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Allowance for Credit Losses
6 Months Ended
Jun. 30, 2011
Allowance for Credit Losses  
Allowance for Credit Losses

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:

 

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  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

 

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:

 

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.