BB&T 2007 Annual Report Download - page 51

As of/ For the Years Ended
December 31,
% Change
2007
v.
2006
2006
v.
2005Mortgage Banking Statistical Information 2007 2006 2005
(Dollars in millions)
Residential mortgage originations $11,940 $ 9,889 $10,528 20.7% (6.1)%
Residential mortgage loans serviced for others 32,093 28,232 25,844 13.7 9.2
Residential mortgage loan sales 7,547 5,282 4,835 42.9 9.2
Commercial mortgage originations 3,012 2,906 2,038 3.6 42.6
Commercial mortgage loans serviced for others 20,752 9,206 8,092 125.4 13.8
Mortgage banking income increased $7 million, or 6.5% during 2007. The growth in 2007 included an increase
of $4 million, or 11.1%, in commercial mortgage banking income primarily generated by Grandbridge, BB&T’s
commercial mortgage banking subsidiary. BB&T significantly expanded the size and product offerings of its
commercial mortgage banking activities during 2007 with the acquisition of Collateral, which is part of
Grandbridge. This acquisition was the primary reason for the 125.4% increase during 2007 in commercial
mortgage loans serviced for others. BB&T’s residential mortgage banking income also increased $3 million during
2007 compared to 2006. While residential mortgage loan sales increased 42.9% during 2007, gains and other
revenues associated with those sales only increased 2.2% due to increased competition in the marketplace.
Mortgage banking income increased $4 million, or 3.8%, during 2006. The increase in 2006 included an increase of
$11 million, or 44.0%, from commercial mortgage banking activities. BB&T’s residential mortgage banking income
declined $7 million during 2006 compared to 2005, primarily as a result of lower gains from sales of mortgage
loans, which resulted in a decline of $12 million from residential mortgage production revenues. While residential
mortgage loan sales increased from $4.8 billion in 2005 to $5.3 billion in 2006, the margins on residential mortgage
loan sales were down as a result of increased competition in the marketplace. This decline was partially offset by
an increase of $5 million related to residential mortgage servicing activities.
Income from bank owned life insurance increased $8 million, or 8.6%, in 2007 compared to 2006, primarily due
to the restructuring of certain contracts into higher-yielding separate account policies in mid-2006.
Other income decreased $28 million, or 23.9%, in 2007 compared to 2006. The decline during 2007 was
primarily due to approximately $33 million in losses from capital markets activities during the last half of 2007.
These losses were primarily caused by disruptions in the financial markets that decreased the value of certain
trading securities and derivative contracts. In addition, BB&T sold an insurance operation during 2007, which
produced a gain of $19 million and generated $17 million in additional revenues from client derivative activities.
Other income for 2007 also reflects lower revenues from investments managed by BB&T Capital Partners, a
small business investment company, which decreased $15 million compared to 2006, and decreased revenues of
$11 million related to various financial assets isolated for the purpose of providing post-employment benefits. The
64.8%, or $46 million, increase in 2006 compared to 2005, was primarily due to increased revenues from
investments managed by BB&T Capital Partners, which contributed $21 million to the growth during 2006. In
addition, 2006 includes increases of $8 million in revenues from various financial assets isolated for the purpose of
providing post-employment benefits and $8 million related to trading income at Scott & Stringfellow.
The ability to generate significant amounts of noninterest revenue in the future will be very important to the
continued financial success of BB&T. Through its subsidiaries, BB&T will continue to focus on asset management,
mortgage banking, trust, insurance, investment banking and brokerage services, as well as other fee-producing
products and services. BB&T plans to continue to pursue acquisitions of additional financial services companies,
including insurance agencies and other fee income producing businesses as a means of expanding fee-based
revenues. Also, among BB&T’s principal strategies following the acquisition of a financial institution is the cross-
sell of noninterest income generating products and services to the acquired institution’s client base. As previously
mentioned, management has set a goal to increase the contribution of noninterest revenue sources to 45% over
the next five years.
Noninterest Expense
Noninterest expense totaled $3.6 billion in 2007, $3.5 billion in 2006 and $3.2 billion in 2005. Noninterest
expense includes certain merger-related and restructuring charges or credits recorded during the years 2007,
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