BB&T 2007 Annual Report Download - page 88

BB&T CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
identifiable intangibles. BB&T also divested one insurance agency during 2007. During 2006, BB&T acquired one
insurance agency and two nonbank financial services companies. Including subsequent adjustments,
approximately $27 million in goodwill and $14 million of identifiable intangibles were recorded in connection with
these transactions. During 2005, BB&T acquired five insurance businesses and four 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. Including subsequent
adjustments, approximately $115 million in goodwill and $85 million of identifiable intangible assets were
recorded in connection with these transactions.
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. These amounts will be charged to goodwill based on the terms of the
agreement. When offered, these incentives are typically issued for terms of three to five 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.
Merger-Related and Restructuring Activities
BB&T has incurred certain merger-related and restructuring expenses, primarily in connection with
business combinations. Merger-related and restructuring expenses or credits include severance and personnel-
related costs or credits, which typically occur in corporate support and data processing functions, occupancy and
equipment charges or credits, which relate to costs or gains associated with lease terminations, obsolete
equipment write-offs, and the sale of duplicate facilities and equipment, and other merger-related and
restructuring charges or credits, which include expenses necessary to convert and combine the acquired branches
and operations of merged companies, direct media advertising related to the acquisitions, asset and supply
inventory write-offs, litigation accruals, and other similar charges. Merger-related and restructuring charges or
(gains) during 2007, 2006 and 2005 were $21 million, $18 million and $(11 million), respectively.
At December 31, 2007 and 2006, there were $16 million and $18 million, respectively, of merger-related and
restructuring accruals. In general, a major portion of accrued costs are utilized in conjunction with or
immediately following the systems conversion, when most of the duplicate positions are eliminated and the
terminated employees begin to receive severance. Other accruals are utilized over time based on the sale, closing
or disposal of duplicate facilities or equipment or the expiration of lease contracts. Merger and restructuring
accruals are re-evaluated periodically and adjusted as necessary. The remaining accruals at December 31, 2007
are expected to be utilized during 2008, unless they relate to specific contracts that expire in later years.
NOTE 3. Securities
The amortized cost and approximate fair values of securities available for sale were as follows:
December 31, 2007
Amortized
Cost
Gross Unrealized Fair
ValueGains Losses
(Dollars in millions)
Securities available for sale:
U.S. Treasury securities $ 72 $ 1 $— $ 73
U.S. government-sponsored entity securities 9,720 49 35 9,734
Mortgage-backed securities 8,218 58 55 8,221
States and political subdivisions 1,423 20 51 1,392
Equity and other securities 3,031 15 47 2,999
Total securities available for sale $22,464 $143 $188 $22,419
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