dividend, Per Share, Declared, Common Stock, Parenthetical Disclosure [Abstract] | ||||||||
Shares, Issued, Ending Balance at Jun. 30, 2008 | 546,928 | |||||||
Stockholders' Equity, Ending Balance at Jun. 30, 2008 | 2,735 | 3,146 | 7,258 | (339) | 38 | 12,838 | ||
Retained Earnings (Accumulated Deficit), Dividend, Per Share, Declared, Common Stock, Parenthetical Disclosure [Abstract] | ||||||||
Shares, Issued, Beginning Balance at Dec. 31, 2008 | 559,248 | |||||||
Beginning Balance at Dec. 31, 2008 | 3,082 | 2,796 | 3,510 | 7,381 | (732) | 44 | 16,081 | |
Add (Deduct): | ||||||||
Net income | 516 | 10 | 526 | |||||
Unrealized holding gains (losses) arising during the period on securities available for sale, net of tax | 45 | 45 | ||||||
Reclassification adjustment for losses (gains) on securities available for sale included in net income, net of tax | (105) | (105) | ||||||
Change in unrealized gains (losses) on securities, net of tax | (60) | (60) | ||||||
Change in unrecognized gains (losses) on cash flow hedges, net of tax | 44 | 44 | ||||||
Change in pension and postretirement liability, net of tax | 17 | 17 | ||||||
Foreign currency translation adjustment | 1 | 1 | ||||||
Total comprehensive income (loss) | 516 | 2 | 10 | 528 | ||||
Common stock issued: In purchase acquisitions | 96 | 1 | 1 | 2 | ||||
Common stock issued: In connection with stock option exercises and other employee benefits, net of cancellations | 100 | |||||||
Common stock issued: in connection with dividend reinvestment plan | 2,374 | 12 | 38 | 50 | ||||
Common stock issued: In common stock offering | 86,250 | 431 | 1,242 | 1,673 | ||||
Redemption of preferred stock | (3,134) | (3,134) | ||||||
Cash dividends declared on common stock | (363) | (363) | ||||||
Cash dividends accrued on preferred stock | (73) | (73) | ||||||
Equity-based compensation expense | 36 | 36 | ||||||
Other, net | 52 | 1 | (52) | (9) | (8) | |||
Retained Earnings (Accumulated Deficit), Dividend, Per Share, Declared, Common Stock, Parenthetical Disclosure [Abstract] | ||||||||
Shares, Issued, Ending Balance at Jun. 30, 2009 | 648,068 | |||||||
Stockholders' Equity, Ending Balance at Jun. 30, 2009 | $0 | $3,240 | $4,828 | $7,409 | ($730) | $45 | $14,792 |
1_Consolidated Statements Chang
Consolidated Statements Changes in Shareholders' Equity (Parenthetical) (USD $) | ||
In Millions, unless otherwise specified | 6 Months Ended
Jun. 30, 2009 | 6 Months Ended
Jun. 30, 2008 |
Consolidated Statements Changes in Shareholders' Equity (Parenthetical) [Abstract] | ||
Tax effect on unrealized holding gains and losses arising during the period | $24 | ($128) |
Tax effect on reclassification adjustment for gains or losses recognized in net income | (64) | (20) |
Tax effect on change on unrecognized gains or losses for cash flow hedges | 28 | 14 |
Tax effect on change on pension and postretirement liability | 11 | 0 |
Tax effect on foreign currency translation adjustment | ($2) | $0 |
Cash dividend declared per share of common stock | 0.62 | 0.93 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows (USD $) | ||||
In Millions | 3 Months Ended
Jun. 30, 2009 | 3 Months Ended
Jun. 30, 2008 | 6 Months Ended
Jun. 30, 2009 | 6 Months Ended
Jun. 30, 2008 |
Cash Flows From Operating Activities: | ||||
Net income | $208 | $431 | $526 | $860 |
Adjustments to reconcile net income to net cash (used in) provided by operating activities: | ||||
Provision for credit losses | 701 | 330 | 1,377 | 553 |
Depreciation | 109 | 93 | ||
Amortization of intangibles | 24 | 25 | 49 | 52 |
Equity-based compensation | 36 | 38 | ||
Discount accretion and premium amortization on long-term debt, net | 33 | 51 | ||
Gain on sales of securities, net | (169) | (53) | ||
Net (increase) decrease in trading securities | (146) | 495 | ||
Net increase in loans held for sale | (2,534) | (687) | ||
Net increase in other assets | (1,212) | (568) | ||
Net (decrease) increase in accounts payable and other liabilities | (3,576) | 268 | ||
Decrease in segregated cash due from banks | 112 | 12 | ||
Other, net | 58 | (59) | ||
Net cash (used in) provided by operating activities | (5,337) | 1,055 | ||
Cash Flows From Investing Activities: | ||||
Proceeds from sales of securities available for sale | 13,628 | 5,236 | ||
Proceeds from maturities, calls and paydowns of securities available for sale | 4,492 | 3,089 | ||
Purchases of securities available for sale | (16,350) | (8,910) | ||
Originations and purchases of loans and leases, net of principal collected | (117) | (3,832) | ||
Net cash paid in business combinations | (700) | (146) | ||
Proceeds from disposals of premises and equipment | 3 | 2 | ||
Purchases of premises and equipment | (82) | (107) | ||
Proceeds from sales of foreclosed property or other real estate held for sale | 151 | 61 | ||
Other, net | 0 | 95 | ||
Net cash provided by (used in) investing activities | 1,025 | (4,512) | ||
Cash Flows From Financing Activities: | ||||
Net increase in deposits | 3,565 | 1,448 | ||
Net increase in federal funds purchased, securities sold under repurchase agreements and short-term borrowed funds | 1,843 | 170 | ||
Proceeds from issuance of long-term debt | 1,111 | 3,385 | ||
Repayment of long-term debt | (684) | (1,539) | ||
