BB&T 2013 Annual Report Download - page 92

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Reclassifications
During 2013, the Company revised its prior practice of offsetting amounts due to and from the FDIC under the loss sharing
agreements such that the amounts related to securities and the aggregate loss calculation are now reported in Accounts
payable and other liabilities on the Consolidated Balance Sheets. In certain instances, other amounts reported in prior years’
consolidated financial statements have been reclassified to conform to the current year 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 ACL, 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. The accounts of an acquired entity
are included as of the date of acquisition, and any excess of purchase price over the fair value of the net assets acquired is
capitalized as goodwill.
BB&T typically issues common stock and/or pays cash for an acquisition, 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.
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.
Restricted Cash
Restricted cash represents amounts posted as collateral for derivatives in a loss position.
Securities
BB&T classifies marketable investment securities as HTM, AFS or trading. Interest income and dividends on securities are
recognized in 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 HTM 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 AFS. AFS securities are
reported at estimated fair value, with unrealized gains and losses reported in AOCI, net of deferred income taxes, in the
shareholders’ equity section of the Consolidated Balance Sheets. Gains or losses realized from the sale of AFS securities are
determined by specific identification and are included in noninterest income.