BB&T 2010 Annual Report Download - page 153

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NOTE 19. Fair Value Disclosures
BB&T carries various assets and liabilities at fair value based on applicable accounting standards. In
addition, BB&T has elected to account for prime residential mortgage and commercial mortgage loans originated
as loans held for sale at fair value in accordance with applicable accounting standards (the “Fair Value Option”).
BB&T also has certain loans held for sale that were originated as loans held for investment. These loans are
carried at the lower of cost or market. Accounting standards define fair value as the exchange price that would be
received on the measurement date to sell an asset or the price paid to transfer a liability in the principal or most
advantageous market available to the entity in an orderly transaction between market participants. These
standards also established a three level fair value hierarchy that describes the inputs that are used to measure
assets and liabilities. Level 1 asset and liability fair values are based on quoted prices in active markets for
identical assets and liabilities. Level 2 asset and liability fair values are based on observable inputs that include:
quoted market prices for similar assets or liabilities; quoted market prices that are not in an active market; or
other inputs that are observable in the market and can be corroborated by observable market data for
substantially the full term of the assets or liabilities. Level 3 assets and liabilities are financial instruments whose
value is calculated by the use of pricing models and/or discounted cash flow methodologies, as well as financial
instruments for which the determination of fair value requires significant management judgment or estimation.
These methodologies may result in a significant portion of the fair value being derived from unobservable data.
Assets and liabilities measured at fair value on a recurring basis, including financial instruments for which
BB&T has elected the Fair Value Option are summarized below:
Fair Value Measurements for Assets and Liabilities
Measured on a Recurring Basis
12/31/2010 Level 1 Level 2 Level 3
(Dollars in millions)
Assets:
Trading securities $ 633 $ 276 $ 346 $ 11
Securities available for sale:
U.S. government-sponsored entities (GSE) 103 — 103 —
Mortgage-backed securities issued by GSE 18,344 — 18,344 —
States and political subdivisions 1,909 — 1,790 119
Non-agency mortgage-backed securities 515 — 515 —
Equity and other securities 759 147 605 7
Covered securities 1,539 — 585 954
Loans held for sale (1) 3,176 — 3,176 —
Residential mortgage servicing rights 830 — — 830
Derivative assets: (2)
Interest rate contracts 926 1 913 12
Foreign exchange contracts 7 — 7 —
Venture capital and similar investments (2)(3) 266 — — 266
Total assets $29,007 $424 $26,384 $2,199
Liabilities:
Derivative liabilities: (2)
Interest rate contracts $ 996 $ 10 $ 949 $ 37
Foreign exchange contracts 6 — 6 —
Short-term borrowed funds (4) 233 — 233 —
Total liabilities $ 1,235 $ 10 $ 1,188 $ 37
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