10-Q 1 basic10q.htm BB&T FIRST QUARTER 2002 10-Q BB&T First Quarter 2002 10-Q

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q

Quarterly Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934

For the quarterly period ended:

March 31, 2002

Commission file number: 1-10853

BB&T CORPORATION
(exact name of registrant as specified in its charter)


North Carolina	56-0939887
(State of Incorporation)	(I.R.S. Employer Identification No.)

200 West Second Street	27101
Winston-Salem, North Carolina	(Zip Code)
(Address of Principal Executive Offices)

(336) 733-2000
(Registrant's Telephone Number, Including Area Code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [ X ] No [__]

At April 30, 2002, 479,237,864 shares of the registrant's common stock, $5 par value, were outstanding.

This Form 10-Q has 45 pages excluding exhibits. The Exhibit Index begins on page 38.

BB&T CORPORATION

FORM 10-Q

March 31, 2002

INDEX

	Page No.
Part I. FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)	2
Consolidated Financial Statements	2
Notes to Consolidated Financial Statements	6
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations	17
Analysis of Financial Condition	19
Market Risk Management	25
Capital Adequacy and Resources	28
Analysis of Results of Operations	30
Item 3. Quantitative and Qualitative Disclosures About Market Risk	25
Part II. OTHER INFORMATION
Item 1. Legal Proceedings	37
Item 6. Exhibits and Reports on Form 8-K	38
SIGNATURES	45

Part I. FINANCIAL INFORMATION

Item 1. Financial Statements

BB&T CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS
(Dollars in thousands, except per share data)

	March 31,		December 31,
	2002		2001

	(unaudited)
Assets
Cash and due from banks	$ 1,471,127		$ 1,871,437
Interest-bearing deposits with banks	63,344		114,749
Federal funds sold and securities purchased under resale agreements or
similar arrangements	269,691		246,040
Trading securities at fair value	143,976		97,675
Securities available for sale at fair value	17,515,228		16,621,684
Securities held to maturity (approximate fair values of $44,164 at
March 31, 2002, and $40,488 at December 31, 2001)	44,189		40,496
Loans held for sale	1,333,917		1,907,416
Loans and leases, net of unearned income	48,822,660		45,535,757
Allowance for loan and lease losses	(705,905	)	(644,418	)

Loans and leases, net	48,116,755		44,891,339

Premises and equipment, net of accumulated depreciation	1,048,825		989,611
Goodwill and other intangibles	1,567,943		934,359
Other assets	3,374,725		3,155,139

Total assets	$ 74,949,720		$ 70,869,945

Liabilities and Shareholders' Equity
Deposits:
Noninterest-bearing deposits	$ 7,142,729		$ 6,939,640
Savings and interest checking	3,287,663		3,013,702
Money rate savings	14,894,883		13,902,088
Certificates of deposit and other time deposits	23,145,964		20,877,845

Total deposits	48,471,239		44,733,275

Short-term borrowed funds	6,043,367		6,649,100
Long-term debt	11,444,091		11,721,076
Accounts payable and other liabilities	1,935,605		1,616,285

Total liabilities	67,894,302		64,719,736

Shareholders' equity:
Preferred stock, $5 par, 5,000,000 shares authorized, none issued and
outstanding	--		--
Common stock, $5 par, 1,000,000,000 shares authorized;
issued and outstanding 481,195,674 at March 31, 2002, and
455,682,560 at December 31, 2001	2,405,978		2,278,413
Additional paid-in capital	1,145,878		418,565
Retained earnings	3,334,186		3,148,501
Unvested restricted stock	(1,793	)	(2,669	)
Accumulated other comprehensive income, net of deferred income
taxes of $113,551 at March 31, 2002, and $201,207 at December 31, 2001	171,169		307,399

Total shareholders' equity	7,055,418		6,150,209

Total liabilities and shareholders' equity	$ 74,949,720		$ 70,869,945

The accompanying notes are an integral part of these consolidated financial statements.

BB&T CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)
(Dollars in thousands, except per share data)

		For the Three Months Ended
		March 31,

		2002		2001


Interest Income
Interest and fees on loans and leases	$	831,451	$	1,004,427
Interest and dividends on securities		247,689		260,667
Interest on short-term investments		2,493		6,455

Total interest income		1,081,633		1,271,549

Interest Expense
Interest on deposits		259,602		447,467
Interest on short-term borrowed funds		26,449		88,700
Interest on long-term debt		148,310		149,928

Total interest expense		434,361		686,095

Net Interest Income		647,272		585,454
Provision for loan and lease losses		56,500		42,020

Net Interest Income After Provision for Loan and Lease Losses		590,772		543,434

Noninterest Income
Service charges on deposit accounts		90,162		79,452
Investment banking and brokerage fees and commissions		52,893		43,708
Mortgage banking income		50,562		6,192
Trust income		23,128		25,076
Agency insurance commissions		63,883		41,953
Other insurance commissions		3,485		2,840
Other nondeposit fees and commissions		44,116		44,440
Securities gains (losses), net		13,407		72,684
Other income		33,084		15,666

Total noninterest income		374,720		332,011

Noninterest Expense
Personnel expense		305,622		286,258
Occupancy and equipment expense		86,194		82,557
Amortization of intangibles		4,351		17,871
Other noninterest expense		152,143		151,812

Total noninterest expense		548,310		538,498

Earnings
Income before income taxes and change in accounting principle		417,182		336,947
Provision for income taxes		117,317		100,447

Income before cumulative effect of change in accounting principle		299,865		236,500
Cumulative effect of change in accounting principle		9,780		--

Net income	$	309,645	$	236,500

Per Common Share
Basic Earnings:
Income before cumulative effect of change in accounting principle	$	.65	$	.52
Cumulative effect of change in accounting principle		.02		--

Net Income	$	.67	$	.52

Diluted Earnings:
Income before cumulative effect of change in accounting principle	$	.64	$	.51
Cumulative effect of change in accounting principle		.02		--

Net Income	$	.66	$	.51

Cash dividends paid	$	.26	$	.23

Average Shares Outstanding
Basic		462,902,144		452,634,896

Diluted		468,604,312		459,429,071

The accompanying notes are an integral part of these consolidated financial statements.

BB&T CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY

For the Three Months Ended March 31, 2002 and 2001
(Unaudited)
(Dollars in thousands)

									Accumulated
	Shares of				Additional		Retained		Other		Total
	Common		Common		Paid-In		Earnings		Comprehensive		Shareholders'
	Stock		Stock		Capital		and Other*		Income		Equity

Balance, December 31, 2000	453,307,379		$ 2,266,537		$ 423,404		$ 2,625,571		$ 104,297		$ 5,419,809
Add (Deduct)
Comprehensive income:
Net income	--		--		--		236,500		--		236,500
Unrealized holding gains (losses) arising during
the period	--		--		--		--		191,640		191,640
Less: reclassification adjustment, net of tax
of $25,502	--		--		--		--		47,362		47,362

Net unrealized gains (losses) on securities	--		--		--		--		144,278		144,278
Unrecognized loss on cash flow hedges, net of
tax of $6,050	--		--		--		--		(9,273	)	(9,273	)

Total comprehensive income	--		--		--		236,500		135,005		371,505
Common stock issued	5,833,987		29,170		120,258		--		--		149,428
Redemption of common stock	(5,761,300	)	(28,807	)	(182,154	)	--		--		(210,961	)
Cash dividends declared on common stock	--		--		--		(103,642	)	--		(103,642	)
Other, net	--		--		5,173		(6,698	)	--		(1,525	)

Balance, March 31, 2001	453,380,066		$ 2,266,900		$ 366,681		$ 2,751,731		$ 239,302		$ 5,624,614

Balance, December 31, 2001	455,682,560		$ 2,278,413		$ 418,565		$ 3,145,832		$ 307,399		$ 6,150,209
Add (Deduct)
Comprehensive income:
Net income	--		--		--		309,645		--		309,645
Unrealized holding gains (losses) arising during
the period	--		--		--		--		(118,993	)	(118,993	)
Less: reclassification adjustment, net of tax
of $4,692	--		--		--		--		8,715		8,715

Net unrealized gains (losses) on securities	--		--		--		--		(127,708	)	(127,708	)
Unrecognized loss on cash flow hedges, net of
tax of $5,559	--		--		--		--		(8,522	)	(8,522	)

Total comprehensive income	--		--		--		309,645		(136,230	)	173,415

Common stock issued	25,513,114		127,565		725,253		--		--		852,818
Cash dividends declared on common stock	--		--		--		(123,960	)	--		(123,960	)
Other, net	--		--		2,060		876		--		2,936

Balance, March 31, 2002	481,195,674		$ 2,405,978		$ 1,145,878		$ 3,332,393		$ 171,169		$ 7,055,418

* Other includes unvested restricted stock.

The accompanying notes are an integral part of these consolidated financial statements.

BB&T CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)
(Dollars in thousands)

	For the Three Months Ended
	March 31,
Cash Flows From Operating Activities:	2002		2001

Net income	$ 309,645		$ 236,500
Adjustments to reconcile net income to net cash provided
by (used in) operating activities:
Provision for loan and lease losses	56,500		42,020
Depreciation of premises and equipment	33,542		32,211
Amortization of intangibles	4,351		17,871
Accretion of negative goodwill	(9,780	)	(1,560	)
Amortization of unearned stock compensation	876		1,334
Discount accretion and premium amortization on securities, net	(1,605	)	(1,018	)
Net decrease (increase) in trading account securities	(46,301	)	(90,499	)
Loss (gain) on sales of securities, net	(13,407	)	(72,684	)
Loss (gain) on sales of loans held for sale	(24,386	)	--
Loss (gain) on disposals of premises and equipment, net	(4,943	)	(11,941	)
Proceeds from sales of loans held for sale	2,513,788		1,191,790
Purchases of loans held for sale	(446,395	)	(459,004	)
Origination of loans held for sale, net of principal collected	(1,469,508	)	(1,146,151	)
Tax benefit from exercise of stock options	2,060		5,172
Decrease (increase) in:
Accrued interest receivable	2,329		1,709
Other assets	(28,352	)	49,726
Increase (decrease) in:
Accrued interest payable	406		19,852
Accounts payable and other liabilities	122,441		(15,827	)
Other, net	(9,358	)	(12,678	)

Net cash provided by (used in) operating activities	991,903		(213,177	)

Cash Flows From Investing Activities:
Proceeds from sales of securities available for sale	478,908		300,847
Proceeds from maturities, calls and paydowns of securities available for sale	659,694		464,497
Purchases of securities available for sale	(1,653,829	)	(307,825	)
Proceeds from maturities, calls and paydowns of securities held to maturity	--		125,037
Purchases of securities held to maturity	(3,693	)	(2,513	)
Leases made to customers	(32,046	)	(32,537	)
Principal collected on leases	28,926		25,686
Loan originations, net of principal collected	(213,298	)	(389,988	)
Purchases of loans	(87,368	)	(14,740	)
Net cash acquired (paid) in transactions accounted for under the purchase method	610,520		36,652
Purchases and originations of mortgage servicing rights	(54,237	)	(42,267	)
Proceeds from disposals of premises and equipment	31,958		5,792
Purchases of premises and equipment	(53,000	)	(55,376	)
Proceeds from sales of foreclosed property	9,821		10,748
Proceeds from sales of other real estate held for development or sale	563		2,086

Net cash provided by (used in) investing activities	(277,081	)	126,099

Cash Flows From Financing Activities:
Net increase (decrease) in deposits	534,740		(457,807	)
Net increase (decrease) in short-term borrowed funds	(1,308,612	)	(1,321,672	)
Proceeds from issuances of long-term debt	18,561		2,577,270
Repayments of long-term debt	(295,546	)	(345,099	)
Net proceeds from common stock issued	26,267		19,237
Redemption of common stock	--		(210,961	)
Cash dividends paid on common stock	(118,296	)	(103,642	)
Other, net	--		96

Net cash provided by (used in) financing activities	(1,142,886	)	157,422

Net Increase (Decrease) in Cash and Cash Equivalents	(428,064	)	70,344
Cash and Cash Equivalents at Beginning of Period	2,232,226		2,120,798

Cash and Cash Equivalents at End of Period	$ 1,804,162		$ 2,191,142

Supplemental Disclosure of Cash Flow Information:
Cash paid during the period for:
Interest	$ 428,895		$ 581,969
Income taxes	1,093		(9,464	)
Noncash financing and investing activities:
Transfer of securities held to maturity to available for sale	--		34,435
Transfer of loans to foreclosed property	17,405		19,271
Transfer of fixed assets to other real estate owned	--		1,368

The accompanying notes are an integral part of these consolidated financial statements.

BB&T CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2002
(Unaudited)

A. Basis of Presentation

In the opinion of management, the accompanying unaudited consolidated financial statements contain all adjustments, consisting only of normal recurring adjustments, necessary to present fairly the consolidated balance sheets of BB&T Corporation and subsidiaries (referred to herein as "BB&T", "the Corporation" or "the Company") as of March 31, 2002, and December 31, 2001; the consolidated statements of income for the three months ended March 31, 2002 and 2001; the consolidated statements of changes in shareholders' equity for the three months ended March 31, 2002 and 2001; and the consolidated statements of cash flows for the three months ended March 31, 2002 and 2001.

The consolidated financial statements and notes are presented in accordance with the instructions for Form 10-Q. The information contained in the footnotes included in BB&T's 2001 Annual Report on Form 10-K should be referred to in connection with the reading of these unaudited interim consolidated financial statements. In certain instances, amounts reported in the 2001 financial statements have been reclassified to conform to the 2002 statement presentation. Such reclassifications had no effect on shareholders' equity or net income.

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates. Material estimates that are particularly susceptible to significant change in the near term relate to the determination of the allowance for loan and lease losses, valuation of mortgage servicing rights and deferred tax assets or liabilities.

B. Nature of Operations

BB&T is a financial holding company headquartered in Winston-Salem, North Carolina. BB&T conducts its business operations primarily through its commercial banking subsidiaries, which do business in North Carolina, South Carolina, Virginia, Maryland, West Virginia, Kentucky, Tennessee, Georgia, Alabama, Indiana and Washington, D.C. BB&T's principal banking subsidiaries, Branch Banking and Trust Company ("Branch Bank"), Branch Banking and Trust Company of South Carolina ("BB&T-SC") and Branch Banking and Trust Company of Virginia ("BB&T-VA"), provide a wide range of banking services to individuals and businesses. At March 31, 2002, BB&T was also the parent company for three subsidiary banks acquired through mergers with Community First Banking Company ("CFBC"), AREA Bancshares Corporation ("AREA") and MidAmerica Bancorp ("MidAmerica"). These banks are expected to be merged with and into Branch Bank based on the location of their operations. BB&T's subsidiary banks offer a variety of loans to businesses and consumers, including an array of mortgage loan products. BB&T's loans are primarily to individuals residing in the market areas described above or to businesses that are located in this geographic area. BB&T's banking subsidiaries also market a wide range of deposit services to individuals and businesses. Subsidiaries of BB&T's commercial banking units offer lease financing to businesses and municipal governments; discount brokerage services and sales of annuities and mutual funds; life insurance, property and casualty insurance, health insurance and commercial general liability insurance on an agency basis; insurance premium financing; arranging permanent financing for commercial real estate and providing loan servicing for third-party investors; and asset management. Direct nonbank subsidiaries of BB&T provide a variety of financial services including automobile lending, equipment financing, factoring, full-service securities brokerage, and capital markets services.

BB&T CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

March 31, 2002
(Unaudited)

C. New Accounting Pronouncements

In June 2001, the FASB issued SFAS No. 141, “Business Combinations,” which supersedes Accounting Principles Board (“APB”) Opinion No. 16, “Business Combinations,” and SFAS No. 38, “Accounting for Preacquisition Contingencies of Purchased Enterprises.” The provisions of the Statement apply to all business combinations initiated after June 30, 2001. SFAS No. 141 requires that all business combinations be accounted for by the purchase method of accounting. This method requires the accounts of an acquired business to be included with the acquirer’s accounts as of the date of acquisition with any excess of purchase price over the fair value of the net assets acquired to be capitalized as goodwill. The Statement also requires that the assets of an acquired company be recognized as assets apart from goodwill if they meet specific criteria presented in the Statement. The Statement ends the use of the pooling-of-interests method of accounting for business combinations, which required the restatement of all prior period information for the accounts of the acquired institution. BB&T has historically been a frequent acquirer and has used both the pooling-of-interests and purchase methods of accounting. As a result of the adoption of this statement, BB&T will account for all mergers and acquisitions initiated after June 30, 2001, using the purchase method.

In June 2001, the FASB issued SFAS No. 142, “Goodwill and Other Intangible Assets,” which supersedes APB Opinion No. 17, “Intangible Assets.” SFAS 142 addresses how intangible assets that are acquired individually or with a group of other assets (but not those acquired in a business combination) should be accounted for in financial statements upon their acquisition, and addresses how goodwill and other intangible assets should be accounted for after they have been initially recognized in the financial statements. The Statement eliminates the requirement to amortize goodwill and other intangible assets that have indefinite useful lives, instead requiring that the assets be tested at least annually for impairment based on the specific guidance in the Statement. BB&T adopted the provisions of the Statement effective January 1, 2002, as required, and applied the provisions of the Statement to all goodwill and other intangible assets recognized in the financial statements. The impact of adoption was reflected as a cumulative effect of a change in accounting principle in the Consolidated Statements of Income, resulting from the reversal of unamortized negative goodwill. Following the adoption of SFAS No. 142, BB&T expects the amortization of goodwill and other intangibles to be reduced by approximately $50 million for 2002. SFAS No. 142 also requires a transitional impairment test of all goodwill and other indefinite-lived intangible assets in conjunction with its initial application. The Statement requires this test to be performed prior to June 30, 2002, and requires any resulting impairment loss to be reported as a change in accounting principle. BB&T has completed transitional impairment tests on its goodwill assets and, based on the results of these tests, management does not anticipate that any material impairment losses will be recorded in 2002.

BB&T CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

March 31, 2002
(Unaudited)

In June 2001, the FASB issued SFAS No. 143, “Accounting for Asset Retirement Obligations,” which addresses financial accounting and reporting for obligations associated with the retirement of tangible long-lived assets and the associated asset retirement costs. The Statement is effective beginning January 1, 2003. Management does not expect the implementation of the Statement to have a material impact on either BB&T’s consolidated financial position or consolidated results of operations.

In August 2001, the FASB issued SFAS No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets,” which supercedes SFAS No. 121, “Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of,” and the accounting and reporting provisions of APB Opinion No. 30, “Reporting the Results of Operations –Reporting the Effects of Disposal of a Segment of a Business, and Extraordinary, Unusual and Infrequently Occurring Events and Transactions.” The Statement establishes a single accounting model for long-lived assets to be disposed of by a sale, and resolves significant implementation issues related to SFAS No. 121. The provisions of the Statement were adopted by BB&T on January 1, 2002. The implementation did not have a material impact on either BB&T’s consolidated financial position or consolidated results of operations.

In May 2002, the FASB issued SFAS No. 145, “Rescission of FASB Statements No. 4, 44, and 64, Amendment of FASB Statement No. 13, and Technical Corrections as of April 2002". This Statement rescinds SFAS No. 4, “Reporting Gains and Losses from Extinguishment of Debt”, and an amendment of that Statement, SFAS No. 64, “Extinguishments of Debt Made to Satisfy Sinking-Fund Requirements.” This Statement also rescinds SFAS No. 44, “Accounting for Intangible Assets of Motor Carriers” and amends SFAS No. 13, “Accounting for Leases”, to eliminate an inconsistency between the required accounting for sale-leaseback transactions and the required accounting for certain lease modifications that have economic effects that are similar to sale-leaseback transactions. This Statement also amends other existing authoritative pronouncements to make various technical corrections, clarify meanings, or describe their applicability under changed conditions. BB&T will adopt the provisions of this Statement effective January 1, 2003. Management does not anticipate that the implementation of this Statement will have a material impact on BB&T’s consolidated financial position or consolidated results of operations.

BB&T CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

March 31, 2002
(Unaudited)

D. Mergers and Acquisitions

The following table presents summary information with respect to significant mergers and acquisitions completed by BB&T Corporation during 2001 and thus far during 2002:

Summary of Completed Mergers and Acquisitions

										BB&T Common
									Total	Shares Issued
Date of				Total	Accounting		Intangibles		Purchase	to Complete
Acquisition	Acquired Company	Headquarters		Assets	Method		Recorded		Price	Transaction

March 20, 2002	Area Bancshares Corporation	Owensboro, Ky.	$	2.9 billion	Purchase	$	283.4 million	$	448.9 million	13.2 million
March 8, 2002	MidAmerica Bancorp	Louisville, Ky.		2.0 billion	Purchase		203.3 million		379.8 million	8.2 million (1)

December 12, 2001	Community First Banking
	Company	Carrollton, Ga.	$	548.1 million	Purchase	$	102.1 million		132.2 million	3.5 million
August 9, 2001	F&M National Corporation	Winchester, Va.		4.0 billion	Pooling		N/A		N/A	31.1 million
June 27, 2001	Virginia Capital Bancshares, Inc.	Fredericksburg, Va.		532.7 million	Purchase		15.2 million		15.2 million	4.7 million
June 7, 2001	Century South Banks, Inc.	Alpharetta, Ga.		1.7 billion	Pooling		N/A		N/A	12.7 million
March 2, 2001	FirstSpartan Financial Corp.	Spartanburg, S.C.		591.0 million	Purchase		42.9 million		107.6 million	3.8 million
January 8, 2001	FCNB Corp.	Frederick, Md.		1.6 billion	Pooling		N/A		N/A	8.7 million

N/A - Not applicable or terms not disclosed.

(1) BB&T also paid cash totaling $68.2 million to complete this acquisition.

The table above does not include mergers and acquisitions of acquired companies prior to their acquisition by BB&T or insurance agency acquisitions, which are summarized below.

