BB&T 2007 Annual Report Download - page 122

BB&T CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
amounts totaling $6.4 billion and $7.1 billion that have been entered into to facilitate transactions on behalf of
BB&T’s clients. BB&T also held derivatives not designated as hedges with notional amounts totaling $15.8 billion
and $1.2 billion at December 31, 2007 and 2006, respectively, as risk management instruments primarily related to
client derivatives, balance sheet management and capital markets activities.
Credit risk related to derivatives arises when amounts receivable from a counterparty exceed those payable.
Because the notional amount of the instruments only serves as a basis for calculating amounts receivable or
payable, the risk of loss with any counterparty is limited to a small fraction of the notional amount. BB&T’s
maximum loss related to credit risk is equal to the gross fair value of its derivative instruments. BB&T deals only
with derivative dealers that are national market makers with strong credit ratings in its derivatives activities.
BB&T further controls the risk of loss by subjecting counterparties to credit reviews and approvals similar to
those used in making loans and other extensions of credit. In addition, counterparties are required to provide cash
collateral to BB&T when their unsecured loss positions exceed certain negotiated limits. As of December 31, 2007
and 2006, BB&T had received cash collateral of approximately $75 million and $17 million, respectively. In
addition, BB&T had posted collateral of $8 million and $29 million at December 31, 2007 and 2006, respectively.
All of the derivative contracts to which BB&T is a party settle monthly, quarterly or semiannually. Further,
BB&T has netting agreements with the dealers with which it does business. Because of these factors, BB&T’s
credit risk exposure related to derivatives contracts at December 31, 2007 and 2006 was not material.
NOTE 20. Computation of Earnings Per Share
The basic and diluted earnings per share calculations are presented in the following table:
Years Ended December 31,
2007 2006 2005
(Dollars in millions, except per
share data, shares in thousands)
Basic Earnings Per Share:
Net income $ 1,734 $ 1,528 $ 1,654
Weighted average number of common shares 547,184 539,140 546,916
Basic earnings per share $ 3.17 $ 2.84 $ 3.02
Diluted Earnings Per Share:
Net income $ 1,734 $ 1,528 $ 1,654
Weighted average number of common shares 547,184 539,140 546,916
Add:
Effect of dilutive outstanding equity-based awards 4,571 4,751 4,464
Weighted average number of diluted common shares 551,755 543,891 551,380
Diluted earnings per share $ 3.14 $ 2.81 $ 3.00
For the years ended December 31, 2007, 2006 and 2005, respectively, the number of antidilutive options was
14.0 million, 8.1 million and 99 thousand.
NOTE 21. Operating Segments
BB&T’s 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 BB&T’s organizational 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.
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