BB&T 2010 Annual Report Download - page 66

the marketplace. BB&T will continue to focus on traditional core funding strategies, supplemented as needed by
the types of borrowings discussed above. See “Liquidity” herein for additional discussion.
Shareholders’ Equity
Shareholders’ equity totaled $16.5 billion at December 31, 2010, an increase of $257 million, or 1.6%, from
year-end 2009. BB&T’s book value per common share at December 31, 2010 was $23.67, compared to $23.47 at
December 31, 2009.
Shareholders’ equity increased $400 million due to BB&T’s earnings available to common shareholders
retained after dividends declared. In addition, shareholders’ equity increased $189 million as a result of the
issuance of additional shares and other transactions in connection with BB&T’s equity-based compensation plans,
401(k) plan and dividend reinvestment plan. These increases were partially offset by a decline of $330 million in
other comprehensive income, which principally relates to decreases in the fair values of available-for-sale
securities, including the impact of the FDIC loss sharing agreement, and changes in cash flow hedges and pension
obligations.
BB&T’s tangible shareholders’ equity available to common shareholders was $10.7 billion at December 31,
2010, an increase of $752 million, or 7.6%, compared to December 31, 2009. BB&T’s tangible book value per
common share at December 31, 2010 was $15.43 compared to $14.44 at December 31, 2009. As of December 31,
2010, measures of tangible capital were not required by the regulators and, therefore, were considered
non-GAAP measures. Please refer to the section titled “Capital” herein for a discussion of how BB&T calculates
and uses these measures in the evaluation of the Company.
Analysis of Results of Operations
Consolidated net income for 2010 totaled $854 million. Net income available to common shareholders totaled
$816 million, which generated basic earnings per common share of $1.18 and diluted earnings per common share of
$1.16. Net income for 2009 was $877 million and net income available to common shareholders totaled $729 million.
Net income for 2008 totaled $1.53 billion and net income available to common shareholders totaled $1.50 billion.
Basic earnings per common share were $1.16 in 2009 and $2.73 in 2008, while diluted earnings per common share
were $1.15 and $2.71 for 2009 and 2008, respectively.
Two important and commonly used measures of bank profitability are return on average assets (net income
as a percentage of average total assets) and return on average common shareholders’ equity (net income available
to common shareholders as a percentage of average common shareholders’ equity). BB&T’s returns on average
assets were .54%, .56%, and 1.12% for the years ended December 31, 2010, 2009 and 2008, respectively. The
returns on average common shareholders’ equity were 4.85%, 4.93%, and 11.44% for the last three years.
Net Interest Income
Net interest income is BB&T’s primary source of revenue. Net interest income is influenced by a number of
factors, including the volume, mix and maturity of interest-earning assets and interest-bearing liabilities and the
interest rates earned and paid thereon. The difference between rates earned on interest-earning assets and the
cost of the supporting funds (with an adjustment made to tax-exempt items to provide comparability with taxable
items, i.e. the “FTE” adjustment) is measured by the net interest margin. The accompanying table presents the
dollar amount of changes in interest income and interest expense, and distinguishes between the changes related
to increases or decreases in average outstanding balances of interest-earning assets and interest-bearing
liabilities (volume), and the changes related to increases or decreases in average interest rates on such assets and
liabilities (rate). Changes attributable to both volume and rate have been allocated proportionately.
For 2010, net interest income on an FTE-adjusted basis totaled $5.5 billion, compared with $5.0 billion in 2009
and $4.3 billion in 2008. Net interest income increased 9.9% in 2010 compared to 2009. The increase in net interest
income during 2010 resulted primarily from higher yields from the covered loan and securities portfolios, which
were outstanding for the full year of 2010 compared to a partial year for 2009. In addition, the covered loan
portfolio’s yield increased during 2010 as a result of improved expectations of cash flows from the original
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