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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2013
Commission File Number: 1-10853
BB&T CORPORATION
(Exact name of Registrant as specified in its Charter)
North Carolina 56-0939887
(State of Incorporation) (I.R.S. Employer Identification No.)
200 West Second Street
Winston-Salem, North Carolina 27101
(Address of principal executive offices) (Zip Code)
(336) 733-2000
(Registrant’s telephone number, including area code)
Securities Registered Pursuant to Section 12(b) of the Securities Exchange Act of 1934:
Title of each class
Name of each exchange
on which registered
Common Stock, $5 par value New York Stock Exchange
Depositary Shares each representing 1/1,000t
h
interest in a share of
Series D Non-Cumulative Perpetual Preferred Stock New York Stock Exchange
Depositary Shares each representing 1/1,000t
h
interest in a share of
Series E Non-Cumulative Perpetual Preferred Stock New York Stock Exchange
Depositary Shares each representing 1/1,000t
h
interest in a share of
Series F Non-Cumulative Perpetual Preferred Stock New York Stock Exchange
Depositary Shares each representing 1/1,000t
h
interest in a share of
Series G Non-Cumulative Perpetual Preferred Stock New York Stock Exchange
Indicate by check mark if the Registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes [X] No [ ]
Indicate by check mark if the Registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes [ ] No [X]
Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes [X] No [ ]
Indicate by check mark whether the Registrant has submitted electronically and posted on its corporate website, if any, every Interactive Data File
required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter
period that the Registrant was required to submit and post such files). Yes [X] No [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to
the best of Registrant’s knowledge, in definitive proxy or information statements incorporated by references in Part III of this Form 10-K or any amendment
to this Form 10-K. [ ]
Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.
See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer X Accelerated filer
Non-accelerated filer (Do not check if a smaller reporting company) Smaller reporting company
Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes [ ] No [X]
At January 31, 2014, the Company had 710,891,276 shares of its Common Stock, $5 par value, outstanding. As of June 30, 2013, the aggregate market
value of voting stock held by nonaffiliates of the Company was approximately $23.7 billion.

Table of contents

  • Page 1
    ... 31, 2013 Commission File Number: 1-10853 BB&T CORPORATION (Exact name of Registrant as specified in its Charter) North Carolina (State of Incorporation) 56-0939887 (I.R.S. Employer Identification No.) 200 West Second Street Winston-Salem, North Carolina (Address of principal executive offices...

  • Page 2
    ...to Consolidated Financial Statements Report of Independent Registered Public Accounting Firm Quarterly Financial Summary Item 9 Item 9A Item 9B Changes in and Disagreements With Accountants on Accounting and Financial Disclosure (None to be reported) Controls and Procedures Other Information - (None...

  • Page 3
    ... of Directors" in the Registrant's Proxy Statement for the 2014 Annual Meeting of Shareholders. For information regarding the registrant's securities authorized for issuance under equity compensation plans, refer to "Equity Compensation Plan Information" in Part II. The other information required...

  • Page 4
    ...share Enterprise resource planning European Union Economic value of equity Securities Exchange Act of 1934, as amended Financial Accounting Standards Board Federal Deposit Insurance Corporation Federal Housing Administration Financial Holding Company Federal Home Loan Bank Federal Home Loan Mortgage...

  • Page 5
    ... Peer Group Reform Act RMO RSU RUFC S&P SBIC SCAP SEC Short-Term Borrowings Simulation TBA TDR U.S. U.S. Treasury UPB VA VaR VIE Definition Loans held for sale London Interbank Offered Rate Line of business Mortgage-backed securities Market Risk, Liquidity and Capital Committee Mortgage servicing...

  • Page 6
    ..."denial of service," "hacking" and "identity theft," could adversely affect our business and financial performance, or our reputation. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this report. Actual results may differ...

  • Page 7
    ... broker-dealer located in Charlotte, North Carolina, which offers clients non-deposit investment products, including discount brokerage services, equities, fixed-rate, variable-rate and index annuities, mutual funds, government and municipal bonds, and money market funds; CRC Insurance Services...

  • Page 8
    ... finance Home equity lending Home mortgage lending Insurance Investment brokerage services Mobile/online banking Payment solutions Retail deposit services Sales finance Small business lending Wealth management/private banking Commercial Services: Asset management Association services Capital markets...

  • Page 9
    ...BB&T Deposit Market Share and Branch Locations by State % of BB&T's Deposits (2) Deposit Market Share Rank (2) Number of Branches (3) North Carolina (1) Virginia Florida Georgia Maryland South Carolina West Virginia Kentucky Alabama Tennessee Texas Washington, D.C. (1) Excludes home office deposits...

  • Page 10
    ... liquidation of large financial companies to avoid market disruption; applying the same leverage and risk-based capital requirements that apply to insured depository institutions to most BHCs, savings and loan holding companies and systemically important nonbank financial companies; limiting the FRB...

  • Page 11
    ... and limiting restrictions on merchant discounting for use of certain payment forms and minimum or maximum amount thresholds as a condition for acceptance of credit cards; implementing regulation of hedge fund and private equity advisers by requiring such advisers to register with the SEC; providing...

  • Page 12
    ... plans based on pre-defined stress scenarios. Such BHCs will also be required to collect and report certain related data on a quarterly basis to allow the FRB to monitor the companies' progress against their annual capital plans. Covered BHCs, including BB&T, may pay dividends and repurchase stock...

  • Page 13
    ...period of time, not to exceed five years; and subject to certain deposit market-share limitations. After a bank has established branches in a state through an interstate merger transaction, the bank may establish and acquire additional branches at any location in the state where a bank headquartered...

  • Page 14
    ... states that, provided a bank does not make distributions that reduce its capital below its applicable required capital, the board of directors of a bank chartered under the laws of North Carolina may declare such distributions as the directors deem proper. Capital Requirements Information related...

