BB&T 2014 Annual Report Download - page 40

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Table of Contents
2014 compared to 2013
Interest income for 2014 on loans and securities acquired from the FDIC decreased $185 million compared to 2013, primarily due to lower average acquired
loan balances. The yield on acquired loans for 2014 was 17.22% compared to 16.93% in 2013. At December 31, 2014, the accretable yield balance on
acquired loans was $378 million. Accretable yield represents the excess of expected future cash flows above the current net carrying amount of loans and will
be recognized in income over the remaining life of the loans.
During 2014, BB&T increased the accretable yield balance on loans acquired from the FDIC by $116 million, compared to a $107 million increase in 2013,
primarily due to improved loss results. These adjustments are recognized on a prospective basis over the remaining lives of the loan pools. Loans acquired
from FDIC have experienced better performance than originally anticipated, which has resulted in the recognition of additional interest income on a level
yield basis over the expected life of the corresponding loans. A significant portion of this increase in interest income is offset by a reduction in noninterest
income recorded in FDIC loss share income.
The provision for loans acquired from the FDIC was a benefit of $29 million in 2014, compared to a provision of $5 million for 2013, which reflects
improvements in credit quality on acquired loans.
FDIC loss share income, net, was $50 million worse than 2013, primarily due to a $29 million change in the offset to the provision for covered loans and $21
million higher negative accretion related to credit losses on covered loans.
2013 compared to 2012
Interest income for 2013 on loans and securities acquired from the FDIC decreased $349 million compared to 2012, primarily due to lower average acquired
loan balances. The yield on acquired loans for 2013 was 16.93% compared to 18.91% in 2012. At December 31, 2013, the accretable yield balance on
acquired loans was $538 million. Accretable yield represents the excess of expected future cash flows above the current net carrying amount of loans and will
be recognized in income over the remaining life of the acquired loans.
During 2013, BB&T increased the accretable yield balance on loans acquired from the FDIC by $107 million, compared to a $72 million reduction in 2012,
primarily due to improved loss results in 2013 and changes in the expected lives of the underlying loans in 2012. These adjustments are recognized on a
prospective basis over the remaining lives of the loan pools.
The provision for loans acquired from the FDIC 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 lives of securities
in 2013, compared to duration adjustments that shortened the lives in 2012.
FTE Net Interest Income and Rate / Volume Analysis
The following table sets forth the major components of net interest income and the related yields and rates, as well as the variances between the periods
caused by changes in interest rates versus changes in volumes. Changes attributable to the mix of assets and liabilities have been allocated proportionally
between the changes due to rate and the changes due to volume.
39
Source: BB&T CORP, 10-K, February 25, 2015 Powered by Morningstar® Document Research℠
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