Net proceeds from common stock issued | 1,723 | 26 | ||
Retirement of preferred stock | (3,134) | 0 | ||
Cash dividends paid on common stock | (526) | (503) | ||
Cash dividends paid on preferred stock | (93) | 0 | ||
Other, net | 1 | (4) | ||
Net cash provided by financing activities | 3,806 | 2,983 | ||
Net Decrease in Cash and Cash Equivalents | (506) | (474) | ||
Cash and Cash Equivalents at Beginning of Period | 2,740 | 3,117 | ||
Cash and Cash Equivalents at End of Period | 2,234 | 2,643 | 2,234 | 2,643 |
Cash paid during the period for: | ||||
Interest | 1,032 | 1,650 | ||
Income taxes | 393 | 528 | ||
Noncash investing and financing activities: | ||||
Transfers of loans to foreclosed property | 831 | 160 | ||
Common stock issued in business combinations | $0 | $0 |
Basis of Presentation
Basis of Presentation | |
6 Months Ended
Jun. 30, 2009 USD / shares | |
Basis of Presentation | |
Note 1. Basis of Presentation | 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 BBT Corporation and subsidiaries (referred to herein as BBT, the Corporation or the Company), arefair statements of BBTs financial position at June 30, 2009 and December 31, 2008, BBTs results of operations for the three and six month periods ended June 30, 2009 and June 30, 2008, and BBTs changes in shareholders equity and cash flows for the six month periods ended June 30, 2009 and 2008. In the opinion of management, all normal recurring adjustments necessary for a fair statement of the consolidated financial position and consolidated results of operati ons have been made. Management has evaluated the effect subsequent events would have on the consolidated financial statements through thetime these consolidated financial statementswere filed with the Securities and Exchange Commission on August 10, 2009. These consolidated financial statements and notes are presented in accordance with the instructions for Form 10-Q. The information contained in the financial statements and footnotes included in BBTs Annual Report on Form 10-K for the year ended December 31, 2008 should be referred to in connection with these unaudited interim consolidated financial statements. Nature of Operations BBT is a financial holding company headquartered in Winston-Salem, North Carolina. BBT conducts operations through its North Carolina chartered commercial bank subsidiary, Branch Banking and Trust Company (Branch Bank), a federally chartered thrift institution, BBT Financial, FSB (BBT FSB) and its nonbank subsidiaries. Branch Bank has offices in North Carolina, South Carolina, Virginia, Maryland, Georgia, West Virginia, Tennessee, Kentucky, Florida, Alabama, Indiana and Washington, D.C. Branch Bank provides a wide range of banking services to individuals and businesses, and offers a variety of loans to businesses and consumers. Such loans are made primarily to individuals residing in the market areas described above or to businesses located within BBTs geographic footprint. Branch Bank also markets a wide range of de posit services to individuals and businesses. Branch Bank offers, either directly, or through its subsidiaries, lease financing to businesses and municipal governments; factoring; discount brokerage services, annuities and mutual funds; life insurance, property and casualty insurance, health insurance and commercial general liability insurance on an agency basis and through a wholesale insurance brokerage operation; insurance premium financing; permanent financing arrangements for commercial real estate; loan servicing for third-party investors; direct consumer finance loans to individuals; and trust and comprehensive wealth advisory services. BBT FSB and the direct nonbank subsidiaries of BBT provide a variety of financial services including credit card lending, automobile lending, equipment financing, full-service securities brokerage, payroll processing, asset mana |
Business Combinations and Intan
Business Combinations and Intangible Assets | |
6 Months Ended
Jun. 30, 2009 USD / shares | |
Business Combinations and Intangible Assets | |
Note 2. Business Combinations and Intangible Assets | NOTE 2. Business Combinations and Intangible Assets Acquisitions During the first six months of 2009, BBT acquired certain assets of an insurance premium financing business. Approximately $8 million of goodwill and $6 million of identifiable intangibles were recorded in connection with this transaction. Goodwill and Other Intangible Assets The changes in the carrying amount of goodwill attributable to each of BBTs operating segments for the six months ended June 30, 2009, are as follows: Goodwill Activity by Operating Segment Residential Banking Mortgage Sales Specialized Insurance Financial All Network Banking Finance Lending Services Services Other Total (Dollars in millions) Balance, January 1, 2009 $ 4,038 $ 7 $ 93 $ 98 $ 1,029 $ 192 $ 26 $ 5,483 Acquisitions - - - 8 - - - 8 Other adjustments (2 ) - - 2 - - - - Balance, June 30, 2009 $ 4,036 $ 7 $ 93 $ 108 $ 1,029 $ 192 $ 26 $ 5,491 The following table presents the gross carrying amounts and accumulated amortization for BBTs identifiable intangible assets subject to amortization at the dates presented: Identifiable Intangible Assets As of June 30, 2009 As of December 31, 2008 Gross Net Gross Net Carrying Accumulated Carrying Carrying Accumulated Carrying Amount Amortization Amount Amount Amortization Amount (Dollars in millions) Identifiable intangible assets Core deposit intangibles $ 457 $ (341 ) $ 116 $ 457 $ (325 ) $ 132 Other (1) 723 (342 ) 381 719 (309 ) 410 Totals $ 1,180 $ (683 ) $ 497 $ 1,176 $ (634 ) $ 542 (1) Other identifiable intangibles are primarily customer relationship intangibles. |
