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In the opinion of management, the accompanying unaudited Consolidated Balance Sheets, Consolidated Statements of Income, Consolidated Statements of Changes in Shareholders’ Equity, and Consolidated Statements of Cash Flows of BB&T Corporation and subsidiaries (referred to herein as “BB&T”, the “Corporation” or the “Company”), are fair statements of BB&T’s financial position at September 30, 2009 and December 31, 2008, BB&T’s results of operations for the three and nine month periods ended September 30, 2009 and 2008, and BB&T’s changes in shareholders’ equity and cash flows for the nine month periods ended September 30, 2009 and 2008. In the opinion of management, all normal recurring adjustments necessary for a fair statement of the consolidated financial position and consolidated results of operations have been made. Management has evaluated the effect subsequent events would have on the consolidated financial statements through the time these consolidated financial statements were filed with the Securities and Exchange Commission on November 9, 2009.

These consolidated financial statements and notes are presented in accordance with the instructions for Form 10-Q. The information contained in the financial statements and footnotes included in BB&T’s Annual Report on Form 10-K for the year ended December 31, 2008 should be referred to in connection with these unaudited interim consolidated financial statements.

Effective July 1, 2009, the Financial Accounting Standards Board (“FASB”) issued new guidance relating to FASB Codification Topic 105-10: Generally Accepted Accounting Principles (“Topic 105-10”). The FASB Codification^TM is the single source of authoritative nongovernmental generally accepted accounting principles (“GAAP”) in the United States of America. Topic 105-10 is effective for financial statements that cover interim and annual periods ending after September 15, 2009. Other than resolving certain minor inconsistencies in current GAAP, Topic 105-10 is not intended to change GAAP, but rather to make it easier to review and research GAAP applicable to a particular transaction or specific accounting issue.

Nature of Operations

BB&T is a financial holding company headquartered in Winston-Salem, North Carolina. BB&T conducts operations through its North Carolina chartered commercial bank subsidiary, Branch Banking and Trust Company (“Branch Bank”), a federally chartered thrift institution, BB&T Financial, FSB (“BB&T FSB”) and its nonbank subsidiaries. Branch Bank has offices in North Carolina, South Carolina, Virginia, West Virginia, Florida, Kentucky, Georgia, Maryland, Alabama, Tennessee, Texas, Nevada, Indiana and Washington, D.C. Branch Bank provides a wide range of banking services to individuals and businesses, and offers a variety of loans to businesses and consumers. Such loans are made primarily to individuals residing in the market areas described above or to businesses located within BB&T’s geographic footprint. Branch Bank also markets a wide range of deposit services to individuals and businesses. Branch Bank offers, either directly, or through its subsidiaries, lease financing to businesses and municipal governments; factoring; discount brokerage services, annuities and mutual funds; life insurance, property and casualty insurance, health insurance and commercial general liability insurance on an agency basis and through a wholesale insurance brokerage operation; insurance premium financing; permanent financing arrangements for commercial real estate; loan servicing for third-party investors; direct consumer finance loans to individuals; trust and comprehensive wealth advisory services and association services. BB&T FSB and the direct nonbank subsidiaries of BB&T provide a variety of financial services including credit card lending, automobile lending, equipment financing, full-service securities brokerage, payroll processing, asset management and capital markets services.

Principles of Consolidation

The consolidated financial statements of BB&T include the accounts of BB&T Corporation and those subsidiaries that are majority owned by BB&T and over which BB&T exercises control. In consolidation, all significant intercompany accounts and transactions are eliminated. The results of operations of companies or assets acquired are included only from the dates of acquisition. All material wholly owned and majority owned subsidiaries are consolidated unless accounting principles generally accepted in the United States of America require otherwise.

BB&T evaluates variable interests in entities for which voting interests are not an effective means of identifying controlling financial interests. Variable interests are those in which the value of the interest changes with the fair value of the net assets of the entity exclusive of variable interests. If the results of the evaluation indicate the existence of a primary beneficiary and the entity does not effectively disperse risks among the parties involved, that primary beneficiary is required to consolidate the entity. Likewise, if the evaluation indicates that the requirements for consolidation are not met and the entity has previously been consolidated, then the entity would be deconsolidated.

BB&T has variable interests in certain entities that were not required to be consolidated, including affordable housing partnership interests, historic tax credit partnerships, other partnership interests and trusts that have issued capital securities. Please refer to Note 6 for additional disclosures regarding BB&T’s significant variable interest entities.

