BB&T 2010 Annual Report Download - page 117

December 31, 2009
Less than 12 months 12 months or more Total
Fair
Value Unrealized Losses Fair Value Unrealized Losses Fair Value Unrealized Losses
(Dollars in millions)
Securities:
U.S. government-sponsored entities (GSE) $ 1,843 $ 60 $ — $— $ 1,843 $ 60
Mortgage-backed securities issued by GSE 16,338 210 114 — 16,452 210
States and political subdivisions 409 65 274 60 683 125
Non-agency mortgage-backed securities 181 66 825 251 1,006 317
Equity and other securities 13 — 1 — 14 —
Covered securities 94 12 — — 94 12
Total temporarily impaired securities $18,878 $413 $1,214 $311 $20,092 $724
On December 31, 2010, BB&T held certain investment securities having continuous unrealized loss positions
for more than 12 months. All of these losses were in non-agency mortgage-backed and municipal securities. At
December 31, 2010, all of the available-for-sale debt securities in an unrealized loss position, excluding those
covered by FDIC loss sharing agreements, were investment grade with the exception of (a) bonds with an
amortized cost of $3 million from one issuer of auction rate securities; (b) two municipal bonds with an amortized
cost of $8 million; and (c) eight non-agency mortgage-backed securities with an amortized cost of $556 million. At
December 31, 2010, the total unrealized loss on these non-investment grade securities was $116 million. All of the
non-investment grade securities referenced above were initially investment grade and have been downgraded
since purchase.
BB&T monitors the credit ratings of all of its debt securities on an ongoing basis. When an investment
security is rated lower than investment grade, the security is evaluated for potential credit impairment. Based on
its evaluation at December 31, 2010, BB&T determined that certain of the non-investment grade non-agency
mortgage-backed securities had credit losses evident and recognized other-than-temporary impairments related
to these securities. BB&T’s evaluation of the other debt securities with continuous unrealized losses indicated
that there were no credit losses evident. Furthermore, as of the date of the evaluation, BB&T did not intend to
sell, and it was more likely than not that the Company would not be required to sell these debt securities before
the anticipated recovery of the amortized cost basis. See the “Summary Analysis Supporting Conclusions” section
below for further details regarding BB&T’s below investment grade securities with significant unrealized losses.
BB&T conducts periodic reviews to identify and evaluate each investment that has an unrealized loss for
other-than-temporary impairment. An unrealized loss exists when the current fair value of an individual security
is less than its amortized cost basis. Unrealized losses that are determined to be temporary in nature are
recorded, net of tax, in accumulated other comprehensive income for available-for-sale securities.
Factors considered in determining whether a loss is temporary include:
ŠThe financial condition and near–term prospects of the issuer, including any specific events that may
influence the operations of the issuer;
ŠBB&T’s intent to sell and whether it is more likely than not that the Company will be required to sell
these debt securities before the anticipated recovery of the amortized cost basis;
ŠThe length of the time and the extent to which the market value has been less than cost;
ŠWhether the decline in fair value is attributable to specific conditions, such as conditions in an industry or
in a geographic area;
ŠWhether a debt security has been downgraded by a rating agency;
ŠWhether the financial condition of the issuer has deteriorated;
ŠThe seniority of the security;
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