  • Page 15
    ... as dividend payments, discretionary payments on Tier 1 instruments, share buybacks, and certain discretionary bonus payments to executive officers, including heads of major business lines and similar employees. The required amount of the capital conservation buffer will be phasedin annually through...

  • Page 16
    ... impact on BB&T's consolidated financial position, results of operations or cash flows. Deposit Insurance Assessments Branch Bank's deposits are insured by the DIF of the FDIC up to the limits set forth under applicable law. The FDIC imposes a risk-based deposit premium assessment system, which was...

  • Page 17
    ... rules, BB&T transferred the management of certain home equity loans from direct retail lending within the Community Banking segment to the Residential Mortgage Banking segment. BB&T continues to analyze the other impacts that such rules may have on its business. Interchange Fees As required by the...

  • Page 18
    ..., 2013, BB&T had approximately 33,700 full-time equivalent employees compared to approximately 34,000 full-time equivalent employees at December 31, 2012. Website Access to BB&T's Filings with the SEC All of BB&T's electronic filings with the SEC, including the Annual Report on Form 10-K, Quarterly...

  • Page 19
    ...Policy and Procedures for Accounting, Securities and Legal Complaints, including Whistleblower Procedures Statement of Political Activity BB&T intends to disclose any substantive amendments or waivers to the Codes of Ethics for Directors or Senior Financial Officers on BB&T's website at www.bbt.com...

  • Page 20
    ... Marketing Officer and Lending Group Manager Cynthia A. Williams Senior Executive Vice President and Chief Corporate Communications Officer W. Rufus Yates Senior Executive Vice President and Capital Markets Manager 6 52 36 58 Enterprise Risk Manager since July 2009. Electronic Delivery Channels...

  • Page 21
    ... higher costs and ratings downgrades. In addition, failure to meet the FRB' s capital planning and adequacy requirements under the Dodd-Frank Act, may limit the ability to pay dividends, enter into acquisitions and repurchase common stock. The Dodd-Frank Act, signed into law in July 2010, represents...

  • Page 22
    ..." for additional information regarding the capital requirements under the Dodd-Frank Act and Basel III. Rulemaking changes implemented by the CFPB will result in higher regulatory and compliance costs related to originating and servicing mortgages and may adversely affect our results of...

  • Page 23
    Credit Risk Changes in national, regional and local economic conditions and deterioration in the geographic and financial markets in which BB&T operates could lead to higher loan charge-offs and reduce BB&T' s net income and growth. BB&T's business is subject to periodic fluctuations based on ...

  • Page 24
    ...unforeseen outflow of cash or deposits. BB&T's inability to access the capital markets could constrain its ability to make new loans, to meet its existing lending commitments and ultimately jeopardize its overall liquidity and capitalization. BB&T's credit ratings are also important to its liquidity...

  • Page 25
    ...a number of large financial services institutions, including BB&T. None of these events resulted in a breach of BB&T's client data or account information; however, the performance of BB&T's website, www.bbt.com, was adversely affected, and in some instances customers were prevented from accessing BB...

  • Page 26
    ...or telecommunications systems. Negative public opinion can result from BB&T's actual or alleged conduct in any number of activities, including lending practices, corporate governance and acquisitions, activities related to asset sales and balance sheet management and from actions taken by government...

  • Page 27
    ... operational in 2016. The objective of the new ERP system is to modernize and consolidate many of the existing systems that are currently used for a variety of functions throughout the Company, including both internal and external financial reporting. BB&T may not be able to successfully implement...

  • Page 28
    ... among commercial banks in BB&T's market area. In addition, BB&T competes with other providers of financial services, such as savings and loan associations, credit unions, consumer finance companies, securities firms, insurance companies, commercial finance and leasing companies, the mutual funds...

  • Page 29
    ... fiscal quarter or year and have a material adverse effect on BB&T's financial condition and/or results of operations. ITEM 2. PROPERTIES BB&T owns or leases significant office space used as the Company's headquarters in Winston-Salem, North Carolina. BB&T owns free-standing operations centers, with...

  • Page 30
    ..."Notes to Consolidated Financial Statements" for additional information. On April 23, 2013, BB&T's shareholders approved a plan that modified the record date and payment date of preferred stock dividends to align with the record and payment date practices associated with common stock dividends. This...

  • Page 31
    ... price. (3) All awards remaining available for future issuance will be issued under the terms of the 2012 Incentive Plan. Performance Graph Set forth below are graphs comparing the total returns (assuming reinvestment of dividends) of BB&T common stock, the S&P 500 Index, and an industry Peer Group...

  • Page 32
    ... on December 31, 1993, 2003 or 2008, including reinvestment of dividends. Fiscal year ended December 31. 2008 BB&T Corporation S&P 500 Index BB&T's Peer Group $ Cumulative Total Return Through December 31, 2009 2010 2011 2012 $100 Invested December 31, 2008 98.10 $ 126.45 93.38 103.92 $ 145.49...

  • Page 33
    ...term debt Other liabilities Shareholders' equity Total liabilities and shareholders' equity Period-End Balances: Total assets Loans and leases (3) Deposits Long-term debt Shareholders' equity Selected Ratios: Rate of return on: Average total assets Average common equity Average total equity Dividend...

  • Page 34
    ...ALLL was 219% of net charge-offs at December 31, 2013, compared to 156% and 136% at December 31, 2012 and 2011, respectively. o ï,· ï,· Growth in noninterest income was driven by record revenues in the insurance, investment banking and brokerage, bankcard fees and merchant discounts, and trust and...

  • Page 35
    ... compared to 2012, which reflects solid growth in insurance income, trust and investment advisory revenues and bankcard fees and merchant discounts totaling 11.6%, 8.7% and 8.5%, respectively. These increases were partially offset by a 32.7% decrease in mortgage banking income. Credit costs declined...

