BB&T 2010 Annual Report Download - page 148

BB&T has sold certain mortgage-related loans that contain recourse provisions. These provisions generally
require BB&T to reimburse the investor for a share of any loss that is incurred after the disposal of the property.
At December 31, 2010 and 2009, BB&T had $1.6 billion and $2.0 billion, respectively, of residential mortgage loans
sold with recourse. In the event of nonperformance by the borrower, BB&T has maximum recourse exposure of
approximately $597 million and $667 million as of December 31, 2010 and 2009, respectively. In addition, BB&T
has $4.4 billion and $4.0 billion in commercial loans serviced for others that were covered by recourse provisions
at December 31, 2010 and 2009, respectively. As of December 31, 2010 and 2009, BB&T’s maximum exposure to
loss for these loans is approximately $1.2 billion and $1.1 billion, respectively. BB&T has recorded $25 million and
$18 million of reserves related to these recourse exposures at December 31, 2010 and 2009, respectively.
BB&T also issues standard representations and warranties related to mortgage loan sales to government-
sponsored entities. Although these agreements often do not specify limitations, BB&T does not believe that any
payments related to these warranties would materially change the financial condition or results of operations of
BB&T. As of December 31, 2010, BB&T has recorded $15 million of reserves related to potential losses resulting
from repurchases of loans sold.
BB&T has investments and future funding commitments to certain venture capital funds. As of December 31,
2010 and 2009, BB&T had investments of $266 million and $281 million related to these ventures, respectively. As
of December 31, 2010 and 2009, BB&T had future funding commitments of $185 million and $183 million,
respectively. BB&T’s risk exposure relating to such commitments is generally limited to the amount of
investments and future funding commitments made.
Legal Proceedings
The nature of the business of BB&T’s banking and other subsidiaries ordinarily results in a certain amount of
claims, litigation, investigations and legal and administrative cases and proceedings, all of which are considered
incidental to the normal conduct of business. BB&T believes it has meritorious defenses to the claims asserted
against it in its currently outstanding legal proceedings and, with respect to such legal proceedings, intends to
continue to defend itself vigorously, litigating or settling cases according to management’s judgment as to what is
in the best interests of BB&T and its shareholders.
The Company is a defendant in three separate cases primarily challenging the Company’s daily ordering of
debit transactions posted to customer checking accounts for the period from 2003 to 2010. The plaintiffs have
requested class action treatment, however, no class has been certified. The court has denied motions by the
Company to dismiss these cases and compel them to be submitted to individual arbitration. The Company has
filed appeals in all three matters, which, if granted, would preclude class action treatment. Even if those appeals
are denied, the Company believes it has meritorious defenses against these matters, including class certification.
Because of these appeals, and because these cases are in the early stages and no damages have been specified, no
specific loss or range of loss can be determined currently.
On at least a quarterly basis, BB&T assesses its liabilities and contingencies in connection with outstanding
legal proceedings utilizing the latest information available. For those matters where it is probable that BB&T will
incur a loss and the amount of the loss can be reasonably estimated, BB&T records a liability in its consolidated
financial statements. These legal reserves may be increased or decreased to reflect any relevant developments on
a quarterly basis. For other matters, where a loss is not probable or the amount of the loss is not estimable,
BB&T has not accrued legal reserves. While the outcome of legal proceedings is inherently uncertain, based on
information currently available, advice of counsel and available insurance coverage, BB&T’s management
believes that its established legal reserves are adequate and the liabilities arising from BB&T’s legal proceedings
will not have a material adverse effect on the consolidated financial position, consolidated results of operations or
consolidated cash flows of BB&T. However, in the event of unexpected future developments, it is possible that
the ultimate resolution of these matters, if unfavorable, may be material to BB&T’s consolidated financial
position, consolidated results of operations or consolidated cash flows.
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