Securities
Securities | |
6 Months Ended
Jun. 30, 2009 USD / shares | |
Securities | |
Note 3. Securities | NOTE 3. Securities The amortized cost and approximate fair values of securities available for sale were as follows: June 30, 2009 Amortized Gross Unrealized Fair Cost Gains Losses Value (Dollars in millions) Securities available for sale: U.S. government-sponsored entities (GSE) $ 1,374 $ 6 $ 1 $ 1,379 Mortgage-backed securities issued by GSE 25,763 236 304 25,695 States and political subdivisions 2,286 18 170 2,134 Non-agency mortgage-backed securities 1,451 - 403 1,048 Equity and other securities 776 9 8 777 Total securities available for sale $ 31,650 $ 269 $ 886 $ 31,033 December 31, 2008 Amortized Gross Unrealized Fair Cost Gains Losses Value (Dollars in millions) Securities available for sale: U.S. government-sponsored entities (GSE) $ 1,320 $ 13 $ - $ 1,333 Mortgage-backed securities issued by GSE 27,117 338 25 27,430 States and political subdivisions 2,413 8 344 2,077 Non-agency mortgage-backed securities 1,573 - 475 1,098 Equity and other securities 937 2 34 905 Total securities available for sale $ 33,360 $ 361 $ 878 $ 32,843 At June 30, 2009 and December 31, 2008, securities with carrying value of approximately $15.0 billion and $16.1 billion were pledged to secure municipal deposits, securities sold under agreements to repurchase, other borrowings, and for other purposes as required or permitted by law. BBT had certain investments in marketable debt securities and mortgage-backed securities issued by Fannie Mae and Freddie Mac that exceeded ten percent of shareholders equity at June 30, 2009. The Fannie Mae investments had total amortized cost and market values of $18.4 billion at June 30, 2009, while Freddie Mac investments had total amortized cost and market values of $7.6 billion. At June 30, 2009, non-agency mortgage-backed securities primarily consisted of residential mortgage-backed securities. Equity securities include investments in stock issued by the FHLB of Atlanta. At June 30, 2009 and December 31, 2008, BBT held $480 million and $479 million, respectively, of investments in FHLB stock. Proceeds from sales of securities available for sale during the first six months of 2009 and 2008 were $13.6 billion and $5.2 billion, respectively. Gross gains of $206 million were realized in 2009 and $62 million of gross gains and $9 million of gross losses were realized in 2008. The amortized cost and estimated fair value of the debt securities portfolio at June 30, 2009, by contractual maturity, are shown in the accompanying table. The expected life of mortgage-backed securities will differ from contractual maturities because borrowers may have the right to call or prepay the underlying mortgage loans |
Loans and Leases
Loans and Leases | |
6 Months Ended
Jun. 30, 2009 USD / shares | |
Loans and Leases | |
Note 4. Loans and Leases | NOTE 4. Loans and Leases The following table provides a breakdown of BBTs loan portfolio as of June 30, 2009 and December 31, 2008: June 30, December 31, 2009 2008 (Dollars in millions) Loans and leases, net of unearned income: Commercial loans and leases $ 50,364 $ 50,480 Sales finance 6,536 6,354 Revolving credit 1,843 1,777 Direct retail 14,577 15,454 Residential mortgage loans 15,639 17,091 Specialized lending 7,393 6,089 Total loans and leases held for investment 96,352 97,245 Loans held for sale 3,982 1,424 Total loans and leases $ 100,334 $ 98,669 An analysis of the allowance for credit losses for the six months ended June 30, 2009 and 2008 is presented in the following table: For the Six Months Ended June 30, 2009 2008 (Dollars in millions) Beginning Balance $ 1,607 $ 1,015 Provision for credit losses 1,377 553 Loans and leases charged-off (877 ) (326 ) Recoveries of previous charge-offs 38 31 Net loans and leases charged-off (839 ) (295 ) Ending Balance $ 2,145 $ 1,273 Allowance for loan and lease losses $ 2,110 $ 1,257 Reserve for unfunded lending commitments 35 16 Allowance for credit losses $ 2,145 $ 1,273 The following table provides a summary of BBTs nonperforming and past due loans as of June 30, 2009 and December 31, 2008: June 30, December 31, 2009 2008 (Dollars in millions) Nonaccrual loans and leases $ 2,091 $ 1,413 Foreclosed real estate 1,201 538 Other foreclosed property 48 79 Total foreclosed property 1,249 617 Total nonperforming assets $ 3,340 $ 2,030 Loans 90 days or more past due and still accruing (1) $ 329 $ 431 (1) Excludes mortgage loans guaranteed by GNMA that BBT does not have the obligation to repurchase. At June 30, 2009, BBT had $123 million in loans under the terms of troubled debt restructurings. This amount consists of $54 million in residential mortgage loans, $47 million in revolving credit loans, $17 million in commercial loans and $5 million in direct retail loans. Loan restructurings generally occur when a borrower is experiencing, or is expected to experience, financial difficulties in the near-term. Consequently, a modification that would otherwise not be considered is granted to the borrower. These loans may continue to accrue interest as long as the borrower complies with the revised terms and conditions and has demonstrated repayment performance with the modified terms. |
