BB&T 2014 Annual Report Download - page 39

Table of Contents
·The income statement effect of the above items is offset by the applicable loss share percentage in FDIC loss share income, net, which cumulatively
resulted in a liability of $235 million as of December 31, 2014. Subsequent to September 30, 2014, any OTTI will not be offset with the expiration
of commercial loss sharing.
·Securities acquired from the FDIC are classified as AFS and carried at fair market value. The changes in unrealized gains/losses (down to the
contractually specified amount) are offset by the applicable loss share percentage in AOCI, which resulted in a liability of $330 million as of
December 31, 2014.
·BB&T would only owe these amounts to the FDIC if BB&T were to sell these securities prior to the end of the third quarter of 2017. BB&T has no
current intent to dispose of the securities.
The following table provides information related to the components of the FDIC loss share receivable (payable):



 
   

Loans $ 534 $ 123 $ 843 $ 464
Securities (565) (535) (565) (521)
Aggregate loss calculation (132) (161) (104) (131)
Total $ (163) $ (573) $ 174 $ (188)
The decrease in the carrying amount attributable to loans acquired from the FDIC was due to the receipt of cash from the FDIC, negative accretion due to
credit loss improvement and the offset to the provision for loans acquired from the FDIC, which was a benefit for the current year. The change in the carrying
amount attributable to the aggregate loss calculation is primarily due to accretion of the expected payment, which is included in “Accretion due to credit loss
improvement” below. The fair values are based upon a discounted cash flow methodology that is consistent with the acquisition date methodology. The fair
value attributable to acquired loans and the aggregate loss calculation changes over time due to the receipt of cash from the FDIC, updated credit loss
assumptions and the passage of time. The fair value attributable to securities acquired from the FDIC is 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 gain sharing period.
The following table provides information related to the income statement impact of loans and securities acquired from the FDIC and the FDIC loss sharing
receivable/payable. The table excludes all amounts related to other assets acquired and liabilities assumed in the acquisition.



  

Interest income-loans $ 278 $ 451 $ 765
Interest income-securities 125 137 172
Total interest income - acquired from FDIC 403 588 937
Benefit (provision) for loans acquired from FDIC 29 (5) (13)
OTTI for securities acquired from FDIC ― ― (4)
FDIC loss share income, net (343) (293) (318)
Adjusted net revenue $ 89 $ 290 $ 602
FDIC loss share income, net:
Offset to provision for covered loans $ (25) $ 4 $ 11
Accretion due to credit loss improvement (276) (255) (271)
Offset to OTTI for securities acquired from FDIC ― ― 3
Accretion for securities (42) (42) (61)
Total $ (343) $ (293) $ (318)
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Source: BB&T CORP, 10-K, February 25, 2015 Powered by Morningstar® Document Research℠
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