BB&T accounts for unconsolidated partnership investments using the equity method of accounting. In addition to affordable housing partnerships, which represent the majority of unconsolidated investments in variable interest entities, BB&T also has investments and future funding commitments to venture capital and other entities. The maximum potential exposure to losses relative to investments in variable interest entities is generally limited to the sum of the outstanding balance, future funding commitments and any related loans to the entity. Loans to these entities are underwritten in substantially the same manner as are other loans and are generally secured.

BB&T has investments in certain entities for which BB&T does not have the controlling interest. For these investments, the Company records its interest using the equity method with its portion of income or loss being recorded in other noninterest income in the Consolidated Statements of Income. BB&T periodically evaluates these investments for impairment.

Reclassifications

BB&T adopted new guidance impacting FASB Topic 810-10: Consolidation on January 1, 2009. This guidance requires that a noncontrolling interest in a subsidiary be accounted for as equity in the consolidated balance sheet and that net income include the amounts for both the parent and the noncontrolling interest, with a separate amount presented in the income statement for the noncontrolling interest share of net income. This guidance also expands the disclosure requirements and provides guidance on how to account for changes in the ownership interest of a subsidiary. In accordance with this guidance, BB&T retrospectively applied the presentation and disclosure provisions for all periods presented. The amounts reclassified in connection with the adoption of this guidance were not material to the consolidated financial statements.

In certain other instances, amounts reported in prior periods’ consolidated financial statements have been reclassified to conform to the current presentation. Such reclassifications had no effect on previously reported cash flows, shareholders’ equity or net income.

Use of Estimates in the Preparation of Financial Statements

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the financial statements 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 include the determination of the allowance for loan and lease losses and the reserve for unfunded lending commitments, determination of fair value for financial instruments, valuation of goodwill, intangible assets and other purchase accounting related adjustments, benefit plan obligations and expenses, and tax assets, liabilities and expense.

Changes in Accounting Principles and Effects of New Accounting Pronouncements

BB&T adopted new guidance impacting FASB Topic 805: Business Combinations (“Topic 805”) on January 1, 2009. This guidance requires the acquiring entity in a business combination to recognize the full fair value of assets acquired and liabilities assumed in the transaction (whether a full or partial acquisition); establishes the acquisition-date fair value as the measurement objective for all assets acquired and liabilities assumed; requires expensing of most transaction and restructuring costs; and requires the acquirer to disclose to investors and other users all of the information needed to evaluate and understand the nature and financial effect of the business combination. Disclosures required by Topic 805 are included in Note 2 to these consolidated financial statements.

In April 2009, the FASB issued new guidance impacting Topic 805. This guidance addresses application issues raised by preparers, auditors, and members of the legal profession on initial recognition and measurement, subsequent measurement and accounting, and disclosure of assets and liabilities arising from contingencies in a business combination. This guidance was effective for BB&T for business combinations entered into on or after January 1, 2009. This guidance did not have a material impact on BB&T’s consolidated financial statements.

BB&T adopted new guidance impacting FASB Topic 815-10: Derivatives and Hedging on January 1, 2009. This guidance requires that an entity provide enhanced disclosures related to derivative and hedging activities. The additional disclosures required by this guidance are included in Note 13 to these consolidated financial statements.

BB&T adopted new guidance impacting FASB Topic 350-30: Intangibles – Goodwill and Other on January 1, 2009. This amends the factors an entity should consider in developing renewal or extension assumptions used in determining the useful life of recognized intangible assets under GAAP. The adoption of this guidance was not material to the consolidated financial statements.

In December 2008, the FASB issued new guidance impacting FASB Topic 715-20: Compensation Retirement Benefits – Defined Benefit Plans – General. The objectives of this guidance are to provide users of the financial statements with more detailed information related to the major categories of plan assets, the inputs and valuation techniques used to measure the fair value of plan assets and the effect of fair value measurements using significant unobservable inputs (Level 3) on changes in plan assets for the period, as well as how investment allocation decisions are made, including the factors that are pertinent to an understanding of investment policies and strategies. The disclosures about plan assets required by this guidance will be effective for BB&T on December 31, 2009.

In April 2009, the FASB issued new guidance impacting FASB Topic 820: Fair Value Measurements and Disclosures (“Topic 820”). This provides additional guidance for estimating fair value when the volume and level of activity for the asset or liability have significantly decreased. This also includes guidance on identifying circumstances that indicate a transaction is not orderly and requires additional disclosures of valuation inputs and techniques in interim periods and defines the major security types that are required to be disclosed. This guidance was effective for BB&T on April 1, 2009. The additional disclosures required by this guidance are included in Note 12 to these consolidated financial statements.

