BB&T 2015 Annual Report Download - page 48

TableofContents
Other, Treasury & Corporate
Other, Treasury & Corporate net income was $137 million in 2014 compared to a net loss of $506 million in 2013. Results in the prior year include $516
million in adjustments for uncertain income tax positions as previously discussed.
Segment net interest income increased $103 million to $401 million, primarily due to an increase in the investment portfolio, lower funding credits on
deposits allocated to Community Banking and Financial Services and lower corporate borrowing costs, partially offset by runoff in the PCI loan portfolio.
Noninterest income decreased $170 million primarily due to lower securities gains in the investment portfolio, lower FDIC loss share income, the sale of a
consumer lending subsidiary during the fourth quarter of 2013 and lower income from assets related to certain post-employment benefits.
The allocated provision for credit losses was a benefit of $66 million compared to a benefit of $16 million in 2013. Results from 2014 included a $29 million
benefit for loans acquired from the FDIC and a $29 million reduction in the reserve for unfunded lending commitments driven by improvements related to the
mix of lines of credit, letters of credit, and bankers’ acceptances. Noninterest expense increased $36 million, primarily due to $122 million in expense related
to early extinguishment of FHLB debt, and higher outside IT services and merger-related expense, partially offset by lower personnel, professional services
and tax and license expense. Intersegment net referral fee expense decreased $59 million as a result of a lower level of mortgage banking referral income that
was allocated to both Community Banking and Financial Services.
Analysis of Financial Condition
Investment Activities
BB&T’s board-approved investment policy is carried out by the MRLCC, which meets regularly to review the economic environment and establish
investment strategies. The MRLCC also has much broader responsibilities, which are discussed in the “Market Risk Management” section in “Management’s
Discussion and Analysis of Financial Condition and Results of Operations” herein.
Investment strategies are reviewed by the MRLCC based on the interest rate environment, balance sheet mix, actual and anticipated loan demand, funding
opportunities and the overall interest rate sensitivity of the Company. In general, the goals of the investment portfolio are: (i) to provide a sufficient margin
of liquid assets to meet unanticipated deposit and loan fluctuations and overall funds management objectives; (ii) to provide eligible securities to secure
public funds, trust deposits as prescribed by law and other borrowings; and (iii) to earn the maximum return on funds invested that is commensurate with
meeting the requirements of (i) and (ii).
Branch Bank invests in securities allowable under bank regulations. These securities may include obligations of the U.S. Treasury, U.S. government agencies,
GSEs (including MBS), bank eligible obligations of any state or political subdivision, non-agency MBS, structured notes, bank eligible corporate
obligations (including corporate debentures), commercial paper, negotiable CDs, bankers acceptances, mutual funds and limited types of equity securities.
Branch Bank also may deal in securities subject to the provisions of the Gramm-Leach-Bliley Act. BB&T’s full-service brokerage and investment banking
subsidiary engages in the underwriting, trading and sales of equity and debt securities subject to the risk management policies of the Company.
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Source: BB&T CORP, 10-K, February 25, 2016 Powered by Morningstar® Document Research℠
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