BB&T 2015 Annual Report Download - page 53

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 
 
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Commercial:
Commercial and industrial $ 33,927 2.39 % 2.9 yrs
CRE - income producing properties 9,984 3.14 4.5
CRE - construction and development 3,356 3.44 3.1
Dealer floor plan (1) 1,215 1.91 NM
Other lending subsidiaries 528 2.68 2.7
Retail:
Direct retail lending (2) 9,060 3.45 8.4
Revolving credit 2,194 9.35 NM
Residential mortgage 6,412 3.42 24.9
(1) The weighted average remaining term for dealer floor plan is excluded as the balance primarily represents loans that are callable on demand.
(2) The weighted average remaining term for direct retail lending represents the remaining contractual draw period. Margin loans totaling $94
million have been excluded from the calculation of the weighted average remaining term because they do not have a contractual end date and
are callable on demand.
NM - not meaningful.
As of December 31, 2015, approximately 3.3% of the outstanding balance of variable rate residential mortgage loans is currently in an interest-only phase.
Approximately 94.0% of these balances will begin amortizing within the next three years. Variable rate residential mortgage loans typically reset every 12
months beginning after a 3 to 10 year fixed period, with an annual cap on rate changes ranging from 2.0% to 6.0%.
As of December 31, 2015, the direct retail lending portfolio includes $6.7 billion of home equity lines. Approximately 74.9% of the outstanding balance of
variable rate home equity lines is currently in the interest-only phase. Approximately 8.8% of these balances will begin scheduled amortization within the
next three years. Variable rate home equity lines typically reset on a monthly basis. Variable rate home equity loans were immaterial as of December 31,
2015.
BB&T monitors the performance of its home equity loans and lines secured by second liens similar to other consumer loans and utilizes assumptions specific
to these loans in determining the necessary ALLL. BB&T also receives notification when the first lien holder, whether BB&T or another financial institution,
has initiated foreclosure proceedings against the borrower. When notified that the first lien is in the process of foreclosure, BB&T obtains valuations to
determine if any additional charge-offs or reserves are warranted. These valuations are updated at least annually thereafter.
BB&T has limited ability to monitor the delinquency status of the first lien, unless the first lien is held or serviced by BB&T. As a result, using migration
assumptions that are based on historical experience and adjusted for current trends, BB&T estimates the volume of second lien positions where the first lien is
delinquent and adjusts the ALLL to reflect the increased risk of loss on these credits. Finally, BB&T also provides additional reserves to second lien
positions when the estimated combined current loan to value ratio for the credit exceeds 100%. As of December 31, 2015, BB&T held or serviced the first
lien on 32.8% of its second lien positions.
Scheduled repayments are reported in the maturity category in which the payment is due. Determinations of maturities are based on contract terms. BB&T’s
credit policy typically does not permit automatic renewal of loans. At the scheduled maturity date (including balloon payment date), the customer generally
must request a new loan to replace the matured loan and execute either a new note or note modification with rate, terms and conditions negotiated at that
time.
BB&T lends to a diverse customer base that is substantially located within the Company’s primary market area. At the same time, the loan portfolio is
geographically dispersed throughout BB&T’s branch network to mitigate concentration risk arising from local and regional economic downturns. Refer to
the “Risk Management” section herein for a discussion of each of the loan portfolios and the credit risk management policies used to manage the portfolios.
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Source: BB&T CORP, 10-K, February 25, 2016 Powered by Morningstar® Document Research℠
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