  • Page 36
    ... of BB&T's Board of Directors on a periodic basis. ACL It is the policy of BB&T to maintain an ALLL and a RUFC that represent management's best estimate of probable credit losses inherent in the portfolio at the balance sheet date. Estimates for loan and lease losses are determined by analyzing...

  • Page 37
    ... pricing matrices that were developed using observable inputs that include benchmark yields, benchmark securities, reported trades, offers, bids, issuer spreads and broker quotes. Management performs various procedures to evaluate the accuracy of the fair values provided by the third-party service...

  • Page 38
    ...interest rate lock commitments, which are related to mortgage loan commitments, is based on quoted market prices adjusted for commitments that BB&T does not expect to fund and includes the value attributable to the net servicing fee. Private Equity and Similar Investments BB&T has private equity and...

  • Page 39
    ... costs. The average rate paid on interest-bearing deposits dropped to 0.32% during 2013, from 0.43% in 2012. This improvement included a 16 basis point reduction in the cost of certificates and other time deposits and a five basis point reduction in the cost of money market and savings accounts. 39

  • Page 40
    ... of money market and savings accounts. The rates paid on average short-term borrowings declined from 0.27% in 2011 to 0.26% during 2012. At December 31, 2012, the targeted Federal funds rate was a range of zero percent to 0.25%. The average rate on long-term debt during 2012 was 3.02%, a decrease of...

  • Page 41
    ...these agreements was recorded as the FDIC loss share receivable at the date of acquisition. The fair value of the FDIC loss share receivable/payable was estimated using a discounted cash flow methodology. Acquired loans were aggregated into separate pools based upon common risk characteristics. Each...

  • Page 42
    ... was based upon the timing and amount that would be payable to the FDIC should they settle at the current fair value at the conclusion of the loss share agreement. The following table provides information related to the income statement impact of covered loans and securities and the FDIC loss...

  • Page 43
    ... provision for covered loans was $5 million in 2013, a decrease of $8 million compared to 2012. This decrease resulted from the quarterly reassessment process. FDIC loss share income, net, was $25 million better than 2012, primarily due to securities duration adjustments that increased the expected...

  • Page 44
    ...-bearing deposits: Interest-checking Money market and savings Certificates and other time deposits Foreign office deposits - interest-bearing Total interest-bearing deposits Federal funds purchased, securities sold under repurchase agreements and short-term borrowed funds Long-term debt Total...

  • Page 45
    ..., 2013 2012 2011 (Dollars in millions) % Change 2013 2012 vs. 2012 vs. 2011 Insurance income $ Service charges on deposits Mortgage banking income Investment banking and brokerage fees and commissions Bankcard fees and merchant discounts Trust and investment advisory revenues Checkcard fees Income...

  • Page 46
    ...compared to 2012. This increase was driven by record income generated by BB&T's insurance, investment banking and brokerage, bankcard fees and merchant discounts, and trust and investment advisory LOBs, along with strong growth in checkcard fees and steady growth in service charges on deposits. This...

  • Page 47
    ... instruments used to manage the economic risk. Service charges on deposit accounts totaled $566 million in 2012, essentially flat compared to the prior year, reflecting the impact of pricing changes for routine services related to retail and commercial transaction deposit products, such as monthly...

  • Page 48
    ...the equipment finance leasing business and lower of cost or fair value adjustments on certain owned real estate. These increases were partially offset by a decrease in advertising and marketing expenses, lower insurance-related expenses and the loss on the sale of a leveraged lease that was recorded...

  • Page 49
    ...for loan and lease losses decreased $419 million, or 63.0%, reflecting improving mix due to the runoff of lower quality loans. Noninterest income of $1.2 billion increased $66 million, or 5.8%, primarily due to higher checkcard fees, bankcard fees, merchant discounts, and service charges on deposits...

  • Page 50
    ..., and higher credit spreads to funding costs for both LHFS and loans held for investment. The allocated provision for loan and lease losses decreased $61 million, primarily reflecting an improvement in mix due to the runoff of lower quality loans. Net charge-offs of $78 million were recorded in 2013...

  • Page 51
    ... in 2012 resulting from improved credit trends in the commercial and industrial loan portfolio. Noninterest income for Financial Services increased $24 million, or 3.3%, to $743 million in 2013. The increase in noninterest income was primarily due to higher investment banking and brokerage fees and...

  • Page 52
    ... decrease in provision expense reflects improved credit quality in the loan portfolio, as well as the sale of NPLs in the second quarter of 2011, which resulted in higher charge-offs. Net charge-offs of $133 million were recorded in 2012 compared to $264 million in 2011. Noninterest income increased...

  • Page 53
    ...customers by Equipment Finance, higher loan referral fees paid by Sheffield Financial and higher personnel expense. Insurance Services Insurance Services net income was $143 million in 2012, an increase of $41 million, or 40.2%, compared to 2011. The increase in net income was driven by acquisitions...

  • Page 54
    ... write-downs on affordable housing investments and lower FDIC loss share income. The decrease in allocated corporate expenses was primarily due to changes in intersegment service center allocations. Analysis of Financial Condition A review of the Company's major balance sheet categories is presented...

  • Page 55
    ..., management sold $306 million of securities that produced a realized loss of $3 million. In addition, BB&T recognized $9 million in charges for OTTI related to certain non-agency MBS and covered securities during 2012. Refer to Note 2 "Securities" in the "Notes to Consolidated Financial Statements...

  • Page 56
    ... of the period using the effective interest method on an FTE basis applying the statutory federal income tax rate of 35% and the amortized cost of the securities. (2) For purposes of the maturity table, MBS, which are not due at a single maturity date, have been included in maturity groupings based...

  • Page 57
    ...in the prime automobile lending market as dealer floor plan financing has been a strategic focus. Average CRE - other loan balances were $150 million higher than the prior quarter, which reflects growth in lending related to multifamily residential construction, office, retail and industrial clients...

