BB&T 2011 Annual Report Download - page 119

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Refer to Note 18 for additional disclosures related to the assumptions and estimates used in determining the fair value of
residential mortgage servicing rights. At December 31, 2011, the sensitivity of the current fair value of the residential
mortgage servicing rights to immediate 10% and 20% adverse changes in key economic assumptions are included in the
accompanying table: Residential
Mortgage Servicing Rights
December 31, 2011
(Dollars in millions)
Fair value of residential mortgage servicing rights $ 563
Composition of residential loans serviced for others:
Fixed-rate mortgage loans 99 %
Adjustable-rate mortgage loans 1
Total 100 %
Weighted average life 3.7 yrs
Prepayment speed 20.8 %
Effect on fair value of a 10% increase $ (35)
Effect on fair value of a 20% increase (66)
Weighted average discount rate 10.0 %
Effect on fair value of a 10% increase $ (18)
Effect on fair value of a 20% increase (34)
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, which may
magnify or counteract the effect of the change.
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,
2011, 2010 and 2009, Grandbridge originated $4.8 billion, $3.1 billion and $2.3 billion, respectively, of commercial real
estate mortgages, the majority of which were arranged for third party investors. As of December 31, 2011, 2010 and 2009,
Grandbridge’s portfolio of commercial real estate mortgages serviced for others totaled $25.4 billion, $24.1 billion and
$24.3 billion, respectively. Commercial real estate mortgage loans serviced for others are not included in loans and leases
on the accompanying Consolidated Balance Sheets. As of December 31, 2011 and 2010, there were $107 million and
$103 million of mortgage servicing rights recorded related to these servicing relationships. Grandbridge had $4.5 billion
and $4.4 billion in loans serviced for others that were covered by recourse provisions at December 31, 2011 and 2010,
respectively. At December 31, 2011 and 2010, Grandbridge’s maximum exposure to loss for these loans was
approximately $1.2 billion. BB&T has recorded $15 million and $19 million of reserves related to these recourse
exposures at December 31, 2011 and 2010, respectively.
NOTE 8. Federal Funds Purchased, Securities Sold Under Agreements to Repurchase and Short-Term Borrowed
Funds
Federal funds purchased, securities sold under agreements to repurchase and short-term borrowed funds are summarized
as follows:
December 31,
2011 2010
(Dollars in millions)
Federal funds purchased $ 12 $ 23
Securities sold under agreements to repurchase 619 1,189
Master notes 296 806
Other short-term borrowed funds 2,639 3,655
Total $ 3,566 $ 5,673
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