BB&T 2011 Annual Report Download - page 150

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credit for sources of funds and a funds charge for the use of funds by each segment. The net FTP credit or charge, which
includes intercompany interest income and expense, is reflected as net intersegment income (expense) in the
accompanying tables.
The allocated provision for loan and lease losses is also allocated to the relevant segments based on management’s
assessment of the segments’ credit risks. During the first quarter of 2011, management refined the process related to
assigning the allocated provision between the Company’s operating segments. Unlike the provision for loan and lease
losses recorded pursuant to GAAP, the allocated provision is designed to achieve a higher degree of correlation between
the loan loss experience and the GAAP basis provision at the segment level, while at the same time providing
management with a measure of operating performance that gives appropriate consideration to the risks inherent in each of
the Company’s operating segments. Any over or under allocated provision for loan and lease losses is reflected in Other,
Treasury & Corporate to arrive at consolidated results.
BB&T allocates expenses to the reportable segments based on various methodologies, including volume and amount of
loans and deposits and the number of full-time equivalent employees. A portion of corporate overhead expense is not
allocated, but is retained in corporate accounts and reflected as Other, Treasury & Corporate in the accompanying tables.
The majority of depreciation expense is recorded in support units and allocated to the segments as part of allocated
corporate expense. Income taxes are allocated to the various segments based on taxable income and statutory rates
applicable to the segment.
Community Banking
Community Banking serves individual and business clients by offering a variety of loan and deposit products and other
financial services. Community Banking is primarily responsible for serving client relationships, and, therefore, is credited
with certain revenue from the Residential Mortgage Banking, Financial Services, Insurance Services, Specialized
Lending, and other segments, which is reflected in net referral fees. The expenses related to real estate assets including
depreciation and amortization were moved to an allocated expense category contained in noninterest expenses.
Residential Mortgage Banking
Residential Mortgage Banking retains and services mortgage loans originated by Community Banking as well as those
purchased from various correspondent originators. Mortgage loan products include fixed and adjustable rate government
and conventional loans for the purpose of constructing, purchasing or refinancing residential properties. Substantially all
of the properties are owner occupied. BB&T generally retains the servicing rights to all loans sold. Residential Mortgage
Banking earns interest on loans held in the warehouse and portfolio, fee income from the origination and servicing of
mortgage loans and recognizes gains or losses from the sale of mortgage loans.
Dealer Financial Services
Dealer Financial Services, a portion of which was previously the Sales Finance segment, originates loans to consumers on
a prime and nonprime basis for the purchase of automobiles. Such loans are originated on an indirect basis through
approved franchised and independent automobile dealers throughout the BB&T market area and nationally through
Regional Acceptance Corporation. Regional Acceptance Corporation has previously been reported as a LOB within
Specialized Lending and this change reflects organizational changes within the indirect auto lending sales channel and the
renaming of these related services under Dealer Financial Services. This segment also originates loans for the purchase of
boats and recreational vehicles originated through dealers in BB&T’s market area. In addition, financing and servicing to
dealers for their inventories is provided through a joint relationship between Dealer Financial Services and Community
Banking.
Specialized Lending
BB&T’s Specialized Lending consists of eight business units that provide specialty finance products to consumers and
businesses. These business units are a combination of internal business units and operating subsidiaries of either the
Corporation or the Bank. The internal business units include Commercial Finance that contains commercial finance and
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