During the three months ended March 31, 2002, BB&T acquired four insurance agencies that were accounted for as purchases. In conjunction with these four transactions, BB&T issued approximately 2.7 million shares of common stock and recorded $97.3 million in intangible assets. BB&T acquired seven insurance agencies during 2001, which were accounted for as purchases. In conjunction with these 2001 transactions, BB&T issued 325,000 shares of common stock and recorded $16.5 million in goodwill and other intangible assets.

BB&T typically provides an allocation period, not to exceed one year, to identify and quantify the fair value of the assets acquired and liabilities assumed in business combinations accounted for as purchases. Management currently does not anticipate any material adjustments to the assigned values of the assets and liabilities of acquired companies.

BB&T CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

March 31, 2002
(Unaudited)

Pending Mergers and Acquisitions

On January 31, 2002, BB&T Asset Management, an asset management subsidiary of BB&T, announced plans to acquire Virginia Investment Counselors (“VIC”) of Norfolk, Virginia. VIC, with $1.2 billion in assets under management, is an investment advisory firm serving individuals, foundations, endowments and retirement funds in 20 states. The transaction, which is subject to regulatory approval, is expected to close in the second quarter.

On March 7, 2002, BB&T announced plans to acquire The Pfefferkorn Company (“Pfefferkorn”) of Winston-Salem, North Carolina. Pfefferkorn is a mortgage banking company with an $840 million loan servicing portfolio and more than $100 million in originations. The transaction was accounted for as a purchase and closed on April 5.

BB&T CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

March 31, 2002
(unaudited)

E. Calculation of Earnings Per Common Share

BB&T's basic and diluted earnings per common share amounts were calculated as follows:

BB&T CORPORATION AND SUBSIDIARIES
COMPUTATION OF EARNINGS PER SHARE
For the Periods as Indicated

	For the Three Months
	Ended March 31,

	2002		2001

	(Dollars in thousands, except per share data)
Basic Earnings Per Share:
Weighted average number of common shares outstanding during the period		462,902,144		452,634,896

Income before cumulative effect of change in accounting principle	$	299,865	$	236,500
Cumulative effect of change in accounting principle		9,780		--

Net income	$	309,645	$	236,500

Basic earnings per share
Income before cumulative effect of change in accounting principle	$	.65	$	.52
Cumulative effect of change in accounting principle		.02		--

Net Income	$	.67	$	.52

Diluted Earnings Per Share:
Weighted average number of common shares		462,902,144		452,634,896
Add:
Dilutive effect of outstanding options (as determined by application of
treasury stock method)		5,702,168		6,794,175

Weighted average number of common shares, as adjusted		468,604,312		459,429,071

Income before cumulative effect of change in accounting principle	$	299,865	$	236,500
Cumulative effect of change in accounting principle		9,780		--

Net income	$	309,645	$	236,500

Diluted earnings per share
Income before cumulative effect of change in accounting principle	$	.64	$	.51
Cumulative effect of change in accounting principle		.02		--

Net Income	$	.66	$	.51

F. Segment Disclosures

BB&T’s operations are divided into six reportable business segments: the Banking Network, Mortgage Banking, Trust Services, Agency Insurance, Investment Banking and Brokerage, and Treasury. These operating segments have been identified based primarily on BB&T’s existing organizational structure. The segments require unique technology and marketing strategies and offer different products and services. While BB&T is managed as an integrated organization, individual executive managers are held accountable for the operations of the business segments that report to them.

BB&T’s strategies for revenue growth are focused on developing and expanding client relationships through quality service delivery and an effective sales culture. The segment results presented herein are based on internal management accounting policies that are designed to support these strategic objectives. Unlike financial accounting, there is no comprehensive authoritative body of guidance for management accounting equivalent to generally accepted accounting principles. Therefore, the performance of the individual segments is not comparable with BB&T’s consolidated results or with similar information presented by any other financial institution. Additionally, because of the interrelationships of the various segments, the information presented is not necessarily indicative of the segments’financial performance if they operated as independent entities.

BB&T CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

March 31, 2002
(Unaudited)

Please refer to BB&T’s Annual Report on Form 10-K for the year ended December 31, 2001, for a description of internal accounting policies and the basis of segmentation, including a description of the segments presented in the accompanying tables. There have been no significant changes from the methods used to develop the segment disclosures contained therein.

The following table discloses selected financial information for BB&T’s reportable business segments for the periods as indicated:

BB&T CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

March 31, 2002
(Unaudited)

BB&T Corporation
Reportable Segments

For the Three Months Ended March 31, 2002 and 2001

		Banking Network				Mortgage Banking				Trust Services				Agency Insurance

		2002		2001		2002		2001		2002		2001		2002		2001

		(Dollars in thousands)
Net interest income (expense)
from external customers	$	345,124	$	374,527	$	155,283	$	146,715	$	(4,981	) $	(9,921	) $	363	$	24
Net intersegment interest income (expense)		148,668		147,115		(99,780	)	(112,949	)	11,196		12,893		--		--

Net interest income		493,792		521,642		55,503		33,766		6,215		2,972		363		24

Provision for loan and lease losses		50,295		41,358		776		700		--		--		--		--
Noninterest income from external customers		129,285		131,065		50,699		4,434		25,098		24,573		61,358		38,291
Intersegment noninterest income		68,114		39,094		--		--		--		--		--		--
Noninterest expense		237,525		247,632		30,498		18,683		18,752		15,348		51,491		30,136
Intersegment noninterest expense		136,541		114,670		7,440		6,817		2,112		775		3,208		1,057

Income before income taxes		266,830		288,141		67,488		12,000		10,449		11,422		7,022		7,122
Provision for income taxes		75,848		77,002		19,308		4,059		2,836		2,200		2,859		2,846

Net income	$	190,982	$	211,139	$	48,180	$	7,941	$	7,613	$	9,222	$	4,163	$	4,276

Identifiable segment assets	$	40,902,046	$	38,522,361	$	9,002,436	$	8,729,592	$	77,022	$	41,955	$	473,940	$	102,188

		Investment Banking
		and Brokerage				Treasury				All Other Segments (1)				Total Segments

		2002		2001		2002		2001		2002		2001		2002		2001

		(Dollars in thousands)
Net interest income (expense)
from external customers	$	1,888	$	2,372	$	52,677	$	33,041	$	84,997	$	70,959	$	635,351	$	617,717
Net intersegment interest income (expense)		--		--		6,403		13,032		--		--		66,487		60,091

Net interest income		1,888		2,372		59,080		46,073		84,997		70,959		701,838		677,808

Provision for loan and lease losses		--		--		35		33		22,396		12,616		73,502		54,707
Noninterest income from external customers		53,977		42,934		27,082		6,399		39,527		40,416		387,026		288,112
Intersegment noninterest income		--		--		--		--		--		--		68,114		39,094
Noninterest expense		47,445		42,223		3,482		1,770		29,033		28,096		418,226		383,888
Intersegment noninterest expense		3,695		381		423		486		5,827		2,850		159,246		127,036

Income before income taxes		4,725		2,702		82,222		50,183		67,268		67,813		506,004		439,383
Provision for income taxes		1,792		1,048		22,394		10,414		15,589		10,098		140,626		107,667

Net income	$	2,933	$	1,654	$	59,828	$	39,769	$	51,679	$	57,715	$	365,378	$	331,716

Identifiable segment assets	$	775,406	$	689,467	$	18,421,415	$	17,852,945	$	7,564,823	$	4,077,507	$	77,217,088	$	70,016,015

(1) Financial data from segments below the quantitative thresholds requiring disclosure are attributable to nonbank consumer finance and other specialized lending operations, factoring, leasing and other smaller subsidiaries.

BB&T CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

March 31, 2002
(Unaudited)

The following table presents a reconciliation of total segment results to consolidated results:

		For the Three Months Ended
		March 31,

		2002		2001

Net Interest Income
Net interest income from segments	$	701,838	$	677,808
Other net interest income (expense) (1)		(119,569	)	36,091
Elimination of net intersegment interest (income) expense (2)		65,003		(128,445	)

Consolidated net interest income	$	647,272	$	585,454

Net income
Net income from segments	$	365,378	$	331,716
Other net income (loss) (1)		140,111		(2,079	)
Elimination of intersegment net income (loss) (2)		(195,844	)	(93,137	)

Consolidated net income	$	309,645	$	236,500

		March 31,		March 31,
		2002		2001

Total Assets
Total assets from segments	$	77,217,088	$	70,016,015
Other assets (1)		16,898,539		5,232,018
Elimination of intersegment assets (2)		(19,165,907	)	(7,388,206	)

Consolidated total assets	$	74,949,720	$	67,859,827

(1) Other net interest income (expense), other net income (loss) and other assets include amounts associated with BB&T’s support functions not allocated to the various reportable segments.

(2) BB&T’s reconciliation of total segment results to consolidated results requires the elimination of internal management accounting practices. These adjustments include the elimination of funds transfer pricing credits and charges and the elimination of intersegment noninterest income and noninterest expense, which are allocated to the various segments using BB&T’s internal accounting methods.

G. Goodwill and Other Intangible Assets

The changes in the carrying amounts of goodwill attributable to each of BB&T’s operating segments for the twelve months ended December 31, 2001, and the three months ended March 31, 2002, are as follows:

BB&T CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

March 31, 2002
(Unaudited)

Goodwill Activity by Operating Segment
(Dollars in thousands)

										Investment
		Banking		Mortgage		Trust		Agency		Banking		All Other
		Network		Banking		Services		Insurance		and Brokerage		Segments		Total

Balance, January 1, 2001	$	538,415	$	3,577	$	8,691	$	120,175	$	70,974	$	30,576	$	772,408
Acquired goodwill		158,593		--		5,739		9,922		--		--		174,254
Amortization expense		(48,122	)	(35	)	(691	)	(9,292	)	(5,443	)	(3,297	)	(66,880	)

Balance, December 31, 2001		648,886		3,542		13,739		120,805		65,531		27,279		879,782

Acquired goodwill		450,305		--		--		68,688		300		--		519,293
Amortization expense (1)		(797	)	--		--		--		--		--		(797	)

Balance, March 31, 2002	$	1,098,394	$	3,542	$	13,739	$	189,493	$	65,831	$	27,279	$	1,398,278

(1)

This amortization expense relates to goodwill recorded under SFAS No. 72.

The following table presents the gross carrying amounts and accumulated amortization for BB&T's intangible assets subject to amortization at the dates presented:

Acquired Intangible Assets
(Dollars in thousands)

		As of March 31, 2002				As of December 31, 2001

		Gross				Gross
		Carrying		Accumulated		Carrying		Accumulated
		Amount		Amortization		Amount		Amortization

Amortizing intangible assets
Core deposit intangibles	$	140,168	$	(33,029	) $	69,574	$	(31,021	)
Other		67,106		(4,580	)	18,963		(3,060	)

Totals	$	207,274	$	(37,609	) $	88,537	$	(34,081	)

During the periods ended March 31, 2002 and 2001, BB&T incurred $4.4 million and $17.9 million, respectively, in pretax amortization expenses associated with goodwill, core deposit intangibles and other intangible assets.

BB&T CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

March 31, 2002
(Unaudited)

The following table presents estimated amortization expense for each of the next five years.

Estimated Amortization Expense
(Dollars in thousands)

For the Year Ended December 31:
2002	$	25,279
2003		27,599
2004		26,494
2005		26,133
2006		25,966

The following tables present actual results for the three months ended March 31, 2002, and adjusted net income and adjusted earnings per share for the three months ended March 31, 2001, assuming the nonamortization provisions of SFAS No. 142 were effective January 1, 2001:

		For the Three Months Ended March 31,

		2002		2001


		(Dollars in thousands)
Reported Net Income	$	309,645	$	236,500
Add back: Goodwill amortization		--		16,490

Adjusted Net Income	$	309,645	$	252,990

Basic earnings per share:
Reported net income	$	0.67	$	0.52
Add back: Goodwill amortization		--		0.04

Adjusted net income	$	0.67	$	0.56

Diluted earnings per share:
Reported net income	$	0.66	$	0.51
Add back: Goodwill amortization		--		0.04

Adjusted net income	$	0.66	$	0.55

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

Forward-Looking Statements

This report contains forward-looking statements with respect to the financial condition, results of operations and business of BB&T. These forward-looking statements involve risks and uncertainties and are based on the beliefs and assumptions of the management of BB&T, and on the information available to management at the time that these disclosures were prepared. Factors that may cause actual results to differ materially from those contemplated by such forward-looking statements include, among others, the following possibilities: (1) competitive pressures among depository and other financial institutions may increase significantly; (2) changes in the interest rate environment may reduce margins; (3) general economic conditions, either nationally or regionally, may be less favorable than expected, resulting in, among other things, a deterioration in credit quality and/or a reduced demand for credit; (4) legislative or regulatory changes, including changes in accounting standards, may adversely affect the businesses in which BB&T is engaged; (5) costs or difficulties related to the integration of the businesses of BB&T and its merger partners may be greater than expected; (6) expected cost savings associated with pending mergers may not be fully realized or realized within the expected time frame; (7) deposit attrition, customer loss or revenue loss following pending or recently completed mergers may be greater than expected; (8) competitors may have greater financial resources and develop products that enable such competitors to compete more successfully than BB&T; and (9) adverse changes may occur in the securities markets.

Critical Accounting Policies

The accounting and reporting policies of BB&T Corporation and its subsidiaries are in accordance with accounting principles generally accepted in the United States and conform to general practices within the banking industry. BB&T’s financial position and results of operations are affected by management’s application of accounting policies, including judgments made to arrive at the carrying value of assets and liabilities and amounts reported for revenues, expenses and related disclosures. Different assumptions in the application of these policies could result in material changes in BB&T’s consolidated financial position and/or consolidated results of operations. The more critical accounting and reporting policies include BB&T’s accounting for securities, loans and leases, the allowance for loan and lease losses, valuation of mortgage servicing rights, mergers and acquisitions and income taxes. BB&T’s accounting policies are fundamental to understanding Management’s Discussion and Analysis of Results of Operations and Financial Condition. Accordingly, BB&T’s significant accounting pollicies are discussed in detail in BB&T’s 2001 Annual Report on Form 10-K filed with the Securities and Exchange Commission.

The following is a summary of BB&T’s more subjective and complex accounting policies.

The allowance for loan and lease losses is established and maintained at levels management deems adequate to cover losses inherent in the portfolio as of the balance sheet date and is based on management’s evaluation of the risks in the loan portfolio and change in the nature and volume of loan activity. Estimates for loan losses are arrived at by analyzing historical loan losses, current trends in delinquencies and charge-offs, plans for problem loan administration, the opinions of our regulators, changes in the size and composition of the loan portfolio and peer group information. Also included in management’s estimates for loan losses are considerations with respect to the impact of economic events, the outcome of which are uncertain. These events may include, but are not limited to, a general slowdown in the economy, fluctuations in overall lending rates, political conditions, legislation that may directly or indirectly affect the banking industry and economic conditions affecting specific geographical areas in which BB&T conducts business.

BB&T’s mortgage banking business has experienced significant growth in recent years. BB&T has a significant loan servicing portfolio and has capitalized the associated mortgage servicing rights. Mortgage servicing rights represent the present value of the future servicing fees arising from the right to service loans in the portfolio. The most critical accounting policy associated with mortgage servicing is the methodology used to determine the valuation of mortgage servicing rights. Application of this methodology requires the development of a number of estimates, including anticipated principal amortization and prepayments of principal. The value of mortgage servicing rights is significantly affected by interest rates, mortgage loan prepayment speeds and the payment performance of the underlying loans. In general, during periods of declining interest rates, the value of mortgage servicing assets declines due to increasing prepayments attributable to increased mortgage refinance activity. Conversely, during periods of rising interest rates, the value of servicing assets generally increases due to reduced refinance activity. BB&T amortizes mortgage servicing rights over the period of estimated net servicing income based on projections of the amount and timing of future cash flows. The amount and timing of servicing asset amortization is adjusted periodically based on actual results and updated projections.

BB&T’s growth in business, profitability and market share over the past several years has been enhanced significantly by mergers and acquisitions. BB&T’s acquisition strategy has historically utilized the pooling-of-interests and purchase business combination methods of accounting. Effective July 1, 2001, BB&T adopted SFAS No. 141, “Business Combinations,” which allows only the use of the purchase combination method of accounting. For acquisitions under the purchase method, BB&T is required to record the assets acquired and liabilities assumed at their fair value, which in many instances involves estimates based on third party valuations, such as appraisals, or internal valuations based on discounted cash flow analyses or other valuation techniques. These estimates also include the establishment of various reserves based on planned facilities dispositions and employee benefit related considerations, among other acquisition-related items. In addition, purchase acquisitions typically result in goodwill or other intangible assets, which are subject to ongoing periodic impairment tests based on the fair value of net assets acquired compared to the carrying value of goodwill and other intangibles. Furthermore, the determination of which intangible assets have finite lives is subjective, as well as the determination of the amortization period for such intangible assets.

The determination of BB&T’s overall income tax provision is complex and requires careful analysis. As part of the Company’s overall business strategy, BB&T may enter into business transactions that require management to consider tax laws and regulations that apply to the specific facts and circumstances under consideration. This analysis includes evaluating the amount and timing of the realization of income tax liabilities or benefits. Management continually monitors tax developments as they affect the Company’s overall tax position.

ANALYSIS OF FINANCIAL CONDITION

BB&T’s total assets at March 31, 2002, were $74.9 billion, a $4.1 billion, or 5.8%, increase from December 31, 2001. The asset category that produced the majority of the increase was loans and leases, including loans held for sale, which grew $2.7 billion, or 5.7%. Additionally, securities available for sale increased $893.5 million, or 5.4%, from December 31, 2001.

Total deposits at March 31, 2002, increased $3.7 billion, or 8.4%, from December 31, 2001. Short-term borrowed funds declined $605.7 million, or 9.1%, and long-term debt decreased $277.0 million, or 2.4%, during the first three months of 2002. Total shareholders’equity increased $905.2 million, or 14.7%, during the same time frame.

The factors causing the fluctuations in these major balance sheet categories are further discussed in the following sections.

Loans and Leases

BB&T’s loan growth slowed during the first quarter of 2002 compared to growth rates experienced during the past few years. Average total loans for the quarter ended March 31, 2002, increased $2.5 billion, or 5.6%, compared to the same period in 2001.

Management emphasizes lending to small and medium-sized businesses and consumer lending in order to improve the overall profitability of the loan portfolio. Average commercial loans, including lease receivables, increased 6.9% during the first three months of 2002 compared to the first quarter of 2001. Commercial loans and leases now compose 55.1% of the loan and lease portfolio compared to 54.4% for the first three months of 2001. Average mortgage loans increased 4.3% during the first three months of 2002 compared to the same period of 2001 and represented 19.1% of average loans and leases at March 31, 2002, compared to 19.4% a year ago. Average consumer loans, which include sales finance, revolving credit and direct retail, increased 3.9% for the three months ended March 31, 2002, compared to the same period in 2001 and compose the remaining 25.8% of average loans, as compared to 26.2% for the same period in 2001. BB&T is a large originator of mortgage loans, with first quarter 2002 originations totaling $2.8 billion and has also historically been a frequent acquirer of community banks and thrift institutions. The combination of these factors has driven up the percentage of mortgage loans in BB&T’s portfolio. On a relative basis, mortgage loans are less profitable than commercial or consumer loans. To improve the overall yield and profitability of the loan portfolio, BB&T sells most of its fixed-rate mortgage loans in the secondary market or securitizes the loans and transfers them to the securities portfolio. However, due to the low interest rate environment and resulting high volumes of mortgage loan originations and the inventory of mortgage loans held for sale, the mix of the consolidated loan portfolio for the first quarter of 2002, as indicated above, was very similar to that of one year ago.

The growth rates of average loans described above include the effects of securitization programs and loan portfolios held by companies that were acquired in purchase transactions during the last nine months of 2001 and the first three months of 2002. BB&T securitized $377.4 million of mortgage loans during 2001, which reduced reported growth in average mortgage loans. During the first three months of 2002, loans totaling $1.9 billion and $1.2 billion were acquired through the purchases of AREA and MidAmerica, respectively. During the last nine months of 2001, loans totaling $442.4 million and $368.8 million were acquired through the purchases of Virginia Capital Bancshares (“VCAP”) of Fredericksburg, Virginia, and CFBC, respectively. Excluding the effect of purchase accounting transactions completed during 2001 and 2002 and mortgage loan securitizations, average “internal”loan growth for the three months ended March 31, 2002, was 3.4% compared to the first quarter of 2001. By category, excluding the effects of purchase accounting transactions and loan securitizations, average mortgage loans, including loans held for sale, were flat, average commercial loans and leases grew 5.5%, and average consumer loans increased 1.8% in the first quarter of 2002 compared to the same period of 2001.

The annualized fully taxable equivalent (“FTE”) yields on commercial, consumer and mortgage loans for the first three months of 2002 were 6.33%, 8.74%, and 7.33%, respectively, resulting in an annualized yield on the total loan portfolio of 7.14%. The FTE yields on commercial, consumer and mortgage loans for the first three months of 2001 were 9.25%, 10.26%, and 7.59%, respectively, resulting in an annualized yield on the total loan portfolio of 9.19%. This reflects a decrease of 205 basis points on the annualized yield on the total loan portfolio during the first three months of 2002 compared to the 2001 period. The decrease in yield resulted from a lower average prime rate during 2001, as well as a lower overall interest rate environment. During 2001, the Federal Reserve reduced the intended Federal Funds Rate from 6.50% at the beginning of the year to 1.75% at year-end where it has remained throughout the first quarter of 2002. As a result of the Federal Reserve Board’s actions, the average prime rate, which is the basis for pricing many commercial and consumer loans, averaged 8.62% in the first quarter of 2001 compared to 4.75% in the first quarter of 2002. The growth in the overall loan portfolio, offset by the decrease in the yield on the portfolio, resulted in a decrease of 17.2% in interest income from loans and leases in the current quarter compared to the first quarter of 2001.