Long-term Debt
Long-term Debt | |
6 Months Ended
Jun. 30, 2009 USD / shares | |
Long-term Debt | |
Note 5. Long-term Debt | NOTE 5. Long-Term Debt Long-term debt is summarized as follows: June 30, December 31, 2009 2008 (Dollars in millions) Parent Company 5.70% Senior Notes Due 2014 $ 509 $ - 6.85% Senior Notes Due 2019 538 - 6.50% Subordinated Notes Due 2011 (1) 609 648 4.75% Subordinated Notes Due 2012 (1,3) 489 497 5.20% Subordinated Notes Due 2015 (1,3) 932 997 4.90% Subordinated Notes Due 2017 (1,3) 335 368 5.25% Subordinated Notes Due 2019 (1,3) 586 600 Branch Bank Floating Rate Senior Notes Due 2009 (8) 40 516 Floating Rate Subordinated Notes Due 2016 (1,8) 350 350 Floating Rate Subordinated Notes Due 2017 (1,8) 261 300 4.875% Subordinated Notes Due 2013 (1,3) 222 250 5.625% Subordinated Notes Due 2016 (1,3) 386 399 Federal Home Loan Bank Advances to Branch Bank (4) Varying maturities to 2028 9,864 9,838 Junior Subordinated Debt to Unconsolidated Trusts (2) 5.85% BBT Capital Trust I Securities Due 2035 514 514 6.75% BBT Capital Trust II Securities Due 2036 598 598 6.82% BBT Capital Trust IV Securities Due 2077 (5) 600 600 8.95% BBT Capital Trust V Securities Due 2063 (6) 450 450 Other Securities (7) 182 182 Other Long-Term Debt 73 66 Fair value hedge-related basis adjustments 572 859 Total Long-Term Debt $ 18,110 $ 18,032 (1) Subordinated notes that qualify under the risk-based capital guidelines as Tier 2 supplementary capital,subject to certain limitations. (2) Securities that qualify under the risk-based capital guidelines as Tier 1 capital, subject to certain limitations. (3) These fixed rate notes were swapped to floating rates based on LIBOR. At June 30, 2009, the effectiverates paid on these borrowings ranged from .75% to 1.74%. (4) At June 30, 2009, the weighted average cost of these advances was 3.62% and the weighted averagematurity was 6.6 years. (5) These securities are fixed rate through June 12, 2037 and then switch to a floating rate based on LIBOR. (6) $360 million of this issuance was swapped to a floating rate based on LIBOR. At June 30, 2009 theeffective rate on the swapped portion was 4.00%. (7) These securities were issued by companies acquired by BBT. At June 30, 2009, the effective rate paidon these borrowings ranged from 3.02% to 10.07%. These securities have varying maturities through 2035. (8) These floating-rate securities are based on LIBOR and had an effective rate of .96% as of June 30, 2009. |
Contractual Obligations, Commit
Contractual Obligations, Commitments, Contingent Liabilities, and Off-Balance Sheet Arrangements | |
6 Months Ended
Jun. 30, 2009 USD / shares | |
Contractual Obligations, Commitments, Contingent Liabilities, and Off-Balance Sheet Arrangements | |
Note 6. Contractual Obligations, Commitments, Contingent Liabilities, and Off-Balance Sheet Arrangements | NOTE 6. Contractual Obligations, Commitments, Contingent Liabilities, and Off-Balance Sheet Arrangements BBT utilizes a variety of financial instruments to meet the financing needs of clients and reduce exposure to fluctuations in interest rates. These financial instruments include commitments to extend credit, standby letters of credit and financial guarantees, and derivatives. BBT also has commitments to fund certain affordable housing investments and contingent liabilities of certain sold loans. Standby letters of credit and financial guarantees written are unconditional commitments issued by BBT 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 June 30, 2009 and December 31, 2008, BBT had issued standby letters of credit totaling $7.6 billion and $5.9 billion, respectively. The carrying amount of the liability for such guarantees was $29 million and $20 million at June 30, 2009 and December 31, 2008, respectively. A derivative is a financial instrument that derives its cash flows, and therefore its value, by reference to an underlying instrument, index or referenced interest rate. These instruments include interest-rate swaps, swaptions, caps, floors, collars, financial forward and futures contracts, when-issued securities, foreign exchange contracts and options written and purchased. BBT uses derivatives primarily to manage risk related to securities, business loans, Federal Funds purchased, other overnight funding, long-term debt, mortgage servicing rights, mortgage banking operations and certificates of deposit. BBT also uses derivatives to facilitate transactions on behalf of its clients. BBT held a variety of derivative financial instruments with notional values of $84.6 billion and $74.2 billion at June 30, 2009 and December 31, 2008, respectively. These instr uments were in a net gain position of $355 million and $626 million