BB&T 2007 Annual Report Download - page 95

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BB&T CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
The following is an analysis of the activity in BB&T’s residential mortgage servicing rights and the related
valuation allowance for the year ended December 31, 2005 based on the lower of cost or market method of
accounting:
Residential
Mortgage Servicing Rights
For the Year Ended
December 31, 2005
(Dollars in millions)
Balance, January 1, $326
Amount capitalized 102
Acquired in purchase acquisitions 1
Amortization expense (84)
Other than temporary impairment (1)
Change in valuation allowance 87
Balance, December 31, $431
Valuation Allowance for
Residential Mortgage
Servicing Rights For
the Year Ended
December 31, 2005
(Dollars in millions)
Balance, January 1, $ 108
Provision for impairment 61
Other than temporary impairment (1)
Provision recapture and other reductions (147)
Balance, December 31, $21
The unpaid principal balances of BB&T’s total residential mortgage servicing portfolio were $51.0 billion,
$45.2 billion and $41.1 billion at December 31, 2007, 2006 and 2005, respectively. The unpaid principal balances of
residential mortgage loans serviced for others consist primarily of agency conforming fixed-rate mortgage loans
and totaled $32.1 billion, $28.2 billion and $25.8 billion at December 31, 2007, 2006 and 2005, respectively.
Mortgage loans serviced for others are not included in loans on the accompanying Consolidated Balance Sheets.
BB&T recognized servicing fees of $114 million, $102 million and $96 million during 2007, 2006 and 2005,
respectively, as a component of mortgage banking income.
During 2007, 2006 and 2005, BB&T sold residential mortgage loans with unpaid principal balances of $7.5
billion, $5.3 billion and $4.8 billion, respectively, and recognized pretax gains of $12 million, $19 million and $34
million, respectively, which were recorded in noninterest income as a component of mortgage banking income.
BB&T retained the related mortgage servicing rights and receives servicing fees. At December 31, 2007 and
2006, the approximate weighted average servicing fee was .36% and .35%, 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 6.01% and 5.92% at December 31, 2007 and 2006, respectively.
At December 31, 2007, BB&T had $170 million of residential mortgage loans sold with limited recourse
liability. In the event of nonperformance by the borrower, BB&T has maximum recourse exposure of
approximately $55 million on these mortgage loans.
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