Allowance for Credit Losses

9 Months Ended

Sep. 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 nine months ended September 30, 2011 is presented in the following tables:
			Three Months Ended September 30, 2011
			Beginning		Charge-						Ending
			Balance		Offs		Recoveries		Provision		Balance
			(Dollars in millions)
	Commercial:
		Commercial and industrial	$	474	$	(102)	$	9	$	55	$	436
		Commercial real estate - other		462		(64)		6		26		430
		Commercial real estate - residential ADC		382		(61)		9		(2)		328
		Specialized lending		13		(2)		1		1		13
	Retail:
		Direct retail lending		233		(74)		10		51		220
		Revolving credit		103		(23)		4		21		105
		Residential mortgage		347		(41)		1		57		364
		Sales finance		42		(7)		2		2		39
		Specialized lending		171		(40)		6		40		177
	Covered and other acquired			159		(53)		―		7		113
	Unallocated			130		―		―		―		130
	Allowance for loan and lease losses			2,516		(467)		48		258		2,355
	Reserve for unfunded lending commitments			59		―		―		(8)		51
	Allowance for credit losses		$	2,575	$	(467)	$	48	$	250	$	2,406

		Nine Months Ended September 30, 2011
		Beginning		Charge-						Ending
		Balance		Offs		Recoveries		Provision		Balance
		(Dollars in millions)
Commercial:
	Commercial and industrial	$	621	$	(242)	$	22	$	35	$	436
	Commercial real estate - other		446		(213)		15		182		430
	Commercial real estate - residential ADC		469		(210)		20		49		328
	Specialized lending		21		(6)		3		(5)		13
Retail:
	Direct retail lending		246		(218)		27		165		220
	Revolving credit		109		(74)		14		56		105
	Residential mortgage		298		(224)		3		287		364
	Sales finance		47		(24)		7		9		39
	Specialized lending		177		(131)		17		114		177
Covered and other acquired			144		(53)		―		22		113
Unallocated			130		―		―		―		130
Allowance for loan and lease losses			2,708		(1,395)		128		914		2,355
Reserve for unfunded lending commitments			47		―		―		4		51
Allowance for credit losses		$	2,755	$	(1,395)	$	128	$	918	$	2,406

An analysis of the allowance for credit losses for the three and nine months ended September 30, 2010 is presented in the following tables:
				Three Months Ended		Nine Months Ended
				September 30, 2010		September 30, 2010
				(Dollars in millions)
	Beginning balance			$	2,753	$	2,672
		Provision for credit losses			770		1,995
		Loans and leases charged-off			(901)		(2,081)
		Recoveries of previous charge-offs			28		91
			Net loans and leases charged-off		(873)		(1,990)
		Other changes, net			―		(27)
	Ending balance			$	2,650	$	2,650
	Allowance for loan and lease losses			$	2,611	$	2,611
	Reserve for unfunded lending commitments				39		39
	Allowance for credit losses			$	2,650	$	2,650

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 September 30, 2011 and December 31, 2010:
			September 30, 2011
			Allowance for Loan and Lease Losses
							Loans
							Acquired
			Individually		Collectively		With
			Evaluated		Evaluated		Deteriorated
			for		for		Credit
			Impairment		Impairment		Quality		Total
			(Dollars in millions)
	Commercial:
		Commercial and industrial	$	87	$	349	$	―	$	436
		Commercial real estate - other		72		358		―		430
		Commercial real estate - residential ADC		54		274		―		328
		Specialized lending		1		12		―		13
	Retail:
		Direct retail lending		32		188		―		220
		Revolving credit		26		79		―		105
		Residential mortgage		148		216		―		364
		Sales finance		1		38		―		39
		Specialized lending		19		158		―		177
	Covered and other acquired			―		49		64		113
	Unallocated			―		130		―		130
	Total		$	440	$	1,851	$	64	$	2,355

		September 30, 2011
		Loans and Leases
						Loans
						Acquired
		Individually		Collectively		With
		Evaluated		Evaluated		Deteriorated
		for		for		Credit
		Impairment		Impairment		Quality		Total
		(Dollars in millions)
Commercial:
	Commercial and industrial	$	643	$	34,174	$	―	$	34,817
	Commercial real estate - other		562		10,369		―		10,931
	Commercial real estate - residential ADC		483		1,931		―		2,414
	Specialized lending		5		3,590		―		3,595
Retail:
	Direct retail lending		164		13,718		―		13,882
	Revolving credit		63		2,065		―		2,128
	Residential mortgage		845		18,516		―		19,361
	Sales finance		8		7,257		―		7,265
	Specialized lending		44		4,997		―		5,041
Covered and other acquired			―		2,942		2,327		5,269
Total		$	2,817	$	99,559	$	2,327	$	104,703