  • Page 58
    ... mortgage loans typically reset every 12 months beginning after a 3 to 10 year fixed period, with an annual cap on rate changes ranging from 2% to 6%. As of December 31, 2013, the direct retail lending portfolio includes $5.2 billion of home equity lines. Approximately 66% of the outstanding balance...

  • Page 59
    ... Loan and Lease Portfolio Based on LOB 2013 2012 December 31, 2011 (Dollars in millions) 2010 2009 Commercial Direct retail lending Sales finance Revolving credit Residential mortgage Other lending subsidiaries Total loans and leases held for investment (excluding covered loans) Covered Total loans...

  • Page 60
    ... and CRE, had an average holding period of four months. NPAs as a percentage of loans and leases plus foreclosed property were 0.91% at December 31, 2013 compared with 1.33% at December 31, 2012. Management expects NPAs to decline at a modest pace during the first quarter of 2014, assuming no...

  • Page 61
    ... the changes in NPAs during 2013 and 2012: Table 21 Rollforward of NPAs Years Ended December 31, 2013 2012 (Dollars in millions) Balance at beginning of year New NPAs Advances and principal increases Disposals of foreclosed assets Disposals of NPLs (1) Charge-offs and losses Payments Transfers...

  • Page 62
    ... Covered Assets) 2013 2012 December 31, 2011 (Dollars in millions) 2010 2009 Nonaccrual loans and leases: Commercial Direct retail lending Sales finance loans Residential mortgage loans (1) Other lending subsidiaries Total nonaccrual loans and leases held for investment Nonaccrual LHFS Total...

  • Page 63
    ... 23 Asset Quality Ratios 2013 As Of / For The Years Ended December 31, 2012 2011 2010 2009 Asset Quality Ratios (including amounts related to covered loans and covered foreclosed property): Loans 30 - 89 days past due and still accruing as a percentage of total loans and leases (1)(2) Loans 90 days...

  • Page 64
    ... Consolidated Financial Statements" for additional policy information regarding TDRs. BB&T's performing TDRs, excluding government guaranteed mortgage loans, totaled $1.3 billion at December 31, 2013, essentially flat compared to the prior year. During 2012, a national bank regulatory agency issued...

  • Page 65
    ... 31, 2013 Past Due Past Due 30-89 Days (1) 90 Days Or More (1) (Dollars in millions) Current Status Total Performing TDRs: Commercial loans: Commercial and industrial CRE - other CRE - residential ADC Direct retail lending Sales finance Revolving credit Residential mortgage (2) Other lending...

  • Page 66
    ... ACL 2013 2012 December 31, 2011 (Dollars in millions) 2010 2009 Beginning balance $ Provision for credit losses (excluding covered loans) Provision for covered loans Charge-offs: Commercial (1) Direct retail lending Sales finance Revolving credit Residential mortgage (2) Other lending subsidiaries...

  • Page 67
    ... accounts, savings accounts, money market deposit accounts, CDs and individual retirement accounts. Deposit account terms vary with respect to the minimum balance required, the time period the funds must remain on deposit and service charge schedules. Interest rates paid on specific deposit types...

  • Page 68
    ..., business and public funds clients. Interest checking and money market and savings accounts decreased $1.5 billion, or 2.1%, compared to the prior year while certificates and other time deposits declined $6.7 billion, or 21.1%, during that same time period. For the year ended December 31, 2013...

  • Page 69
    ... funding on average in 2013 as compared to 1.9% in 2012. See Note 7 "Short-Term Borrowings" in the "Notes to Consolidated Financial Statements" herein for further disclosure. The types of short-term borrowings that have been, or may be, used by the Company include Federal funds purchased, securities...

  • Page 70
    ...by improvements of $411 million related to pensions and other post-retirement benefit plans and $175 million related to changes in unrealized net gains on cash flow hedges. Tangible book value per common share at December 31, 2013 was $18.08 compared to $16.53 at December 31, 2012. As of December 31...

  • Page 71
    ...provides lending solutions to large corporate clients. Traditionally, lending to small and mid-sized businesses has been among BB&T's strongest market segments. Commercial and small business loans are primarily originated through BB&T's Community Bank. In accordance with the Company's lending policy...

  • Page 72
    ... credit cards to its existing banking client base and does not solicit cardholders through nationwide programs or other forms of mass marketing. Such balances are generally unsecured and actively managed. Residential Mortgage Loan Portfolio Branch Bank offers various types of fixed- and adjustable...

  • Page 73
    ... the market value of portfolios, securities, or other financial instruments due to changes in the level, volatility, or correlations among financial market rates or prices, including interest rates, foreign exchange rates, equity prices, or other relevant rates or prices. For additional information...

  • Page 74
    ... loans and securities, and internal historical prepayment experience for client deposits with no stated maturity and loans that are not residential mortgage related. These assumptions are subject to monthly back-testing, and are adjusted as deemed necessary to reflect changes in interest rates...

  • Page 75
    ... table include prepayment speeds of mortgage-related and other assets, cash flows and maturities of derivative financial instruments, loan volumes and pricing, deposit sensitivity, customer preferences and capital plans. The resulting change in net interest income reflects the level of sensitivity...

  • Page 76
    ... of derivative financial instruments, loan volumes and pricing and deposit sensitivity. The resulting change in the EVE reflects the level of sensitivity that EVE has in relation to changing interest rates. Table 33 EVE Simulation Analysis EVE/Assets December 31, 2013 2012 Hypothetical Percentage...

  • Page 77
    ... during 2013. In addition, the Parent Company issued $1.0 billion of senior notes and repaid $500 million of maturing long-term debt. Funds raised through master note agreements with commercial clients are placed in a note receivable at Branch Bank primarily for its use in meeting short-term funding...