at June 30, 2009 and December 31, 2008, respectively. BBT invests in certain affordable housing and historic building rehabilitation projects throughout its market area as a means of supporting local communities and receives tax credits related to these investments. BBT typically acts as a limited partner in these investments and does not exert control over the operating or financial policies of the partnerships. Branch Bank typically provides financing during the construction and development of the properties; however, permanent financing is generally obtained from independent third parties upon completion of a project. As of June 30, 2009 and December 31, 2008, BBT had investments of $940 million and $891 million, respectively, related to these projects, which are included in other assets on the Consolidated Balance Sheets. BBTs outstanding commitments to fund affordable housing investments total ed $402 million a |
Benefit Plans
Benefit Plans | |
6 Months Ended
Jun. 30, 2009 USD / shares | |
Benefit Plans | |
Note 7. Benefit Plans | NOTE 7. Benefit Plans BBT provides various benefit plans to substantially all employees, including employees of acquired entities. Employees of acquired entities generally participate in existing BBT plans after consummation of the business combinations. The plans of acquired institutions are typically merged into the BBT 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 BBTs Annual Report on Form 10-K for the year ended December 31, 2008 for descriptions and disclosures about the various benefit plans offered by BBT. The following table summarizes the components of net periodic benefit cost recognized for BBTs pension plans for the three and six month periods ended June 30, 2009 and 2008, respectively: Pension Plans Qualified Nonqualified For the For the Three Months Ended Three Months Ended June 30, June 30, 2009 2008 2009 2008 (Dollars in millions) Service cost $ 19 $ 18 $ 1 $ 1 Interest cost 19 18 2 2 Estimated return on plan assets (35 ) (34 ) - - Amortization and other 14 (1 ) - - Net periodic benefit cost $ 17 $ 1 $ 3 $ 3 Pension Plans Qualified Nonqualified For the For the Six Months Ended Six Months Ended June 30, June 30, 2009 2008 2009 2008 (Dollars in millions) Service cost $ 38 $ 35 $ 2 $ 2 Interest cost 38 36 4 4 Estimated return on plan assets (71 ) (68 ) - - Amortization and other 28 (2 ) 1 1 Net periodic benefit cost $ 33 $ 1 $ 7 $ 7 BBT makes contributions to the qualified pension plan in amounts between the minimum required for funding standard accounts and the maximum amount deductible for federal income tax purposes. A discretionary contribution of $422 million was made to the qualified pension plan in the first quarter of 2009. Management currently has no plans to make any additional contributions to the qualified pension plan in 2009; however, management may elect to make additional contributions during 2009 if deemed appropriate. |
Computation of Earnings per Com
Computation of Earnings per Common Share | |
6 Months Ended
Jun. 30, 2009 USD / shares | |
Computation of Earnings per Common Share | |
Note 8. Computation of Earnings per Share | NOTE 8. Computation of Earnings Per Common Share BBTs basic and diluted earnings per common share amounts for the three and six month periods ended June 30, 2009 and 2008, respectively, were calculated as follows: For the Three Months Ended For the Six Months Ended June 30, June 30, 2009 2008 2009 2008 (Dollars in millions, except per share data, shares in thousands) Basic Earnings Per Common Share: Net income available to common shareholders $ 121 $ 428 $ 392 $ 856 Weighted average number of common shares 602,726 546,628 581,382 546,421 Basic earnings per common share $ .20 $ .78 $ .67 $ 1.57 Diluted Earnings Per Common Share: Net income available to common shareholders $ 121 $ 428 $ 392 $ 856 Weighted average number of common shares 602,726 546,628 581,382 546,421 Effect of dilutive outstanding equity-based awards 6,071 3,130 4,874 2,923 Weighted average number of diluted common shares 608,797 549,758 586,256 549,344 Diluted earnings per common share $ .20 $ .78 $ .67 $ 1.56 For the three months ended June 30, 2009 and 2008, the number of anti-dilutive awards was 39.1 million and 33.2 million shares, respectively. For the six months ended June 30, 2009 and 2008, the number of anti-dilutive awards was 39.3 million and 32.4 million shares, respectively. In addition, BBT had a warrant outstanding for 13.9 million shares as of June 30, 2009 that was anti-dilutive. On July 22, 2009, the warrant was repurchased. |
Comprehensive Income
Comprehensive Income (Loss) | |
6 Months Ended
Jun. 30, 2009 USD / shares | |
Comprehensive Income (Loss) | |