		December 31, 2010
		Allowance for Loan and Lease Losses
						Loans
						Acquired
		Individually		Collectively		With
		Evaluated		Evaluated		Deteriorated
		for		for		Credit
		Impairment		Impairment		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
						Loans
						Acquired
		Individually		Collectively		With
		Evaluated		Evaluated		Deteriorated
		for		for		Credit
		Impairment		Impairment		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 risk ratings are based on established regulatory guidance. Loans with a Pass rating represent those not considered as a problem credit. Special mention loans are those that have a potential weakness deserving management's close attention. Substandard loans are those where a well-defined weakness has been identified that may put full collection of contractual cash flows at risk. Substandard loans are placed in nonaccrual status when BB&T believes it is no longer probable it will collect all contractual cash flows.

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.

The following tables illustrate the credit quality indicators associated with BB&T's loans and leases held for investment as of September 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.
		September 30, 2011
		Commercial
						Commercial
				Commercial		Real Estate -
		Commercial		Real Estate -		Residential		Specialized
		& Industrial		Other		ADC		Lending
		(Dollars in millions)
	Pass	$	31,742	$	8,693	$	1,188	$	3,548
	Special mention		527		210		61		3
	Substandard - performing		1,969		1,590		737		34
	Nonperforming		579		438		428		10
	Total (1)	$	34,817	$	10,931	$	2,414	$	3,595

	September 30, 2011
	Retail
	Direct Retail		Revolving		Residential		Sales		Specialized
	Lending		Credit		Mortgage		Finance		Lending
	(Dollars in millions)
Performing	$	13,731	$	2,128	$	19,063	$	7,258	$	4,995
Nonperforming		151		―		298		7		46
Total	$	13,882	$	2,128	$	19,361	$	7,265	$	5,041

	December 31, 2010
	Commercial
					Commercial
			Commercial		Real Estate -
	Commercial		Real Estate -		Residential		Specialized
	& Industrial		Other		ADC		Lending
	(Dollars in millions)
Pass	$	30,774	$	9,095	$	1,587	$	3,348
Special mention		554		306		108		30
Substandard - performing		2,214		1,633		1,189		14
Nonperforming		508		405		513		11
Total (1)	$	34,050	$	11,439	$	3,397	$	3,403

		December 31, 2010
		Retail
		Direct Retail		Revolving		Residential		Sales		Specialized
		Lending		Credit		Mortgage		Finance		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 $26 million and $521 million as of September 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 September 30, 2011 and December 31, 2010:
			September 30, 2011
			Loans and Leases Excluding Covered (1)
			Accruing Loans and Leases
							90 Days Or		Nonaccrual		Total Loans And
					30-89 Days		More Past		Loans And		Leases, Excluding
			Current		Past Due		Due		Leases (2)		Covered Loans
			(Dollars in millions)
	Commercial:
		Commercial and industrial	$	34,161	$	76	$	1	$	579	$	34,817
		Commercial real estate - other		10,464		27		2		438		10,931
		Commercial real estate - residential ADC		1,959		27		―		428		2,414
		Specialized lending		3,568		14		3		10		3,595
	Retail:
		Direct retail lending		13,531		148		52		151		13,882
		Revolving credit		2,090		23		15		―		2,128
		Residential mortgage (3)		18,260		527		276		298		19,361
		Sales finance		7,172		67		19		7		7,265
		Specialized lending		4,764		229		2		46		5,041
	Other acquired			44		1		2		―		47
	Total (3)		$	96,013	$	1,139	$	372	$	1,957	$	99,481