Securities

Securities available for sale totaled $17.5 billion at March 31, 2002, an increase of $893.5 million, or 5.4%, from December 31, 2001. Securities available for sale had net unrealized gains, net of deferred income taxes, of $160.4 million at March 31, 2002, compared to net unrealized gains, net of deferred income taxes, of $288.1 million at December 31, 2001. Securities held to maturity totaled $44.2 million, up $3.7 million, or 9.1%, from year-end 2001. Trading securities totaled $144.0 million, an increase of $46.3 million, or 47.4%, compared to the balance at December 31, 2001.

Average total securities for the first three months of 2002 were $16.5 billion, up $740.0 million, or 4.7%, from the average during the first three months of 2001.

The annualized FTE yield on average total securities for the first three months of 2002 was 6.61%, a decrease of 64 basis points from the yield earned in the first three months of 2001. This decrease in yield resulted principally from the lower interest rate environment, which resulted in cash flows from the maturity of higher yielding securities, callable bonds and prepayments of mortgage backed securities during 2001 and 2002 being reinvested at lower interest rates.

Other Interest Earning Assets

Federal funds sold and securities purchased under resale agreements or similar arrangements totaled $269.7 million at March 31, 2002, an increase of $23.7 million, or 9.6%, compared to December 31, 2001. Interest-bearing deposits with banks decreased $51.4 million, or 44.8%, from December 31, 2001. These categories of earning assets are subject to large daily fluctuations based on the availability of these types of funds. The average yield on other interest-earning assets for the first three months of 2002 was 2.22%, a decrease from the 5.47% earned during the first three months of 2001. The decrease in the yield on other interest-earning assets is principally the result of the decrease in the average Federal funds rate from 5.59% for the first three months of 2001 to 1.74% for the first three months of 2002.

Other Assets

BB&T’s other noninterest-earning assets, excluding premises and equipment and noninterest-bearing cash and due from banks, increased $853.2 million from December 31, 2001, to March 31, 2002. The increase resulted primarily from goodwill, which increased $518.4 million due to the acquisitions of AREA, MidAmerica and CRC, higher capitalized mortgage servicing rights, which increased $27.3 million and core deposit and other intangibles, which increased $115.2 million.

Deposits

Total end of period deposits increased $3.7 billion, or 8.4%, from December 31, 2001, to March 31, 2002. Average deposits for the first three months of 2002 increased $2.7 billion, or 6.2%, compared to the first three months of 2001. The categories of deposits with the highest average rates of growth in 2002 compared to 2001 were: average money rate savings accounts, including investor deposit accounts, which increased $2.0 billion, or 16.7%, and average noninterest-bearing deposits, which increased $680.9 million, or 11.7%. The growth realized in these deposit categories was partially offset by a decline of $295.6 million, or 8.5%, in average savings and interest checking.

The growth in average deposits for 2002 includes the effect of deposits acquired in purchase accounting transactions completed during the last nine months of 2001 and the first three months of 2002. The purchase of AREA and MidAmerica in the first quarter of 2002 resulted in the addition of $2.1 billion and $1.1 billion in deposits, respectively. During the last nine months of 2001, the purchase of VCAP and CFBC added $381.6 million and $428.4 million in deposits, respectively. Growth rates for noninterest-bearing deposits are also affected by an official check outsourcing program, which has improved fee income and net income, but reduced the balance of noninterest-bearing deposits. Excluding the effects of purchase accounting transactions and official check outsourcing, average deposits for the three months ended March 31, 2002, would have increased 3.1% compared to the same time period one year ago. Excluding the effects of purchase accounting and official check outsourcing, transaction account deposits increased 9.2% compared to the three months ended March 31, 2001, and certificate accounts and other time deposits would have decreased 2.7%.

The annualized average rate paid on total interest-bearing deposits during the first three months of 2002 was 2.69%, a decrease of 219 basis points compared to 2001.

Borrowings

The growth in loans, securities and other assets in recent years has exceeded the growth of total deposits. As a result, cost-effective alternative funding sources have been increasingly utilized in recent years to support balance sheet growth. However, the slowdown in loan growth that has characterized 2001 and the first quarter of 2002, combined with consistent growth in deposits during this time frame, has produced decreases in short-term and long-term funding sources other than deposits.

At March 31, 2002, short-term borrowed funds totaled $6.0 billion, a decrease of $605.7 million, or 9.1%, compared to December 31, 2001. For the first quarter of 2002, average short-term borrowed funds totaled $5.9 billion, a decrease of $673.4 million, or 10.2%, from the comparable period of 2001. The average annualized rate paid on short-term borrowed funds was 1.81% for the first quarter of 2002, a decrease of 364 basis points from the average rate of 5.45% paid in the first quarter of 2001. This decrease in the cost of short-term borrowed funds resulted from the lower interest rate environment that has existed during 2002 compared to 2001, which included a 385 basis point decrease in the average Federal funds rate from the first quarter of 2001 to the first quarter of 2002.

Long-term debt consists primarily of FHLB advances, medium term bank notes and corporate subordinated debt. These borrowings provide BB&T with the flexibility to structure borrowings in a manner that aids in the management of interest rate risk and liquidity. Long-term debt totaled $11.4 billion at March 31, 2002, a decrease of $277.0 million, or 2.4%, from the balance at December 31, 2001. For the first quarter of 2002, average long-term debt totaled $11.6 billion, an increase of $1.1 billion, or 10.6%, compared to the first quarter of 2001. Long-term debt has been utilized for a variety of funding needs, including the repurchase of common stock. The substantial increase in average long-term borrowings during the year reflects BB&T’s efforts to take advantage of low interest rates and lower funding costs. The average annualized rate paid on long-term borrowed funds was 5.19% for the first quarter of 2002, a decrease of 60 basis points from the average rate of 5.79% paid in the first quarter of 2001.

Asset Quality

Nonperforming assets, composed of foreclosed real estate, repossessions, nonaccrual loans and restructured loans, totaled $422.3 million at March 31, 2002, compared to $373.6 million at December 31, 2001. Nonperforming assets, as a percentage of loan-related assets, were .84% at March 31, 2002, compared to .79% at December 31, 2001. Loans 90 days or more past due and still accruing interest totaled $101.0 million at March 31, 2002, compared to $101.8 million at year-end 2001.

Net charge-offs totaled $56.2 million for the first quarter and amounted to .48% of average loans and leases, on an annualized basis, compared to $28.9 million, or .26% of average loans and leases, on an annualized basis, in the corresponding period in 2001.

While the slowdown in the economy has resulted in increases in nonperforming assets and net charge-offs during the first quarter, BB&T’s lending strategy, which focuses on relationship-based lending within our markets and smaller individual loan balances, continues to produce superior credit quality in good and bad economic times. BB&T’s asset quality, as measured by relative levels of nonperforming assets and net charge-offs, has remained approximately half that of published industry averages.

The allowance for loan and lease losses was $705.9 million, or 1.41% of loans and leases, at March 31, 2002, compared to $644.4 million, or 1.36% of loans and leases, at December 31, 2001. The increase in the allowance as a percentage of loans and leases reflects higher provisions for loan and lease losses in view of the economic slowdown and resulting higher nonperforming assets and net charge-offs, and the impact of institutions acquired by BB&T in the first quarter of 2002 that had higher allowance to loan ratios than BB&T.

The provision for loan and lease losses for the first quarter of 2002 was $56.5 million, compared to $42.0 million in the comparable quarter of 2001. The increased provision during 2002 was necessary to cover higher net charge-offs, as discussed above, and to maintain the allowance at a level considered adequate to absorb losses inherent in the loan portfolio at the balance sheet date.

Asset quality statistics for the last five calendar quarters are presented in the accompanying table.

ASSET QUALITY ANALYSIS
(Dollars in thousands)


	For the Three Months Ended

			3/31/02		12/31/01		9/30/01		6/30/01		3/31/01

Allowance For Loan & Lease Losses
Beginning balance		$	644,418	$	634,552	$	610,171	$	601,788	$	578,107
Allowance for acquired loans, net			61,177		9,047		--		9,470		10,566
Provision for loan and lease losses			56,500		65,000		68,500		48,798		42,020
Net charge-offs			(56,190	)	(64,181	)	(44,119	)	(49,885	)	(28,905	)

Ending balance		$	705,905	$	644,418	$	634,552	$	610,171	$	601,788

Risk Assets
Nonaccrual loans and leases		$	354,916	$	316,607	$	266,384	$	244,711	$	203,710
Foreclosed real estate			46,687		39,106		34,601		27,725		41,132
Other foreclosed property			20,734		17,858		17,733		20,494		22,946
Restructured loans			--		--		183		521		2,574

Total nonperforming assets		$	422,337	$	373,571	$	318,901	$	293,451	$	270,362

Loans 90 days or more past due
and still accruing		$	100,962	$	101,778	$	93,968	$	84,399	$	83,001

Asset Quality Ratios
Nonaccrual loans and leases as a
percentage of total loans and leases*			.71	%	.67	%	.57	%	.52	%	.45	%
Total nonperforming assets as a percentage of:
Total assets			.56		.53		.45		.43		.40
Loans and leases plus foreclosed property*			.84		.79		.68		.62		.58
Annualized net charge-offs as a percentage of
average loans and leases*			.48		.54		.37		.43		.26
Allowance for loan and lease losses as a
percentage of loans and leases*			1.41		1.36		1.35		1.30		1.30
Ratio of allowance for loan and lease losses to:
Annualized net charge-offs			3.10	x	2.53	x	3.63	x	3.05	x	5.13	x
Nonaccrual and restructured loans and leases			1.99		2.04		2.38		2.49		2.92

*All items referring to loans and leases include loans held for sale and are net of unearned income.

MARKET RISK MANAGEMENT

The effective management of market risk is essential to achieving BB&T’s strategic financial objectives. As a financial institution, BB&T’s most significant market risk exposure is interest rate risk. The primary objective of interest rate risk management is to minimize the effect that changes in interest rates have on net interest income. This is accomplished through active management of asset and liability portfolios with a focus on the strategic pricing of asset and liability accounts and management of maturity mixes for assets and liabilities. The goal of these activities is the development of appropriate maturity and repricing opportunities in BB&T’s portfolios of assets and liabilities that will produce consistent net interest income during periods of changing interest rates. BB&T’s Asset / Liability Management Committee (“ALCO”) monitors loan, investment and liability portfolios to ensure comprehensive management of interest rate risk. These portfolios are analyzed for proper fixed-rate and variable-rate mixes under various interest rate scenarios.

The asset/liability management process is designed to achieve relatively stable net interest margins and assure liquidity by coordinating the volumes, maturities or repricing opportunities of earning assets, deposits and borrowed funds. It is the responsibility of the ALCO to determine and achieve the most appropriate volume and mix of earning assets and interest-bearing liabilities, as well as ensure an adequate level of liquidity and capital, within the context of corporate performance goals. The ALCO also sets policy guidelines and establishes long-term strategies with respect to interest rate risk exposure and liquidity. The ALCO meets regularly to review BB&T’s interest rate risk and liquidity positions in relation to present and prospective market and business conditions, and adopts funding and balance sheet management strategies that are intended to ensure that the potential impact on earnings and liquidity as a result of fluctuations in interest rates is within acceptable standards.

The majority of assets and liabilities of financial institutions are monetary in nature and differ greatly from most commercial and industrial companies that have significant investments in fixed assets and inventories. Fluctuations in interest rates and actions of the Board of Governors of the Federal Reserve System (“FRB”) to regulate the availability and cost of credit have a greater effect on a financial institution’s profitability than do the effects of higher costs for goods and services. Through its balance sheet management function, BB&T is positioned to respond to changing interest rates and inflationary trends.

Management uses Interest Sensitivity Simulation Analysis (“Simulation”) to measure the sensitivity of projected earnings to changes in interest rates. Simulation takes into account the current contractual agreements that BB&T has with its customers on deposits, borrowings, loans, investments and any commitments to enter into those transactions. Management monitors BB&T’s interest sensitivity by means of a computer model that incorporates the current volumes, average rates and scheduled maturities and payments of asset and liability portfolios, together with multiple scenarios of projected prepayments, repricing opportunities and anticipated volume growth. Using this information, the model projects earnings based on projected portfolio balances under multiple interest rate scenarios. This level of detail is needed to simulate the effect that changes in interest rates and portfolio balances may have on the earnings of BB&T. This method is subject to the accuracy of the assumptions that underlie the process, but it provides a better illustration of the sensitivity of earnings to changes in interest rates than other analyses such as static or dynamic gap.

The asset/liability management process requires a number of key assumptions. Management determines the most likely outlook for the economy and interest rates by analyzing external factors, including published economic projections and data, the effects of likely monetary and fiscal policies as well as any enacted or prospective regulatory changes. BB&T’s current and prospective liquidity position, current balance sheet volumes and projected growth, accessibility of funds for short-term needs and capital maintenance are also considered. This data is combined with various interest rate scenarios to provide management with information necessary to analyze interest sensitivity and to aid in the development of strategies to reach performance goals.

The following table shows the effect that the indicated changes in interest rates would have on net interest income as projected for the next twelve months under the “most likely”interest rate scenario incorporated into the Interest Sensitivity Simulation computer model. Key assumptions in the preparation of the table include prepayment speeds of mortgage-related assets; cash flows and maturities of derivative financial instruments, changes in market condition, loan volumes and pricing, deposit sensitivity; customer preferences and capital plans. The resulting change in net interest income reflects the level of sensitivity that net interest income has in relation to changing interest rates.

Interest Sensitivity Simulation Analysis
March 31, 2002

Interest				Annualized
Rate				Hypotethtical
Scenario				Percentage
Linear				Change in
Change in		Prime		Net Interest
Prime Rate		Rate		Income

+3.00	%	7.75	%	2.29	%
+1.50		6.25		1.20
-1.50		3.25		-2.97
-3.00		1.75		-3.97

Management has established parameters for asset/liability management which prescribe a maximum impact on net interest income of 3% for a 150 basis point parallel change in interest rates over six months from the most likely interest rate scenario, and a maximum of 6% for a 300 basis point change over 12 months. It is management’s ongoing objective to effectively manage the impact of changes in interest rates and minimize the resulting effect on earnings as evidenced by the preceding table. At March 31, 2002, the sensitivity of BB&T’s net interest income to changes in interest rates was within the guidelines established by management, as illustrated in the accompanying table.

Derivative Financial Instruments

BB&T utilizes a variety of financial instruments to manage various financial risks. These instruments, commonly referred to as derivatives, primarily consist of interest rate swaps, caps, floors, collars, financial forward and futures contracts and options written and purchased. A derivative is a financial instrument that derives its cash flows, and therefore its value, by reference to an underlying instrument, index or referenced interest rate. BB&T uses derivatives primarily to hedge business loans, forecasted sales of mortgage loans, federal funds purchased, long-term debt and certificates of deposit.

Credit risk related to derivatives arises when amounts receivable from a counterparty exceed those payable. The risk of loss with any counterparty is limited to a small fraction of the notional amount. BB&T deals only with national market makers with strong credit ratings in its derivatives activities. BB&T further controls the risk of loss by subjecting counterparties to credit reviews and approvals similar to those used in making loans and other extensions of credit. All of the derivative contracts to which BB&T is a party settle monthly, quarterly or semiannually. Further, BB&T has netting agreements with the dealers with which it does business. Because of these factors, BB&T’s credit risk exposure at March 31, 2002, was not material.

Derivative contracts are written in amounts referred to as notional amounts. Notional amounts only provide the basis for calculating payments between counterparties and do not represent amounts to be exchanged between parties or a measure of financial risk. On March 31, 2002, BB&T had derivative financial instruments outstanding with notional amounts totaling $5.2 billion. The estimated fair value of open contracts reflected net unrealized gains of $46.9 million at March 31, 2002.

The following table sets forth certain information concerning BB&T’s derivative financial instruments at March 31, 2002:

Derivative Financial Instruments
March 31, 2002
(Dollars in thousands)

			Average			Average
	Notional		Receive			Pay			Estimated
Type	Amount		Rate			Rate			Fair Value

Receive fixed swaps	$	823,994		5.66	%		1.90	%	$	(3,216	)
Pay fixed swaps		198,309		2.02			4.61			960
Caps, floors and collars		1,319,050		--			--			34,113
Foreign exchange contracts		131,934		--			--			389
Forward contracts and futures		2,164,412		--			--			14,607
Interest rate lock commitments		500,295		--			--			--
Options on contracts purchased		85,000		--			--			83

Total	$	5,222,994							$	46,936

CAPITAL ADEQUACY AND RESOURCES

The maintenance of appropriate levels of capital is a management priority and is monitored on an ongoing basis. BB&T's principal goals related to capital are to provide an adequate return to shareholders while retaining a sufficient base to support future growth and comply with all regulatory standards.

Total shareholders’equity was $7.1 billion at March 31, 2002, compared to $6.2 billion at December 31, 2001. BB&T’s book value per common share at March 31, 2002, was $14.66 compared to $13.50 at December 31, 2001.

Financial holding companies and their subsidiaries are subject to regulatory requirements with respect to risk-based capital adequacy. Risk-based capital ratios measure capital as a percentage of balance sheet risk. The risk-weighted values of balance sheet items are determined in accordance with risk factors specified by Federal regulatory pronouncements.

Tier 1 capital (total shareholders’equity excluding unrealized gains (losses) on debt securities available for sale and unrealized gains or losses on cash flow hedges, net of deferred income taxes, plus certain mandatorily redeemable capital securities, less nonqualifying intangible assets) is required to be at least 4% of risk-weighted assets, and total capital (Tier 1 capital, a qualifying portion of the allowance for loan and lease losses and qualifying subordinated debt) must be at least 8% of risk-weighted assets, with one half of the minimum consisting of Tier 1 capital.

In addition to the risk-based capital measures described above, regulators have also established minimum leverage capital requirements for banking organizations. This is the primary measure of capital adequacy used by BB&T’s management, and is calculated by dividing period-end Tier 1 capital by average tangible assets for the most recent quarter. The minimum required Tier 1 leverage ratio ranges from 3% to 5% depending upon Federal bank regulatory agency evaluation of an organization’s overall safety and soundness.

BB&T’s capital ratios at the end of the last five quarters are presented in the accompanying table:

CAPITAL ADEQUACY RATIOS

	2002		2001

	First		Fourth		Third		Second		First
	Quarter		Quarter		Quarter		Quarter		Quarter
Risked-based capital ratios:
Tier 1 capital	10.0	%	9.8	%	9.6	%	9.7	%	9.6	%
Total capital	13.4		13.3		13.2		12.0		12.1
Tier 1 leverage ratio	7.7		7.2		7.1		7.2		7.0

ANALYSIS OF RESULTS OF OPERATIONS

Net income for the first quarter of 2002 totaled $309.6 million, an increase of 30.9% compared to the $236.5 million earned during the comparable quarter of 2001. On a diluted per share basis, earnings for the three months ended March 31, 2002, were $.66, compared to $.51 for the same period in 2001, an increase of 29.4%. BB&T’s operating results for the first quarter of 2002 produced an annualized return on average assets of 1.76% and an annualized return on average shareholders’equity of 19.41% compared to prior year ratios of 1.43% and 17.48%, respectively.

BB&T recorded certain items related principally to the consummation of mergers and acquisitions during both 2002 and 2001. For the first quarter of 2002, BB&T recorded $9.4 million in net after-tax charges primarily associated with the mergers of CFBC, AREA and MidAmerica, as well as systems conversion costs related to other mergers. During the first quarter of 2001, BB&T incurred $24.9 million in net after-tax charges primarily associated with the acquisitions of FCNB Corp. of Frederick, Maryland, and systems conversion costs related to other mergers. Merger-related charges typically include, but are not limited to, personnel-related expenses such as staff relocation, severance benefits, early retirement packages and contract settlements; occupancy, furniture and equipment expenses including branch consolidation; and other costs, such as operational charge-offs, professional fees, etc. The charges incurred during the first quarter of 2002 were offset by a $9.8 million gain resulting from the implementation of SFAS No. 142, which required any existing negative goodwill to be recognized as income effective January 1, 2002. This gain is classified separately as a cumulative effect of a change in accounting principle. In the aggregate, these merger-related items, combined with the cumulative effect adjustment, did not materially affect net income in 2002; however, merger-related costs reduced net income in the first quarter of 2001 by $24.9 million.

Excluding the effect of the above-described merger-related items and the cumulative effect of a change in accounting principle on operating results for both 2002 and 2001, BB&T’s net income for the first quarter of 2002 would have totaled $309.2 million, an increase of 18.3% over the $261.4 million that would have been earned during the first quarter of 2001.

The following table sets forth selected financial ratios for the last five calendar quarters:

PROFITABILITY MEASURES BASED ON NET INCOME

	2002		2001

	First		Fourth		Third		Second		First
	Quarter		Quarter		Quarter		Quarter		Quarter
Return on average assets	1.76	%	1.56	%	1.27	%	1.40	%	1.43	%
Return on average equity	19.41		17.93		14.92		16.81		17.48
Net interest margin	4.26		4.20		4.18		4.16		4.14

Net Interest Income and Net Interest Margin

Net interest income on an FTE basis was $685.3 million for the first quarter of 2002 compared to $634.4 million for the same period in 2001, an increase of $50.9 million, or 8.0%. For the three months ended March 31, 2002, average earning assets increased $3.2 billion, or 5.3%, compared to the same period of 2001, while average interest-bearing liabilities increased $2.4 billion, or 4.5%. The net interest margin increased from 4.14% in the first quarter of 2001 to 4.26% in the current quarter. The twelve basis point improvement in the net interest margin was the result of the average cost of funds decreasing faster than yields earned on interest-earning assets. The average cost of funds in the first quarter of 2002 decreased 202 basis points compared to the first quarter of 2001, while the average yield earned on interest-earning assets decreased 169 basis points, increasing the interest rate spread by 33 basis points and the net interest margin by 12 basis points.

The following table sets forth the major components of net interest income and the related annualized yields and rates for the first quarter of 2002 compared to the same period in 2001, and the variances between the periods caused by changes in interest rates versus changes in volumes.