Note 9. Comprehensive Income (Loss) | NOTE 9. Comprehensive Income (Loss) The balances in accumulated other comprehensive loss for the periods indicated are shown in the following tables: As of June 30, 2009 Deferred Pre-Tax Tax Expense After-Tax Amount (Benefit) Amount (Dollars in millions) Unrealized net losses on securities available for sale $ (617 ) $ (233 ) $ (384 ) Unrealized net gains on cash flow hedges 148 56 92 Foreign currency translation adjustment (10 ) (2 ) (8 ) Unrecognized net pension and postretirement costs (692 ) (262 ) (430 ) Total $ (1,171 ) $ (441 ) $ (730 ) As of June 30, 2009, accumulated other comprehensive income included $77 million of unrealized losses related to other-than-temporarily impaired securities. As of December 31, 2008 Deferred Pre-Tax Tax Expense After-Tax Amount (Benefit) Amount (Dollars in millions) Unrealized net losses on securities available for sale $ (517 ) $ (193 ) $ (324 ) Unrealized net gains on cash flow hedges 76 28 48 Foreign currency translation adjustment (9 ) - (9 ) Unrecognized net pension and postretirement costs (720 ) (273 ) (447 ) Total $ (1,170 ) $ (438 ) $ (732 ) The following table reflects the components of total comprehensive income for the three and six month periods ended June 30, 2009 and 2008, respectively. For the Three Months Ended For the Six Months Ended June 30, June 30, 2009 2008 2009 2008 (Dollars in millions) Comprehensive income: Net income $ 208 $ 431 $ 526 $ 860 Other comprehensive income: Change in unrealized net losses on securities (95 ) (256 ) (60 ) (246 ) Change in unrealized net gains on cash flow hedges 36 20 44 13 Change in pension and postretirement liability 9 (1 ) 17 (2 ) Net foreign currency translation adjustment 3 1 1 - Total comprehensive income $ 161 $ 195 $ 528 $ 625 |
Equity-Based Compensation Plans
Equity-Based Compensation Plans | |
6 Months Ended
Jun. 30, 2009 USD / shares | |
Equity-Based Compensation Plans | |
Note 10. Equity-based Compensation Plans | NOTE 10. Equity-Based Compensation Plans BBT has options, restricted shares of common stock and restricted share units outstanding from the following equity-based compensation plans: the 2004 Stock Incentive Plan (2004 Plan), the 1995 Omnibus Stock Incentive Plan, the Non-Employee Directors Stock Option Plan, and plans assumed from acquired entities. All plans generally allow for accelerated vesting of awards for holders who retire and have met all retirement eligibility requirements and in connection with certain other events. BBTs shareholders have approved all equity-based compensation plans with the exception of plans assumed from acquired companies. As of June 30, 2009, the 2004 Plan is the only plan that has awards available for future grants. Please refer to BBTs Annual Report on Form 10-K for the year ended December 31, 2008 for further disclosures related to equity-based awards issued by BBT. BBT measures the fair value of each option award on the date of grant using the Black-Scholes option-pricing model with the following weighted average assumptions used for grants awarded during the first six months of 2009 and 2008. Substantially all of BBTs option awards are granted in February of each year. Therefore, the assumptions noted below are weighted accordingly. 2009 2008 Assumptions: Risk-free interest rate 3.1 % 3.7 % Dividend yield 6.0 4.5 Volatility factor 29.1 15.5 Expected life 7.1 yrs 6.9 yrs Fair value of options per share $ 2.59 $ 3.43 BBT measures the fair value of restricted shares based on the price of BBTs common stock on the grant date and the fair value of restricted share units based on the price of BBTs common stock on the grant date less the present value of expected dividends that are foregone during the vesting period. The following table details the activity during the first six months of 2009 related to stock options awarded by BBT: For the Six Months Ended June 30, 2009 Wtd. Avg. Exercise Options Price Outstanding at beginning of period 41,837,504 $ 36.55 Granted 2,832,038 16.89 Exercised (19,379 ) 18.86 Forfeited or expired (1,469,597 ) 35.70 Outstanding at end of period 43,180,566 $ 35.30 Exercisable at end of period 30,269,932 $ 36.14 The following table details the activity during the first six months of 2009 related to restricted shares and restricted share units awarded by BBT: For the Six Months Ended June 30, 2009 Wtd. Avg. Grant Date Shares/Units Fair Value Nonvested at beginning of period 6,259,349 $ 29.15 Granted 5,001,771 7.46 Vested (117,811 ) 26.38 Forfeited (97,351 ) 22.08 Nonvested at end of period 11,045,958 $ 19.42 |
Fair Value Disclosures
Fair Value Disclosures | |
6 Months Ended
Jun. 30, 2009 USD / shares | |
Fair Value Disclosures | |
Note 11. Fair Value Disclosures | NOTE 11. Fair Value Disclosures BBT carries various assets and liabilities at fair value based on applicable accounting standards. In addition, BBT has elected to account for prime residential mortgage and commercial mortgage loans held for sale at fair value in accordance with SFAS No. 159, The Fair Value Option for Financial Assets and Liabilities-including an amendment of FASB Statement No. 115, (the Fair Value Option). SFAS No. 157 established a framework for measuring fair value and defines fair value as the exchange price that would be received on the measurement date to sell an asset or the price paid to transfer a liability in the principal or most advantageous market available to the entity in an orderly transaction between market participants. SFAS No. 157 also established a three level fair value hierarchy that describes the inputs that are used to measure assets and liabilities. Level 1 Level 1 asset and liability fair values are based on quoted prices in active markets for identical