Operating Segments

BB&T previously reported its results of operations through the following business segments: Community Banking, Residential Mortgage Banking, Dealer Financial Services, Specialized Lending, Insurance Holdings and Financial Services, with the remaining operations recorded in OT&C. In the fourth quarter of 2017, BB&T revised its management structure and changed its basis of presentation into four new business segments: CB-Retail, CB-Commercial, IH&PF and FS&CF, with the remaining operations recorded in OT&C.

The new business segment structure aligns with how BB&T’s management reviews performance and makes decisions by client, segment and business unit. The CB-Retail segment brings together the existing Community Banking retail services and operations with the BUs and subsidiaries that primarily serve retail clients, including the former Residential Mortgage Banking, and portions of both Dealer Financial Services and Specialized Lending segments. The services and operations that support large, medium and small business clients from the prior Community Banking and Dealer Financial Services are included in the CB-Commercial segment. The FS&CF segment combines the previous Financial Services operations with the Equipment Finance, Governmental Finance and Grandbridge businesses from the former Specialized Lending segment as those businesses are national in scope consistent with the Capital Markets Corporate Banking Division. The IH&PF received the Prime Rate Premium Finance Corporation from the former Specialized Lending segment as it finances insurance premiums. Prior periods have been revised to reflect the restructuring. The segments require unique technology and marketing strategies and offer different products and services through a number of distinctly branded BUs. In addition, there is an OT&C segment. While BB&T is managed as an integrated organization, individual executive managers are held accountable for the operations of these business segments.

Also during 2017, a change was made in the method for allocation of capital to the operating segments impacting both the allocated balances and funding credit, resulting primarily in an increase to net interest income in the CB-Retail segment, offset by the OT&C segment. Results for prior periods have been revised to reflect the changes in allocation methodology, which are not considered significant to other segments.

BB&T emphasizes revenue growth by focusing on client service, sales effectiveness and relationship management along with an organizational focus on referring clients between BUs. The business objective is to provide BB&T’s entire suite of products to our clients with the end goal of providing our clients the best financial experience in the marketplace. The segment results are presented based on internal management accounting methodologies that were designed to support these strategic objectives. Unlike financial accounting, there is no comprehensive authoritative body of guidance for management accounting equivalent to GAAP. The performance of the 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 indicative of how the segments would perform if they operated as independent entities.

The management accounting process uses various estimates and allocation methodologies to measure the performance of the operating segments. To determine financial performance for each segment, BB&T allocates capital, funding charges and credits, provisions for credit losses, certain noninterest expenses and income tax provisions to each segment, as applicable. To promote revenue growth, certain revenues are reflected in noninterest income in the individual segment results and also allocated to CB-Retail, CB-Commercial and FS&CF. These allocated revenues are reflected as net referral fees in non-interest income and eliminated in OT&C. Additionally, certain client groups of CB-Retail and CB-Commercial have also been identified as clients of other BUs within the business segments. Periodically, existing clients within the CB-Retail segment may be identified and assigned as Wealth Division clients, at which time, these clients’ loan and deposit balances are reported in the FS&CF segment. The net interest income and related net FTP associated with these customers’ loans and deposits are accounted for in CB-Retail in the respective line categories of net interest income (expense) and net intersegment interest income (expense). For the Wealth Division, NIM and net intersegment interest income have been combined in the net intersegment interest income (expense) line with an appropriate offsetting amount to the OT&C line item to ensure consolidated totals reflect the Company’s total NIM for loans and deposits. Allocation methodologies are subject to periodic adjustment as the internal management accounting system is revised and business or product lines within the segments change.

BB&T utilizes an FTP system to eliminate the effect of interest rate risk from the segments’ net interest income because such risk is centrally managed within the Treasury function. The FTP system credits or charges the segments with the economic value or cost of the funds the segments create or use. The net FTP credit or charge, which includes intercompany interest income and expense, is reflected as net intersegment interest income (expense) in the accompanying tables.

The provision for credit losses is also allocated to the relevant segments based on management’s assessment of the segments’ credit risks. The allocated provision is designed to achieve a high degree of correlation between the loan loss experience and the GAAP basis provision at the segment level, while at the same time providing management with a measure of operating performance that gives appropriate consideration to the risks inherent in each of the Company’s operating segments. Any over or under allocated provision for credit losses is reflected in OT&C to arrive at consolidated results.

