BB&T 2009 Annual Report Download - page 24

While management uses the best information available to establish the allowance for loan and lease losses,
future adjustments to the allowance or to the reserving methodology may be necessary if economic conditions
differ substantially from the assumptions used in making the valuations.
The following table presents an estimated allocation of the allowance for loan and lease losses at the end of
each of the past five years. This allocation of the allowance for loan and lease losses is calculated on an
approximate basis and is not necessarily indicative of future losses or allocations. The entire amount of the
allowance is available to absorb losses occurring in any category of loans and leases.
Table 5
Allocation of Allowance for Loan and Lease Losses by Lines of Business
December 31,
2009 2008 2007 2006 2005
Amount
% Loans
in each
category (1) Amount
% Loans
in each
category Amount
% Loans
in each
category Amount
% Loans
in each
category Amount
% Loans
in each
category
(Dollars in millions)
Balances at end of period
applicable to:
Commercial loans and
leases $1,574 52.1% $ 912 51.9% $ 548 49.3% $475 49.8% $422 49.2%
Sales finance 77 6.6 55 6.5 58 6.6 58 6.9 65 7.1
Revolving credit 127 2.1 94 1.8 70 1.8 67 1.7 65 1.8
Direct retail 297 15.0 124 15.9 79 17.3 75 18.5 94 19.4
Residential mortgage loans 131 16.2 91 17.6 25 19.2 21 18.8 19 18.8
Specialized lending 264 8.0 238 6.3 171 5.8 139 4.3 110 3.7
Unallocated 130 — 60 — 53 — 53 — 50 —
Total $2,600 100.0% $1,574 100.0% $1,004 100.0% $888 100.0% $825 100.0%
(1) Excludes loans covered by FDIC loss sharing agreements.
Investment Activities
Investment securities represent a significant portion of BB&T’s assets. Branch Bank invests in securities as
allowable under bank regulations. These securities include obligations of the U.S. Treasury, U.S. government
agencies, U.S. government-sponsored entities, including mortgage-backed securities, bank eligible obligations of
any state or political subdivision, privately-issued mortgage-backed securities, structured notes, bank eligible
corporate obligations, including corporate debentures, commercial paper, negotiable certificates of deposit,
bankers acceptances, mutual funds and limited types of equity securities. Branch Bank also may deal in securities
subject to the provisions of the Gramm-Leach-Bliley Act. Scott & Stringfellow, LLC, BB&T’s full-service
brokerage and investment banking subsidiary, engages in the underwriting, trading and sales of equity and debt
securities subject to the risk management policies of the Corporation.
BB&T’s investment activities are governed internally by a written, board-approved policy. The investment
policy is carried out by the Corporation’s Market Risk and Liquidity Committee (“MRLC”), which meets
regularly to review the economic environment and establish investment strategies. The MRLC also has much
broader responsibilities, which are discussed in the “Market Risk Management” section in “Management’s
Discussion and Analysis of Financial Condition and Results of Operations” herein.
Investment strategies are reviewed by the MRLC based on the interest rate environment, balance sheet
mix, actual and anticipated loan demand, funding opportunities and the overall interest rate sensitivity of the
Corporation. In general, the investment portfolio is managed in a manner appropriate to the attainment of the
following goals: (i) to provide a sufficient margin of liquid assets to meet unanticipated deposit and loan
fluctuations and overall funds management objectives; (ii) to provide eligible securities to secure public funds,
trust deposits as prescribed by law and other borrowings; and (iii) to earn the maximum return on funds invested
that is commensurate with meeting the requirements of (i) and (ii).
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