  • Page 78
    ... seeking secured funding, asset sales, and under the most extreme scenarios, curtailing new loan originations. Management believes current sources of liquidity are adequate to meet BB&T's current requirements and plans for continued growth. See Note 4 "Premises and Equipment," Note 9 "Long-Term Debt...

  • Page 79
    ... than 1 to 3 3 to 5 One Year Years Years (Dollars in millions) After 5 Years Long-term debt Operating leases Commitments to fund affordable housing investments Private equity commitments (1) Time deposits Contractual interest payments (2) Total contractual cash obligations $ 21,210 $ 2,143 $ 1,508...

  • Page 80
    Related Party Transactions The Company may extend credit to its officers and directors in the ordinary course of business. These loans are made under substantially the same terms as comparable third-party lending arrangements and are in compliance with applicable banking regulations. Capital The ...

  • Page 81
    ... to periodically submit the company's capital plans to the banking regulators. Management's capital deployment plan in order of preference is to focus on organic growth, dividends, strategic opportunities and share repurchases. Table 37 Capital Ratios December 31, 2013 2012 (Dollars in millions...

  • Page 82
    ...Net income (1) Noncontrolling interest Preferred stock dividends Net income available to common shareholders (1) Basic EPS (1) Diluted EPS (1) Selected Average Balances: Assets Securities, at amortized cost Loans and leases (2) Total earning assets Deposits Short-term borrowings Long-term debt Total...

  • Page 83
    ...loans and the sale of a consumer lending subsidiary during October 2013. NIM was 3.56%, down 28 basis points compared to the fourth quarter of 2012, which reflects covered loan run-off and lower yields on new loans and securities, partially offset by lower funding costs. Noninterest income decreased...

  • Page 84
    ..., the Chief Executive Officer and Chief Financial Officer concluded that the Company's disclosure controls and procedures are effective. There was no change in the Company's internal control over financial reporting that occurred during the fourth quarter of 2013 that has materially affected, or...

  • Page 85
    ... DATA Report of Independent Registered Public Accounting Firm To the Board of Directors and Shareholders of BB&T Corporation: In our opinion, the accompanying consolidated balance sheets and the related consolidated statements of income, comprehensive income, changes in shareholders' equity and...

  • Page 86
    ... Long-term debt Accounts payable and other liabilities Total liabilities Commitments and contingencies (Note 14) Shareholders' equity: Preferred stock, $5 par, liquidation preference of $25,000 per share Common stock, $5 par Additional paid-in capital Retained earnings AOCI, net of deferred income...

  • Page 87
    ... short-term borrowings Interest on long-term debt Total interest expense Net Interest Income Provision for credit losses Net Interest Income After Provision for Credit Losses Noninterest Income Insurance income Service charges on deposits Mortgage banking income Investment banking and brokerage fees...

  • Page 88
    BB&T CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME Years Ended December 31, 2013, 2012 and 2011 (Dollars in millions) Net Income OCI, Net of Tax: Change in unrecognized pension and postretirement amounts Change in unrecognized gains (losses) on cash flow hedges ...

  • Page 89
    ... 401(k) plan In connection with preferred stock offering Cash dividends declared on common stock Cash dividends declared on preferred stock Equity-based compensation expense Other, net Balance, December 31, 2013 Shares of Additional Common Preferred Common Paid-In Retained Stock Stock Stock Capital...

  • Page 90
    ... property Other, net Net cash from investing activities Cash Flows From Financing Activities: Net change in deposits Net change in short-term borrowings Proceeds from issuance of long-term debt Repayment of long-term debt Net proceeds from preferred stock issued Cash dividends paid on common stock...

  • Page 91
    ...party investors; direct consumer finance loans to individuals; credit card lending; automobile financing; factoring and equipment financing. BB&T also markets a wide range of other services, including deposits; discount and full service brokerage, annuities and mutual funds; life insurance, property...

  • Page 92
    ... 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 AFS. AFS securities are reported at estimated fair value, with...

  • Page 93
    ... used to economically hedge the LHFS at fair value. The fair value of LHFS is primarily based on quoted market prices for securities collateralized by similar types of loans. Direct loan origination fees and costs related to LHFS are not capitalized and are recorded as mortgage banking income...

  • Page 94
    ...includes an evaluation of the client's debt to income ratio, credit report, property value, loan vintage, and certain other client-specific factors that impact their ability to make timely principal and interest payments on the loan. Nonaccrual commercial TDRs may be returned to accrual status based...

  • Page 95
    ...amounts and timing of cash flows expected to be received on impaired loans. Those estimates are susceptible to significant change. Changes to the ACL are made by charges to the provision for credit losses, which is reflected in the Consolidated Statements of Income. Loans or lease balances deemed to...

  • Page 96
    ... at the balance sheet date. In connection with this process, BB&T establishes reserves related to these loans that are calculated using an expected cash flow approach. These discounted cash flow analyses incorporate adjustments to future cash flows that reflect management's best estimate of the...

  • Page 97
    .... Rent expense and rental income on operating leases is recorded using the straight-line method over the appropriate lease terms. Short-Term Borrowings Federal funds purchased represent unsecured borrowings from other banks and generally mature daily. Securities sold under repurchase agreements are...

  • Page 98
    ...purchased. BB&T uses derivatives primarily to manage economic risk related to securities, commercial loans, MSRs and mortgage banking operations, long-term debt and other funding sources. BB&T also uses derivatives to facilitate transactions on behalf of its clients. The fair value of derivatives in...

  • Page 99
    ... at fair value with changes in fair value recorded as a component of mortgage banking income. Commercial MSRs are recorded as other assets on the Consolidated Balance Sheets at the lower of cost or market and are amortized in proportion to, and over the estimated period, that net servicing income is...

  • Page 100
    ... annual reporting periods beginning after December 15, 2014. BB&T is currently evaluating this guidance to determine the impact on its consolidated financial position, results of operations and cash flows. In June 2013, the FASB issued new guidance related to Investment Companies. The new guidance...