In April 2009, the FASB issued new guidance impacting FASB Topic 320-10: Investments – Debt and Equity Securities. This guidance amends GAAP for debt securities to make the guidance more operational and to improve the presentation and disclosure of other-than-temporary impairments on debt and equity securities in the financial statements. This guidance was effective for BB&T on April 1, 2009. BB&T did not have any cumulative effect adjustment related to the adoption of this guidance and the additional disclosures required are included in the Consolidated Statements of Income and in Note 3 to these consolidated financial statements.

In April 2009, the FASB issued new guidance impacting FASB Topic 825-10: Financial Instruments. This guidance amends GAAP to require disclosures about fair value of financial instruments in interim periods, as well as in annual periods. The additional disclosures required by this guidance are included in Note 12 to these consolidated financial statements.

In May 2009, the FASB issued new guidance impacting FASB Topic 855: Subsequent Events. This provides guidance on management’s assessment of subsequent events that occur after the balance sheet date through the date that the financial statements are issued. This guidance is generally consistent with current accounting practice. In addition, it requires certain additional disclosures. This guidance was effective for periods ending after June 15, 2009 and had no impact on BB&T’s consolidated financial statements.

In June 2009, the FASB issued Statement of Financial Accounting Standards (“SFAS”) No. 166, “Accounting for Transfers of Financial Assets – an amendment of FASB Statement No. 140,” (“SFAS No. 166”). The objective of SFAS No. 166 is to improve the relevance, representational faithfulness, and comparability of the information that a reporting entity provides in its financial reports about a transfer of financial assets; the effects of a transfer on its financial position, financial performance, and cash flows; and a transferor’s continuing involvement in transferred financial assets. SFAS No. 166 is effective for financial asset transfers occurring after December 31, 2009. BB&T is currently evaluating the provisions of SFAS No. 166.

In June 2009, the FASB issued SFAS No. 167, “Amendments to FASB Interpretation No. 46(R),” (“SFAS No. 167”). The objective of this Statement is to improve financial reporting by enterprises involved with variable interest entities and to provide more relevant and reliable information to users of financial statements. SFAS No. 167 is effective as of January 1, 2010. BB&T is currently evaluating the provisions of SFAS No. 167.

In August 2009, the FASB issued new guidance impacting Topic 820. This guidance is intended to reduce ambiguity in financial reporting when measuring the fair value of liabilities. This guidance was effective for the first reporting period (including interim periods) after issuance and had no impact on BB&T’s consolidated financial statements.

In September 2009, the FASB issued new guidance impacting Topic 820. This creates a practical expedient to measure the fair value of an alternative investment that does not have a readily determinable fair value. This guidance also requires certain additional disclosures. This guidance is effective for interim and annual periods ending after December 15, 2009. BB&T is currently evaluating the new guidance.

NOTE 2. Business Combinations

9 Months Ended

Sep. 30, 2009

USD / shares

Notes to Financial Statements [Abstract]

NOTE 2. Business Combinations

NOTE 2. Business Combinations

Acquisitions

On August 14, 2009, Branch Bank entered into a purchase and assumption agreement with the Federal Deposit Insurance Corporation (“FDIC”) to acquire certain assets and assume substantially all of the deposits and certain liabilities of Colonial Bank, an Alabama state-chartered bank headquartered in Montgomery, Alabama (“Colonial Bank”).

Colonial Bank operated 357 locations in Florida, Alabama, Georgia, Texas and Nevada. Excluding the effects of purchase accounting adjustments, Branch Bank assumed approximately $19.2 billion of the deposits of Colonial Bank. Additionally, Branch Bank purchased approximately $14.3 billion in loans, $165 million of other real estate owned (“OREO”) and $3.7 billion of investment securities. In connection with the acquisition, Branch Bank also entered into loss sharing agreements with the FDIC. Approximately $14.3 billion of acquired loans and OREO and $1.1 billion of the purchased investment securities are covered by loss sharing agreements between the FDIC and Branch Bank.

Pursuant to the terms of these loss sharing agreements, the FDIC’s obligation to reimburse Branch Bank for losses with respect to certain loans, OREO, certain investment securities and other assets (collectively, “covered assets”), begins with the first dollar of loss incurred. The terms of the loss sharing agreement with respect to certain non-agency mortgage-backed securities totaling $624 million provides that Branch Bank will be reimbursed by the FDIC for 95% of any and all losses. All other covered assets are subject to a stated threshold of $5.0 billion that provides for the FDIC to reimburse Branch Bank for (1) 80% of losses incurred up to $5 billion and (2) 95% of losses in excess of $5 billion. Gains and recoveries on covered assets will offset losses, or be paid to the FDIC, at the applicable loss share percentage at the time of recovery.