Net Interest Income and Rate / Volume Analysis
For the Three Months Ended March 31, 2002 and 2001


	Average Balances				Annualized Yield / Rate						Income / Expense				Increase			Change due to


Fully Taxable Equivalent - (Dollars in thousands)	2002		2001		2002			2001			2002		2001		(Decrease)			Rate (6)			Volume (6)
Assets
Securities (1):
U.S. Treasury, U.S. government agencies and other (5)	$	15,496,084	$	14,642,116		6.55	%		7.25	%	$	253,824	$	265,247	$	(11,423	)	$	(25,971	)	$	14,548

States and political subdivisions		986,541		1,100,543		7.50			7.27			18,502		20,009		(1,507	)		587			(2,094	)
Total securities (5)		16,482,625		15,742,659		6.61			7.25			272,326		285,256		(12,930	)		(25,384	)		12,454
Other earning assets (2)		454,518		478,978		2.22			5.47			2,493		6,455		(3,962	)		(3,648	)		(314	)
Loans and leases, net
of unearned income (1)(3)(4)(5)		47,833,213		45,299,720		7.14			9.19			844,804		1,028,789		(183,985	)		(238,951	)		54,966

Total earning assets		64,770,356		61,521,357		6.97			8.66			1,119,623		1,320,500		(200,877	)		(267,983	)		67,106

Non-earning assets		6,711,325		5,434,034

Total assets	$	71,481,681	$	66,955,391

Liabilities and Shareholders' Equity
Interest-bearing deposits:
Savings and interest checking	$	3,201,268	$	3,496,877		0.81			1.85			6,383		15,916		(9,533	)		(8,286	)		(1,247	)
Money rate savings		13,721,226		11,756,965		1.14			3.52			38,469		102,182		(63,713	)		(78,497	)		14,784
Certificates of deposit and other time deposits		22,276,868		21,956,161		3.91			6.08			214,750		329,369		(114,619	)		(119,362	)		4,743

Total interest-bearing deposits		39,199,362		37,210,003		2.69			4.88			259,602		447,467		(187,865	)		(206,145	)		18,280
Short-term borrowed funds		5,930,689		6,604,135		1.81			5.45			26,449		88,700		(62,251	)		(54,006	)		(8,245	)
Long-term debt		11,572,254		10,465,027		5.19			5.79			148,310		149,928		(1,618	)		(16,643	)		15,025

Total interest-bearing liabilities		56,702,305		54,279,165		3.10			5.12			434,361		686,095		(251,734	)		(276,794	)		25,060

Noninterest-bearing deposits		6,498,552		5,817,639
Other liabilities		1,811,740		1,371,433
Shareholders' equity		6,469,084		5,487,154

Total liabilities and
shareholders' equity	$	71,481,681	$	66,955,391

Average interest rate spread						3.87			3.54
Net yield on earning assets						4.26	%		4.14	%	$	685,262	$	634,405	$	50,857		$	8,811		$	42,046

Taxable equivalent adjustment											$	37,990	$	48,951


(1)	Yields related to securities, loans and leases exempt from income taxes are stated on a taxable equivalent basis assuming tax rates in effect for the periods presented.
(2)	Includes Federal funds sold and securities purchased under resale agreements or similar arrangements.
(3)	Loan fees, which are not material for any of the periods shown, have been included for rate calculation purposes.
(4)	Nonaccrual loans have been included in the average balances. Only the interest collected on such loans has been included as income.
(5)	Includes assets which were held for sale or available for sale at amortized cost and trading securities at estimated fair value.
(6)	Changes in interest income and expense attributable to both changes in interest rates and changes in volumes are allocated proportionately.

Noninterest Income

Noninterest income for the three months ended March 31, 2002, was $374.7 million compared to $332.0 million for the same period in 2001, an increase of $42.7 million, or 12.9%. The increase was principally the result of substantially higher mortgage banking income, growth in service charges on deposits, growth in insurance commissions from BB&T’s agency network, and higher investment banking and brokerage fees and commissions. Excluding merger-related items, the cumulative effect of a change in accounting principle and the growth in noninterest income that resulted from the timing of purchase accounting transactions, noninterest income would have increased 15.0% in the first quarter of 2002 compared to the first quarter of 2001.

Noninterest income, excluding merger-related items and the cumulative effect item previously discussed, as a percentage of net interest income plus noninterest income excluding merger-related items, or the “fee income ratio”, was 35.1% for the first quarter of 2002, compared to 32.3% in the first quarter of 2001. This increase indicates that BB&T is deriving a greater percentage of its revenues from noninterest income sources. It is a primary goal of BB&T to increase this ratio, as it provides a source of income less dependent on movements in interest rates.

Service charges on deposits totaled $90.2 million for the first quarter of 2002, an increase of $10.7 million, or 13.5%, compared to the first quarter of 2001. The largest components of the growth within service charges on deposits were NSF and overdraft charges on personal accounts and account analysis fees on commercial accounts, which contributed $3.3 million and $6.2 million, respectively, to the increase in the first quarter of 2002 compared to 2001.

Trust income totaled $23.1 million for the current quarter, a decrease of $1.9 million, or 7.8%, compared to the same period a year ago. The decrease in trust income for the quarter reflects a decrease in asset management fees. Assets under management totaled $20.1 billion at March 31, 2002, up from $15.3 billion at March 31, 2001. This significant increase in trust assets under management reflects trust assets of companies acquired through purchase accounting. Through the acquisitions of AREA and MidAmerica, BB&T acquired trust assets totaling $2.6 billion.

Investment banking and brokerage fees and commissions totaled $52.9 million during the first quarter of 2002, an increase of $9.2 million, or 21.0%, compared to the first quarter of 2001. The increase in this category of revenue for the first quarter resulted primarily from an increase in trading income, fees from advisory and consulting services and management of third party investment portfolios from Scott & Stringfellow, BB&T’s wholly-owned investment banking and brokerage subsidiary.

Agency insurance commissions totaled $63.9 million for the first quarter of 2002, an increase of $21.9 million, or 52.3%, compared to the same three month period of 2001. The growth in revenue resulted primarily from the purchase of additional agencies during 2001 and 2002, as well as internal growth. The purchase of Cooney, Rikard & Curtin, Inc. (“CRC”) in January 2002 contributed $13.2 million in revenue growth for the first quarter of 2002. Additionally, property and casualty insurance commissions increased $4.3 million, contingent insurance commissions increased $1.8 million and title insurance commissions increased $1.2 million.

Income from mortgage banking activities totaled $50.6 million for the first quarter of 2002, an increase of $44.4 million compared to the same period of 2001. In 2002, a $9.8 million valuation allowance was provided reducing the value of BB&T’s capitalized mortgage servicing rights as a result of the declining interest rate environment. In the first quarter of 2001, a similar valuation totaling $35.0 million was recorded. Excluding these valuation provisions, mortgage income would have been $60.3 million for 2002 and $41.2 million for 2001, an increase of $19.1 million, or 46.5%. Mortgage loan originations totaled $2.8 billion for the first quarter of 2002 compared to $1.7 billion in the first quarter of 2001. These higher mortgage loan volumes produced increased mortgage banking fees in 2002. Servicing fee income increased $4.2 million; origination fees on loans sold increased $5.5 million; gains from loan sales increased $7.1 million and mortgage loan underwriting fees increased $2.9 million.

Other nondeposit fees and commissions totaled $44.1 million for the first quarter of 2002, a decrease of $.3 million, or .7%, compared to the three months ended March 31, 2001.

BB&T realized a $13.4 million gain from sales of securities in the first quarter of 2002 compared to a gain of $72.7 million in the first quarter last year, which included a $63.0 million pretax gain on an investment in an electronic transaction processing company. Excluding the $63.0 million gain, securities gains for the first quarter of 2001 would have been $9.7 million. The increase in the 2002 gains, exclusive of the gain from the sale of the investment in the transaction processing company, totaled $3.7 million.

Other income totaled $33.1 million for the first quarter of 2002, an increase of $17.4 million, or 111.2%, compared to the same period one year ago. Income from investments in bank owned life insurance increased $5.7 million from the 2001 period. Additionally, a $5.8 million gain was recognized in the first quarter of 2002 in connection with the demutualization of Principal Financial Group (“PFG”), which resulted in BB&T receiving stock in exchange for investments in bank owned life insurance with PFG. These increases were offset by a decrease in amortization of negative goodwill, which totaled $1.6 million in the first quarter of 2001.

Noninterest Expense

Noninterest expenses totaled $548.3 million for the first quarter of 2002 compared to $538.5 million for the same period a year ago, an increase of $9.8 million, or 1.8%. Noninterest expenses for the first quarter of 2002 includes $14.6 million of pretax expenses principally associated with the mergers of CFBC, AREA and MidAmerica, and costs incurred in connection with the integration of other recently completed acquisitions. Excluding these merger-related charges, noninterest expenses would have totaled $533.7 million, an increase of $49.0 million, or 10.1%, over the same period one year ago. Excluding the effects of business combinations accounted for as purchases that were completed in the last nine months of 2001 and first three months of 2002, and the aforementioned merger-related expenses, noninterest expenses for the first quarter of 2002 would have increased 4.1% from the comparable period of 2001.

BB&T’s efficiency ratio (noninterest expenses, excluding the merger-related expenses referred to above and costs related to foreclosed assets, as a percentage of FTE net interest income plus noninterest income excluding merger-related items and securities gains and losses) was 50.5% for the first quarter of 2002 compared to 51.7% for the first quarter of 2001.

Personnel expense, the largest component of noninterest expense, was $305.6 million for the first quarter of 2002 compared to $286.3 million for the same period in 2001, an increase of $19.4 million, or 6.8%. These amounts include merger-related costs of $.7 million in the first quarter of 2002 and $11.9 million in the first quarter of 2001. Excluding the merger-related charges from both years, personnel expense in the 2002 quarter would have increased $30.6 million, or 11.1%, from the 2001 period. This increase was primarily the result of purchase acquisitions, which added costs of $13.8 million, an increase of $2.0 million in insurance incentive compensation, an increase in pension expense of $3.8 million, an increase of $4.6 million in employee mortgage loan incentive compensation and an increase of $2.9 million in employee investment incentive compensation. Excluding the effects of the merger-related charges and purchase acquisitions, personnel expense for the first quarter of 2002 would have increased $11.8 million, or 4.3%, over the first quarter of 2001.

Occupancy and equipment expense for the three months ended March 31, 2002, totaled $86.2 million, an increase of $3.6 million, or 4.4%, compared to 2001. These amounts include merger-related charges of $2.7 million in the first quarter of 2002 and $7.4 million in the first quarter of 2001. Excluding the merger-related charges, occupancy and equipment expense would have increased $8.3 million, or 11.0%, compared to the same period in 2001. The increase was primarily the result of an increase in information technology equipment expense in the amount of $3.0 million and an increase in rent on buildings and premises in the amount of $2.6 million. Additionally, the acquisitions of CRC, MidAmerica and CFBC contributed $1.7 million to occupancy and equipment expense. Excluding the effects of the merger-related charges and purchase acquisitions, occupancy and equipment expense for the first quarter of 2002 would have increased $5.9 million, or 7.8%, over the first quarter of 2001.

The amortization of goodwill and other intangible assets totaled $4.4 million for the three months ended March 31, 2002, a decrease of $13.5 million, or 75.7%, from the amount incurred in the first quarter of 2001. This decrease is due to the adoption of SFAS No. 142, which ended the amortization of goodwill effective July 1, 2001, as previously discussed herein.

Other noninterest expenses for the first quarter of 2002 totaled $152.1 million, an increase of $.3 million, or .2%, compared to 2001. These amounts include merger-related costs of $11.1 million in the first quarter of 2002 and $34.5 million in the first quarter of 2001. Excluding these costs, other noninterest expenses for the three months ended March 31, 2002, would have increased $23.7 million, or 20.2%, from the comparable 2001 period. This increase is due to increases in the amortization of mortgage servicing rights of $15.9 million and an increase in data processing software expense in the amount of $2.3 million. Also, the acquisitions of CRC, MidAmerica and CFBC, consummated using purchase accounting, added $3.2 million to other noninterest expense.

Provision for Income Taxes

The provision for income taxes totaled $117.3 million for the first quarter of 2002, an increase of $16.9 million, or 16.8%, compared to the first quarter of 2001. Excluding the tax benefits associated with merger-related charges from all periods presented, the provision for income taxes would have been $122.6 million during the first quarter of 2002 and $112.1 million for the first quarter of 2001. These amounts represent an increase of $10.5 million, or 9.3%, compared to the first quarter of 2001. The effective tax rates on pretax income were 28.1% and 29.8% for the three months ended March 31, 2002 and 2001, respectively. Excluding the effect of merger-related charges on pretax income and the income tax provision, BB&T’s effective income tax rates were 28.4% and 30.0% for the three months ended March 31, 2002 and 2001, respectively.

During 2001 and 2000, BB&T entered into option contracts which legally transferred part of the responsibility for the future residual management of certain leveraged lease investments including the future remarketing or re-leasing of these assets to a wholly-owned subsidiary in a foreign jurisdiction having a lower income tax rate, thereby lowering the effective income tax rate applicable to these lease investments. These option contracts provide that the foreign subsidiary may purchase the lease investments at expiration of the existing leveraged leases for a fixed price. As a result, a portion of the residual value included in the consolidated leveraged lease analysis should be taxed at a lower tax rate than originally anticipated, resulting in a change in the total net income from the lease. In accordance with SFAS No. 13, "Accounting for Leases", the net income from the affected leases was recalculated from inception based on the new effective income tax rate. The recalculation had the effect of reducing net interest income for 2001 and 2000 by $40.6 million and $14.3 million, respectively, and reducing the 2001 income tax provision by $56.6 million and the tax provision for 2000 by $19.8 million. BB&T intends to permanently reinvest the earnings of this subsidiary and, therefore, in accordance with the provisions of SFAS No. 109, "Accounting for Income Taxes", deferred income taxes associated with the foreign subsidiary arising from these transactions have not been provided.

BB&T transferred certain securities and real estate secured loans to a wholly-owned subsidiary in exchange for additional common equity in the subsidiary. The transaction produced a difference between BB&T’s tax basis in the equity investment in the subsidiary and the assets transferred to the subsidiary, resulting in a net reduction in the income tax provision for the first quarter of 2002.

The Internal Revenue Service (“IRS”) is conducting an examination of BB&T’s Federal income tax returns for the years ended December 31, 1996, 1997 and 1998. In connection with this examination the IRS has issued Notices of Proposed Adjustment with respect to BB&T’s income tax treatment of certain leveraged lease investments that were entered into during the years under examination. Management believes that BB&T’s treatment of these leveraged leases was appropriate and in compliance with existing tax laws and regulations, and intends to vigorously defend this position. In addition, inasmuch as the proposed adjustments relate primarily to the timing of revenue recognition and amortization expense, deferred taxes have been provided. Management does not expect that BB&T’s consolidated financial position or consolidated results of operations will be materially adversely affected as a result of the IRS examination.

Item 1. Legal Proceedings

The nature of the business of BB&T's banking subsidiaries ordinarily results in a certain amount of litigation. The subsidiaries of BB&T are involved in various legal proceedings, all of which are considered incidental to the normal conduct of business. Management believes that the liabilities arising from these proceedings will not have a materially adverse effect on the consolidated financial position or consolidated results of operations of BB&T.

Item 6. Exhibits and Reports on Form 8-K

Exhibit No.	Description	Location
2(a)	Agreement and Plan of Reorganization dated as of July 29, 1994 and amended and restated as of October 22, 1994 between the Registrant and BB&T Financial Corporation.	Incorporated herein by reference to Registration No. 33-56437.

2(b)	Plan of Merger as of July 29, 1994 as amended and restated on October 22, 1994 between the Registrant and BB&T Financial Corporation.	Incorporated herein by reference to Registration No. 33-56437.

2(c)	Agreement and Plan of Reorganization dated as of November 1, 1996 between the Registrant and United Carolina Bancshares Corporation, as amended.	Incorporated herein by reference to Exhibit 3(a) filed in the Annual Report on Form 10-K, filed March 17, 1997.


2(d)	Agreement of Plan of Reorganization dated as of October 29, 1997 between the Registrant and Life Bancorp, Inc.	Incorporated herein by reference to Registration No. 33-44183.

2(e)	Agreement and Plan of Reorganization dated as of February 6, 2000 between the Registrant and One Valley Bancorp, Inc.	Incorporated herein by reference to Exhibit 99.1 filed in the Current Report on Form 8-K, dated February 9, 2000


3(a)(i)	Amended and Restated Articles of Incorporation of the Registrant, as amended.	Incorporated herein by reference to Exhibit 3(a) filed in the Annual Report on Form 10-K, filed March 17, 1997.

3(a)(ii)	Articles of Amendment of Articles of Incorporation.	Incorporated herein by reference to Exhibit 3(a)(ii) filed in the Annual Report on Form 10-K, filed March 18, 1998


3(b)(i)	Bylaws of the Registrant, as amended.	Incorporated herein by reference to Exhibit 3(b) filed in the Annual Report on Form 10-K, filed March 18, 1998


3(b)(ii)a	Articles of Amendment of the Bylaws of the Registrant.	Filed herewith.

4(a)	Articles of Amendment to Amended and Restated Articles of Incorporation of the Registrant related to Junior Participating Preferred Stock.	Incorporated herein by reference to Exhibit 3(a) filed in the Annual Report on Form 10-K, filed March 17, 1997.

4(b)	Rights Agreement dated as of December 17, 1996 between the Registrant and Branch Banking and Trust Company, Rights Agent.	Incorporated herein by reference to Exhibit 1 filed under Form 8-A, filed January 10, 1997.

4(c)	Subordinated Indenture (including Form of Subordinated Debt Security) between the Registrant and State Street Bank and Trust Company, Trustee, dated as of May 24, 1996.	Incorporated herein by reference to Exhibit 4(d) of Registration No. 333-02899.

4(d)	Senior Indenture (including Form of Senior Debt Security) between the Registrant and State Street Bank and Trust company, Trustee, dated as of May 24, 1996.	Incorporated herein by reference to Exhibit 4(c) of Registration No. 333-02899.

10 (a)*	Death Benefit Only Plan, Dated April 23, 1990, by and between Branch Banking and Trust Company (as successor to Southern National Bank of North Carolina) and L. Glenn Orr, Jr.	Incorporated herein by reference to Registration No. 33-33984.

10 (b)*	BB&T Corporation Non-Employee Directors' Deferred Compensation and Stock Option Plan.	Incorporated herein by reference to Exhibit 10(b) of the Annual Report on Form 10-K, filed March 17, 1997.

10 (c)*	BB&T Corporation 1994 Omnibus Stock Incentive Plan.	Incorporated herein by reference to Registration No. 33-57865.

10 (d)*	Settlement and Non-Compete Agreement, dated February 28, 1995, by and between the Registrant and L. Glenn Orr, Jr.	Incorporated herein by reference to Registration No. 33-56437.

10 (e)*	Settlement Agreement, Waiver and General Release dated September 19, 1994, by and between the Registrant, Branch Banking and Trust Company (as successor to Southern National Bank of North Carolina) and Gary E. Carlton.	Incorporated herein by reference to Registration No. 33-56437.

10 (f)	BB&T Corporation 401(k) Savings Plan (restated effective January 1, 2000, and subsequently amended).	Incorporated herein by reference to Exhibit 10(f) filed in the Annual Report on Form 10-K, filed March 16, 2001.

10 (g)*	BB&T Corporation 1995 Omnibus Stock Incentive Plan.	Incorporated herein by reference to Exhibit 10(g) filed in the Annual Report on Form 10-K, filed March 17, 1997.

10 (h)*	Branch Banking and Trust Company Long-Term Incentive Plan.	Incorporated by reference to the identified exhibit under the Quarterly Report on Form 10-Q, filed May 14, 1991.

10 (i)*	Branch Banking and Trust Company Executive Incentive Compensation Plan.	Incorporated by reference to the identified exhibit under the Annual Report on Form 10-K, filed February 22, 1985.

10 (j)*	Southern National Deferred Compensation Plan for Key Executives.	Incorporated herein by reference to Exhibit 10(j) filed in the Annual Report on Form 10-K, filed March 17, 1997.

10 (k)*	BB&T Corporation Target Pension Plan.	Incorporated herein by reference to Exhibit 10(k) filed in the Annual Report on Form 10-K, filed March 17, 1997.

10 (l)*	BB&T Corporation Supplemental Executive Retirement Plan.	Incorporated herein by reference to Exhibit 10(l) filed in the Annual Report on Form 10-K, filed March 17, 1997.

10 (m)*	Settlement and Noncompetition Agreement, dated July 1, 1997, by and between the Registrant and E. Rhone Sasser.	Incorporated herein by reference to Exhibit 10(m) filed in the Annual Report on Form 10-K, filed March 18, 1998.

10 (n)*	BB&T Corporation Supplemental Defined Contribution Plan for Highly Compensated Employees (amended and restated effective November 1, 2001).	Incorporated herein by Reference to Exhibit 10 (n) filed in the Annual Report on Form 10-K, filed March 15, 2002.

10 (o)*	Scott & Stringfellow, Inc. Executive and Employee Retention Plan.	Incorporated herein by reference to Registration No. 333-81471.

10 (p)*	BB&T Corporation Non-Qualified Defined Contribution Plan (amended and restated November 1, 2001).	Incorporated herein by reference to Exhibit 10 (p) filed in the Annual Report on Form 10-K, filed March 15, 2002.

10 (q)*	BB&T Corporation Amended and Restated 1996 Short-term Incentive Plan.	Incorporated herein by reference to Exhibit 10(q) of the Annual Report on Form 10-K, filed on March 16, 2001.

10 (r)*	Amendment to 1995 Omnibus Stock Incentive Plan.	Incorporated herein by reference to Registration No. 333-36540.

10 (s)*	Employment Agreement dated February 6, 2000, by and between the Registrant and J. Holmes Morrison.	Incorporated herein by reference to Exhibit 10(s) of the Annual Report on Form 10-K, filed on March 16, 2001.

