BB&T 2010 Annual Report Download - page 105

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Securities
At the date of purchase, BB&T classifies marketable investment securities as held to maturity, available for
sale or trading. Interest income and dividends on securities are recognized in interest income on an accrual basis.
Premiums and discounts on debt securities are amortized as an adjustment to interest income using the interest
method.
Debt securities acquired where BB&T has both the intent and ability to hold to maturity are classified as
held to maturity and reported at amortized cost.
Debt securities, which may be sold to meet liquidity needs arising from unanticipated deposit and loan
fluctuations, changes in regulatory capital requirements, or unforeseen changes in market conditions, are
classified as available for sale. Securities available for sale are reported at estimated fair value, with unrealized
gains and losses reported as accumulated other comprehensive income or loss, net of deferred income taxes, in the
shareholders’ equity section of the Consolidated Balance Sheets. Gains or losses realized from the sale of
securities available for sale are determined by specific identification and are included in noninterest income.
BB&T evaluates each held to maturity and available-for-sale security in a loss position for other-than-
temporary impairment. In its evaluation BB&T considers such factors as the length of time and the extent to
which the market value has been below cost, long term expectations and recent experience regarding principal
and interest payments, and BB&T’s intent to sell and whether it is more likely than not that the Company would
be required to sell those securities before the anticipated recovery of the amortized cost basis. Beginning in 2009,
in accordance with new accounting guidance for impairments of debt securities that are deemed to be other-than-
temporary, the credit component of an other-than-temporary impairment loss is recognized in earnings and the
non-credit component is recognized in accumulated other comprehensive income in situations where BB&T does
not intend to sell the security and it is more-likely-than-not that BB&T will not be required to sell the security
prior to recovery. Prior to January 1, 2009, unrealized losses (both the credit and non-credit components) on
available-for-sale debt securities that were deemed to be other-than-temporary were included in current period
earnings.
Trading account securities, which include both debt and equity securities, are reported at fair value.
Unrealized market value adjustments, fees, and realized gains or losses from trading account activities
(determined by specific identification) are included in noninterest income. Interest income on trading account
securities is included in interest and dividends from securities.
Loans Held for Sale
BB&T accounts for new originations of prime residential mortgage and commercial mortgage loans held for
sale at fair value. BB&T accounts for the derivatives used to economically hedge the loans held for sale at fair
value. Held for investment loans that have been transferred to loans held for sale are carried at the lower of cost
or market because these loans are not exchanged in an active market and BB&T does not hedge these assets.
The value for loans held for sale carried at fair value is primarily based on quoted market prices for securities
backed by similar types of loans. Direct loan origination fees and costs related to loans held for sale and accounted
for at fair value are not capitalized and recognized in earnings upon the sale of such loans, but rather are recorded
as mortgage banking income in the case of the direct loan origination fees and primarily personnel expense in the
case of the direct loan origination costs. Gains and losses on sales of mortgage loans are included in mortgage
banking income. Gains and losses on sales of commercial loans held for sale are included in other noninterest
income.
Loans and Leases
The Company’s accounting methods for loans differ depending on whether the loans are originated or
acquired as a result of a business acquisition or purchased at a discount as a result of credit deterioration since
the date of origination.
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