BB&T 2010 Annual Report Download - page 131

Download and view the complete annual report

Please find page 131 of the 2010 BB&T annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 181

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120
  • 121
  • 122
  • 123
  • 124
  • 125
  • 126
  • 127
  • 128
  • 129
  • 130
  • 131
  • 132
  • 133
  • 134
  • 135
  • 136
  • 137
  • 138
  • 139
  • 140
  • 141
  • 142
  • 143
  • 144
  • 145
  • 146
  • 147
  • 148
  • 149
  • 150
  • 151
  • 152
  • 153
  • 154
  • 155
  • 156
  • 157
  • 158
  • 159
  • 160
  • 161
  • 162
  • 163
  • 164
  • 165
  • 166
  • 167
  • 168
  • 169
  • 170
  • 171
  • 172
  • 173
  • 174
  • 175
  • 176
  • 177
  • 178
  • 179
  • 180
  • 181

Commercial Mortgage Banking Activities
BB&T also arranges and services commercial real estate mortgages through Grandbridge Real Estate
Capital, LLC (“Grandbridge”) the commercial mortgage banking subsidiary of Branch Bank. During the years
ended December 31, 2010, 2009 and 2008, Grandbridge originated $3.1 billion, $2.3 billion and $3.7 billion,
respectively, of commercial real estate mortgages, the majority of which were arranged for third party investors.
As of December 31, 2010, 2009 and 2008, Grandbridge’s portfolio of commercial real estate mortgages serviced for
others totaled $24.1 billion, $24.3 billion and $23.9 billion, respectively. Commercial real estate mortgage loans
serviced for others are not included in loans on the accompanying Consolidated Balance Sheets. Grandbridge had
$4.4 billion and $4.0 billion in loans serviced for others that were covered by recourse provisions at December 31,
2010 and 2009, respectively. At December 31, 2010 and 2009, Grandbridge’s maximum exposure to loss for these
loans was approximately $1.2 billion and $1.1 billion, respectively. BB&T has recorded $19 million and $12 million
of reserves related to these recourse exposures at December 31, 2010 and 2009, respectively.
Commercial mortgage servicing rights are recorded as other assets on the Consolidated Balance Sheets at
lower of cost or market and amortized in proportion to and over the estimated period that net servicing income is
expected to be received based on projections of the amount and timing of estimated future net cash flows. The
following is an analysis of the activity in BB&T’s commercial mortgage servicing rights for the years ended
December 31, 2010, 2009 and 2008:
Commercial Mortgage
Servicing Rights
Years Ended
December 31,
2010 2009 2008
(Dollars in millions)
Carrying value, January 1, $101 $98 $88
Additions 20 21 23
Purchases ——1
Amortization expense (18) (18) (14)
Carrying value, December 31, $103 $101 $ 98
At December 31, 2010, the sensitivity of the current fair value of the capitalized commercial mortgage
servicing rights to adverse changes in key economic assumptions are included in the accompanying table.
Commercial
Mortgage Servicing Rights
December 31, 2010
(Dollars in millions)
Fair value of commercial mortgage servicing rights $ 121
Weighted average life 7.3 yrs
Prepayment speed .5%
Effect on fair value of a 10% increase $ (1)
Effect on fair value of a 15% increase (1)
Weighted average discount rate 12.4%
Effect on fair value of a 25% increase $ (9)
Effect on fair value of a 50% increase (17)
The sensitivity calculations above are hypothetical and should not be considered to be predictive of future
performance. As indicated, changes in fair value based on adverse changes in assumptions generally cannot be
extrapolated because the relationship of the change in assumption to the change in fair value may not be linear.
Also, in this table, the effect of an adverse variation in a particular assumption on the fair value of the mortgage
servicing rights is calculated without changing any other assumption; while in reality, changes in one factor may
result in changes in another (for example, increases in market interest rates may result in increased value of
escrow deposits), which may magnify or counteract the effect of the change.
131