BB&T 2008 Annual Report Download - page 18

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Commercial Loan and Lease Portfolio
The commercial loan and lease portfolio represents the largest category of the Corporation’s total loan
portfolio. BB&T’s commercial lending program is generally targeted to serve small-to-middle market businesses
with sales of $200 million or less. In addition, BB&T’s Corporate Banking Group provides lending solutions to
large corporate clients. Traditionally, lending to small and mid-sized businesses has been among BB&T’s
strongest market segments.
Commercial and small business loans are primarily originated through BB&T’s banking network. In
accordance with the Corporation’s lending policy, each loan undergoes a detailed underwriting process, which
incorporates BB&T’s underwriting approach, procedures and evaluations described above. In addition, Branch
Bank has adopted an internal maximum credit exposure lending limit of $245 million for a “best grade” credit,
which is considerably below Branch Bank’s maximum legal lending limit. Commercial loans are typically priced
with an interest rate tied to market indices, such as the prime rate and the London Interbank Offered Rate
(“LIBOR”), or a fixed-rate. Commercial loans are individually monitored and reviewed for any possible
deterioration in the ability of the client to repay the loan. Approximately 92% of BB&T’s commercial loans are
secured by real estate, business equipment, inventories and other types of collateral. BB&T’s commercial leases
consist of investments in various types of leveraged lease transactions.
Sales Finance Loan Portfolio
The sales finance category primarily includes secured indirect installment loans to consumers for the
purchase of new and used automobiles, boats and recreational vehicles. Such loans are originated through
approved franchised and independent dealers throughout the BB&T market area. These loans are relatively
homogenous and no single loan is individually significant in terms of its size and potential risk of loss. Sales
finance loans are subject to the same rigorous lending policies and procedures as described above for commercial
loans and are underwritten with note amounts and credit limits that ensure consistency with the Corporation’s
risk philosophy. In addition to its normal underwriting due diligence, BB&T uses application systems and
“scoring systems” to help underwrite and manage the credit risk in its sales finance portfolio. Also included in the
sales finance category are commercial lines, serviced by the Sales Finance Department, to finance dealer
wholesale inventory (“Floor Plan Lines”) for resale to consumers. Floor Plan Lines are underwritten by
commercial loan officers in compliance with the same rigorous lending policies described above for commercial
loans. In addition, Floor Plan Lines are subject to intensive monitoring and oversight to ensure quality and
mitigate risk from fraud.
Revolving Credit Loan Portfolio
The revolving credit portfolio is comprised of the outstanding balances on credit cards and BB&T’s checking
account overdraft protection product, Constant Credit. BB&T markets credit cards to its existing banking client
base and does not solicit cardholders through nationwide programs or other forms of mass marketing. Such
balances are generally unsecured and actively managed by BB&T FSB.
Direct Retail Loan Portfolio
The direct retail loan portfolio consists of a wide variety of loan products offered through BB&T’s banking
network. Various types of secured and unsecured loans are marketed to qualifying existing clients and to other
creditworthy candidates in BB&T’s market area. The vast majority of direct retail loans are secured by first or
second liens on residential real estate, and include both closed-end home equity loans and revolving home equity
lines of credit. Direct retail loans are subject to the same rigorous lending policies and procedures as described
above for commercial loans and are underwritten with note amounts and credit limits that ensure consistency
with the Corporation’s risk philosophy
Mortgage Loan Portfolio
BB&T is a large originator of residential mortgage loans, with originations in 2008 totaling $16.4 billion.
Branch Bank offers various types of fixed- and adjustable-rate loans for the purpose of constructing, purchasing
or refinancing residential properties. BB&T primarily originates conforming mortgage loans and higher quality
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