10 (t)	BB&T Corporation Pension Plan (restated effective January 1, 2000, and subsequently amended).	Incorporated herein by reference to Exhibit 10(t) of the Annual Report on Form 10-K, filed on March 16, 2001.

10 (u)*	Amendment to BB&T Corporation Nonqualified Defined Contribution Plan.	Incorporated herein by reference to Exhibit 10(u) of the Annual Report on Form 10-K, filed on March 16, 2001.

10 (v)*	BB&T Corporation Non-Employee Directors' Deferred Compensation and Stock Option Plan (amended and restated effective November 1, 2001).	Incorporated herein by reference to Exhibit 10 (v) filed in the Annual Report on Form 10-K, filed March 15, 2002.

10 (w)*	Amendment to the BB&T Corporation Supplemental Defined Contribution Plan for Highly Compensated Employees.	Incorporated herein by reference to Exhibit 10(w) of the Annual Report on Form 10-K, filed on March 16, 2001.

10 (x)*	BB&T Corporation Non-Qualified Deferred Compensation Trust (amended and restated effective Incorporated herein by reference to Exhibit November 1, 2001).	10 (x) filed in the Annual Report on Form 10-K, filed March 15, 2002.

10 (y)*	2001 Declaration of Amendment to BB&T Corporation Non-Employee Directors' Deferred Compensation and Stock Option Plan	Incorporated herein by reference to Exhibit 10 (y) filed in the Annual Report on Form 10-K, filed March 15, 2002.

10 (z)*	Amended and Restated Employment Agreement by and among the Registrant, Branch Banking and Trust Co. and John A. Allison IV	Filed herewith.

10 (aa)*	Amended and Restated Employment Agreement by and among the Registrant, Branch Banking and Trust Co. and W. Kendall Chalk	Filed herewith.

10 (ab)*	Amended and Restated Employment Agreement by and among the Registrant, Branch Banking and Trust Co. and Robert E. Greene	Filed herewith.

10 (ac)*	Amended and Restated Employment Agreement by and among the Registrant, Branch Banking and Trust Co. and Sherry A. Kellett	Filed herewith.

10 (ad)*	Amended and Restated Employment Agreement by and among the Registrant, Branch Banking and Trust Co. and Kelly S. King	Filed herewith.

10 (ae)*	Amended and Restated Employment Agreement by and among the Registrant, Branch Banking and Trust Co. and Scott E. Reed	Filed herewith.

10 (af)*	Amended and Restated Employment Agreement by and among the Registrant, Branch Banking and Trust Co. and Henry G. Williamson, Jr.	Filed herewith.

10 (ag)*	Amended and Restated Employment Agreement by and among the Registrant, Branch Banking and Trust Co. and C. Leon Wilson, III	Filed herewith.

11	Statement re Computation of Earnings Per Share.	Filed herewith as Note E.

22	Proxy Statement for the 2002 Annual Meeting of Shareholders.	Incorporated herein by reference to BB&T's Definitive Proxy Statement filed on Schedule 14A on March 21, 2002.

	* Management compensatory plan or arrangement.

(b) Current Reports on Form 8-K during and following the quarter ended March 31, 2002.

On January 11, 2002, BB&T filed a Current Report on Form 8-K under Item 5 to report the results of operations for the fourth quarter of 2001. On February 7, 2002, BB&T filed five Current Reports on Form 8-K under Item 5 to file presentation materials related to an Investor and Analyst Conference held on February 7, 2002. On February 27, 2002, BB&T filed a Current Report on Form 8-K under Item 5 to announce the approval of a share buyback program authorizing the repurchase of up to 40 million shares of BB&T common stock. On March 21, 2002, BB&T filed a Current Report on Form 8-K under Item 4 to report the appointment of PricewaterhouseCoopers LLP as its independent public accountant for 2002. On April 11, 2002, BB&T filed a Current Report on Form 8-K under Item 5 to report the results of operations for the first quarter of 2002.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


		BB&T CORPORATION
		(Registrant)

Date: May 13, 2002		By: /s/ Scott E. Reed
		Scott E. Reed, Senior Executive Vice President and Chief
		Financial Officer

Date: May 13, 2002		By: /s/ Sherry A. Kellett
		Sherry A. Kellett, Senior Executive Vice President and
		Controller (Principal Accounting Officer)

Exhibit 3(b)(ii)

CERTIFIED EXTRACT OF CORPORATE RESOLUTION
OF BB&T CORPORATION

The undersigned Secretary of BB&T Corporation (“Corporation”) hereby certifies that the following resolution was adopted at a duly called and validly held meeting of the Board of Directors of the Corporation on April 23, 2002:

WHEREAS, Article II, Section 8 (“Proxies”) of the Bylaws of the Corporation, as amended (“Bylaws”), currently provides as follows:

“Shareholders may vote at any meeting of the shareholders by proxies duly authorized in writing. Proxies shall be valid only for one meeting, to be specified therein, and any adjournment of such meeting. Proxies shall be dated and shall be filed with the records of the meeting.”; and

WHEREAS, the Board of Directors deems it to be in the best interests of the Corporation to amend the Bylaws to clarify that shareholders may designate proxies by electronic or telephonic means in a manner permitted by the Corporation and to conform the Bylaws with the provisions of Section 55-7-22 of the North Carolina Business Corporation Act;

NOW, THEREFORE, BE IT RESOLVED, that Article II, Section 8 of the Bylaws of the Corporation is hereby amended to read in its entirety as follows:

“Shares may be voted either in person or by one or more proxies authorized by a written appointment of proxy signed by the shareholder or his duly authorized attorney-in-fact. In addition, proxies may be appointed in the form of (i) a photocopy, telegram, cablegram, facsimile or equivalent reproduction and, if and to the extent permitted by the corporation, (ii) an electronic mail message or other form of electronic, wire or wireless communication that provides a written statement which appears to have been sent by the shareholder, and (iii) any kind of telephonic transmission, even if not accompanied by written communication, under circumstances or together with information from which the corporation can reasonably assume that the appointment was made or authorized by the shareholder. An appointment of proxy is valid for 11 months from the date of its execution, unless a different period is expressly provided in the appointment form.”


	/s/ Jerone C. Herring
	Jerone C. Herring
	Secretary

Exhibit 10(z)

AMENDED AND RESTATED EMPLOYMENT AGREEMENT

THIS AMENDED AND RESTATED EMPLOYMENT AGREEMENT (the or this “Agreement”), dated as of the 25th day of April, 2002, to be effective as of the 1st day of January, 2002, by and among BB&T CORPORATION, a North Carolina corporation (“BB&T”), BRANCH BANKING AND TRUST COMPANY, a North Carolina chartered commercial bank (the “Employer”), and JOHN A. ALLISON IV (the “Employee”).

R E C I T A L S:

BB&T, the Employer and its Affiliates (as defined in Section 2a) are engaged in the banking and financial services business. The Employee is experienced in, and knowledgeable concerning, the material aspects of such business. The Employee heretofore has served as the Chairman of the Board of both BB&T and the Employer and has been employed as the Chief Executive Officer of both BB&T and the Employer pursuant to the terms of an Employment Agreement dated April 15, 1996, as subsequently amended (the “Predecessor Agreement”). BB&T and the Employer desire to continue to employ the Employee as Chief Executive Officer of both BB&T and the Employer and desire that the Employee continue to serve as the Chairman of the Board of Directors of both BB&T and the Employer, and the Employee desires to continue to be employed by and serve BB&T and the Employer in such capacities. Furthermore, BB&T and the Employer desire to continue to provide the Employee certain disability, death, severance and supplemental retirement benefits in addition to those provided by the employee benefit plans of BB&T and the Employer. BB&T, the Employer and the Employee desire to amend and restate the Predecessor Agreement in order to: (i) incorporate all amendments made to the Predecessor Agreement; and (ii) clarify and more clearly state the terms of their existing understanding.

NOW, THEREFORE, in consideration of the mutual covenants and obligations contained herein and the compensation BB&T and the Employer agree herein to pay the Employee, and of other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, BB&T, the Employer and the Employee agree as follows:

1. Effect of Prior Agreements. This Agreement expresses the whole and entire agreement between the parties with reference to the employment and service of the Employee and supersedes and replaces any prior employment agreements (including, without limitation, the Predecessor Agreement), understandings or arrangements (whether written or oral) among BB&T, the Employer and the Employee. Without limiting the foregoing, the Employee agrees that this Agreement satisfies any rights he may have had under any prior agreement or understanding (including, without limitation, the Predecessor Agreement) with the Employer and BB&T with respect to his employment by the Employer and BB&T.

2. Definitions. Wherever used in this Agreement, including, but not limited to, the Recitals, Sections 1 and 2, the following terms shall have the meanings set forth below (unless otherwise indicated by the context):

a. "Affiliate" means a Person that directly or indirectly through one or more intermediaries, controls, or is controlled by, or is under common control with, another Person.

b. "Change of Control" means the earliest of the following dates:

(i) the date any person or group of persons (as defined in Section 13(d) and 14(d) of the Securities Exchange Act of 1934) together with its Affiliates, excluding employee benefit plans of the Employer or BB&T, is or becomes, directly or indirectly, the “beneficial owner” (as defined in Rule 13d-3 promulgated under the Securities Exchange Act of 1934) of securities of the Employer or BB&T representing twenty percent (20%) or more of the combined voting power of the Employer’s or BB&T’s then outstanding securities (excluding the acquisition of securities of the Employer by an entity at least eighty percent (80%) of the outstanding voting securities of which are, directly or indirectly, beneficially owned by BB&T); or

(ii) the date, when as a result of a tender offer or exchange offer for the purchase of securities of BB&T (other than such an offer by BB&T for its own securities), or as a result of a proxy contest, merger, share exchange, consolidation or sale of assets, or as a result of any combination of the foregoing, individuals who at the beginning of any two-year period during the Term constitute BB&T’s Board of Directors, plus new directors whose election or nomination for election by BB&T’s shareholders is approved by a vote of at least two-thirds of the directors still in office who were directors at the beginning of such two-year period (“Continuing Directors”), cease for any reason during such two-year period to constitute at least two-thirds (2/3) of the members of such Board of Directors; or

(iii) the date the shareholders of BB&T approve a merger, share exchange or consolidation of BB&T with any other corporation or entity regardless of which entity is the survivor, other than a merger, share exchange or consolidation which would result in the voting securities of BB&T outstanding immediately prior thereto continuing to represent (either by remaining outstanding or being converted into voting securities of the surviving or acquiring entity) at least sixty percent (60%) of the combined voting power of the voting securities of BB&T or such surviving or acquiring entity outstanding immediately after such merger or consolidation; or

(iv) the date the shareholders of BB&T approve a plan of complete liquidation or winding-up of BB&T or an agreement for the sale or disposition by BB&T of all or substantially all of BB&T’s assets; or

(v) the date of any event (other than a “merger of equals” as described in this subparagraph b) which BB&T’s Board of Directors determines should constitute a Change of Control.

Notwithstanding the foregoing, the term “Change in Control” shall not include any event which the Board of Directors of BB&T (or, if the event described in clause (ii) above has occurred, a majority of the Continuing Directors), prior to the occurrence of such event, specifically determines, for the purpose of this Agreement or employment agreements with other executives that contain substantially similar provisions, is a “merger of equals” (regardless of the form of the transaction), unless a majority of the Continuing Directors revokes such specific determination within one year after occurrence of the event that otherwise would constitute a Change in Control (a “MOE Revocation”). The parties to this Agreement agree that any determination concerning whether a transaction is a “merger of equals” shall be solely within the discretion of the Board of Directors of BB&T or a majority of the Continuing Directors, as the case may be.

c. "Code" means the Internal Revenue Code of 1986, as amended, and rules and regulations issued thereunder.

d. "Commencement Month" means the first day of the calendar month next following the month in which falls the Employee's Termination Date.

e. "Compensation Continuance Period" means the period of time over which the Employee is Compensation pursuant to the provisions of Section 8. receiving Termination

f. "Computation Period" means the twelve (12) consecutive month period beginning with the Commencement Month and each anniversary of the Commencement Month.

g. "Confidential Information" means all non-public information that has been created, discovered, developed or otherwise become known to the Employer, BB&T or their Affiliates other than through public sources, including, but not limited to, all inventions, processes, data, computer programs, marketing plans, customer lists, depositor lists, budgets, projections, new products, information covered by the Trade Secrets Protection Act, N.C. Gen. Stat., Chapter 66, §§152 to 162, and other information owned by the Employer, BB&T or their Affiliates which is not public information.

h. "Excise Tax" means the excise tax on excess parachute payments under Section 4999 of the Code (or any successor or similar provision thereof), including any interest or penalties with respect to such excise tax.

i. "Good Reason" means the occurrence of any of the following events without the Employee's express written consent:

(i) the assignment to the Employee of duties inconsistent with the position and status of the offices and positions of the Employer and/or BB&T held by the Employee as of January 1, 2002; or

(ii) a reduction by the Employer or BB&Tin the Employee's pay grade or annual base salary as then in effect; or

(iii) the exclusion of the Employee from participation in the Employer’s or BB&T’s employee benefit plans in effect as of, or adopted or implemented on or after, January 1, 2002, as the same may be improved or enhanced from time to time during the Term; or

(iv) any purported termination of the employment of the Employee by the Employer or BB&T which is not effected in accordance with this Agreement.

j. "Just Cause" means one or more of the following: the Employee's personal dishonesty; gross incompetence; willful misconduct; breach of a fiduciary duty involving personal profit; intentional failure to perform stated duties; willful violation of any law, rule or regulation (other than traffic violations or similar offenses) or final cease-and-desist order; conviction of a felony or of a misdemeanor involving moral turpitude; unethical business practices in connection with the Employer’s or BB&T’s business; misappropriation of the Employer’s or BB&T’s assets (determined on a reasonable basis) or those of their Affiliates; or material breach of any other provision of this Agreement; provided, that the Employee has received written notice from the Employer or BB&T of such material breach and such breach remains uncured for a period of thirty (30) days after the delivery of such notice. For purposes of this provision, no act or failure to act, on the part of the Employee, shall be considered “willful”unless it is done, or omitted to be done, by the Employee in bad faith or without a reasonable belief that the Employee’s action or omission was in the best interests of the Employer and BB&T.

k. "Pension Plan" means the BB&T Corporation Pension Plan, a tax qualified defined benefit pension plan, as the same may be amended from time to time.

l. "Person" means any individual, person, partnership, limited liability company, joint venture, corporation, company, firm, group or other entity.

m. "Term" means the term of the Employee's employment under this Agreement as provided in Section 4.

n. "Termination Compensation" means a monthly amount equal to one-twelfth (1/12th) of the highest amount of the annual cash compensation (including cash bonuses and other cash-based benefits, including for these purposes amounts earned or payable whether or not deferred) received by the Employee during any one of the five (5) calendar years immediately preceding the calendar year in which falls his Termination Date; provided, that if the cash compensation received by the Employee during the Termination Year exceeds the highest amount of the annual cash compensation received by him during any one of the immediately preceding five (5) calendar years, the cash compensation received by the Employee during the Termination Year shall be deemed to be his highest amount of annual cash compensation.

o. "Termination Date" means the date the Employee's employment is terminated.

p. "Termination Year" means the calendar year in which falls the Employee's Termination Date.

3. Employment. During the Term (as defined in subparagraph m of Section 2 and Section 4), the Employee shall serve as Chairman of the Board of both BB&T and the Employer and shall be employed as Chief Executive Officer of both BB&T and the Employer. The Employee shall have such duties and responsibilities as are commensurate with such positions. The Employee shall also serve on such committees and task forces of BB&T and the Employer, including, without limitation, the Executive Management Committee of BB&T, as he may be appointed from time to time by BB&T, the Employer or their Boards of Directors. Notwithstanding the foregoing, in no event shall the failure to appoint or reappoint the Employee to any committee or task force of BB&T or the Employer be treated as a breach of this Agreement by BB&T or the Employer, or as a termination of the employment of the Employee. The Employee hereby accepts and agrees to such service and employment, subject to the general supervision and pursuant to the orders, advice, and direction of the Employer, BB&T and their Boards of Directors. The Employee shall perform such duties as are customarily performed by one holding such positions in other same or similar businesses or enterprises as that engaged in by the Employer and BB&T, and shall also additionally render such other services and duties as may be reasonably assigned to him from time to time by the Employer or BB&T, consistent with his positions.

4. Term of Employment. The Term shall commence as of January 1, 2002, and shall terminate on December 31, 2006, unless extended or shortened as provided in this Agreement. As of the first day of each calendar month commencing February 1, 2002, the Term shall be automatically extended, without any further action by BB&T, the Employer or the Employee, for an additional calendar month; provided, however, that on any one month anniversary date BB&T, the Employer or the Employee may serve notice to the other parties to fix the Term to a definite five-year period from the date of such notice and no further automatic extensions shall occur. Notwithstanding the foregoing, the Term shall not be extended beyond the first day of the calendar month next following the date on which the Employee attains age sixty-five (65). The Term, as it may be extended pursuant to this Section 4, or, as it may be shortened in accordance with Section 7 or 8, is hereinafter referred to as the “Term.”

5. Compensation.

a. For all services rendered by the Employee to the Employer and BB&T under this Agreement, the Employer or BB&T shall pay to the Employee, during the Term, a minimum annual base salary at a rate not less than $837,052.08, payable in accordance with the standard payroll practices and procedures of the Employer or BB&T applicable to all officers. Any salary increase payable to the Employee shall be determined in accordance with the Employer’s or BB&T’s annual salary plan, and shall be based on the Employer’s and/or BB&T’s performance and the performance of the Employee.

b. The Employee shall continue to participate in any bonus or incentive plans, whether any such plan provides for awards in cash or securities, made available to officers similarly situated to the Employee, as such plan or plans may be modified from time to time, or such other similar plans for which the Employee may become eligible and designated a participant.

c. Except as otherwise specifically provided in this Agreement, for as long as the Employee is employed by the Employer and BB&T, the Employee also shall be entitled to receive, on the same basis as other similarly situated officers of the Employer or BB&T, employee pension and welfare benefits and group employee benefits such as sick leave, vacation, group disability and health, life, and accident insurance and similar indirect compensation which the Employer or BB&T may from time to time extend to its officers.

d. If, during the Term, the Employee becomes eligible for benefits under the Pension Plan and retires, the Employee shall be eligible to participate in the same retiree health care program provided to other retiring employees at the time. During the Compensation Continuance Period, the Employee shall be deemed to be an “active employee”of the Employer for purposes of participating in the Employer’s or BB&T’s health care plan and for purposes of satisfying any age and service requirements under the Employer’s or BB&T’s retiree health care program. Thus, if the Employee has not satisfied either the age or service requirement (or both) under the Employer’s or BB&T’s retiree health care program at the time payment of his Termination Compensation begins, but satisfies the age or service requirement (or both) at the time such Termination Compensation payments end, he shall be deemed to have satisfied the age or service requirement (or both) for purposes of the Employer’s or BB&T’s retiree health care program as of the date his Termination Compensation payments end. For purposes of satisfying any service requirement under the Employer’s or BB&T’s retiree health care program, the Employee shall be credited with one year of service for each Computation Period which begins and ends during the Compensation Continuance Period.

6. Covenants of the Employee.

a. To the extent and subject to the limitations provided in the following subsections of this Section 6 (whichever subsection may be applicable), upon termination of the Employee’s employment prior to the expiration of the Term, the Employee shall not directly or indirectly, either as a principal, agent, employee, employer, stockholder, co-partner or in any other individual or representative capacity whatsoever, engage in the banking and financial services business, which includes, but it is not limited to, consumer, savings, commercial banking and the insurance and trust businesses, or the savings and loan or mortgage banking business, or any other business in which the Employer, BB&T or their Affiliates are engaged, anywhere in the States of North Carolina and South Carolina and in any county outside of North Carolina and South Carolina contiguous to North Carolina or South Carolina, nor shall the Employee solicit, or assist any other Person in so soliciting, any depositors or customers of the Employer, BB&T or their Affiliates, or induce any then or former employees to terminate their employment with the Employer, BB&T or their Affiliates, except that this Section 6a shall not be read to prohibit the investment described in the last sentence of Section 9.

b. If the Employee terminates his employment with the Employer or BB&T for Good Reason at any time, the Employee shall be subject to the non-competition and non-solicitation provisions of Section 6a until the earlier of: (i) the first anniversary of the Employee’s Termination Date; or (ii) the date as of which the Employee ceases to receive any further Termination Compensation because of his breach of the non-competition or non-solicitation provisions of Section 6a. However, if the Employee terminates his employment with the Employer or BB&T for Good Reason within twelve (12) months after a Change of Control or, if later, within ninety (90) days after a MOE Revocation (as defined in Section 2b), subparagraph c below shall apply, not this subparagraph b.

c. If the Employee terminates his employment with the Employer or BB&T for any reason within twelve (12) months after a Change of Control, or, if later, within ninety (90) days after a MOE Revocation, the Employee shall not be subject to the non-competition and non-solicitation provisions of Section 6a.

d. If the Employee terminates his employment with the Employer or BB&T for any reason other than Good Reason at any time (except within twelve (12) months after a Change of Control, or, if later, within ninety (90) days after a MOE Revocation), the Employee shall be subject to the non-competition and non-solicitation provisions of Section 6a.

e. If the employment of the Employee is terminated by the Employer or BB&T at any time for Just Cause, the Employee shall not be subject to the non-competition and non-solicitation provisions of Section 6a.

f. If the employment of the Employee is terminated by the Employer or BB&T for any reason other than Just Cause at any time (except within twelve (12) months after a Change of Control, or, if later, within ninety (90) days after a MOE Revocation), the Employee shall be subject to the non-competition and non-solicitation provisions of Section 6a until the earlier of: (i) the first anniversary of the Employee’s Termination Date; or (ii) the date as of which the Employee ceases to receive any further Termination Compensation because of his breach of the non-competition or non-solicitation provisions of Section 6a. If the employment of the Employee is terminated by the Employer or BB&T for any reason other than Just Cause within twelve (12) months after a Change of Control, or, if later, within ninety (90) days after a MOE Revocation), the Employee shall not be subject to the non-competition and non-solicitation provisions of Section 6a.

g. During the Term and thereafter, and except as required by any court, supervisory authority or administrative agency or as may be otherwise required by applicable law, the Employee shall not, without the written consent of the Boards of Directors of the Employer and BB&T, or a person authorized thereby, disclose to any person, other than an employee of the Employer, BB&T or an Affiliate thereof, or a person to whom disclosure is reasonably necessary or appropriate in connection with the performance by the Employee of his duties as an employee of the Employer or BB&T, any Confidential Information obtained by him while in the employ of the Employer or BB&T, unless such information has become a matter of public knowledge at the time of such disclosure.

h. The covenants contained in this Section 6 shall be construed and interpreted in any judicial proceeding to permit their enforcement to the maximum extent permitted by law. The Employee agrees that the restraints imposed in this Section 6 are necessary for the reasonable and proper protection of the Employer, BB&T and their Affiliates and that each and every one of the restraints is reasonable in respect to such matter, length of time and the area. The Employee further acknowledges that damages at law would not be a measurable or adequate remedy for breach of the covenants contained in this Section 6 and, accordingly, the Employee agrees to submit to the equitable jurisdiction of any court of competent jurisdiction in connection with any action to enjoin the Employee from violating any such covenants.

