BB&T 2008 Annual Report Download - page 130

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BB&T CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
fair value requires significant management judgment or estimation. These methodologies may result in a
significant portion of the fair value being derived from unobservable data. Level 3 assets and liabilities
include certain trading securities, non-agency mortgage-backed securities, mortgage servicing rights,
venture capital investments and certain derivative contracts.
Assets and liabilities measured at fair value on a recurring basis, including financial instruments for which
BB&T has elected the Fair Value Option are summarized below:
Fair Value Measurements for Assets and Liabilities
Measured on a Recurring Basis
As of
December 31,
2008
Quoted Prices in
Active Markets for
Identical Assets
(Level 1)
Significant Other
Observable Inputs
(Level 2)
Significant
Unobservable Inputs
(Level 3)
(Dollars in millions)
Assets:
Trading securities $ 376 $204 $ 168 $ 4
Securities available for sale 32,843 170 31,574 1,099
Loans held for sale (1) 1,396 — 1,396 —
Residential mortgage servicing rights 370 — — 370
Derivative assets (2) 1,723 4 1,681 38
Venture capital investments (2) 183 — 1 182
Total assets $36,891 $378 $34,820 $1,693
Liabilities:
Derivative liabilities (2) $ 1,097 $ 11 $ 1,085 $ 1
Short-term borrowed funds (3) 149 — 149 —
Total liabilities $ 1,246 $ 11 $ 1,234 $ 1
(1) Loans held for sale are residential and commercial mortgage loans that were originated subsequent to
December 31, 2007 for which BB&T elected the fair value option under SFAS No. 159. Loans originated prior
to January 1, 2008 and certain other loans held for sale are still accounted for at the lower of cost or market.
There were $28 million in loans held for sale that are not accounted for at fair value at December 31, 2008.
(2) These amounts are reflected in other assets and other liabilities on the Consolidated Balance Sheet.
(3) Short-term borrowed funds reflect securities sold short positions.
The table below presents a reconciliation for the year ended December 31, 2008, for all Level 3 assets and
liabilities that are measured at fair value on a recurring basis.
Fair Value Measurements Using Significant Unobservable Inputs
For the Year Ended December 31, 2008 AFS Securities Trading
Mortgage
Servicing
Rights Net Derivatives
Venture
Capital
Investments
(Dollars in millions)
Balance at January 1, 2008 $ 9 $ 27 $ 472 $ 2 $128
Total realized and unrealized gains or losses:
Included in earnings (35) (3) (314) 35 (8)
Included in other comprehensive income (loss) (3) — — — —
Purchases, issuances and settlements 5 (19) 212 — 62
Transfers in and/or out of Level 3 1,123 (1) — — —
Balance at December 31, 2008 $1,099 $ 4 $ 370 $ 37 $182
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