BB&T 2013 Annual Report Download - page 139

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139
Assets and liabilities related to derivatives are presented on a gross basis in the Consolidated Balance Sheets. Cash collateral
posted for derivative instruments in a loss position is reported as Restricted cash. Derivatives with dealer counterparties are
governed by the terms of ISDA master netting agreements and Credit Support Annexes. The ISDA Agreement allows
counterparties to offset trades in a gain against trades in a loss to determine net exposure and allows for the right of setoff in
the event of either a default or an 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 addition to collateral, the right of setoff allows
counterparties to offset derivative values transacted with a defaulting party with certain other contractual receivables from or
obligations due to the defaulting party in determining the net termination amount. No portion of the change in fair value of
the derivatives has been excluded from effectiveness testing. The ineffective portion was immaterial for all periods presented.
The Effect of Derivative Instruments on the Consolidated Statements of Income
Years Ended December 31, 2013, 2012 and 2011
Effective Portion
Pre-tax Gain (Loss) Location of Pre-tax Gain (Loss) Reclassified
Recognized in OCI Amounts Reclassified from AOCI into Income
2013 2012 2011 from AOCI into Income 2013 2012 2011
(Dollars in millions)
Cash Flow Hedges:
Interest rate contracts $ 204 $ (84) $ (225) Total interest income $ ― $ 11 $ 26
Total interest expense (77) (72) (72)
$ (77) $ (61) $ (46)
Pre-tax Gain (Loss)
Location of Amounts Recognized in Income
Recognized in Income 2013 2012 2011
(Dollars in millions)
Fair Value Hedges:
Interest rate contracts Total interest income $ (21) $ (21) $ (21)
Total interest expense 141 288 314
$ 120 $ 267 $ 293
N
ot Designated as Hedges:
Client-related and other risk management:
Interest rate contracts Other income $ 26 $ 35 $ 10
Foreign exchange contracts Other income 11 9 6
Mortgage Banking:
Interest rate contracts Mortgage banking income (27) 59 (70)
MSRs:
Interest rate contracts Mortgage banking income (197) 128 394
$ (187) $ 231 $ 340