7. Disability.If, by reason of a physical or mental disability during the Term, the Employee is unable to carry out the essential functions of his employment pursuant to this Agreement for twelve (12) consecutive months, his employment hereunder may be terminated by action of the Board of Directors of the Employer or BB&T determining to do so upon one month’s notice to be given to the Employee at any time after the period of twelve (12) consecutive months of disability and while such disability continues. If, prior to the expiration of the one-month period after the giving of such notice, the Employee shall recover from such disability and return to the full-time active discharge of his duties hereunder, then such notice shall be of no further force and effect and the Employee’s employment shall continue as if the same had been uninterrupted. If the Employee shall not so recover from his disability and return to his duties, then his employment shall terminate on the date which coincides with the expiration of such one month’s notice. During the first twelve (12) consecutive months of the period of the Employee’s disability, the Employee shall continue to earn all compensation (including bonuses and incentive compensation) to which the Employee would have been entitled as if he had not been disabled, such compensation to be paid at the time, in the amounts, and in the manner provided in Section 5a, inclusive of any compensation received pursuant to any applicable disability insurance plan of the Employer or BB&T. Thereafter, the Employee shall receive compensation to which he is entitled under any applicable disability insurance plan of the Employer or BB&T. In the event a dispute arises between the Employee and the Employer or BB&T concerning the Employee’s physical or mental disability or ability to continue or return to the performance of his duties as aforesaid, the Employee shall submit, at the expense of the Employer and BB&T, to examination by a competent physician mutually agreeable to the parties, and his opinion as to the Employee’s capability to so perform shall be final and binding. Upon termination of the Employee’s employment by reason of disability, the Term shall end.

8. Termination; Termination Compensation and Other Post Termination Benefits.

a. If the Employee shall die during the Term, this Agreement and the employment relationship hereunder shall automatically terminate on the date of death, which date shall be his Termination Date, and, thus, the last day of the Term.

b. The Employer or BB&T shall have the right to terminate the Employee's employment under this Agreement at any time for Just Cause upon written notice to the Employee as provided in subparagraph i below. In the event the employment of the Employee is terminated by the Employer or BB&T for Just Cause, the Employee shall have no right to receive compensation (such as Termination Compensation) or other benefits (including the special SERP enhancement benefits described in Section 8f) under this Agreement for any period after such termination.

c. The Employer or BB&T may terminate the Employee's employment under this Agreement other than for Just Cause at any time upon written notice to the Employee as provided in subparagraph i below. In the event the Employer or BB&T terminates the employment of the Employee under this Agreement pursuant to this subparagraph c, the Employee shall be entitled to the following compensation and benefits:

(i) The Employee shall receive Termination Compensation each month during the period described in subparagraph (ii) below, subject, however, to the Employee’s compliance with the non-competition and non-solicitation provisions of Section 6a for a one-year period following the Employee’s Termination Date.

(ii) Termination Compensation shall be paid to the Employee each month until the end of the Term [that is, Termination Compensation shall be paid to the Employee each month during the period commencing with the Commencement Month and ending on the earlier of (1) or (2), where (1) is the first day of the month next following the month in which the Employee attains age sixty-five (65), and (2) is the date that coincides with the expiration of the sixty-month period which began with the Commencement Month], such Termination Compensation to be payable at the time compensation would have been paid to the Employee in accordance with Section 5a.

(iii) The Employer and BB&T shall use their best efforts to accelerate vesting of any unvested benefits of the Employee under any employee stock-based or other benefit plan or arrangement to the extent permitted by the terms of such plan or arrangement.

(iv) The Employer shall make available to the Employee, at the Employer’s cost, outplacement services by such entity or person as shall be designated by the Employer, with the cost to the Employer of such outplacement services not to exceed $20,000.

(v) The Employee shall continue to participate (treating the Employee as an “active employee”of the Employer for this purpose) in the same group hospitalization plan, health care plan, dental care plan, life or other insurance or death benefit plan, and any other present or future similar group employee benefit plan or program for which officers of the Employer generally are eligible, on the same terms as were in effect prior to the Employee’s Termination Date, either under the Employer’s or BB&T’s plans or comparable plans or coverage, for the Compensation Continuance Period.

(vi) The Employee shall be entitled to the special enhanced SERP benefits described in subparagraph f below.

The Termination Compensation and other benefits provided for in this subparagraph c shall be paid by the Employer or BB&T in accordance with the standard payroll practices and procedures in effect prior to the Employee’s Termination Date. If the Employee breaches Section 6a of this Agreement prior to the first anniversary of his Termination Date, the Employee shall not be entitled to receive any further Termination Compensation or benefits pursuant to this Section 8c from and after the date of such breach.

d. If (i) the employment of the Employee is terminated for any reason other than Just Cause or on account of the Employee’s death, regardless of whether the Employer or BB&T or the Employee initiates such termination, within twelve (12) months after a Change of Control (or, if later, within ninety (90) days after a MOE Revocation), or (ii) the Employee terminates his employment at any time for Good Reason, the Employee shall be entitled to the following compensation and benefits:

(i) Termination Compensation shall be paid to the Employee each month until the end of the Term [that is, Termination Compensation shall be paid to the Employee each month during the period commencing with the Commencement Month and ending on the earlier of (1) or (2), where (1) is the first day of the month next following the month in which the Employee attains age sixty-five (65), and (2) is the date that coincides with the expiration of the sixty-month period which began with the Commencement Month], such Termination Compensation to be payable at the time such compensation would have been paid to the Employee in accordance with Section 5a.

(ii) The Employer and BB&T shall use their best efforts to accelerate vesting of any unvested benefits of the Employee under any employee stock-based or other benefit plan or arrangement to the extent permitted by the terms of such plan or arrangement.

(iii) The Employer shall make available to the Employee, at the Employer’s cost, outplacement services by such entity or person as shall be designated by the Employer, with the cost to the Employer of such outplacement services not to exceed $20,000.

(iv) The Employee shall continue to participate (treating the Employee as an “active employee”of the Employer for this purpose) in the same group hospitalization plan, health care plan, dental care plan, life or other insurance or death benefit plan, and any other present or future similar group employee benefit plan or program for which officers of the Employer generally are eligible, either under the Employer’s or BB&T’s plans or comparable plans or coverage, for the Compensation Continuance Period, on the same terms as were in effect either (A) at his Termination Date, or (B) if such plans and programs in effect prior to the Change of Control or prior to the MOE Revocation were, considered together as a whole, materially more generous to the officers of the Employer, than at the date of the Change of Control or at the date of the MOE Revocation, as the case may be.

(v) The Employee shall be entitled to the special enhanced SERP benefits described in subparagraph f below.

The Termination Compensation and other benefits provided for in this subparagraph d shall be paid by the Employer or BB&T in accordance with the standard payroll practices and procedures in effect prior to the Employee’s Termination Date, a Change of Control or MOE Revocation, as appropriate. In accordance with Section 6b, if the Employee terminates his employment at any time for Good Reason (except within twelve (12) months after a Change of Control, or, if later, within ninety (90) days after a MOE Revocation), the Employee shall be subject to the non-competition and non-solicitation provisions of Section 6a for the one-year period following his Termination Date. If the Employee breaches Section 6a of this Agreement prior to the first anniversary of his Termination Date, the Employee shall not be entitled to receive any further Termination Compensation or benefits pursuant to this Section 8d from and after the date of such breach.

Should the circumstances of the termination of the employment of the Employee result in application of both subparagraphs c and d, subparagraph d shall be deemed to apply and control.

e. If the Employee terminates his employment for any reason other than Good Reason and such termination does not occur within twelve (12) months after a Change of Control (or, if later, within ninety (90) days after a MOE Revocation), he shall not be entitled to compensation (such as Termination Compensation) or other benefits (including the special SERP enhancement benefits described in Section 8f) under this Agreement for any period after such termination.

f. The Employee is a participant in the BB&T Corporation Non-Qualified Defined Benefit Plan (the "SERP"). The SERP was formerly known as the Branch Banking and Trust Company Supplemental Executive Retirement Plan. The SERP is a non-qualified, unfunded supplemental retirement plan which provides benefits to or on behalf of selected key management employees. The benefits provided under the SERP supplement the retirement and survivor benefits payable from the Pension Plan. Except in the event the employment of the Employee is terminated by the Employer or BB&T for Just Cause and except in the event the Employee terminates his employment for any reason other than Good Reason and such termination does not occur within twelve (12) months after a Change of Control (or, if later, within ninety (90) days after a MOE Revocation), the following special provisions shall apply for purposes of this Agreement:

(i) The provisions of the SERP shall be and hereby are incorporated in this Agreement. The SERP, as applied to the Employee, may not be terminated, modified or amended without the express written consent of the Employee. Thus, any amendment or modification to the SERP or the termination of the SERP shall be ineffective as to the Employee unless the Employee consents in writing to such termination, modification or amendment. The Supplemental Pension Benefit (as defined in the SERP) of the Employee shall not be adversely affected because of any modification, amendment or termination of the SERP. In the event of any conflict between the terms of this subparagraph f and the SERP, the provisions of this subparagraph f shall prevail.

(ii) The SERP, as applied to the Employee, shall be and hereby is amended by the following special provisions:

(A) In determining the Employee’s Years of Service (as defined in the Pension Plan), the Compensation Continuance Period shall be taken into account. The Employee shall be credited with one Year of Service for each Computation Period which begins and ends during the Compensation Continuance Period. The 35 Years of Service limitation specified in the Pension Plan shall, however, apply.

(B) The Average Compensation (as defined in the Pension Plan) of the Employee shall be the greater of (1) or (2), where (1) is his Average Compensation as determined under the Pension Plan as of his Termination Date and (2) is the annual amount of his Termination Compensation.

Attached to this Agreement as Exhibit A are several SERP calculations. The purpose of these calculations is to illustrate the application and effect of this subparagraph f.

g. In receiving any payments pursuant to this Section 8, the Employee shall not be obligated to seek other employment or take any other action by way of mitigation of the amounts payable to the Employee hereunder and such amounts shall not be reduced or terminated whether or not the Employee attains other employment.

h. In the event that any amount paid or distributed to the Employee pursuant to this Agreement shall constitute a parachute payment within the meaning of Section 280G of the Code, and the aggregate of such parachute payments and any other amounts paid or distributed to the Employee from any other plans or arrangements maintained by the Employer, BB&T, or their Affiliates shall cause the Employee to be subject to the Excise Tax, the Employer shall pay to the Employee an additional amount (the “Gross-Up Payment”) such that the net amount the Employee shall receive after the payment of any Excise Tax shall equal the amount which he would have received if the Excise Tax had not been imposed. The Gross-Up Payment shall be determined by BB&T’s regular independent auditors and shall equal the sum of the following:

(1) The rate of the Excise Tax multiplied by the amount of the excess parachute payments;

(2) Any federal income tax, social security tax, unemployment tax or Excise Tax imposed upon the Employee as a result of the Gross-Up Payment required to be made under this subparagraph h.; and

(3) Any state income or other tax imposed upon the Employee as a result of the Gross-Up Payment required to be made under this subparagraph h.

For purposes of determining the amount of the Gross-Up Payment, the Employee shall be deemed to pay federal income taxes at the highest marginal rate of federal income taxation for individuals in the calendar year in which the Excise Tax is required to be paid. In addition, the Employee shall be deemed to pay state income taxes at a rate determined in accordance with the following formula:

( 1 —(highest marginal rate of federal income taxation for individuals)) x (highest marginal rate of North Carolina income taxes for individuals in the calendar year in which the Excise Tax is required to be paid).

In the event the Employee is subject to the provisions of Section 68 of the Code, the combined federal and state income tax rate determined above shall be adjusted to reflect any loss in the federal deduction for state income taxes on the Gross-Up Payment.

The Gross-Up Payment shall be paid to the Employee by the Employer or BB&T on or before the date that the Employee is required to pay the Excise Tax; provided, however, that if the amount of such payment cannot be finally determined on or before such day, the Employer or BB&T shall pay to the Employee on such day an estimate, as determined in good faith by BB&T’s regular independent auditors, of the minimum amount of such payment and shall pay the remainder of such payment (together with interest at the rate provided under Section 1274(b)(2)(B) of the Code) as soon as the amount can be determined but no later than the thirtieth (30th) day after the date the Employee becomes subject to the payment of the Excise Tax. In the event that the Excise Tax is subsequently determined to be less than the amount taken into account hereunder at the time the Gross-Up Payment is made, the Employee shall repay to the Employer or BB&T, as applicable, at the time that the amount of such reduction in Excise Tax is finally determined, the portion of the Gross-Up Payment attributable to such reduction (plus the portion of the Gross-Up Payment attributable to the Excise Tax, federal and state taxes imposed on the Gross-Up Payment being repaid by the Employee, if such repayment results in a reduction in Excise Tax and/or a federal or state tax deduction) plus interest on the amount of such repayment at the rate provided in Section 1274(b)(2)(B) of the Code. In the event that the Excise Tax is determined to exceed the amount taken into account hereunder at the time the Gross-Up Payment is made (including by reason of any payment the existence or amount of which cannot be determined at the time of the Gross-Up Payment), the Employer or BB&T shall make an additional Gross-Up Payment in respect of such excess (plus any interest payable with respect to such excess) at the time that the amount of such excess is finally determined. The parties agree that the intent of this subparagraph h is that the Employee shall be reimbursed for the Excise Tax on his excess parachute payments and all taxes on that reimbursement. The intended goal is to place the Employee in the same economic position as if no Excise Tax had been imposed.

i. A termination of the Employee's employment by BB&T, the Employer or the Employee for any reason other than death shall be communicated by Notice of Termination to the other parties hereto. For this purpose, a Notice of Termination means a written notice which specifies the effective date of termination.

9. Other Employment. The Employee shall devote all of his business time, attention, knowledge and skills solely to the business and interests of the Employer, BB&T and their Affiliates. The Employer, BB&T and their Affiliates shall be entitled to all of the benefits, profits and other emoluments arising from or incident to all work, services and advice of the Employee, and the Employee shall not, during the Term, become interested, directly or indirectly, in any manner, as a partner, officer, director, stockholder, advisor, employee or in any other capacity in any other business similar to the business of the Employer, BB&T and their Affiliates. Nothing contained in this Section 9 shall be deemed, however, to prevent or limit the right of the Employee to invest in a business similar to the business of the Employer, BB&T and their Affiliates if such investment is limited to less than one (1) percent of the capital stock or other securities of any corporation or similar organization whose stock or securities are publicly owned or are regularly traded on any public exchange.

10. Severability. All agreements and covenants contained in this Agreement are severable, and in the event any of them shall be held to be invalid by any competent court, this Agreement shall be interpreted as if such invalid agreements or covenants were not contained herein.

11.Assignment Prohibited. This Agreement is personal to each of the parties hereto, and none of the parties may assign or delegate any of his or its rights or obligations hereunder without first obtaining the written consent of the other parties; provided, however, that nothing in this Section 11 shall preclude the Employee from designating a beneficiary to receive any benefit payable under this Agreement upon his death.

12. No Attachment. Except as otherwise provided in this Agreement or required by applicable law, no right to receive payments under this Agreement shall be subject to anticipation, commutation, alienation, sale, assignment, encumbrance, charge, pledge or hypothecation or to execution, attachment, levy, or similar process or assignment by operation of law, and any attempt, voluntary or involuntary, to effect any such action shall be null, void and of no effect.

13. Headings. The headings of paragraphs and sections herein are included solely for convenience of reference and shall not control the meaning or interpretation of any of the provisions of this Agreement.

14. Governing Law. The parties intend that this Agreement and the performance hereunder and all suits and special proceedings hereunder shall be construed in accordance with and under and pursuant to the laws of the State of North Carolina without regard to conflicts of law principles thereof and that in any action, special proceeding or other proceeding that may be brought arising out of, in connection with, or by reason of this Agreement, the laws of the State of North Carolina shall be applicable and shall govern to the exclusion of the law of any other forum, without regard to the jurisdiction in which any action or special proceeding may be instituted.

15. Binding Effect. This Agreement shall be binding upon, and inure to the benefit of, the Employee and his heirs, executors, administrators and legal representatives and BB&T, the Employer and their permitted successors and assigns.

16. Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original but all of which together shall constitute one and the same instrument.

17. Notices. All notices, requests, demands and other communications to any party under this Agreement shall be in writing (including telefacsimile transmission or similar writing) and shall be given to such party at his or its address or telefacsimile number set forth below or such other address or telefacsimile number as such party may hereafter specify for the purpose by notice to the other party:


(a)		If to the Employee:

		John A. Allison IV



(b)		If to BB&T or the Employer:

		BB&T Corporation
		200 West Second Street
		Winston-Salem, NC 27101
		Fax: (336) 733-2058
		Attention: Chief Operating Officer

Each such notice, request, demand or other communication shall be effective (i) if given by mail, 72 hours after such communication is deposited in the mails with first class postage prepaid, addressed as aforesaid or (ii) if given by any other means, when delivered at the address specified in this Section 17. Delivery of any notice, request, demand or other communication by telefacsimile shall be effective when received if received during normal business hours on a business day. If received after normal business hours, the notice, request, demand or other communication will be effective at 10:00 a.m. on the next business day.

18. Modification Of Agreement. No waiver or modification of this Agreement or of any covenant, condition, or limitation herein contained shall be valid unless in writing and duly executed by the party to be charged therewith. No evidence of any waiver or modification shall be offered or received in evidence at any proceeding, arbitration, or litigation between the parties hereto arising out of or affecting this Agreement, or the rights or obligations of the parties hereunder, unless such waiver or modification is in writing, duly executed as aforesaid. The parties further agree that the provisions of this Section 18 may not be waived except as herein set forth.

19. Taxes. To the extent required by applicable law, the Employer or BB&T shall deduct and withhold all necessary federal, state, local and employment taxes and any other similar sums required by law to be withheld from any payments made pursuant to the terms of this Agreement.

20. Attorneys’Fees. In the event any dispute shall arise between the Employee, the Employer and BB&T as to the terms or interpretations of this Agreement, whether instituted by formal legal proceedings or otherwise, including any action taken by the Employee to enforce the terms of this Agreement or in defending against any action taken by the Employer or BB&T, the Employer or BB&T shall reimburse the Employee for all reasonable costs and expenses, including reasonable attorneys’fees, arising from such dispute, proceeding or action, if the Employee shall prevail in any action initiated by the Employee or shall have acted reasonably and in good faith in defending against any action initiated by the Employer or BB&T. Such reimbursement shall be paid within ten (10) days of the Employee furnishing to the Employer written evidence, which may be in the form, among other things, of a cancelled check or receipt, of any costs or expenses incurred by the Employee. Any such request for reimbursement by the Employee shall be made no more frequently than at 60-day intervals.

21. Joint and Several Obligations. To the extent permitted by applicable law, all obligations of the Employer or BB&T under this Agreement shall be joint and several.

22. Recitals. The recitals to this Agreement shall form a part of this Agreement.

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date and year first above written.


	BB&T CORPORATION

	/s/ Henry G. Williamson, Jr.
	By:

	Name: Henry G. Williamson, Jr.


	Title: Chief Operating Officer

	BRANCH BANKING AND TRUST COMPANY

	/s/ Henry G. Williamson, Jr.
	By:
	Name: Henry G. Williamson, Jr.
	Title: Chief Operating Officer

	EMPLOYEE:

	/s/ John A. Allison IV

	John A. Allison IV






                                  EXHIBIT A



                  Amended and Restated Employment Agreement
                                      of
                              John A. Allison IV
                          Effective January 1, 2002

                        Illustrative SERP Calculations





                                                           18



                                                                        Example 1a

Name:                                                                         John Allison
Date of Hire:                                                                 February 15, 1971
Assumed Date of Termination:                                                  December 31, 2001*
Benefit Commencement Date:                                                    January 1, 2007 **
Age as of payment date:                                                       58.38

Qualified Plan Calculation (as of January 1, 2007):

1. Average Compensation                                                          $200,000.00

2. Times 1%                                                                            x .01

3. Equals                                                                           2,000.00

4. Average Compensation over $62,580                                              137,420.00

5. Times .5%                                                                          x .005

6. Equals                                                                             687.10

7. Subtotal (3) + (6)                                                               2,687.10

8. Times Years of Service                                                              31.00
    (not to exceed 35 years)

9. Equals                                                                          83,300.10

10. Times Early Payment Reduction Factor                                               x .75

11. Equals Early Reduced benefit                                                   62,475.08
       beginning 1/1/2007

12. Not less than benefit accrued as of                                            62,475.08
     December 31 preceding DOT

13. Equals                                                                         62,475.08

14. Not less than Prior Accrued Benefit                                            46,863.00
      as of 12/31/1995

15. Equals                                                                         62,475.08

16. Divided by 12                                                                        /12

17. Equals monthly benefit                                                         $5,206.26

                                                           19

      beginning 1/1/2007 (based on life annuity)

*Assumes the employment of the Employee is terminated on December 31, 2001 for a reason entitling
 the Employee to receive Termination Compensation under his Employment Agreement for the 60
 month period beginning January 1, 2002 and ending December 31, 2006.

