NOTE 4. Allowance for Credit Losses

An analysis of the allowance for credit losses for the three and six months ended June 30, 2011 is presented in the following tables:


	Three Months Ended June 30, 2011
	Beginning Balance		Charge- Offs			Recoveries		Provision			Ending Balance
	(Dollars in millions)
Commercial:
Commercial and industrial	$	535	$	(62	)	$	9	$	(8	)	$	474
Commercial real estate—other		497		(81	)		6		40			462
Commercial real estate—residential ADC		421		(78	)		7		32			382
Specialized lending		18		(2	)		1		(4	)		13

Retail:
Direct retail lending		245		(66	)		8		46			233
Revolving credit		105		(24	)		5		17			103
Residential mortgage		328		(129	)		1		147			347
Sales finance		43		(7	)		3		3			42
Specialized lending		175		(41	)		6		31			171
Covered and other acquired		144		—			—		15			159
Unallocated		130		—			—		—			130

Allowance for loan and lease losses		2,641		(490	)		46		319			2,516
Reserve for unfunded lending commitments		50		—			—		9			59

Allowance for credit losses	$	2,691	$	(490	)	$	46	$	328		$	2,575


	Six Months Ended June 30, 2011
	Beginning Balance		Charge- Offs			Recoveries		Provision			Ending Balance
	(Dollars in millions)
Commercial:
Commercial and industrial	$	621	$	(140	)	$	13	$	(20	)	$	474
Commercial real estate—other		446		(149	)		9		156			462
Commercial real estate—residential ADC		469		(149	)		11		51			382
Specialized lending		21		(4	)		2		(6	)		13

Retail:
Direct retail lending		246		(144	)		17		114			233
Revolving credit		109		(51	)		10		35			103
Residential mortgage		298		(183	)		2		230			347
Sales finance		47		(17	)		5		7			42
Specialized lending		177		(91	)		11		74			171
Covered and other acquired		144		—			—		15			159
Unallocated		130		—			—		—			130

Allowance for loan and lease losses		2,708		(928	)		80		656			2,516
Reserve for unfunded lending commitments		47		—			—		12			59

Allowance for credit losses	$	2,755	$	(928	)	$	80	$	668		$	2,575

An analysis of the allowance for credit losses for the three and six months ended June 30, 2010 is presented in the following tables:


	Three Months Ended June 30, 2010			Six Months Ended June 30, 2010
	(Dollars in millions)
Beginning balance	$	2,759		$	2,672
Provision for credit losses		650			1,225
Loans and leases charged-off		(671	)		(1,180	)
Recoveries of previous charge-offs		29			63

Net loans and leases charged-off		(642	)		(1,117	)

Other changes, net		(14	)		(27	)

Ending balance	$	2,753		$	2,753

Allowance for loan and lease losses	$	2,723		$	2,723
Reserve for unfunded lending commitments		30			30

Allowance for credit losses	$	2,753		$	2,753

The following tables provide a breakdown of the allowance for loan and lease losses and the recorded investment in loans based on the method for determining the allowance as of June 30, 2011 and December 31, 2010:


	June 30, 2011
	Allowance for Loan and Lease Losses
	Individually Evaluated for Impairment		Collectively Evaluated for Impairment		Loans Acquired With Deteriorated Credit Quality		Total
	(Dollars in millions)
Commercial:
Commercial and industrial	$	108	$	366	$	—	$	474
Commercial real estate—other		93		369		—		462
Commercial real estate—residential ADC		82		300		—		382
Specialized lending		1		12		—		13

Retail:
Direct retail lending		32		201		—		233
Revolving credit		26		77		—		103
Residential mortgage		148		199		—		347
Sales finance		1		41		—		42
Specialized lending		17		154		—		171
Covered and other acquired		—		45		114		159
Unallocated		—		130		—		130

Total	$	508	$	1,894	$	114	$	2,516


	June 30, 2011
	Loans and Leases
	Individually Evaluated for Impairment		Collectively Evaluated for Impairment		Loans Acquired With Deteriorated Credit Quality		Total
	(Dollars in millions)
Commercial:
Commercial and industrial	$	711	$	33,455	$	—	$	34,166
Commercial real estate—other		620		10,514		—		11,134
Commercial real estate—residential ADC		565		2,124		—		2,689
Specialized lending		6		3,616		—		3,622

Retail:
Direct retail lending		174		13,505		—		13,679
Revolving credit		62		2,029		—		2,091
Residential mortgage		796		17,576		—		18,372
Sales finance		7		7,229		—		7,236
Specialized lending		38		4,804		—		4,842
Covered and other acquired		—		3,035		2,519		5,554

