BB&T 2008 Annual Report Download - page 98

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BB&T CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
On August 1, 2006, BB&T completed the acquisition of First Citizens Bancorp (“First Citizens”), a $700
million bank holding company headquartered in Cleveland, Tennessee. In conjunction with this transaction,
BB&T issued approximately 2.9 million shares of common stock and 38 thousand stock options valued in the
aggregate at $122 million and paid $20 million in cash. Including subsequent adjustments, BB&T recorded $94
million in goodwill and $14 million in amortizing intangibles, which are primarily core deposit intangibles.
On June 1, 2006, BB&T completed the acquisition of Main Street Banks Inc. (“Main Street”), a $2.3 billion
bank holding company headquartered in Atlanta, Georgia. In conjunction with this transaction, BB&T issued
approximately 14.3 million shares of common stock and 636 thousand stock options valued in the aggregate at
$621 million. Including subsequent adjustments, BB&T recorded $426 million in goodwill and $43 million in
amortizing intangibles, which are primarily core deposit intangibles.
Insurance and Other NonBank Acquisitions
During 2008, BB&T acquired eleven insurance businesses and one nonbank financial services company.
Including subsequent adjustments, approximately $247 million in goodwill and $152 million of identifiable
intangible assets were recorded in connection with these transactions. During 2007, BB&T acquired four
insurance agencies and two nonbank financial services companies. Including subsequent adjustments, BB&T
recorded approximately $80 million in goodwill and $93 million of identifiable intangibles in connection with these
transactions. BB&T also divested one insurance agency during 2007. During 2006, BB&T acquired one insurance
agency and two nonbank financial services companies. Including subsequent adjustments, approximately $27
million in goodwill and $14 million of identifiable intangibles were recorded in connection with these transactions.
Merger and acquisition agreements of businesses other than financial institutions occasionally include
additional incentives to the acquired entities to offset the loss of future cash flows previously received through
ownership positions. Typically, these incentives are based on the acquired entity’s contribution to BB&T’s
earnings compared to agreed-upon amounts. These amounts will be charged to goodwill based on the terms of the
agreement. When offered, these incentives are typically issued for terms of three to five years. As certain
provisions of these agreements do not specify dollar limitations, it is not possible to quantify the maximum
exposure resulting from these agreements.
Merger-Related and Restructuring Activities
BB&T has incurred certain merger-related and restructuring expenses, primarily in connection with
business combinations. Merger-related and restructuring expenses or credits include severance and personnel-
related costs or credits, which typically occur in corporate support and data processing functions, occupancy and
equipment charges or credits, which relate to costs or gains associated with lease terminations, obsolete
equipment write-offs, and the sale of duplicate facilities and equipment, and other merger-related and
restructuring charges or credits, which include expenses necessary to convert and combine the acquired branches
and operations of merged companies, direct media advertising related to the acquisitions, asset and supply
inventory write-offs, litigation accruals, and other similar charges. Merger-related and restructuring charges
during 2008, 2007 and 2006 were $15 million, $21 million and $18 million, respectively.
At December 31, 2008 and 2007, there were $24 million and $16 million, respectively, of merger-related and
restructuring accruals. In general, a major portion of accrued costs are utilized in conjunction with or
immediately following the systems conversion, when most of the duplicate positions are eliminated and the
terminated employees begin to receive severance. Other accruals are utilized over time based on the sale, closing
or disposal of duplicate facilities or equipment or the expiration of lease contracts. Merger and restructuring
accruals are re-evaluated periodically and adjusted as necessary. The remaining accruals at December 31, 2008
are expected to be utilized during 2009, unless they relate to specific contracts that expire in later years.
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