**Assumes the Employee elects to begin receiving his benefits under the qualified plan as of the first
  day of the month next following the month in which he receives his last monthly payment of
  Termination Compensation under his Employment Agreement.

Footnotes

1. Average Compensation equals highest 5 years compensation out of the last ten years worked as
   defined in Section 2.14 of the BB&T Corporation Pension Plan (BB&T Plan). Calculated as follows:

      Year                      Total W-2 Wages                     Compensation Under Š .2.14

      1997                         1,137,677.51                                    200,000.00
      1998                         1,148,364.00                                    200,000.00
      1999                         1,172,607.82                                    200,000.00
      2000                         1,956,163.43                                    200,000.00
      2001                         2,287,744.51                                    200,000.00

Average                            1,540,511.45                                    200,000.00


2. Per Section 5.1 of the BB&T Plan

4. The BB&T Plan benefit formula in Section  5.1 for a benefit based on "Average Compensation in
    excess of Covered Compensation."   The Covered Compensation is calculated by taking an average
    of the Social Security wage base as defined in Section 230 of the Social Security Act for each year
    during the 35 year period ending with the year in which the Participant attains his Social Security
    Retirement Age.

    For this calculation, the projected average Wage Base is $62,580 as follows:

                         Year                            Wage Base

                         1980                               25,900
                         1981                               29,700
                         1982                               32,400
                         1983                               35,700
                         1984                               37,800
                         1985                               39,600
                         1986                               42,000
                         1987                               43,800
                         1988                               45,000
                         1989                               48,000
                         1990                               51,300
                         1991                               53,400
                         1992                               55,500
                         1993                               57,600

                                                           20

                         1994                               60,600
                         1995                               61,200
                         1996                               62,700
                         1997                               65,400
                         1998                               68,400
                         1999                               72,600
                         2000                               76,200
                         2001                               80,400
                         2002                               80,400
                         2003                               80,400
                         2004                               80,400
                         2005                               80,400
                         2006                               80,400
                         2007                               80,400
                         2008                               80,400
                         2009                               80,400
                         2010                               80,400
                         2011                               80,400
                         2012                               80,400
                         2013                               80,400
                         2014                               80,400

Average Wage Base                                           62,580


10.  Plan benefits are reduced if paid prior to Normal Retirement Date per Section 5.2 of the BB&T Plan
      as follows:

        Age at Payment Commencement Date                     Reduction Factor
                                      64                                0.980
                                      63                                0.960
                                      62                                0.940
                                      61                                0.920
                                      60                                0.860
                                      59                                0.800
                                      58                                0.725
                                      57                                0.650
                                      56                                0.575
                                      55                                0.500

14.  When the Southern National Plan merged with the BB&T Plan as of December 31, 1995 all
      persons who were participants on that date had a frozen benefit calculated equal to the Accrued
      Benefit as of December 31, 1995 per Section 5.1 of the BB&T Plan

SERP Benefit (as of January 1, 2007)

1. Average Compensation                                           $2,287,744.51

2. Times 1%                                                               x .01

3. Equals                                                             22,877.45

                                                           21

4. Average Compensation over $68,544                               2,219,200.51

5. Times .5%                                                             x .005

6. Equals                                                             11,096.00

7. Subtotal (3) + (6)                                                 33,973.45

8. Times Years of Service                                                 35.00
    (not to exceed 35 years)

9. Equals                                                          1,189,070.67

10. Times Early Payment Reduction Factor                                  x .75

11. Equals Early Reduced benefit                                     891,803.00
       beginning 1/1/2007

12. Less Qualified Plan Benefit                                      -62,475.08

13. Non-Qualified Plan Benefit                                       829,327.92

14. Divided by 12                                                           /12

15. Equals monthly Non-qualified benefit                             $69,110.66
      beginning 1/1/2007 (based on life annuity)

Footnotes

1. As per section 8f of the Employee's Employment Agreement, "Termination Compensation" will
    be included in calculation of Average Compensation under the BB&T Corporation Non-Qualified
    Defined Benefit Plan. As modified by the Employment Agreement, Average Compensation will be the
    greater of (i) the Employee's Average Compensation as determined under the Qualified Plan as of
    his actual date of termination or (ii) the amount of his Termination Compensation.  The Non-Qualified
    Plan (i.e., the SERP) does not use the various limits on compensation imposed on the Qualified Plan.

2. Per Section 5.1 of the BB&T Plan

4. The BB&T Plan benefit formula in Section  5.1 for a benefit based on "Average Compensation in
    excess of Covered Compensation."   The Covered Compensation is calculated by taking an average
    of the Social Security wage base as defined in Section 230 of the Social Security Act for each year
    during the 35 year period ending with the year in which the Participant attains his Social Security
    Retirement Age.

    For this calculation, the average Wage Base (assuming a 4% annual increase) is $68,544 as follows:

                                      Year                            Wage Base
                                      ----                            ---------
                                      1980                               25,900
                                      1981                               29,700
                                      1982                               32,400

                                                           22

                                      1983                               35,700
                                      1984                               37,800
                                      1985                               39,600
                                      1986                               42,000
                                      1987                               43,800
                                      1988                               45,000
                                      1989                               48,000
                                      1990                               51,300
                                      1991                               53,400
                                      1992                               55,500
                                      1993                               57,600
                                      1994                               60,600
                                      1995                               61,200
                                      1996                               62,700
                                      1997                               65,400
                                      1998                               68,400
                                      1999                               72,600
                                      2000                               76,200
                                      2001                               80,400
                                      2002                               83,700
                                      2003                               87,000
                                      2004                               90,600
                                      2005                               94,200
                                      2006                               98,100
                                      2007                               98,100
                                      2008                               98,100
                                      2009                               98,100
                                      2010                               98,100
                                      2011                               98,100
                                      2012                               98,100
                                      2013                               98,100
                                      2014                               98,100

Average Wage Base                                                        68,544

8. As per Section 8f of the Employee's Employment Agreement, in determining the Employee's Years
   of Service, the period of time over which the Employee receives Termination Compensation is taken
   into account (not to exceed a total of 35 years).  In this example, the Employee is credited with 35
   years of service (31 Years of Service as of the Employee's actual date of termination plus 4 Years of
   Service in the compensation continuance period).

10.  Plan benefits are reduced if paid prior to Normal Retirement Date per Section 5.2 of the BB&T Plan
      as follows:

       Age at Payment Commencement Date                     Reduction Factor
                                     64                                0.980
                                     63                                0.960
                                     62                                0.940
                                     61                                0.920
                                     60                                0.860
                                     59                                0.800

                                                           23

                                     58                                0.725
                                     57                                0.650
                                     56                                0.575
                                     55                                0.500


















                                                           24







                                                    Example 1b

Name:                                                          John Allison
Date of Hire:                                                  February 15, 1971
Assumed Date of Termination:                                   December 31, 2001 *
Benefit Commencement Date:                                     September 1, 2013 **
Age as of payment date:                                        65

Qualified Plan Calculation (as of September 1, 2013):

1. Average Compensation                                                  $200,000.00

2. Times 1%                                                                    x .01

3. Equals                                                                   2,000.00

4. Average Compensation over $62,580                                      137,420.00

5. Times .5%                                                                  x .005

6. Equals                                                                     687.10

7. Subtotal (3) + (6)                                                       2,687.10

8. Times Years of Service                                                      31.00
    (not to exceed 35 years)

9. Equals                                                                  83,300.10

10. Not less than benefit accrued as of                                    83,300.10
     December 31 preceding DOT

11. Equals                                                                 83,300.10

12. Not less than Prior Accrued Benefit                                    62,484.00
      as of 12/31/1995

13. Equals                                                                 83,300.10

14. Divided by 12                                                                /12

15. Equals monthly benefit                                                 $6,941.68
      beginning 9/1/2013 (based on life annuity)

*Assumes the employment of the Employee is terminated on December 31, 2001 for a reason entitling
 the Employee to receive Termination Compensation under his Employment Agreement for the 60
 month period beginning January 1, 2002 and ending December 31, 2006.

                                                           25

**Assumes the Employee elects to begin receiving his benefit under the qualified plan as of his Normal
  Retirement Date.

Footnotes

1. Average Compensation equals highest 5 years compensation out of the last ten years worked as
   defined in Section 2.14 of the BB&T Corporation Pension Plan (BB&T Plan). Calculated as follows:

                   Year                     Total W-2 Wages                    Compensation Under Š .2.14

                   1997                        1,137,677.51                                   200,000.00
                   1998                        1,148,364.00                                   200,000.00
                   1999                        1,172,607.82                                   200,000.00
                   2000                        1,956,163.43                                   200,000.00
                   2001                        2,287,744.51                                   200,000.00

Average                                        1,540,511.45                                   200,000.00


2. Per Section 5.1 of the BB&T Plan

4. The BB&T Plan benefit formula in Section  5.1 for a benefit based on "Average Compensation in
    excess of Covered Compensation."   The Covered Compensation is calculated by taking an average
    of the Social Security wage base as defined in Section 230 of the Social Security Act for each year
    during the 35 year period ending with the year in which the Participant attains his Social Security
    Retirement Age.

    For this calculation, the projected average Wage Base is $62,580 as follows:

                                      Year                           Wage Base

                                      1980                              25,900
                                      1981                              29,700
                                      1982                              32,400
                                      1983                              35,700
                                      1984                              37,800
                                      1985                              39,600
                                      1986                              42,000
                                      1987                              43,800
                                      1988                              45,000
                                      1989                              48,000
                                      1990                              51,300
                                      1991                              53,400
                                      1992                              55,500
                                      1993                              57,600
                                      1994                              60,600
                                      1995                              61,200
                                      1996                              62,700
                                      1997                              65,400
                                      1998                              68,400
                                      1999                              72,600
                                      2000                              76,200

                                                           26

                                      2001                              80,400
                                      2002                              80,400
                                      2003                              80,400
                                      2004                              80,400
                                      2005                              80,400
                                      2006                              80,400
                                      2007                              80,400
                                      2008                              80,400
                                      2009                              80,400
                                      2010                              80,400
                                      2011                              80,400
                                      2012                              80,400
                                      2013                              80,400
                                      2014                              80,400

Average Wage Base                                                       62,580


12.  When the Southern National Plan merged with the BB&T Plan as of December 31, 1995 all
      persons who were participants on that date had a frozen benefit calculated equal to the Accrued
      Benefit as of December 31, 1995 per Section 5.1 of the BB&T Plan

SERP Benefit (as of September 1, 2013)

1. Average Compensation                                      2,287,744.51

2. Times 1%                                                         x .01

3. Equals                                                       22,877.45

4. Average Compensation over $68,544                         2,219,200.51

5. Times .5%                                                       x .005

6. Equals                                                       11,096.00

7. Subtotal (3) + (6)                                           33,973.45

8. Times Years of Creditable Service                                35.00
    (not to exceed 35 years)

9. Equals                                                    1,189,070.67

10. Less Qualified Plan Benefit                                -83,300.10

11. Non-Qualified Plan Benefit                               1,105,770.57

12. Divided by 12                                                     /12

13. Equals monthly Non-qualified benefit                        92,147.55
      beginning 9/1/2013 (based on life annuity)

                                                           27

Footnotes

1. Under the revised formula, "Termination Compensation" can be included in calculation of
    Average Compensation under the BB&T Corporation Non-Qualified Defined Benefit Plan.
    Termination Compensation equals the highest annual compensation in the final 5 years of
    employment.  This Plan does not use the various limits on compensation that the Qualified
    Plan is subject to.

2. Per Section 5.1 of the BB&T Plan

4. The BB&T Plan benefit formula in Section  5.1 for a benefit based on "Average Compensation in
    excess of Covered Compensation."   The Covered Compensation is calculated by taking an average
    of the Social Security wage base as defined in Section 230 of the Social Security Act for each year
    during the 35 year period ending with the year in which the Participant attains his Social Security
    Retirement Age.

    For this calculation, the average Wage Base (assuming a 4% annual increase) is $68,544 as follows:

                                         Year                           Wage Base

                                         1980                              25,900
                                         1981                              29,700
                                         1982                              32,400
                                         1983                              35,700
                                         1984                              37,800
                                         1985                              39,600
                                         1986                              42,000
                                         1987                              43,800
                                         1988                              45,000
                                         1989                              48,000
                                         1990                              51,300
                                         1991                              53,400
                                         1992                              55,500
                                         1993                              57,600
                                         1994                              60,600
                                         1995                              61,200
                                         1996                              62,700
                                         1997                              65,400
                                         1998                              68,400
                                         1999                              72,600
                                         2000                              76,200
                                         2001                              80,400
                                         2002                              83,700
                                         2003                              87,000
                                         2004                              90,600
                                         2005                              94,200
                                         2006                              98,100
                                         2007                              98,100
                                         2008                              98,100
                                         2009                              98,100

                                                           28

                                         2010                              98,100
                                         2011                              98,100
                                         2012                              98,100
                                         2013                              98,100
                                         2014                              98,100

Average Wage Base                                                          68,544

8. As per Section 8f of the Employee's Employment Agreement, in determining the Employee's Years
   of Service, the period of time over which the Employee receives Termination Compensation is taken
   into account (not to exceed a total of 35 years).  In this example, the Employee is credited with 35
   years of service (31 Years of Service as of the Employee's actual date of termination plus 4 Years of
   Service in the compensation continuance period).

                                                           29





                                              Example 2a

Name:                                                              John Allison
Date of Hire:                                                      February 15, 1971
Assumed Date of Termination:                                       August 31, 2003 *
Benefit Commencement Date:                                         September 1, 2008 **
Age as of payment date:                                            60

Qualified Plan Calculation (as of September 1, 2008):

1. Average Compensation                                                       $201,000.00

2. Times 1%                                                                         x .01

3. Equals                                                                        2,010.00

4. Average Compensation over $65,376                                           135,624.00

5. Times .5%                                                                       x .005

6. Equals                                                                          678.12

7. Subtotal (3) + (6)                                                            2,688.12

8. Times Years of Service                                                           33.00
    (not to exceed 35 years)

9. Equals                                                                       88,707.96

10. Times Early Payment Reduction Factor                                            x .86

11. Equals Early Reduces benefit                                                76,288.85
       beginning 9/1/2008

12. Not less than benefit accrued as of                                         73,719.48
     December 31 preceding DOT

13. Equals                                                                      76,288.85

14. Not less than Prior Accrued Benefit                                         53,736.24
      as of 12/31/1995

15. Equals                                                                      76,288.85

16. Divided by 12                                                                     /12

17. Equals monthly benefit                                                      $6,357.40
      beginning 9/1/2008 (based on life annuity)

                                                           30

*Assumes the employment of the Employee is terminated on August 31, 2003 for a reason entitling
 the Employee to receive Termination Compensation under his Employment Agreement for the 60
 month period beginning September 1, 2003 and ending August 31, 2008.

**Assumes the Employee elects to begin receiving his benefits under the qualified plan as of the first
  day of the month next following the month in which he receives his last monthly payment of
  Termination Compensation under his Employment Agreement.

Footnotes

1. Average Compensation equals highest 5 years compensation out of the last ten years worked as
   defined in Section 2.14 of the BB&T Corporation Pension Plan (BB&T Plan). Calculated as follows
   assuming an annual 4% increase in compensation:

              Year                 Total W-2 Wages                   Compensation Under Š .2.14

              1998                    1,148,364.00
              1999                    1,172,607.82                                  200,000.00
              2000                    1,956,163.43                                  200,000.00
              2001                    2,287,744.51                                  200,000.00
              2002                    2,379,254.29                                  200,000.00
              2003                    1,649,616.31                                 205,000.00*

Average                               1,312,975.95                                  201,000.00

* Projected Compensation Limit

2. Per Section 5.1 of the BB&T Plan

4. The BB&T Plan benefit formula in Section  5.1 for a benefit based on "Average Compensation in
    excess of Covered Compensation."   The Covered Compensation is calculated by taking an average
    of the Social Security wage base as defined in Section 230 of the Social Security Act for each year
    during the 35 year period ending with the year in which the Participant attains his Social Security
    Retirement Age.

    For this calculation, the average Wage Base (assuming an annual 4% increase) is $65,376 as follows:

                                          Year                       Wage Base
                                          1980                           25900
                                          1981                           29700
                                          1982                           32400
                                          1983                           35700
                                          1984                           37800
                                          1985                           39600
                                          1986                           42000
                                          1987                           43800
                                          1988                           45000
                                          1989                           48000
                                          1990                           51300
                                          1991                           53400
                                          1992                           55500
                                          1993                           57600

                                                           31

                                          1994                           60600
                                          1995                           61200
                                          1996                           62700
                                          1997                           65400
                                          1998                           68400
                                          1999                           72600
                                          2000                           76200
                                          2001                           80400
                                          2002                           83700
                                          2003                           87000
                                          2004                           87000
                                          2005                           87000
                                          2006                           87000
                                          2007                           87000
                                          2008                           87000
                                          2009                           87000
                                          2010                           87000
                                          2011                           87000
                                          2012                           87000
                                          2013                           87000
                                          2014                           87000

Average Wage Base                                                        65376


10.  Plan benefits are reduced if paid prior to Normal Retirement Date per Section 5.2 of the BB&T Plan
      as follows:

           Age at Payment Commencement Date                Reduction Factor
                                         64                           0.980
                                         63                           0.960
                                         62                           0.940
                                         61                           0.920
                                         60                           0.860
                                         59                           0.800
                                         58                           0.725
                                         57                           0.650
                                         56                           0.575
                                         55                           0.500

14.  When the Southern National Plan merged with the BB&T Plan as of December 31, 1995 all
      persons who were participants on that date had a frozen benefit calculated equal to the Accrued
      Benefit as of December 31, 1995 per Section 5.1 of the BB&T Plan

SERP Benefit (as of September 1, 2008)

1. Average Compensation                                          $2,379,254.29

2. Times 1%                                                              x .01

3. Equals                                                            23,792.54

                                                           32

4. Average Compensation over $70,272                              2,308,982.29

5. Times .5%                                                            x .005

6. Equals                                                            11,544.91

7. Subtotal (3) + (6)                                                35,337.45

8. Times Years of Service                                                35.00
    (not to exceed 35 years)

9. Equals                                                         1,236,810.90

10. Times Early Payment Reduction Factor                                 x .86

11. Equals Early Reduced benefit                                  1,063,657.38
       beginning 9/1/2008

12. Not less than benefit accrued as of December 31               1,063,783.80
     preceding the Date of Termination

13. Equals                                                        1,063,783.80

14. Less Qualified Plan Benefit                                     -76,288.85

15. Non-Qualified Plan Benefit                                      987,494.95

16. Divided by 12                                                          /12

17. Equals monthly Non-qualified benefit                            $82,291.25
      beginning 9/1/2008 (based on life annuity)

Footnotes

1. As per section 8f of the Employee's Employment Agreement, "Termination Compensation" will
    be included in calculation of Average Compensation under the BB&T Corporation Non-Qualified
    Defined Benefit Plan. As modified by the Employment Agreement, Average Compensation will be the
    greater of (i) the Employee's Average Compensation as determined under the Qualified Plan as of
    his actual date of termination or (ii) the amount of his Termination Compensation.  The Non-Qualified
    Plan (i.e., the SERP) does not use the various limits on compensation imposed on the Qualified Plan.

2. Per Section 5.1 of the BB&T Plan

4. The BB&T Plan benefit formula in Section  5.1 for a benefit based on "Average Compensation in
    excess of Covered Compensation."   The Covered Compensation is calculated by taking an average
    of the Social Security wage base as defined in Section 230 of the Social Security Act for each year
    during the 35 year period ending with the year in which the Participant attains his Social Security
    Retirement Age.

    For this calculation, the average Wage Base (assuming a 4% annual increase) is $70,272 as follows:

                                                           33

                                     Year                       Wage Base
                                     1980                          25,900
                                     1981                          29,700
                                     1982                          32,400
                                     1983                          35,700
                                     1984                          37,800
                                     1985                          39,600
                                     1986                          42,000
                                     1987                          43,800
                                     1988                          45,000
                                     1989                          48,000
                                     1990                          51,300
                                     1991                          53,400
                                     1992                          55,500
                                     1993                          57,600
                                     1994                          60,600
                                     1995                          61,200
                                     1996                          62,700
                                     1997                          65,400
                                     1998                          68,400
                                     1999                          72,600
                                     2000                          76,200
                                     2001                          80,400
                                     2002                          83,700
                                     2003                          87,000
                                     2004                          90,600
                                     2005                          94,200
                                     2006                          98,100
                                     2007                         102,000
                                     2008                         106,200
                                     2009                         106,200
                                     2010                         106,200
                                     2011                         106,200
                                     2012                         106,200
                                     2013                         106,200
                                     2014                         106,200

Average Wage Base                                                  70,272

8. As per Section 8f of the Employee's Employment Agreement, in determining the Employee's Years
   of Service, the period of time over which the Employee receives Termination Compensation is taken
   into account (not to exceed a total of 35 years).  In this example, the Employee is credited with 35
   years of service (33 Years of Service as of the Employee's actual date of termination plus 2 Years of
   Service in the compensation continuance period).