assets and liabilities. Level 1 assets and liabilities include certain equity securities and derivative contracts that are traded in an active market. Level 2 Level 2 asset and liability fair values are based on observable inputs that include: quoted market prices for similar assets or liabilities; quoted market prices that are not in an active market; or other inputs that are observable in the market and can be corroborated by observable market data for substantially the full term of the assets or liabilities. Level 2 assets and liabilities include fixed income securities and mortgage-backed securities that are held in the Corporations trading and available-for-sale portfolios, loans held for sale, certain derivative contracts and short-term borrowings. Level 3 Level 3 assets and liabilities are financial instruments whose value is calculated by the use of pricing models and/or discounted cash flow methodologies, as well as financial instruments for which the determination of fair value requires significant management judgment or estimation. These methodologies may result in a significant portion of the fair value being derived from unobservable data. Level 3 assets and liabilities include certain trading securities, non-agency mortgage-backed securities, mortgage servicing rights, venture capital investments and certain derivative contracts. Assets and liabilities measured at fair value on a recurring basis, including financial instruments for which BBT has elected the Fair Value Option are summarized below: Fair Value Measurements for Assets and Liabilities Measured on a Recurring Basis 6/30/2009 Level 1 Level 2 Level 3 (Dollars in Millions) Assets: Trading securities $ 522 $ 213 $ 295 $ 14 Securities available for sale: U.S. government-sponsored entities (GSE) 1,379 - 1,379 - Mortgage-backed securities issued by GSE 25,695 - 25,695 - States and political subdivisions 2,134 - |
Derivative Financial Instrument
Derivative Financial Instruments | |
6 Months Ended
Jun. 30, 2009 USD / shares | |
Derivative Financial Instruments | |
Note 12. Derivative Financial Instruments | NOTE 12. Derivative Financial Instruments BBT uses a variety of derivative instruments to manage interest rate and foreign exchange risks. These instruments consist of interest-rate swaps, swaptions, caps, floors, collars, financial forward and futures contracts, when-issued securities, foreign exchange contracts and options written and purchased. A derivative is a financial instrument that derives its cash flows, and therefore its value, by reference to an underlying instrument, index or referenced interest rate. There are five areas of risk management: balance sheet management, mortgage banking operations, mortgage servicing rights, net investment in a foreign subsidiary and client-related and other risk management activities. The following tables set forth certain information concerning BBTs derivative financial instruments and related hedged items at June 30, 2009: Derivative Classifications and Hedging Relationships June 30, 2009 Hedged Item or Notional Fair Value Transaction Amount Gain(1) Loss(1) (Dollars in millions) Derivatives Designated as Cash Flow Hedges Interest rate contracts Receive fixed swaps First forecasted interest receipts on $ 5,000 $ 32 $ (36 ) commercial loans Pay fixed swaps First forecasted interest payments on 3,150 39 (6 ) overnight funding Pay fixed swaps First forecasted interest payments on 2,900 48 (31 ) 3 month LIBOR funding Caps First forecasted interest payments on 442 1 - 3 month LIBOR funding Total $ 11,492 $ 120 $ (73 ) Derivatives Designated as Net Investment Hedges Foreign exchange contracts $ 73 $ - $ (2 ) Derivatives Designated as Fair Value Hedges Interest rate contracts Receive fixed swaps Individual fixed rate long-term debt $ 3,342 $ 262 $ (8 ) Receive fixed swaps Long-term CDs 328 3 - Pay fixed swaps Individual fixed rate securities 354 - (69 ) available for sale Total $ 4,024 $ 265 $ (77 ) Derivatives Not Designated as Hedges Client-related and other risk management Interest rate contracts Receive fixed swaps $ 10,969 $ 444 $ (30 ) Pay fixed swaps 10,736 29 (391 ) Other swaps 7,713 4 (7 ) Option trades 898 - - Swaptions 543 27 (26 ) Futures contracts 3,329 1 - Collars 151 |
Operating Segments
Operating Segments | |
6 Months Ended
Jun. 30, 2009 USD / shares | |
Operating Segments | |
Note 13. Operating Segments | NOTE 13. Operating Segments BBTs operations are divided into seven reportable business segments: the Banking Network, Residential Mortgage Banking, Sales Finance, Specialized Lending, Insurance Services, Financial Services and Treasury. These operating segments have been identified based on BBTs organizational structure. The segments require unique technology and marketing strategies and offer different products and services. While BBT is managed as an integrated organization, individual executive managers are held accountable for the operations of these business segments. BBT 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 BBTs 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. During the second quarter of 2009, BBT recalibrated its allocation of the economic provision for credit losses given the continued