			December 31, 2010
			Loans and Leases Excluding Covered (1)
			Accruing Loans and Leases
							90 Days Or		Nonaccrual		Total Loans And
					30-89 Days		More Past		Loans And		Leases, Excluding
			Current		Past Due		Due		Leases (2)		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 (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 $26 million and $521 million as of September 30, 2011 and December 31, 2010, respectively.
(3)	Residential mortgage loans include $82 million and $83 million in government guaranteed loans 30-89 days past due, and $185 million and $153 million in government guaranteed loans 90 days or more past due as of September 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 September 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 nine months ended September 30, 2011.
			September 30, 2011
					Unpaid				Average		Interest
			Recorded		Principal		Related		Recorded		Income
			Investment		Balance		Allowance		Investment		Recognized
			(Dollars in millions)
	With No Related Allowance Recorded:
	Commercial:
		Commercial and industrial	$	149	$	225	$	―	$	119	$	―
		Commercial real estate - other		149		194		―		105		―
		Commercial real estate - residential ADC		182		342		―		186		―
		Specialized lending		―		―		―		―		―
	Retail:
		Direct retail lending		23		80		―		27		1
		Residential mortgage (1)		28		55		―		33		1
		Sales finance		1		1		―		1		―
		Specialized lending		2		3		―		2		―
	With An Allowance Recorded:
	Commercial:
		Commercial and industrial		494		513		87		343		1
		Commercial real estate - other		413		456		72		348		4
		Commercial real estate - residential ADC		301		339		54		232		2
		Specialized lending		5		5		1		4		―
	Retail:
		Direct retail lending		141		148		32		127		6
		Revolving credit		63		62		26		61		2
		Residential mortgage (1)		608		625		126		582		20
		Sales finance		7		10		1		5		―
		Specialized lending		42		45		19		15		1
	Total (1)		$	2,608	$	3,103	$	418	$	2,190	$	38

			December 31, 2010
					Unpaid
			Recorded		Principal		Related
			Investment		Balance		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 $209 million and $115 million in government guaranteed loans and related allowance of $22 million and $14 million as of September 30, 2011 and December 31, 2010, respectively.

Modifications to a borrower's debt agreement are considered troubled debt restructurings ("restructurings") if a concession is granted for economic or legal reasons related to a borrower's financial difficulties that otherwise would not be considered. Restructurings are undertaken in order to improve the likelihood of recovery on the loan and may take the form of modifications made with the stated interest rate lower than the current market rate for new debt with similar risk, other modifications to the structure of the loan that fall outside of normal underwriting policies and procedures, or in certain limited circumstances forgiveness of principal or interest. Modifications of covered and other acquired loans that are part of a pool accounted for as a single asset are not considered restructurings.
The following table provides a summary of the primary reason loan modifications were classified as restructurings and their estimated impact on the allowance for loan and lease losses during the three and nine months ended September 30, 2011:
			Three Months Ended						Nine Months Ended
			September 30, 2011						September 30, 2011
			Types of						Types of
			Modifications (1)				Increase To		Modifications (1)				Increase To
			Rate (2)		Structure		Allowance		Rate (2)		Structure		Allowance
			(Dollars in millions)
	Commercial:
		Commercial and industrial	$	5	$	9	$	1	$	26	$	36	$	3
		Commercial real estate - other		9		22		2		35		45		5
		Commercial real estate - residential ADC		7		14		1		23		37		8
		Specialized lending		1		1		―		1		1		―
	Retail:
		Direct retail lending		10		1		2		42		4		7
		Revolving credit		10		―		2		31		―		6
		Residential mortgage		23		2		2		77		7		10
		Sales finance		2		―		―		4		3		1
		Specialized lending		8		2		4		30		5		12
(1)	Includes modifications made to existing restructurings, as well as new modifications that are considered restructurings. Balances represent the recorded investment as of the end of the period in which the modification was made.
(2)	Includes restructurings made with a below market interest rate that also includes a modification of loan structure.

There was no forgiveness of principal or interest for restructurings recorded during the three and nine months ended September 30, 2011. Charge-offs recorded at the modification date were $6 million and $29 million for the three and nine months ended September 30, 2011, respectively. Modifications made to existing restructurings in the commercial portfolio segment approximated 19% and 28% of total commercial restructurings for the three and nine months ended September 30, 2011, respectively.

The allowance for nonperforming commercial restructurings for relationships with outstanding debt of $2 million or more are determined using a discounted expected cash flow approach and/or the value of collateral. The allowance for other commercial restructurings and all retail restructurings are determined using a discounted expected cash flow approach.

The following table provides a summary of the pre-default balance for modifications that experienced a payment default during the three and nine months ended September 30, 2011, respectively, that had been classified as restructurings during the previous 12 months. BB&T defines payment default as movement of the restructuring to nonaccrual status, foreclosure or charge-off, whichever occurs first.

			Three		Nine
			Months		Months
			Ended		Ended
			September		September
			30, 2011		30, 2011
			(Dollars in millions)
	Commercial:
		Commercial and industrial	$	5	$	38
		Commercial real estate - other		4		79
		Commercial real estate - residential ADC		11		73
		Specialized lending		―		―
	Retail:
		Direct retail lending		1		14
		Revolving credit		3		11
		Residential mortgage		5		23
		Sales finance		―		1
		Specialized lending		2		4
If a restructuring subsequently defaults, BB&T evaluates the restructuring for possible impairment. As a result, the related allowance may be increased or charge-offs may be taken to reduce the carrying value of the loan.