10.  Plan benefits are reduced if paid prior to Normal Retirement Date per Section 5.2 of the BB&T Plan
      as follows:


                                                           34


                  Age at Payment Commencement Date                Reduction Factor
                                                64                           0.980
                                                63                           0.960
                                                62                           0.940
                                                61                           0.920
                                                60                           0.860
                                                59                           0.800
                                                58                           0.725
                                                57                           0.650
                                                56                           0.575
                                                55                           0.500







                                                           35







                                        Example 2b

Name:                                                         John Allison
Date of Hire:                                                 February 15, 1971
Assumed Date of Termination:                                  August 31, 2003 *
Benefit Commencement Date:                                    September 1, 2013 **
Age as of payment date:                                       65

Qualified Plan Calculation (as of September 1, 2013):

1. Average Compensation                                            $201,000.00

2. Times 1%                                                              x .01

3. Equals                                                             2,010.00

4. Average Compensation over $65,376                                135,624.00

5. Times .5%                                                            x .005

6. Equals                                                               678.12

7. Subtotal (3) + (6)                                                 2,688.12

8. Times Years of Service                                                33.00
    (not to exceed 35 years)

9. Equals                                                            88,707.96

10. Not less than benefit accrued as of                              85,720.33
     December 31 preceding DOT

11. Equals                                                           88,707.96

12. Not less than Prior Accrued Benefit                              62,484.00
      as of 12/31/1995

13. Equals                                                           88,707.96

14. Divided by 12                                                          /12

15. Equals monthly benefit                                           $7,392.33
      beginning 9/1/2013 (based on life annuity)

*Assumes the employment of the Employee is terminated on August 31, 2003 for a reason entitling
 the Employee to receive Termination Compensation under his Employment Agreement for the 60
 month period beginning September 1, 2003 and ending August 31, 2008.

**Assumes the Employee elects to begin receiving his benefit under the qualified plan as of his Normal
  Retirement Date.


                                                           36


Footnotes

1. Average Compensation equals highest 5 years compensation out of the last ten years worked as
   defined in Section 2.14 of the BB&T Corporation Pension Plan (BB&T Plan). Calculated as follows
   assuming an annual 4% increase in compensation:

                  Year                 Total W-2 Wages                   Compensation Under Š .2.14

                  1998                    1,148,364.00
                  1999                    1,172,607.82                                  200,000.00
                  2000                    1,956,163.43                                  200,000.00
                  2001                    2,287,744.51                                  200,000.00
                  2002                    2,379,254.29                                  200,000.00
                  2003                    1,649,616.31                                 205,000.00*

Average                                   1,788,826.81                                  201,000.00

* Projected Compensation Limit

2. Per Section 5.1 of the BB&T Plan

4. The BB&T Plan benefit formula in Section  5.1 for a benefit based on "Average Compensation in
    excess of Covered Compensation."   The Covered Compensation is calculated by taking an average
    of the Social Security wage base as defined in Section 230 of the Social Security Act for each year
    during the 35 year period ending with the year in which the Participant attains his Social Security
    Retirement Age.

    For this calculation, the average Wage Base (assuming an annual 4% increase) is $65,376 as follows:

                                     Year                       Wage Base

                                     1980                          25,900
                                     1981                          29,700
                                     1982                          32,400
                                     1983                          35,700
                                     1984                          37,800
                                     1985                          39,600
                                     1986                          42,000
                                     1987                          43,800
                                     1988                          45,000
                                     1989                          48,000
                                     1990                          51,300
                                     1991                          53,400
                                     1992                          55,500
                                     1993                          57,600
                                     1994                          60,600
                                     1995                          61,200
                                     1996                          62,700
                                     1997                          65,400


                                                           37


                                     1998                          68,400
                                     1999                          72,600
                                     2000                          76,200
                                     2001                          80,400
                                     2002                          83,700
                                     2003                          87,000
                                     2004                          87,000
                                     2005                          87,000
                                     2006                          87,000
                                     2007                          87,000
                                     2008                          87,000
                                     2009                          87,000
                                     2010                          87,000
                                     2011                          87,000
                                     2012                          87,000
                                     2013                          87,000
                                     2014                          87,000

Average Wage Base                                                  65,376

12.  When the Southern National Plan merged with the BB&T Plan as of December 31, 1995 all
      persons who were participants on that date had a frozen benefit calculated equal to the Accrued
      Benefit as of December 31, 1995 per Section 5.1 of the BB&T Plan

SERP Benefit (as of September 1, 2013)

1. Average Compensation                                          $2,379,254.29

2. Times 1%                                                              x .01

3. Equals                                                            23,792.54

4. Average Compensation over $70,272                              2,308,982.29

5. Times .5%                                                            x .005

6. Equals                                                            11,544.91

7. Subtotal (3) + (6)                                                35,337.45

8. Times Years of Service                                                35.00
    (not to exceed 35 years)

9. Equals                                                         1,236,810.90

10. Not less than benefit accrued as of December 31               1,236,957.90
     preceding the Date of Termination

11. Equals                                                        1,236,957.90

12. Less Qualified Plan Benefit                                     -88,707.96


                                                           38


13. Non-Qualified Plan Benefit                                    1,148,249.94

14. Divided by 12                                                          /12

15. Equals monthly Non-qualified benefit                            $95,687.50
      beginning 9/1/2013 (based on life annuity)

Footnotes

1. As per section 8f of the Employee's Employment Agreement, "Termination Compensation" will
    be included in calculation of Average Compensation under the BB&T Corporation Non-Qualified
    Defined Benefit Plan. As modified by the Employment Agreement, Average Compensation will be the
    greater of (i) the Employee's Average Compensation as determined under the Qualified Plan as of
    his actual date of termination or (ii) the amount of his Termination Compensation.  The Non-Qualified
    Plan (i.e., the SERP) does not use the various limits on compensation imposed on the Qualified Plan.

2. Per Section 5.1 of the BB&T Plan

4. The BB&T Plan benefit formula in Section  5.1 for a benefit based on "Average Compensation in
    excess of Covered Compensation."   The Covered Compensation is calculated by taking an average
    of the Social Security wage base as defined in Section 230 of the Social Security Act for each year
    during the 35 year period ending with the year in which the Participant attains his Social Security
    Retirement Age.

    For this calculation, the average Wage Base (assuming a 4% annual increase) is $70,272 as follows:

                                             Year                       Wage Base
                                             1980                          25,900
                                             1981                          29,700
                                             1982                          32,400
                                             1983                          35,700
                                             1984                          37,800
                                             1985                          39,600
                                             1986                          42,000
                                             1987                          43,800
                                             1988                          45,000
                                             1989                          48,000
                                             1990                          51,300
                                             1991                          53,400
                                             1992                          55,500
                                             1993                          57,600
                                             1994                          60,600
                                             1995                          61,200
                                             1996                          62,700
                                             1997                          65,400
                                             1998                          68,400
                                             1999                          72,600
                                             2000                          76,200
                                             2001                          80,400


                                                           39


                                             2002                          83,700
                                             2003                          87,000
                                             2004                          90,600
                                             2005                          94,200
                                             2006                          98,100
                                             2007                         102,000
                                             2008                         106,200
                                             2009                         106,200
                                             2010                         106,200
                                             2011                         106,200
                                             2012                         106,200
                                             2013                         106,200
                                             2014                         106,200

Average Wage Base                                                          70,272

8. As per Section 8f of the Employee's Employment Agreement, in determining the Employee's Years
   of Service, the period of time over which the Employee receives Termination Compensation is taken
   into account (not to exceed a total of 35 years).  In this example, the Employee is credited with 35
   years of service (33 Years of Service as of the Employee's actual date of termination plus 2 Years of
   Service in the compensation continuance period).









                                                           40


                                            Example 3

Name:                                                      John Allison
Date of Hire:                                              February 15, 1971
Assumed Date of Termination:                               August 31, 2013*
Benefit Commencement Date:                                 September 1, 2013 *
Age as of payment date:                                    65

Qualified Plan Calculation (as of September 1, 2013):

1. Average Compensation                                           247,000.00

2. Times 1%                                                            x .01

3. Equals                                                           2,470.00

4. Average Compensation over $72,852                              174,148.00

5. Times .5%                                                          x .005

6. Equals                                                             870.74

7. Subtotal (3) + (6)                                               3,340.74

8. Times Years of Service                                              35.00
    (not to exceed 35 years)

9. Equals                                                         116,925.90

10. Not less than benefit accrued as of                           113,826.30
     December 31 preceding DOT

11. Equals                                                        116,925.90

12. Not less than Prior Accrued Benefit                            62,484.00
      as of 12/31/1995

13. Equals                                                        116,925.90

14. Divided by 12                                                        /12

15. Equals monthly benefit                                         $9,743.83
      beginning 9/1/2013 (based on life annuity)

*Assumes the Employee retires at his Normal Retirement Age (age 65).  Thus, no Termination
 Compensation is paid under his Employment Agreement.

Footnotes

1. Average Compensation equals highest 5 years compensation out of the last ten years worked as


                                                           41


   defined in Section 2.14 of the BB&T Corporation Pension Plan (BB&T Plan). Calculated as follows
   assuming an annual 4% increase in compensation:

                 Year                Total W-2 Wages                     Compensation Under Š .2.14 *

                 2008                   3,010,515.70
                 2009                   3,130,936.33                                      235,000.00
                 2010                   3,256,173.78                                      240,000.00
                 2011                   3,386,420.73                                      245,000.00
                 2012                   3,521,877.56                                      255,000.00
                 2013                   2,441,835.11                                      260,000.00

Average                                 3,261,184.82                                      247,000.00

* Projected Compensation Limits

2. Per Section 5.1 of the BB&T Plan

4. The BB&T Plan benefit formula in Section  5.1 for a benefit based on "Average Compensation in
    excess of Covered Compensation."   The Covered Compensation is calculated by taking an average
    of the Social Security wage base as defined in Section 230 of the Social Security Act for each year
    during the 35 year period ending with the year in which the Participant attains his Social Security
    Retirement Age.

    For this calculation, the average Wage Base (assuming an annual 4% increase) is $72,852 as follows:

                                  Year                      Wage Base
                                  1980                         25,900
                                  1981                         29,700
                                  1982                         32,400
                                  1983                         35,700
                                  1984                         37,800
                                  1985                         39,600
                                  1986                         42,000
                                  1987                         43,800
                                  1988                         45,000
                                  1989                         48,000
                                  1990                         51,300
                                  1991                         53,400
                                  1992                         55,500
                                  1993                         57,600
                                  1994                         60,600
                                  1995                         61,200
                                  1996                         62,700
                                  1997                         65,400
                                  1998                         68,400
                                  1999                         72,600
                                  2000                         76,200
                                  2001                         80,400
                                  2002                         83,700


                                                           42


                                  2003                         87,000
                                  2004                         90,600
                                  2005                         94,200
                                  2006                         98,100
                                  2007                        102,000
                                  2008                        106,200
                                  2009                        110,400
                                  2010                        114,900
                                  2011                        119,400
                                  2012                        124,200
                                  2013                        129,300
                                  2014                        134,400

Average Wage Base                                              72,852

12.  When the Southern National Plan merged with the BB&T Plan as of December 31, 1995 all
      persons who were participants on that date had a frozen benefit calculated equal to the Accrued
      Benefit as of December 31, 1995 per Section 5.1 of the BB&T Plan

SERP Benefit (as of September 1, 2013)

1. Average Compensation                                        $3,261,184.82

2. Times 1%                                                            x .01

3. Equals                                                          32,611.85

4. Average Compensation over $72,852                            3,188,332.82

5. Times .5%                                                          x .005

6. Equals                                                          15,941.66

7. Subtotal (3) + (6)                                              48,553.51

8. Times Years of Service                                              35.00
    (not to exceed 35 years)

9. Equals                                                       1,699,372.93

10. Not less than benefit accrued as of December 31             1,699,423.33
     preceding the Date of Termination

11. Equals                                                      1,699,423.33

12. Less Qualified Plan Benefit                                  -116,925.90

13. Non-Qualified Plan Benefit                                  1,582,497.43

14. Divided by 12                                                        /12

15. Equals monthly Non-qualified benefit                         $131,874.79
      beginning 9/1/2013 (based on life annuity)


                                                           43


Footnotes

1. As per section 8f of the Employee's Employment Agreement, "Termination Compensation" will
    be included in calculation of Average Compensation under the BB&T Corporation Non-Qualified
    Defined Benefit Plan. As modified by the Employment Agreement, Average Compensation will be the
    greater of (i) the Employee's Average Compensation as determined under the Qualified Plan as of
    his actual date of termination or (ii) the amount of his Termination Compensation.  The Non-Qualified
    Plan (i.e., the SERP) does not use the various limits on compensation imposed on the Qualified Plan.

2. Per Section 5.1 of the BB&T Plan

4. The BB&T Plan benefit formula in Section  5.1 for a benefit based on "Average Compensation in
    excess of Covered Compensation."   The Covered Compensation is calculated by taking an average
    of the Social Security wage base as defined in Section 230 of the Social Security Act for each year
    during the 35 year period ending with the year in which the Participant attains his Social Security
    Retirement Age.

    For this calculation, the average Wage Base (assuming an annual 4% increase) is $72,852 as follows:

                                      Year                      Wage Base
                                      1980                         25,900
                                      1981                         29,700
                                      1982                         32,400
                                      1983                         35,700
                                      1984                         37,800
                                      1985                         39,600
                                      1986                         42,000
                                      1987                         43,800
                                      1988                         45,000
                                      1989                         48,000
                                      1990                         51,300
                                      1991                         53,400
                                      1992                         55,500
                                      1993                         57,600
                                      1994                         60,600
                                      1995                         61,200
                                      1996                         62,700
                                      1997                         65,400
                                      1998                         68,400
                                      1999                         72,600
                                      2000                         76,200
                                      2001                         80,400
                                      2002                         83,700
                                      2003                         87,000
                                      2004                         90,600
                                      2005                         94,200
                                      2006                         98,100


                                                           44


                                      2007                        102,000
                                      2008                        106,200
                                      2009                        110,400
                                      2010                        114,900
                                      2011                        119,400
                                      2012                        124,200
                                      2013                        129,300
                                      2014                        134,400

Average Wage Base                                                  72,852

Exhibit 10(aa)

AMENDED AND RESTATED EMPLOYMENT AGREEMENT

R E C I T A L S:

BB&T, the Employer and its Affiliates (as defined in Section 2a) are engaged in the banking and financial services business. The Employee is experienced in, and knowledgeable concerning, the material aspects of such business. The Employee heretofore has been employed as a Senior Executive Vice President of both BB&T and the Employer pursuant to the terms of an Employment Agreement dated April 15, 1996, as subsequently amended (the “Predecessor Agreement”). BB&T and the Employer desire to continue to employ the Employee as a Senior Executive Vice President of both BB&T and the Employer, and the Employee desires to continue to be employed by each of BB&T and the Employer in each such capacity. Furthermore, BB&T and the Employer desire to continue to provide the Employee certain disability, death, severance and supplemental retirement benefits in addition to those provided by the employee benefit plans of BB&T and the Employer. BB&T, the Employer and the Employee desire to amend and restate the Predecessor Agreement in order to: (i) incorporate all amendments made to the Predecessor Agreement; and (ii) clarify and more clearly state the terms of their existing understanding.

2. Definitions. Wherever used in this Agreement, including, but not limited to, the Recitals, Sections 1 and 2, the following terms shall have the meanings set forth below (unless otherwise indicated by the context):

a. "Affiliate" means a Person that directly or indirectly through one or more intermediaries, controls, or is controlled by, or is under common control with, another Person.

b. "Change of Control"means the earliest of the following dates:

(i) the date any person or group of persons (as defined in Section 13(d) and 14(d) of the Securities Exchange Act of 1934) together with its Affiliates, excluding employee benefit plans of the Employer or BB&T, is or becomes, directly or indirectly, the “beneficial owner”(as defined in Rule 13d-3 promulgated under the Securities Exchange Act of 1934) of securities of the Employer or BB&T representing twenty percent (20%) or more of the combined voting power of the Employer’s or BB&T’s then outstanding securities (excluding the acquisition of securities of the Employer by an entity at least eighty percent (80%) of the outstanding voting securities of which are, directly or indirectly, beneficially owned by BB&T); or

(v) the date of any event (other than a “merger of equals”as described in this subparagraph b) which BB&T’s Board of Directors determines should constitute a Change of Control.

c. "Code" means the Internal Revenue Code of 1986, as amended, and rules and regulations issued thereunder.

d. "Commencement Month" means the first day of the calendar month next following the month in which falls the Employee's Termination Date.

e. "Compensation Continuance Period" means the period of time over which the Employee is receiving Termination Compensation pursuant to the provisions of Section 8.

f. "Computation Period" means the twelve (12) consecutive month period beginning with the Commencement Month and each anniversary of the Commencement Month.

i. "Good Reason"means the occurrence of any of the following events without the Employee's express written consent:

(i) the assignment to the Employee of duties inconsistent with the position and status of the offices and positions of the Employer and/or BB&T held by the Employee as of January 1, 2002; or

(ii) a reduction by the Employer or BB&T in the Employee's pay grade or annual base salary as then in effect; or

(iv) any purported termination of the employment of the Employee by the Employer or BB&T which is not effected in accordance with this Agreement.

k. "Pension Plan" means the BB&T Corporation Pension Plan, a tax qualified defined benefit pension plan, as the same may be amended from time to time.

l. "Person" means any individual, person, partnership, limited liability company, joint venture, corporation, company, firm, group or other entity.

m. "Term" means the term of the Employee's employment under this Agreement as provided in Section 4.

o. "Termination Date" means the date the Employee's employment is terminated.

p. "Termination Year" means the calendar year in which falls the Employee's Termination Date.

3. Employment. During the Term (as defined in subparagraph m of Section 2 and Section 4), the Employee shall be employed as a Senior Executive Vice President of both BB&T and the Employer. The Employee shall have such duties and responsibilities as are commensurate with each such position. The Employee shall also serve on such committees and task forces of BB&T and the Employer, including, without limitation, the Executive Management Committee of BB&T, as he may be appointed from time to time by BB&T, the Employer or their Boards of Directors. Notwithstanding the foregoing, in no event shall the failure to appoint or reappoint the Employee to any committee or task force of BB&T or the Employer be treated as a breach of this Agreement by BB&T or the Employer, or as a termination of the employment of the Employee. The Employee hereby accepts and agrees to such employment, subject to the general supervision and pursuant to the orders, advice, and direction of the Employer, BB&T and their Boards of Directors. The Employee shall perform such duties as are customarily performed by one holding such positions in other same or similar businesses or enterprises as that engaged in by the Employer and BB&T, and shall also additionally render such other services and duties as may be reasonably assigned to him from time to time by the Employer or BB&T, consistent with his positions.

5. Compensation.

a. For all services rendered by the Employee to the Employer and BB&T under this Agreement, the Employer or BB&T shall pay to the Employee, during the Term, a minimum annual base salary at a rate not less than $313,708.56, payable in accordance with the standard payroll practices and procedures of the Employer or BB&T applicable to all officers. Any salary increase payable to the Employee shall be determined in accordance with the Employer’s or BB&T’s annual salary plan, and shall be based on the Employer’s and/or BB&T’s performance and the performance of the Employee.

6. Covenants of the Employee.

b. If the Employee terminates his employment with the Employer or BB&T for Good Reason at any time, the Employee shall be subject to the non-competition and non-solicitation provisions of Section 6a until the earlier of: (i) the first anniversary of the Employee’s Termination Date; or (ii) the date as of which the Employee ceases to receive any further Termination Compensation because of his breach of the non-competition or non-solicitation provisions of Section 6a. However, if the Employee terminates his employment with the Employer or BB&T for Good Reason within twelve (12) months after a Change of Control or, if later, within ninety (90) days after a MOE Revocation (as defined in Section 2b), subparagraph c below shall apply, not this subparagraph b.

d. If the Employee terminates his employment with the Employer or BB&T for any reason other than Good Reason at any time (except within twelve (12) months after a Change of Control, or, if later, within ninety (90) days after a MOE Revocation), the Employee shallbe subject to the non-competition and non-solicitation provisions of Section 6a.

e. If the employment of the Employee is terminated by the Employer or BB&T at any time for Just Cause, the Employee shall not be subject to the non-competition and non-solicitation provisions of Section 6a.

f. If the employment of the Employee is terminated by the Employer or BB&T for any reason other than Just Cause at any time (except within twelve (12) months after a Change of Control, or, if later, within ninety (90) days after a MOE Revocation), the Employee shallbe subject to the non-competition and non-solicitation provisions of Section 6a until the earlier of: (i) the first anniversary of the Employee’s Termination Date; or (ii) the date as of which the Employee ceases to receive any further Termination Compensation because of his breach of the non-competition or non-solicitation provisions of Section 6a. If the employment of the Employee is terminated by the Employer or BB&T for any reason other than Just Cause within twelve (12) months after a Change of Control, or, if later, within ninety (90) days after a MOE Revocation), the Employee shall notbe subject to the non-competition and non-solicitation provisions of Section 6a.

7. Disability. If, by reason of a physical or mental disability during the Term, the Employee is unable to carry out the essential functions of his employment pursuant to this Agreement for twelve (12) consecutive months, his employment hereunder may be terminated by action of the Board of Directors of the Employer or BB&T determining to do so upon one month’s notice to be given to the Employee at any time after the period of twelve (12) consecutive months of disability and while such disability continues. If, prior to the expiration of the one-month period after the giving of such notice, the Employee shall recover from such disability and return to the full-time active discharge of his duties hereunder, then such notice shall be of no further force and effect and the Employee’s employment shall continue as if the same had been uninterrupted. If the Employee shall not so recover from his disability and return to his duties, then his employment shall terminate on the date which coincides with the expiration of such one month’s notice. During the first twelve (12) consecutive months of the period of the Employee’s disability, the Employee shall continue to earn all compensation (including bonuses and incentive compensation) to which the Employee would have been entitled as if he had not been disabled, such compensation to be paid at the time, in the amounts, and in the manner provided in Section 5a, inclusive of any compensation received pursuant to any applicable disability insurance plan of the Employer or BB&T. Thereafter, the Employee shall receive compensation to which he is entitled under any applicable disability insurance plan of the Employer or BB&T. In the event a dispute arises between the Employee and the Employer or BB&T concerning the Employee’s physical or mental disability or ability to continue or return to the performance of his duties as aforesaid, the Employee shall submit, at the expense of the Employer and BB&T, to examination by a competent physician mutually agreeable to the parties, and his opinion as to the Employee’s capability to so perform shall be final and binding. Upon termination of the Employee’s employment by reason of disability, the Term shall end.