BB&T 2008 Annual Report Download - page 69

uncertainty in Income Taxes” because management cannot reasonably estimate the timing of any payments that
may be required in connection with these liabilities. Further discussion of the nature of each obligation is included
in Note 15 “Commitments and Contingencies” in the “Notes to Consolidated Financial Statements.”
Table 24
Contractual Obligations and Other Commitments
December 31, 2008
Total Less than One Year 1to3 Years 3to5 Years After 5 Years
(Dollars in millions)
Contractual Cash Obligations
Long-term debt $18,032 $ 536 $ 2,488 $1,733 $13,275
Operating leases 934 131 220 153 430
Commitments to fund affordable housing
investments 412 247 134 22 9
Venture capital commitments 222 68 117 13 24
Time deposits 47,216 34,594 8,498 3,768 356
Total contractual cash obligations $66,816 $35,576 $11,457 $5,689 $14,094
BB&T’s significant commitments include certain investments in affordable housing and historic building
rehabilitation projects throughout its market area. BB&T enters into such arrangements as a means of
supporting local communities and recognizes tax credits relating to these investments. At December 31, 2008,
BB&T’s investments in such projects totaled $891 million, which includes outstanding commitments of $412
million. BB&T typically acts as a limited partner in these investments and does not exert control over the
operating or financial policies of the partnerships. Branch Bank typically provides financing during the
construction and development of the properties; however, permanent financing is generally obtained from
independent third parties upon completion of a project. As of December 31, 2008, BB&T had $161 million in loan
commitments outstanding related to these projects, of which $81 million had been funded. BB&T’s risk exposure
relating to such commitments is generally limited to the amount of investments and loan commitments made.
Please refer to Note 1 “Summary of Significant Accounting Policies” in the “Notes to Consolidated Financial
Statements” for further discussion of these investments in limited partnerships.
In addition, BB&T enters into derivative contracts to manage various financial risks. A derivative is a
financial instrument that derives its cash flows, and therefore its value, by reference to an underlying instrument,
index or referenced interest rate. Derivative contracts are carried at fair value on the Consolidated Balance
Sheets with the fair value representing the net present value of expected future cash receipts or payments based
on market interest rates as of the balance sheet date. Derivative contracts are written in amounts referred to as
notional amounts, which only provide the basis for calculating payments between counterparties and are not a
measure of financial risk. Therefore, the derivative liabilities recorded on the balance sheet as of December 31,
2008 do not represent the amounts that may ultimately be paid under these contracts. Further discussion of
derivative instruments is included in Note 1 “Summary of Significant Accounting Policies” and Note 19
“Derivative Financial Instruments” in the “Notes to Consolidated Financial Statements.”
In the ordinary course of business, BB&T indemnifies its officers and directors to the fullest extent
permitted by law against liabilities arising from litigation. BB&T also issues standard representation and
warranties in underwriting agreements, merger and acquisition agreements, loan sales, brokerage activities and
other similar arrangements. Counterparties in many of these indemnifications provide similar indemnifications to
BB&T. Although these agreements often do not specify limitations, BB&T does not believe that any payments
related to these guarantees would materially change the financial condition or results of operations of BB&T.
BB&T holds public funds in certain states that do not require 100% collateralization on public fund bank
deposits. In these states, should the failure of another public fund depository institution result in a loss for the
public entity, the resulting shortfall would have to be absorbed on a pro-rata basis by the remaining financial
institutions holding public funds in that state.
BB&T has investments and future funding commitments to certain venture capital funds. As of December 31,
2008, BB&T had investments of $168 million, net of minority interest, related to these ventures and future
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