The loss sharing agreement applicable to single family residential mortgage loans provides for FDIC loss sharing and Branch Bank reimbursement to the FDIC, in each case as described above, for ten years. The loss sharing agreement applicable to commercial loans and other covered assets provides for FDIC loss sharing for five years and Branch Bank reimbursement to the FDIC for gains and recoveries for a total of eight years, in each case as described above.

The loss sharing agreements are subject to certain servicing procedures as specified in the agreements. The expected reimbursements under the loss sharing agreements were recorded as an indemnification asset at their estimated fair value of $3.3 billion on the acquisition date.

On October 15, 2019, BB&T is required to pay the FDIC 55% of the excess, if any, of (i) $1 billion over (ii) the sum of (A) 25% of the total net amounts paid to BB&T under both of the loss sharing agreements (i.e., BB&T’s payments received from the FDIC for losses, offset by BB&T’s payments made to the FDIC for recoveries) plus (B) 20% of the deemed total cost to BB&T of administering the assets covered under the loss sharing agreements other than shared loss securities. The deemed total cost to BB&T of administering the covered assets is the sum of 2% of the average of the principal amount of shared loss loans and shared loss assets (other than the shared loss securities) based on the beginning and end of year balances for each of the 10 years during which the shared loss agreements are in effect. In addition, any payments made by either party with respect to the securities with a 95% loss share will be excluded from this calculation.

Branch Bank did not immediately acquire the real estate, banking facilities, furniture or equipment of Colonial Bank as part of the purchase and assumption agreement. However, Branch Bank has the option to purchase the real estate and furniture and equipment from the FDIC. The term of this option expires 170 days after August 14, 2009, unless extended by the FDIC. Acquisition costs of the real estate and furniture and equipment will be based on current appraisals and determined at a later date. Currently all banking facilities and equipment are leased from the FDIC on a month-to-month basis.

Branch Bank has determined that the acquisition of the net assets of Colonial Bank constitutes a business acquisition as defined by Topic 805. Accordingly, the assets acquired and liabilities assumed as of August 14, 2009 are presented at their fair values in the table below as required by that topic. Fair values were determined based on the requirements of Topic 820. In many cases the determination of these fair values required management to make estimates about discount rates, future expected cash flows, market conditions and other future events that are highly subjective in nature and subject to change. These fair value estimates are considered preliminary, and are subject to change for up to one year after the closing date of the acquisition as additional information relative to closing date fair values becomes available. Branch Bank and the FDIC are engaged in ongoing discussions that may impact which assets and liabilities are ultimately acquired or assumed by Branch Bank and/or the purchase price. In addition, the tax treatment of FDIC assisted acquisitions is complex and subject to interpretations that may result in future adjustments of deferred taxes as of the acquisition date.

Approximately $690 million of goodwill and a $176 million core deposit intangible were recorded in connection with this transaction. The goodwill was assigned to BB&T’s banking network segment. All of the goodwill and core deposit intangible assets recognized are deductible for income tax purposes.


	As Recorded by Colonial Bank		Fair Value Adjustments			As Recorded by BB&T
	(Dollars in millions)
Assets:
Cash, due from banks and federal funds sold	$	185	$	—		$	185
Interest-bearing deposits in banks and the Federal Reserve		876		—			876
Investment securities (including $1,145 of covered securities)		3,723		(1	)		3,722
Covered loans held for sale		1,139		—			1,139
Covered loans		12,954		(4,628	)		8,326
Non-covered loans		235		(64	)		171

Total loans		14,328		(4,692	)		9,636
Goodwill		—		690			690
Core deposit intangible		—		176			176
Covered other real estate owned		165		(28	)		137
Federal Deposit Insurance Corporation loss share indemnification asset		—		3,346			3,346
Other assets (including $36 of covered assets)		360		1			361

Total assets acquired	$	19,637	$	(508	)	$	19,129

Liabilities:
Deposits	$	19,205	$	131		$	19,336
Repurchase agreements		74		—			74
Advances from Federal Home Loan Bank of Atlanta		3,341		313			3,654
Accrued expenses and other liabilities		90		96			186

Total liabilities assumed	$	22,710	$	540		$	23,250

Due from FDIC for net liabilities assumed	$	3,073	$	1,048		$	4,121

The following is a description of the methods used to determine the fair values of significant assets and liabilities presented above.

Cash, due from banks and federal funds sold, interest-bearing deposits in banks and the Federal Reserve

The carrying amount of these assets is a reasonable estimate of fair value based on the short-term nature of these assets.

