BB&T 2015 Annual Report Download - page 156

TableofContents
The allocated provision for loan and lease losses is also allocated to the relevant segments based on management’s assessment of the segments’ credit risks.
The allocated provision is designed to achieve a high degree of correlation between the loan loss experience and the GAAP basis provision at the segment
level, while at the same time providing management with a measure of operating performance that gives appropriate consideration to the risks inherent in
each of the Company’s operating segments. Any over or under allocated provision for loan and lease losses is reflected in Other, Treasury and Corporate to
arrive at consolidated results.
BB&T allocates expenses to the reportable segments based on various methodologies, including volume and amount of loans and deposits and the number of
full-time equivalent employees. Allocation systems are refined from time to time along with further identification of certain cost pools. These cost pools and
refinements are implemented to provide for improved managerial reporting of cost to the appropriate business segments. A portion of corporate overhead
expense is not allocated, but is retained in corporate accounts and reflected as Other, Treasury and Corporate in the accompanying tables. The majority of
depreciation expense is recorded in support units and allocated to the segments as part of allocated corporate expense. Income taxes are allocated to the
various segments based on taxable income and statutory rates applicable to the segment.
Community Banking
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Community Banking serves individual and business clients by offering a variety of loan and deposit products and other financial services. Community
Banking is primarily responsible for serving client relationships and, therefore, is credited with certain revenue from the Residential Mortgage Banking,
Financial Services, Insurance Services, Specialized Lending, and other segments, which is reflected in net referral fees.
Residential Mortgage Banking
Residential Mortgage Banking retains and services mortgage loans originated by Community Banking as well as those purchased from various
correspondent originators. Mortgage loan products include fixed and adjustable rate government and conventional loans for the purpose of constructing,
purchasing or refinancing residential properties. Substantially all of the properties are owner occupied. BB&T generally retains the servicing rights to loans
sold. Residential Mortgage Banking earns interest on loans held in the warehouse and portfolio, earns fee income from the origination and servicing of
mortgage loans and recognizes gains or losses from the sale of mortgage loans.
Dealer Financial Services
Dealer Financial Services originates loans to consumers on a prime and nonprime basis for the purchase of automobiles. Such loans are originated on an
indirect basis through approved franchised and independent automobile dealers throughout the BB&T market area and nationally through Regional
Acceptance Corporation. This segment also originates loans for the purchase of boats and recreational vehicles originated through dealers in BB&T’s market
area. In addition, financing and servicing to dealers for their inventories is provided through a joint relationship between Dealer Financial Services and
Community Banking.
Specialized Lending
Specialized Lending consists of BUs and subsidiaries that provide specialty finance products to consumers and businesses. The BUs include Commercial
Finance and Governmental Finance. Commercial Finance structures and manages asset-based working capital financing, supply chain financing, export-
import finance, accounts receivable management and credit enhancement. Commercial Finance also contains the Mortgage Warehouse Lending business,
which provides short-term lending solutions to finance first-lien residential mortgage LHFS by independent mortgage companies. Governmental Finance
provides tax-exempt financing to meet the capital project needs of local governments. Operating subsidiaries include BB&T Equipment Finance, which
provides equipment leasing largely within BB&T’s banking footprint; Sheffield Financial, a dealer-based financer of equipment for both small businesses
and consumers; Prime Rate Premium Finance Corporation, which includes AFCO and CAFO, insurance premium finance BUs that provide funding to
businesses in the United States and Canada and to consumers in certain markets within BB&T’s banking footprint; and Grandbridge, a full-service
commercial mortgage banking lender providing loans on a national basis. Lendmark Financial Services, a direct consumer finance lending company, was
sold during 2013. Branch Bank clients as well as nonbank clients within and outside BB&T’s primary geographic market area are served by these LOBs. The
Community Banking segment receives credit for referrals to these LOBs with the corresponding charge retained as part of Other, Treasury and Corporate in
the accompanying tables.
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Source: BB&T CORP, 10-K, February 25, 2016 Powered by Morningstar® Document Research℠
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