BB&T 2011 Annual Report Download - page 93

BB&T has investments in certain entities for which BB&T does not have the controlling interest. For these investments,
the Company records its portion of income or loss in other noninterest income in the Consolidated Statements of Income.
BB&T periodically evaluates these investments for impairment.
Reclassifications
In certain instances, amounts reported in prior years’ consolidated financial statements have been reclassified to conform to the
current presentation. Such reclassifications had no effect on previously reported cash flows, shareholders’ equity or net income.
Use of Estimates in the Preparation of Financial Statements
The preparation of financial statements in conformity with GAAP requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as
of the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods.
Actual results could differ from those estimates. Material estimates that are particularly susceptible to significant change
include the determination of the allowance for credit losses, determination of fair value for financial instruments,
valuation of goodwill, intangible assets and other purchase accounting related adjustments, benefit plan obligations and
expenses, and tax assets, liabilities and expense.
Business Combinations
BB&T accounts for all business combinations using the acquisition method of accounting. Under this method of accounting,
the accounts of an acquired entity are included with the acquirer’s accounts as of the date of acquisition with any excess of
purchase price over the fair value of the net assets acquired (including identifiable intangibles) capitalized as goodwill.
To consummate an acquisition, BB&T typically issues common stock and/or pays cash, depending on the terms of the
acquisition agreement. The value of common shares issued is determined based upon the market price of the stock as of
the closing of the acquisition.
In connection with mergers and acquisitions, BB&T may issue options to purchase shares of its common stock in
exchange for options to purchase shares of the acquired entities that are outstanding at the time the merger is completed.
To the extent vested, the options are considered to be part of the purchase price paid. There is no change in the aggregate
intrinsic value of the options issued compared to the intrinsic value of the options held immediately before the exchange,
nor does the ratio of the exercise price per option to the market value per share change.
Cash and Cash Equivalents
Cash and cash equivalents include cash and due from banks, interest-bearing deposits with banks, Federal funds sold and
securities purchased under resale agreements or similar arrangements. Cash and cash equivalents have maturities of three
months or less. Accordingly, the carrying amount of such instruments is considered a reasonable estimate of fair value.
Securities
BB&T classifies marketable investment securities as held to maturity, available for sale or trading. Interest income and
dividends on securities are recognized in interest income on an accrual basis. Premiums and discounts on debt securities
are amortized as an adjustment to interest income using the interest method.
Debt securities are classified as held to maturity where BB&T has both the intent and ability to hold the securities to
maturity. These securities are reported at amortized cost.
Debt securities, which may be sold to meet liquidity needs arising from unanticipated deposit and loan fluctuations,
changes in regulatory capital requirements, or unforeseen changes in market conditions, are classified as available for sale.
Securities available for sale are reported at estimated fair value, with unrealized gains and losses reported in accumulated
other comprehensive income or loss, net of deferred income taxes, in the shareholders’ equity section of the Consolidated
Balance Sheets. Gains or losses realized from the sale of securities available for sale are determined by specific
identification and are included in noninterest income.
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