BB&T allocates expenses to the reportable segments based on various methodologies, including volume and amount of loans and deposits and the number of full-time equivalent employees. Allocation systems are refined from time to time along with further identification of certain cost pools. These cost pools and refinements are implemented to provide for improved managerial reporting of cost to the appropriate business segments. A portion of corporate overhead expense is not allocated, but is retained in OT&C in the accompanying tables. The majority of depreciation expense is recorded in support units and allocated to the segments as part of allocated corporate expense. Income taxes are allocated to the various segments based on taxable income and statutory rates applicable to the segment.

Community Banking Retail and Consumer Finance

CB-Retail serves retail clients by offering a variety of loan and deposit products, payment services, bankcard products and other financial services by connecting clients to a wide range of financial products and services.

CB-Retail includes Residential Mortgage Banking, which retains and services mortgage loans originated by BB&T as well as those purchased from various correspondent originators. Mortgage loan products include fixed and adjustable rate government and conventional loans used for the purpose of constructing, purchasing or refinancing residential properties. Substantially all of the properties are owner occupied. BB&T generally retains the servicing rights to loans sold. Residential Mortgage Banking earns interest on loans held in the warehouse and portfolio, earns fee income from the origination and servicing of mortgage loans and recognizes gains or losses from the sale of mortgage loans. Residential Mortgage Banking also includes Mortgage Warehouse Lending, which provides short-term lending solutions to finance first-lien residential mortgage LHFS by independent mortgage companies.

CB-Retail also includes Dealer Retail Services which originates loans to consumers on a prime and nonprime basis for the purchase of automobiles. Such loans are originated on an indirect basis through approved franchised and independent automobile dealers throughout the BB&T market area and nationally through Regional Acceptance Corporation. Additionally, CB-Retail originates loans for the purchase of boats and recreational vehicles originated through dealers in BB&T’s market area.

CB-Retail includes Sheffield Financial which is a BU that provides specialty finance products to consumers; as well as BB&T Commercial Equipment Capital, which is an operating subsidiary that provides mid-market equipment leasing primarily within BB&T’s banking footprint.

CB-Retail is primarily responsible for serving individual client relationships and, therefore, is credited with certain revenue from IH&PF and FS&CF, which is reflected in noninterest income.

Community Banking Commercial

CB-Commercial serves large, medium and small business clients by offering a variety of loan and deposit products and connecting the client with the combined organization’s broad array of financial services. CB-Commercial includes commercial real estate lending, commercial and industrial lending, corporate banking, asset based-lending, dealer inventory financing, tax exempt financing, cash management and treasury services, and commercial deposit products.

CB-Commercial is primarily responsible for serving commercial client relationships and, therefore, is credited with certain revenue from CB-Retail, IH&PF and FS&CF, which is reflected in noninterest income.

Financial Services and Commercial Finance

FS&CF provides personal trust administration, estate planning, investment counseling, wealth management, asset management, corporate retirement services, capital markets and corporate banking services, corporate trust services and specialty finance products to businesses.

FS&CF includes BB&T Securities, a full-service brokerage and investment banking firm that provides services in retail brokerage, equity and debt underwriting and investment advice and facilitates the origination, trading and distribution of fixed-income securities and equity products in both the public and private capital markets. BB&T Securities also has a public finance department that provides investment banking services, financial advisory services and municipal bond financing to a variety of regional taxable and tax-exempt issuers. FS&CF also offers clients investment alternatives, including discount brokerage services, equities, fixed-rate and variable-rate annuities, mutual funds and governmental and municipal bonds.

FS&CF also includes specialty finance offered through two operating subsidiaries and a BU. Operating subsidiaries include Grandbridge, a full-service commercial mortgage banking lender providing loans on a national basis, and BB&T Equipment Finance, which provides equipment leasing for large and middle market clients. The BU is Governmental Finance which provides tax-exempt financing to meet the capital project needs of local governments. Branch Bank clients as well as nonbank clients within and outside BB&T’s primary geographic market area are served by these subsidiaries and the BU.

In addition, FS&CF includes the Capital Markets Corporate Banking Division that originates and services large corporate relationships, syndicated lending relationships and client derivatives.

CB-Retail and CB-Commercial receive an interoffice credit for referrals to FS&CF, with the corresponding charge retained as part of OT&C in the accompanying tables. Also captured within the net intersegment interest income for FS&CF is the NIM for the loans and deposits associated with client relationships assigned to the Wealth Division that are housed in CB-Retail.

