BB&T 2014 Annual Report Download - page 117
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Table of Contents
The following table presents a roll forward of the carrying value of residential MSRs recorded at fair value:
Carrying value, January 1, $ 1,047 $ 627 $ 563
Additions 141 336 270
Change in fair value due to changes in valuation inputs or assumptions:
Prepayment speeds (219) 287 19
Weighted average OAS ― (31) (36)
Servicing costs (2) (29) (22)
Realization of expected net servicing cash flows, passage of time and other (123) (143) (167)
Carrying value, December 31, $ 844 $ 1,047 $ 627
Gains (losses) on derivative financial instruments used to mitigate the
income statement effect of changes in fair value $ 251 $ (197) $ 128
The sensitivity of the fair value of the residential MSRs to changes in key assumptions is included in the accompanying table:
Prepayment speed 10.8 % 12.8 % 12.0 % 5.5 % 8.0 % 6.9 %
Effect on fair value of a 10% increase $ (30) $ (33)
Effect on fair value of a 20% increase (58) (64)
OAS 9.1 % 9.9 % 9.3 % 9.1 % 9.9 % 9.3 %
Effect on fair value of a 10% increase $ (26) $ (39)
Effect on fair value of a 20% increase (50) (75)
Composition of loans serviced for others:
Fixed-rate residential mortgage loans 99.4 % 99.7 %
Adjustable-rate residential mortgage loans 0.6 0.3
Total 100.0 % 100.0 %
Weighted average life 5.7 yrs 7.9 yrs
The sensitivity calculations above are hypothetical and should not be considered to be predictive of future performance. As indicated, changes in fair value
based on adverse changes in assumptions generally cannot be extrapolated because the relationship of the change in assumption to the change in fair value
may not be linear. Also, in the above table, the effect of an adverse variation in a particular assumption on the fair value of the MSRs is calculated without
changing any other assumption; while in reality, changes in one factor may result in changes in another, which may magnify or counteract the effect of the
change.
Commercial Mortgage Banking Activities
CRE mortgage loans serviced for others are not included in loans and leases on the accompanying Consolidated Balance Sheets. The following table
summarizes commercial mortgage banking activities for the periods presented:
UPB of CRE mortgages serviced for others $ 27,599 $ 28,095
CRE mortgages serviced for others covered by recourse provisions 4,264 4,594
Maximum recourse exposure from CRE mortgages
sold with recourse liability 1,278 1,320
Recorded reserves related to recourse exposure 7 9
Originated CRE mortgages during the year 5,265 4,881
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Source: BB&T CORP, 10-K, February 25, 2015 Powered by Morningstar® Document Research℠
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