Total	$	2,979	$	97,887	$	2,519	$	103,385


	December 31, 2010
	Allowance for Loan and Lease Losses
	Individually Evaluated for Impairment		Collectively Evaluated for Impairment		Loans Acquired With Deteriorated Credit Quality		Total
	(Dollars in millions)
Commercial:
Commercial and industrial	$	96	$	525	$	—	$	621
Commercial real estate—other		63		383		—		446
Commercial real estate—residential ADC		75		394		—		469
Specialized lending		1		20		—		21

Retail:
Direct retail lending		26		220		—		246
Revolving credit		25		84		—		109
Residential mortgage		167		131		—		298
Sales finance		1		46		—		47
Specialized lending		2		175		—		177
Covered and other acquired		—		54		90		144
Unallocated		—		130		—		130

Total	$	456	$	2,162	$	90	$	2,708


	December 31, 2010
	Loans and Leases
	Individually Evaluated for Impairment		Collectively Evaluated for Impairment		Loans Acquired With Deteriorated Credit Quality		Total
	(Dollars in millions)
Commercial:
Commercial and industrial	$	708	$	33,342	$	—	$	34,050
Commercial real estate—other		691		10,748		—		11,439
Commercial real estate—residential ADC		684		2,713		—		3,397
Specialized lending		4		3,399		—		3,403

Retail:
Direct retail lending		177		13,572		—		13,749
Revolving credit		62		2,065		—		2,127
Residential mortgage		803		16,747		—		17,550
Sales finance		5		7,045		—		7,050
Specialized lending		24		4,526		—		4,550
Covered and other acquired		—		3,394		2,858		6,252

Total	$	3,158	$	97,551	$	2,858	$	103,567

BB&T monitors the credit quality of its commercial portfolio segment using internal risk ratings. These ratings have been correlated with bond ratings for similar instruments based on management's judgment. BB&T assigns an internal risk rating at loan origination and reviews the relationship again on an annual basis or at any point management becomes aware of information affecting the borrower's ability to fulfill their obligations.

BB&T monitors the credit quality of its retail portfolio segment based primarily on delinquency status, which is the primary factor considered in determining whether a retail loan should be classified as nonaccrual.

For the commercial portfolio segment, BB&T's internal risk ratings were correlated with Moody's bond ratings by mapping the historical default rates by internal risk grade to those implied in the bond ratings. Investment grade includes all loans mapped to a "Baa" or higher rating. Near investment grade includes all loans mapped to a "Ba" rating. Noninvestment grade includes all loans mapped to a "B" or lower rating. For the retail portfolio segment, nonperforming loans reflect loans in nonaccrual status.

The following tables illustrate the credit quality indicators associated with BB&T's loans and leases held for investment as of June 30, 2011 and December 31, 2010. Covered and other acquired loans are excluded from this analysis because their related allowance is determined by loan pool performance due to the application of the accretion method.


	June 30, 2011
	Commercial
	Commercial & Industrial		Commercial Real Estate -Other		Commercial Real Estate- Residential ADC		Specialized Lending
	(Dollars in millions)
Investment grade	$	8,212	$	783	$	45	$	2,100
Near investment grade		17,095		4,493		385		868
Noninvestment grade—performing		8,248		5,391		1,799		643
Noninvestment grade—nonperforming (1)		611		467		460		11

Total (1)	$	34,166	$	11,134	$	2,689	$	3,622


	June 30, 2011
	Retail
	Direct Retail Lending		Revolving Credit		Residential Mortgage		Sales Finance		Specialized Lending
	(Dollars in millions)
Performing	$	13,507	$	2,091	$	18,080	$	7,229	$	4,801
Nonperforming		172		—		292		7		41

Total	$	13,679	$	2,091	$	18,372	$	7,236	$	4,842


	December 31, 2010
	Commercial
	Commercial & Industrial		Commercial Real Estate- Other		Commercial Real Estate- Residential ADC		Specialized Lending
	(Dollars in millions)
Investment grade	$	8,358	$	687	$	35	$	2,070
Near investment grade		16,637		4,618		512		756
Noninvestment grade—performing		8,547		5,729		2,337		566
Noninvestment grade—nonperforming (1)		508		405		513		11

Total (1)	$	34,050	$	11,439	$	3,397	$	3,403


	December 31, 2010
	Retail
	Direct Retail Lending		Revolving Credit		Residential Mortgage		Sales Finance		Specialized Lending
	(Dollars in millions)
Performing	$	13,558	$	2,127	$	17,084	$	7,044	$	4,501
Nonperforming		191		—		466		6		49

Total	$	13,749	$	2,127	$	17,550	$	7,050	$	4,550

(1)	Excludes nonperforming commercial loans held for sale of $116 million and $521 million as of June 30, 2011 and December 31, 2010, respectively.