Insurance Holdings and Premium Finance

BB&T's insurance agency / brokerage network is the fifth largest in the world. IH&PF provides property and casualty, employee benefits and life insurance to businesses and individuals. It also provides small business and corporate services, such as workers compensation and professional liability, as well as surety coverage and title insurance.

IH&PF also includes Prime Rate Premium Finance Corporation, which includes AFCO and CAFO, insurance premium finance subsidiaries that provide funding to businesses in the United States and Canada.

CB-Retail, CB-Commercial and FS&CF segments receive credit for insurance commissions and referrals to IH&PF with the corresponding charge retained as part of OT&C in the accompanying tables.

Other, Treasury & Corporate

OT&C is the combination of the Other segment that represents operating entities that do not meet the quantitative or qualitative thresholds for disclosure; BB&T’s Treasury function, which is responsible for the management of the securities portfolios, overall balance sheet funding and liquidity, and overall management of interest rate risk; the corporate support functions that have not been allocated to the business segments; certain merger-related charges or credits that are incurred as part of the acquisition and conversion of acquired entities; certain charges that are considered to be unusual in nature and not reflective of the normal operations of the segments; and intercompany eliminations including intersegment net referral fees in noninterest income and net intersegment interest income (expense).

The investment balances and results related to affordable housing investments are included in the OT&C segment. Additionally, OT&C includes a group of consolidated SBIC private equity and mezzanine investment funds that invest in privately owned middle market operating companies to facilitate growth or ownership transition. PCI loans from the Colonial acquisition and related net interest income are also included in this segment. Performance results of bank acquisitions prior to system conversion are typically reported in this segment and on a post-conversion date are reported in the other segments as applicable.



Year Ended December 31,	CB-Retail									CB-Commercial									FS&CF
(Dollars in millions)	2017			2016			2015			2017			2016			2015			2017			2016		2015
Net interest income (expense)	$	3,415		$	3,290		$	3,035		$	1,740		$	1,604		$	1,345		$	583		$	511	$	443
Net intersegment interest income (expense)	149			115			(119		)	379			404			324			127			142		110
Segment net interest income	3,564			3,405			2,916			2,119			2,008			1,669			710			653		553
Allocated provision for credit losses	501			475			365			69			(40		)	1			(15		)	128		67
Segment net interest income after provision	3,063			2,930			2,551			2,050			2,048			1,668			725			525		486
Noninterest income	1,404			1,354			1,342			423			392			390			1,181			1,148		1,046
Noninterest expense	2,725			2,469			2,357			1,198			1,302			1,153			1,190			1,141		1,020
Income (loss) before income taxes	1,742			1,815			1,536			1,275			1,138			905			716			532		512
Provision (benefit) for income taxes	650			686			588			441			403			324			225			156		151
Segment net income (loss)	$	1,092		$	1,129		$	948		$	834		$	735		$	581		$	491		$	376	$	361

Identifiable assets (period end)	$	71,093		$	74,642		$	71,027		$	56,563		$	55,035		$	51,231		$	29,144		$	26,795	$	25,294

	IH&PF									OT&C (1)									Total BB&T Corporation
	2017			2016			2015			2017			2016			2015			2017			2016		2015
Net interest income (expense)	$	98		$	86		$	79		$	699		$	830		$	690		$	6,535		$	6,321	$	5,592
Net intersegment interest income (expense)	(21		)	(19		)	(16		)	(634		)	(642		)	(299		)	—			—		—
Segment net interest income	77			67			63			65			188			391			6,535			6,321		5,592
Allocated provision for credit losses	4			3			4			(12		)	6			(9		)	547			572		428
Segment net interest income after provision	73			64			59			77			182			400			5,988			5,749		5,164
Noninterest income	1,777			1,731			1,611			(3		)	(153		)	(370		)	4,782			4,472		4,019
Noninterest expense	1,590			1,525			1,371			741			284			365			7,444			6,721		6,266
Income (loss) before income taxes	260			270			299			(667		)	(255		)	(335		)	3,326			3,500		2,917
Provision (benefit) for income taxes	99			104			105			(504		)	(291		)	(374		)	911			1,058		794
Segment net income (loss)	$	161		$	166		$	194		$	(163	)	$	36		$	39		$	2,415		$	2,442	$	2,123

Identifiable assets (period end)	$	6,024		$	5,943		$	4,998		$	58,818		$	56,861		$	57,397		$	221,642		$	219,276	$	209,947

(1) Includes financial data from subsidiaries below the quantitative and qualitative thresholds requiring disclosure.