  • Page 101
    ... for other purposes as required or permitted by law. Certain investments in marketable debt securities and MBS issued by FNMA and FHLMC exceeded ten percent of shareholders' equity at December 31, 2013. The FNMA investments had total amortized cost and fair value of $13.2 billion and $12.7 billion...

  • Page 102
    ... in income on the sale of securities are reflected in the following table: Years Ended December 31, 2013 2012 2011 (Dollars in millions) Gross gains Gross losses Net realized gains (losses) $ $ 57 $ (6) 51 $ 1 $ (4) (3) $ 175 (1) 174 The following table reflects changes in credit losses...

  • Page 103
    ...loss position for potential credit impairment. These models give consideration to long-term macroeconomic factors applied to current security default rates, prepayment rates and recovery rates and security-level performance. At December 31, 2013, one non-agency MBS reflected an immaterial unrealized...

  • Page 104
    ...) December 31, 2013 Current Total Commercial: Commercial and industrial $ 38,110 $ 35 $ CRE - other 11,535 8 CRE - residential ADC 901 2 Other lending subsidiaries 4,482 14 Retail: Direct retail lending 15,595 132 Revolving credit 2,370 23 Residential mortgage 22,738 463 Sales finance 9,316 56...

  • Page 105
    ... Due Due Nonaccrual (Dollars in millions) December 31, 2012 Current Total Commercial: Commercial and industrial CRE - other CRE - residential ADC Other lending subsidiaries Retail: Direct retail lending Revolving credit Residential mortgage Sales finance Other lending subsidiaries Covered Total...

  • Page 106
    ... 31, 2013 Beginning Balance ChargeOffs Recoveries Provision (Dollars in millions) Other Ending Balance Commercial: Commercial and industrial CRE - other CRE - residential ADC Other lending subsidiaries Retail: Direct retail lending Revolving credit Residential mortgage Sales finance Other lending...

  • Page 107
    ... ChargeOffs Recoveries Provision (Dollars in millions) Ending Balance Commercial: Commercial and industrial CRE - other CRE - residential ADC Other lending subsidiaries Retail: Direct retail lending Revolving credit Residential mortgage Sales finance Other lending subsidiaries Covered Unallocated...

  • Page 108
    ..., 2013 December 31, 2012 Recorded Related Recorded Related Investment ALLL Investment ALLL (Dollars in millions) Commercial: Commercial and industrial CRE - other CRE - residential ADC Other lending subsidiaries Retail: Direct retail lending Revolving credit Residential mortgage Sales finance Other...

  • Page 109
    ... are considered impaired. December 31, 2013 2012 (Dollars in millions) Performing TDRs: Commercial: Commercial and industrial CRE - other CRE - residential ADC Direct retail lending Sales finance Revolving credit Residential mortgage Other lending subsidiaries Total performing TDRs Nonperforming...

  • Page 110
    ..., foreclosure or charge-off, whichever occurs first. Years Ended December 31, 2012 2011 (Dollars in millions) 2013 Commercial: Commercial and industrial CRE - other CRE - residential ADC Retail: Direct retail lending Revolving credit Residential mortgage Sales finance Other lending subsidiaries...

  • Page 111
    ...accompanying table: Estimated Useful Life (Years) December 31, 2013 2012 (Dollars in millions) Land and land improvements Buildings and building improvements Furniture and equipment Leasehold improvements Construction in progress Capitalized leases on premises and equipment Total Less - accumulated...

  • Page 112
    ... recorded to date. Residential Mortgage Banking Dealer Financial Specialized Insurance Services Lending Services (Dollars in millions) Community Banking Financial Services Total Goodwill balance, January 1, 2012 Acquired goodwill, net Contingent consideration Other adjustments Goodwill balance...

  • Page 113
    ... the financial condition or results of operations of BB&T. Residential MSRs are recorded on the Consolidated Balance Sheets at fair value with changes in fair value recorded as a component of mortgage banking income in the Consolidated Statements of Income. Various derivative instruments are used to...

  • Page 114
    ... speeds Weighted average OAS Servicing costs Realization of expected net servicing cash flows, passage of time and other Carrying value, December 31, Gains (losses) on derivative financial instruments used to mitigate the income statement effect of changes in fair value $ 627 $ 336 287 (31...

  • Page 115
    ... reserves related to recourse exposure Originated CRE mortgages during the period - year to date NOTE 7. Short-Term Borrowings Short-term borrowings are summarized as follows: $ 28,095 $ 4,594 1,320 9 4,881 29,520 4,970 1,368 13 4,934 December 31, 2013 2012 (Dollars in millions) Federal funds...

  • Page 116
    ... (LIBOR-based, 0.54% at December 31, 2013) FHLB Advances to Branch Bank: Varying maturities to 2034 Other Long-Term Debt Fair value hedge-related basis adjustments Total Long-Term Debt $ ― $ 510 700 300 500 999 749 749 500 400 599 539 933 349 586 298 650 750 500 499 750 ― 386 350 262 8,110 101...

  • Page 117
    ... estimated effective rates of long-term debt, including the effect of hedges (carrying amount excludes fair value hedge-related basis adjustments): Carrying Effective Amount Rate (Dollars in millions) BB&T Corporation Fixed Rate Senior Notes swapped to floating rates BB&T Corporation Floating Rate...

  • Page 118
    ... value of restricted shares Based on the common stock price on the grant date Fair value of RSUs Based on the common stock price on the grant date less the present value of expected dividends that are foregone during the vesting period Expected life Based on historical behavior of employees related...

  • Page 119
    ... 31, 2012 2013 2011 Assumptions: Risk-free interest rate Dividend yield Volatility factor Expected life Fair value of options per share $ 1.3 % 1.5 % 1.7 % 3.6 4.4 3.5 28.0 33.0 37.2 7.0 yrs 7.0 yrs 7.4 yrs 5.48 $ 6.07 $ 7.45 BB&T previously issued grants to non-executive employees consisting...