The following tables represent aging analyses of BB&T's past due loans and leases held for investment as of June 30, 2011 and December 31, 2010:


	June 30, 2011
	Loans and Leases Excluding Covered (1)
	Accruing Loans and Leases
	Current		30-89 Days Past Due		90 Days Or More Past Due		Nonaccrual Loans And Leases (2)		Total Loans And Leases, Excluding Covered Loans
	(Dollars in millions)
Commercial:
Commercial and industrial	$	33,479	$	72	$	4	$	611	$	34,166
Commercial real estate—other		10,628		35		4		467		11,134
Commercial real estate—residential ADC		2,204		25		—		460		2,689
Specialized lending		3,587		17		7		11		3,622

Retail:
Direct retail lending		13,294		154		59		172		13,679
Revolving credit		2,053		22		16		—		2,091
Residential mortgage (3)		17,324		504		252		292		18,372
Sales finance		7,140		68		21		7		7,236
Specialized lending		4,620		181		—		41		4,842
Other acquired		48		—		2		—		50

Total (2)(3)	$	94,377	$	1,078	$	365	$	2,061	$	97,881


	December 31, 2010
	Loans and Leases Excluding Covered (1)
	Accruing Loans and Leases
	Current		30-89 Days Past Due		90 Days Or More Past Due		Nonaccrual Loans And Leases (2)		Total Loans And Leases, Excluding Covered Loans
	(Dollars in millions)
Commercial:
Commercial and industrial	$	33,371	$	163	$	8	$	508	$	34,050
Commercial real estate—other		10,962		68		4		405		11,439
Commercial real estate—residential ADC		2,792		84		8		513		3,397
Specialized lending		3,358		29		5		11		3,403

Retail:
Direct retail lending		13,293		189		76		191		13,749
Revolving credit		2,079		28		20		—		2,127
Residential mortgage (3)		16,173		615		296		466		17,550
Sales finance		6,922		95		27		6		7,050
Specialized lending		4,281		219		1		49		4,550
Other acquired		54		1		3		—		58

Total (2)(3)	$	93,285	$	1,491	$	448	$	2,149	$	97,373

(1)	Covered loans have been excluded from this aging analysis because they are covered by FDIC loss sharing agreements, and their related allowance is determined by loan pool performance due to the application of the accretion method.

(2)	Excludes nonperforming commercial loans held for sale of $116 million and $521 million as of June 30, 2011 and December 31, 2010, respectively.

(3)	Residential mortgage loans include $78 million and $83 million in government guaranteed loans past due 30-89 days, and $162 million and $153 million in government guaranteed loans past due greater than 90 days as of June 30, 2011 and December 31, 2010, respectively.

The following tables set forth certain information regarding BB&T's impaired loans, excluding acquired impaired loans and loans held for sale, that were evaluated for specific reserves as of June 30, 2011 and December 31, 2010. The average balance of impaired loans and the interest income recognized while on impaired status are reported for the six months ended June 30, 2011.


	June 30, 2011
	Recorded Investment		Unpaid Principal Balance		Related Allowance		Average Recorded Investment		Interest Income Recognized
	(Dollars in millions)
With No Related Allowance Recorded:
Commercial:
Commercial and industrial	$	163	$	237	$	—	$	147	$	—
Commercial real estate—other		143		194		—		141		—
Commercial real estate—residential ADC		181		317		—		206		—
Specialized lending		—		—		—		—		—

Retail:
Direct retail lending		24		82		—		27		—
Residential mortgage (1)		25		50		—		27		—
Sales finance		1		1		—		2		—
Specialized lending		2		4		—		6		—

With An Allowance Recorded:
Commercial:
Commercial and industrial		548		581		108		445		2
Commercial real estate—other		477		519		93		438		4
Commercial real estate—residential ADC		384		418		82		317		2
Specialized lending		6		6		1		3		—

Retail:
Direct retail lending		150		159		32		138		4
Revolving credit		62		61		26		61		1
Residential mortgage (1)		611		626		133		594		14
Sales finance		6		7		1		4		—
Specialized lending		36		38		17		22		1

Total (1)	$	2,819	$	3,300	$	493	$	2,578	$	28


	December 31, 2010
	Recorded Investment		Unpaid Principal Balance		Related Allowance
	(Dollars in millions)
With No Related Allowance Recorded:
Commercial:
Commercial and industrial	$	196	$	267	$	—
Commercial real estate—other		175		246		—
Commercial real estate—residential ADC		200		300		—

Retail:
Direct retail lending		22		69		—
Residential mortgage (1)		25		50		—

With An Allowance Recorded:
Commercial:
Commercial and industrial		512		534		96
Commercial real estate—other		516		565		63
Commercial real estate—residential ADC		484		556		75
Specialized lending		4		4		1

Retail:
Direct retail lending		155		161		26
Revolving credit		62		61		25
Residential mortgage (1)		663		690		153
Sales finance		5		5		1
Specialized lending		24		24		2

Total (1)	$	3,043	$	3,532	$	442

(1)	Residential mortgage loans exclude $160 million and $115 million in government guaranteed loans and related allowance of $15 million and $14 million as of June 30, 2011 and December 31, 2010, respectively.