deterioration in 2009. This change was retroactively applied to January 2009 and resulted in a reduction in provision expense in the Parent/Reconciling segment and additional provision expense allocated to the individual business units for the first quarter of 2009. The change in allocation primarily impacted the Banking Network, Residential Mortgage Banking and Sales Finance segments, which were allocated additional provision expense of approximately $141 million, $27 million and $9 million, respectively, related to the first quarter of 2009. As previously discussed in the Annual Report on Form 10-K for the year ended December 31, 2008, the 2008 economic provision for loan and lease losses was adjusted early in the first quarter of 2009. In addition, management changed the way it views certain transactions that had been unallocated to the business units. This primarily related to securities gains and losses. These amounts were previously reported within the Parent/Reconciling segment, but have been retroactively applied to the Treasury segment. Please refer to BBTs Annual Report on Form 10-K for the year ended December 31, 2008 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 BBTs reportable business segments for the periods indicated: BBT Corporation Reportable Segments For the Three Months Ended June 30, 2009 and 2008 Residential |
Loan Servicing
Loan Servicing | |
6 Months Ended
Jun. 30, 2009 USD / shares | |
Loan Servicing | |
Note 14. Loan Servicing | NOTE 14. Loan Servicing BBT has two classes of mortgage servicing rights for which it separately manages the economic risks: residential and commercial. Commercial mortgage servicing rights are recorded as other assets on the Consolidated Balance Sheets at lower of cost or market and amortized in proportion to and over the estimated period that net servicing income is expected to be received based on projections of the amount and timing of estimated future net cash flows. Residential mortgage servicing rights are recorded on the Consolidated Balance Sheets at fair value with changes in fair value recorded as a component of mortgage banking income in the Consolidated Statements of Income for each period. BBT uses various derivative instruments to mitigate the income statement effect of changes in fair value, due to changes in valuation inputs and assumptions, of its residential mortgage ser vicing rights. The following is an analysis of the activity in BBTs residential mortgage servicing rights for the six month periods ended June 30, 2009 and 2008: Residential Mortgage Servicing Rights For the Six Months Ended June 30, 2009 2008 (Dollars in millions) Carrying value, January 1, $ 370 $ 472 Additions 218 115 Increase (decrease) in fair value: Due to changes in valuation inputs or assumptions 91 68 Other changes (1) (64 ) (44 ) Carrying value, June 30, $ 615 $ 611 (1) Represents the realization of expected net servicing cash flows, expected borrower payments and the passage of time. BBT uses assumptions and estimates in determining the fair value of capitalized mortgage servicing rights. These assumptions include prepayment speeds, servicing costs and Option Adjusted Spread (OAS) commensurate with the risks involved and comparable to assumptions used by market participants to value and bid servicing rights available for sale in the market. At June 30, 2009, the weighted average life was 4.3 years, the prepayment speed was 18.7% and the OAS was 3.6%. The unpaid principal balances of BBTs total residential mortgage servicing portfolio were $66.5 billion and $59.7 billion at June 30, 2009 and December 31, 2008, respectively. The unpaid principal balances of residential mortgage loans serviced for others consist primarily of agency conforming fixed-rate mortgage loans and totaled $46.8 billion and $40.7 billion at June 30, 2009 and December 31, 2008, respectively. Mortgage loans serviced for others are not included in loans on the accompanying Consolidated Balance Sheets. BBT recognized servicing fees of $87 million and $68 million during the first six months of 2009 and 2008, respectively, as a component of mortgage banking income. At June 30, 2009 and 2008, the approximate weighted average servicing fee was .38% and .37%, respectively, of the outstanding balance of the residential mortgage loans. The weighted average coupon interest rate on the portfolio of mortgage loans serviced for others was 5.74% and 5.98% at June 30, 2009 and 2008, respectively. BBT ha |
Document Information
Document Information | |
6 Months Ended
Jun. 30, 2009 USD / shares | |
Document Information [Line Items] | |
Document Type | 10-Q |
Amendment Flag | false |
Document Period End Date | 2009-06-30 |
Entity Information
Entity Information (USD $) | |||
In Millions | 6 Months Ended
Jun. 30, 2009 | Jul. 31, 2009
| Jun. 30, 2008
|
Entity Information [Line Items] | |||
Entity Registrant Name | BB&T Corporation | ||
Entity Central Index Key | 0000092230 | ||
Current Fiscal Year End Date | --12-31 | ||
Entity Well-known Seasoned Issuer | Yes | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Filer Category | Large Accelerated Filer | ||
Entity Public Float | $12,700 | ||
Entity Common Stock, Shares Outstanding | 648,138,236 |