  • Page 120
    ...income Interest expense FDIC loss share income, net Securities (gains) losses, net Total before income taxes Less: Income taxes Net of income taxes Net change in AOCI AOCI balance, December 31, 2013...Year Ended December 31, 2012 Unrecognized FDIC's Share Net Pension Unrealized Net Unrealized of ...

  • Page 121
    ..., 2012 (Dollars in millions) 2013 2011 Federal income taxes at statutory rate of 35% Increase (decrease) in provision for income taxes as a result of: State income taxes, net of Federal tax benefit Federal tax credits Tax exempt income Nontaxable gain on termination of leveraged lease Adjustments...

  • Page 122
    ... Net unrealized loss on AFS securities Equity-based compensation Reserves and expense accruals Net unrealized loss on cash flow hedges Other Total deferred tax assets Deferred tax liabilities: Prepaid pension plan expense MSRs Lease financing Loan fees and expenses Identifiable intangible assets...

  • Page 123
    ... employees are available to finance future benefits. The following actuarial assumptions were used to determine net periodic pension costs for the qualified pension plan: December 31, 2012 2013 2011 Weighted average assumed discount rate Weighted average expected long-term rate of return on plan...

  • Page 124
    2013 Years Ended December 31, 2012 2011 (Dollars in millions) Net Periodic Pension Cost: Service cost Interest cost Estimated return on plan assets Net amortization and other Net periodic benefit cost Pre-Tax Amounts Recognized in Total Comprehensive Income: Net actuarial loss (gain) Net ...

  • Page 125
    ... fixed income securities, and 0% to 12% for alternative investments, which include real estate, hedge funds, private equities and commodities, with any remainder to be held in cash equivalents. The fair value of the pension plan assets at December 31, 2013 and 2012 by asset category are reflected in...

  • Page 126
    ... shares of BB&T common stock valued at $138 million and $107 million at December 31, 2013 and 2012, respectively. International equity securities include a common/commingled fund that consists of assets from several accounts, pooled together, to reduce management and administration costs. Total plan...

  • Page 127
    ... of credit and financial guarantees written are unconditional commitments issued by BB&T to guarantee the performance of a customer to a third party. These guarantees are primarily issued to support public and private borrowing arrangements, including commercial paper issuance, bond financing and...

  • Page 128
    ... percentages of certain deposit types, subject to various adjustments. At December 31, 2013, the net reserve requirement amounted to $303 million. Branch Bank is subject to laws and regulations that limit the amount of dividends it can pay. In addition, both BB&T and Branch Bank are subject to...

  • Page 129
    ... Company Financial Statements Parent Company Condensed Balance Sheets December 31, 2013 and 2012 December 31, 2013 2012 (Dollars in millions) Assets: Cash and due from banks Interest-bearing deposits with banks AFS securities at fair value HTM securities at amortized cost Investment in banking...

  • Page 130
    ...671 661 1,332 43 ― 1,289 $ Parent Company Condensed Statements of Comprehensive Income Years Ended December 31, 2013, 2012 and 2011 2013 2012 (Dollars in millions) 2011 Net Income OCI, Net of Tax: Change in unrecognized pension and postretirement amounts Change in unrecognized gains (losses) on...

  • Page 131
    ... investing activities Cash Flows From Financing Activities: Net change in long-term debt Net change in short-term borrowed funds Net change in advances from subsidiaries Net proceeds from common stock issued Net proceeds from preferred stock issued Cash dividends paid on common and preferred stock...

  • Page 132
    ...) Assets: Trading securities AFS securities: U.S. Treasury GSE MBS issued by GSE States and political subdivisions Non-agency MBS Other Covered LHFS Residential MSRs Derivative assets: Interest rate contracts Foreign exchange contracts Private equity and similar investments Total assets Liabilities...

  • Page 133
    ... data. The fair values of interest rate lock commitments, which are related to mortgage loan commitments and are categorized as Level 3, are based on quoted market prices adjusted for commitments that are not expected to fund and include the value attributable to the net servicing fees. 133

  • Page 134
    ... judgment and actual values in a sale could differ materially from those estimated. Short-term borrowings: Short-term borrowings represent debt securities sold short that are entered into as a hedging strategy for the purposes of supporting institutional and retail client trading activities. The...

  • Page 135
    ... on equity and subordinated debt investments in privately-held middle market companies. These investments generally are not redeemable and distributions are received as the underlying assets of the funds liquidate. The timing of distributions, which are expected to occur on various dates through...

  • Page 136
    ... agreements and other short-term borrowed funds approximate their fair values. Long-term debt: The fair values of long-term debt are estimated based on quoted market prices for the instrument if available, or for similar instruments if not available, or by using discounted cash flow analyses...

  • Page 137
    ...,313 December 31, 2012 Total Fair Value Level 2 (Dollars in millions) Financial assets: HTM securities Loans and leases, net of ALLL excluding covered loans Covered loans, net of ALLL FDIC loss share receivable Financial liabilities: Deposits FDIC loss share payable Long-term debt $ 13,594 $ 13...

  • Page 138
    ... as hedges: Client-related and other risk management: Interest rate contracts: Receive fixed swaps Pay fixed swaps Other Foreign exchange contracts Total 3 mo. LIBOR funding $ 4,300 $ ― $ (203) $ 6,035 $ ― $ (298) Long-term debt Commercial loans Municipal securities 6,822 178...

  • Page 139
    ...additional termination event. Credit Support Annexes govern the terms of daily collateral posting practices. Collateral practices mitigate the potential loss impact to affected parties by requiring liquid collateral to be posted on a scheduled basis to secure the aggregate net unsecured exposure. In...

