BB&T 2015 Annual Report Download - page 110

TableofContents
The following is a description of the methods used to determine the fair values of significant assets and liabilities presented above.
Cash, due from banks and federal funds sold: The carrying amount of these assets is a reasonable estimate of fair value based on the short-term nature of these
assets.
Securities: Fair values for securities are based on quoted market prices, where available. If quoted market prices are not available, fair value estimates are
based on observable inputs including quoted market prices for similar instruments, quoted market prices that are not in an active market or other inputs that
are observable in the market. In the absence of observable inputs, fair value is estimated based on pricing models and/or discounted cash flow methodologies.
Loans and leases: Fair values for loans were based on a discounted cash flow methodology that considered factors including the type of loan and related
collateral, classification status, fixed or variable interest rate, term of loan, amortization status and current discount rates. Loans were grouped together
according to similar characteristics and were treated in the aggregate when applying various valuation techniques. The discount rates used for loans are based
on current market rates for new originations of comparable loans and include adjustments for liquidity concerns. The discount rate does not include a factor
for credit losses as that has been included as a reduction to the estimated cash flows.
CDI: This intangible asset represents the value of the relationships with deposit customers. The fair value was estimated based on a discounted cash flow
methodology that gave appropriate consideration to expected customer attrition rates, cost of the deposit base, reserve requirements and the net maintenance
cost attributable to customer deposits. The CDI is being amortized over 10 years based upon the estimated economic benefits received.
Deposits: The fair values used for the demand and savings deposits by definition equal the amount payable on demand at the acquisition date. The fair values
for time deposits are estimated using a discounted cash flow calculation that applies interest rates currently being offered to the contractual interest rates on
such time deposits.
Debt: The fair values of long-term debt instruments are estimated based on quoted market prices for the instrument if available, or for similar instruments if
not available, or by using discounted cash flow analyses, based on current incremental borrowing rates for similar types of instruments.
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Source: BB&T CORP, 10-K, February 25, 2016 Powered by Morningstar® Document Research℠
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