BB&T 2007 Annual Report Download - page 33

MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Overview
The following discussion and analysis of the consolidated financial condition and consolidated results of
operations of BB&T Corporation and its subsidiaries for each of the three years in the period ended December 31,
2007, and related financial information, are presented in conjunction with the consolidated financial statements
and related notes to assist in the evaluation of BB&T’s 2007 performance.
Reclassifications
In certain circumstances, reclassifications have been made to prior period information to conform to the 2007
presentation. Such reclassifications had no effect on previously reported shareholders’ equity or net income.
Mergers and Acquisitions Completed During 2007
During 2007, BB&T completed the following mergers and acquisitions:
On January 2, 2007, BB&T completed its acquisition of insurance premium finance company AFCO Credit
Corporation and its Canadian affiliate, CAFO, Inc. (collectively, “AFCO”). The acquisition has significantly
strengthened BB&T’s insurance premium finance franchise in the United States, as well as provided entry into
Canada.
On May 1, 2007, BB&T completed its merger with Coastal Financial Corporation (“Coastal”), a bank holding
company headquartered in Myrtle Beach, South Carolina. Coastal had $1.7 billion in assets and operated 17
branches in the Myrtle Beach area of South Carolina and seven branches in the Wilmington area of North
Carolina. Shareholders of Coastal received .385 of a share of BB&T common stock in exchange for each share of
Coastal common stock.
On November 1, 2007, BB&T completed its acquisition of Collateral Real Estate Capital, LLC (“Collateral”),
a commercial real estate finance company headquartered in Birmingham, Alabama. BB&T combined the
operations of Collateral with its existing commercial mortgage banking subsidiary, Laureate Capital LLC. The
combined company was renamed Grandbridge Real Estate Capital LLC and will be based in Charlotte, North
Carolina.
In addition to the mergers and acquisitions noted above, BB&T acquired four insurance agencies and
divested one insurance agency during 2007, all of which were immaterial in relation to the consolidated results of
BB&T. See Note 2 “Business Combinations” in the “Notes to Consolidated Financial Statements” for further
information regarding mergers and acquisitions.
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 and effects of new accounting pronouncements are discussed in detail in Note 1 in
the “Notes to Consolidated Financial Statements.”
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