BB&T 2015 Annual Report Download - page 107

TableofContents
Equity-Based Compensation
BB&T maintains various equity-based compensation plans that provide for the granting of stock options (incentive and nonqualified), stock appreciation
rights, restricted stock, RSUs, performance units and performance shares to selected employees and directors. BB&T values share-based awards at the grant
date fair value and recognizes the expense over the requisite service period taking into account retirement eligibility.
Pension and Postretirement Benefit Obligations
BB&T offers various pension plans and postretirement benefit plans to employees. Calculation of the obligations and related expenses under these plans
requires the use of actuarial valuation methods and assumptions. The discount rate assumption used to measure the postretirement benefit obligations is set
by reference to a high quality corporate bond yield curve and the individual characteristics of the plan such as projected cash flow patterns and payment
durations. The expected long-term rate of return on assets is based on the expected returns for each major asset class in which the plan invests, adjusted for the
weight of each asset class in the target mix.
Insurance Income
Insurance commission revenue is generally recognized at the later of the billing date or the effective date of the related insurance policies. Insurance
premiums from underwriting activities are recognized as income over the policy term. The portion of premiums that will be earned in the future is deferred
and included in other liabilities in the Consolidated Balance Sheets.
Segments
Segment results are presented based on internal management accounting policies that were designed to support BB&T’s strategic objectives. The Other,
Treasury and Corporate segment includes financial data from subsidiaries below the quantitative and qualitative thresholds requiring disclosure. Refer to
Note 20 “Operating Segments”for additional disclosures regarding BB&T’s segments.
Changes in Accounting Principles and Effects of New Accounting Pronouncements
During February 2016, the FASB issued new guidance related to Leases. The new guidance requires lessees to recognize assets and liabilities related to
certain operating leases on the balance sheet. The new guidance also requires additional disclosures by lessees and contains targeted changes to accounting
by lessors. This guidance is effective for fiscal years beginning after December 15, 2018 and interim periods within those fiscal years. The Company is
currently evaluating this guidance to determine the impact on its consolidated financial statements.
During January 2016, the FASB issued new guidance related to Financial Instruments. The new guidance requires equity investments to be measured at fair
value with changes in fair value recognized in net income, excluding equity investments that are consolidated or accounted for under the equity method of
accounting. The new guidance allows equity investments without readily determinable fair values to be measured at cost minus impairment, with a
qualitative assessment required to identify impairment. The new guidance also requires public companies to use exit prices to measure the fair value of
financial instruments, eliminates the disclosure requirements related to measurement assumptions for the fair value of instruments measured at amortized cost
and requires separate presentation of financial assets and liabilities based on form and measurement category. In addition, for liabilities measured at fair value
under the fair value option, the changes in fair value due to changes in instrument-specific credit risk should be recognized in OCI. This guidance is effective
for fiscal years beginning after December 15, 2017 and interim periods within those fiscal years. The Company is currently evaluating this guidance to
determine the impact on its consolidated financial statements.
During September 2015, the FASB issued new guidance related to Business Combinations. The new guidance requires acquirers to recognize adjustments to
provisional amounts (that are identified during the measurement period) in the reporting period in which the adjustment amounts are determined. The new
guidance also requires such amounts to be disclosed in the consolidated financial statements. BB&T early adopted this guidance effective September 30,
2015. The adoption of this guidance was not material to the consolidated financial statements.
During May 2015, the FASB issued new guidance related to Insurance. The new guidance requires insurance companies to provide additional disclosures
about the liability for unpaid claims and claim adjustment expenses. This guidance is effective for annual periods beginning after December 15, 2015.
BB&T’s insurance operations primarily consist of agency/broker transactions; therefore, the adoption of this guidance is not expected to be material to the
consolidated financial statements.
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Source: BB&T CORP, 10-K, February 25, 2016 Powered by Morningstar® Document Research℠
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