BB&T 2008 Annual Report Download - page 101

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BB&T CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
On December 31, 2008, BB&T also held certain investment securities having continuous unrealized loss
positions for more than 12 months. As of December 31, 2008, the unrealized losses on these securities totaled $412
million. Substantially all of these losses were in non-agency mortgage-backed and municipal securities. At
December 31, 2008, all of the available-for-sale debt securities with the exception of four non-agency mortgage-
backed securities were investment grade. During the fourth quarter of 2008, four non-agency mortgage-backed
securities, with a book value of approximately $293 million, were downgraded below investment grade. BB&T
evaluated all of its non-agency mortgage-backed securities based on the underlying collateral as well as capital
structure. BB&T holds the senior position on all of the non-agency mortgage-backed securities. The unrealized
losses for all of the securities having continuous unrealized loss positions for more than 12 months are the result
of changes in market interest rates and liquidity. Based on the evaluation on December 31, 2008, there were no
credit losses evident from these securities. At December 31, 2008, BB&T had the ability and intent to retain these
securities for a period of time sufficient to recover all unrealized losses.
NOTE 4. Loans and Leases
December 31,
2008 2007
(Dollars in millions)
Loans and leases, net of unearned income:
Commercial loans $49,727 $43,685
Leveraged leases 753 1,185
Total commercial loans and leases 50,480 44,870
Sales finance 6,354 6,021
Revolving credit 1,777 1,618
Direct retail 15,454 15,691
Residential mortgage loans 17,091 17,467
Specialized lending
Loans 5,527 4,774
Leases 562 466
Total specialized lending 6,089 5,240
Total loans held for sale 1,424 779
Total loans and leases (1) $98,669 $91,686
(1) Unearned income totaled $748 million and $2.3 billion at December 31, 2008 and 2007, respectively.
The following table provides details regarding BB&T’s investment in leveraged leases.
December 31,
2008 2007
(Dollars in millions)
Rentals receivable (net of principal and interest on nonrecourse debt and head lease
obligation) $1,367 $ 3,365
Unearned income (614) (2,180)
Investment in leveraged leases, net of unearned income 753 1,185
Deferred taxes arising from leveraged leases (70) (45)
Net investment in leveraged leases $ 683 $ 1,140
BB&T has entered into a settlement agreement with the Internal Revenue Service (“IRS”) regarding its
leveraged lease transactions. For tax purposes, the leveraged leases were deemed terminated as of December 31,
2008. Please refer to Note 13 for additional details regarding BB&T’s leveraged lease settlement.
BB&T had $68.3 billion in loans secured by real estate at December 31, 2008. However, these loans were not
concentrated in any specific market or geographic area other than Branch Bank’s primary markets. Certain loans have
been pledged as collateral for all outstanding Federal Home Loan Bank advances at December 31, 2008 and 2007.
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