BB&T 2011 Annual Report Download - page 138
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NOTE 18. 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”). 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
12/31/2011 Level 1 Level 2 Level 3
(Dollars in millions)
Assets:
Trading securities $ 534 $ 298 $ 235 $ 1
Securities available for sale:
GSE securities 306 — 306 —
Mortgage-backed securities issued by
GSE 18,132 — 18,132 —
States and political subdivisions 1,923 — 1,923 —
Non-agency mortgage-backed securities 368 — 368 —
Other securities 7 6 1 —
Covered securities 1,577 — 593 984
Loans held for sale 3,736 — 3,736 —
Residential mortgage servicing rights 563 — — 563
Derivative assets: (1)
Interest rate contracts 1,518 1 1,457 60
Foreign exchange contracts 7 — 7 —
Venture capital and similar investments (1)(2) 261 — — 261
Total assets $ 28,932 $ 305 $ 26,758 $ 1,869
Liabilities:
Derivative liabilities: (1)
Interest rate contracts $ 1,498 $ — $ 1,497 $ 1
Foreign exchange contracts 8 — 8 —
Short-term borrowed funds (3) 118 — 118 —
Total liabilities $ 1,624 $ — $ 1,623 $ 1
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