  • Page 140
    ... rate lock and funding date for mortgage loans originated for sale. For interest rate lock commitment derivatives and LHFS, use mortgage-based derivatives such as forward commitments and options to mitigate market risk. For MSRs, mitigate the income statement effect of changes in the fair value...

  • Page 141
    ...7 yrs ― yrs Year Ended December 31, 2013 2012 (Dollars in millions) Cash flow hedges: Pre-tax deferred gain from terminated cash flow hedges recorded in OCI Fair value hedges: Pre-tax deferred gain from terminated fair value hedges related to long-term debt Pre-tax reduction of interest expense...

  • Page 142
    ... diluted EPS calculations are presented in the following table: Years Ended December 31, 2013 2012 2011 (Dollars in millions, except per share data, shares in thousands) Net income available to common shareholders Weighted average number of common shares Effect of dilutive outstanding equity-based...

  • Page 143
    ... Commercial Finance LOB that is part of the Specialized Lending segment and the identified wealth and private banking clients of the Wealth Division within the Financial Services segment. The net interest income and associated net FTP associated with these customers' loans and deposits is accounted...

  • Page 144
    ... Financial, a dealer-based financer of equipment for both small businesses and consumers; Prime Rate Premium Finance Corporation, which includes AFCO and CAFO, insurance premium finance LOBs that provide funding to businesses in the United States and Canada and to consumers in certain markets...

  • Page 145
    ..., corporate finance and equity research and facilitates the origination, trading and distribution of fixed-income securities and equity products in both the public and private capital markets. BB&T Securities also has a public finance department that provides investment banking services, financial...

  • Page 146
    ...income (loss) Identifiable segment assets (period end) (1) $ Insurance Services 2012 2011 3 $ 6 9 3 $ 4 7 ― 1,365 ― 1,016 61 82 213 70 143 $ 3,297 $ 2 $ 5 7 ― 1,041 ― 786 42 72 148 46 102 $ 2,350 $ 2013 Financial Services Other, Treasury and Corporate (1) 2012 2011 2013 2012 2011 (Dollars...

  • Page 147
    ... net income (loss) Identifiable segment assets (period end) (1) $ Insurance Services 2012 2011 3 $ 6 9 3 $ 4 7 ― 1,365 ― 1,016 61 82 213 70 143 3,297 2 $ 5 7 ― 1,041 ― 786 42 72 148 46 102 2,350 2013 Financial Services Other, Treasury and Corporate (1) 2012 2011 2013 2012 2011 (Dollars in...

  • Page 148
    ... Chief Executive Officer (Principal Executive Officer) /s/ Daryl N. Bible Daryl N. Bible Senior Executive Vice President and Chief Financial Officer (Principal Financial Officer) /s/ Cynthia B. Powell Cynthia B. Powell Executive Vice President and Corporate Controller (Principal Accounting Officer...

  • Page 149
    ... S. King Kelly S. King Chairman and Chief Executive Officer /s/ Nido R. Qubein Nido R. Qubein Director /s/ John A. Allison IV John A. Allison IV Director /s/ Tollie W. Rich, Jr. Tollie W. Rich, Jr. Director /s/ Jennifer S. Banner Jennifer S. Banner Director /s/ Thomas E. Skains Thomas E. Skains...

  • Page 150
    ...Description Location 2.1 Purchase and Assumption Agreement Whole Bank All Deposits, among the Federal Deposit Insurance Corporation, receiver of Colonial Bank, Montgomery, Alabama, the Federal Deposit Insurance Corporation and Branch Banking and Trust Company, dated as of August 14, 2009. Articles...

  • Page 151
    ...Proxy Statement for the 2009 Annual Meeting of Shareholders on Schedule 14A, filed March 13, 2009. Incorporated herein by reference to Exhibit 10.1 of the Current Report on Form 8-K, filed June 25, 2010. Incorporated herein by reference to Exhibit 10.6 of the Quarterly Report on Form 10-Q, filed May...

  • Page 152
    ... Unit Agreement for the BB&T Corporation Amended and Restated 2004 Stock Incentive Plan (4-Year Vesting). BB&T Corporation Amended and Restated Short-term Incentive Plan. Incorporated herein by reference to Exhibit 10.5 of the Quarterly Report on Form 10-Q, filed May 7, 2010. Incorporated herein by...

  • Page 153
    ... 10.4 of the Quarterly Report on Form 10-Q, filed May 2, 2013. Incorporated herein by reference to Exhibit 10.1 of the Current Report on Form 8-K, filed December 19, 2012. 10.29* BB&T Corporation Non-Qualified Defined Contribution Plan. 10.30* BB&T Corporation Non-Qualified Deferred Compensation...

  • Page 154
    ... 27, 2009. Incorporated herein by reference to Exhibit 10.1 of the Quarterly Report on Form 10-Q, filed November 2, 2012. Incorporated herein by reference to Exhibit 10.2 of the Quarterly Report on Form 10-Q, filed November 2, 2012. Filed herewith as Note 19 to the consolidated financial statements...

  • Page 155
    ... Filed herewith. 31.2 Filed herewith. 32 Filed herewith. 101.CAL 101.DEF 101.INS 101.LAB 101.PRE 101.SCH * †Filed herewith. Filed herewith. Filed herewith. Filed herewith. Filed herewith. Filed herewith. Management compensatory plan or arrangement. Exhibit filed with the SEC and available...

  • Page 156
    ... adversely affect the registrant's ability to record, process, summarize and report financial information; and b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Date: February...

  • Page 157
    ... adversely affect the registrant's ability to record, process, summarize and report financial information; and b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Date: February...

  • Page 158
    ...N. Bible Daryl N. Bible Senior Executive Vice President and Chief Financial Officer A signed original of this written statement required by Section 906 has been provided to BB&T Corporation and will be retained by BB&T Corporation and furnished to the Securities and Exchange Commission or its staff...