Investment Securities

Fair values for securities are based on quoted market prices, where available. If quoted market prices are not available, fair value estimates are based on observable inputs including quoted market prices for similar instruments, quoted market prices that are not in an active market or other inputs that are observable in the market. In the absence of observable inputs, fair value is estimated based on pricing models and/or discounted cash flow methodologies.

Loans

Fair values for loans were based on a discounted cash flow methodology that considered factors including the type of loan and related collateral, classification status, fixed or variable interest rate, term of loan and whether or not the loan was amortizing, and current discount rates. Loans were grouped together according to similar characteristics and were treated in the aggregate when applying various valuation techniques. The discount rates used for loans are based on current market rates for new originations of comparable loans and include adjustments for liquidity concerns. The discount rate does not include a factor for credit losses as that has been included in the estimated cash flows.

Core deposit intangible

This intangible asset represents the value of the relationships that Colonial Bank had with its deposit customers. The fair value of this intangible asset was estimated based on a discounted cash flow methodology that gave appropriate consideration to expected customer attrition rates, cost of the deposit base, reserve requirements and the net maintenance cost attributable to customer deposits.

Other real estate owned

OREO is presented at the estimated present value that management expects to receive when the property is sold, net of related costs of disposal.

FDIC loss share indemnification asset

This loss sharing asset is measured separately from the related covered asset as it is not contractually embedded in the assets and is not transferable with the assets should Branch Bank choose to dispose of them. Fair value was estimated using projected cash flows related to the loss sharing agreements based on the expected reimbursements for losses and the applicable loss sharing percentages. These expected reimbursements do not include reimbursable amounts related to future covered expenditures. These cash flows were discounted to reflect the uncertainty of the timing and receipt of the loss sharing reimbursement from the FDIC.

Deferred taxes

Deferred taxes totaling approximately $24 million, which are reflected in the other assets line in the table above, relate to a difference between the financial statement and tax basis of the acquired loans and loss share indemnification asset. Deferred taxes are reported based upon the principles in FASB Topic 740: Income Taxes, and are calculated based on the estimated federal and state income tax rates currently in effect for BB&T.

Deposits

The fair values used for the demand and savings deposits that comprise the transaction accounts acquired, by definition equal the amount payable on demand at the acquisition date. The fair values for time deposits are estimated using a discounted cash flow calculation that applies interest rates currently being offered to the interest rates embedded on such time deposits.

Advances from Federal Home Loan Bank of Atlanta

The fair values of Federal Home Loan Bank (FHLB) advances were based on pricing supplied by the FHLB.

The operating results of BB&T for the period ended September 30, 2009 include the operating results produced by the acquired assets and assumed liabilities for the period of August 15, 2009 to September 30, 2009 and were not material to the three or nine months ended September 30, 2009. Due primarily to BB&T acquiring only certain assets and liabilities of Colonial Bank, the significant amount of fair value adjustments, and the FDIC loss sharing agreements now in place, historical results of Colonial Bank are not material to BB&T’s results, and thus no pro forma information is presented.

On October 9, 2009, BB&T entered into a definitive agreement to sell certain Nevada branch locations that were acquired from Colonial Bank and approximately $800 million in deposits. The sale is expected to close in the first quarter of 2010, subject to regulatory approval.

Other Acquisitions

During the first nine months of 2009, BB&T acquired certain assets of an insurance premium financing business and two commercial real estate servicing businesses. Approximately $9 million of goodwill and $6 million of identifiable intangibles were recorded in connection with these acquisitions.

NOTE 3. Securities

9 Months Ended

Sep. 30, 2009

USD / shares

Notes to Financial Statements [Abstract]

NOTE 3. Securities

NOTE 3. Securities

The amortized cost and approximate fair values of securities available for sale were as follows:


	September 30, 2009
	Amortized Cost		Gross Unrealized				Fair Value
	Amortized Cost		Gains		Losses		Fair Value
	(Dollars in millions)
Securities available for sale:
U.S. government-sponsored entities (GSE)	$	2,643	$	24	$	—	$	2,667
Mortgage-backed securities issued by GSE		25,880		326		54		26,152
States and political subdivisions		2,238		99		128		2,209
Non-agency mortgage-backed securities		1,393		—		332		1,061
Equity and other securities		849		20		1		868
Covered securities		1,152		35		11		1,176

Total securities available for sale	$	34,155	$	504	$	526	$	34,133


	December 31, 2008
	Amortized Cost		Gross Unrealized				Fair Value
	Amortized Cost		Gains		Losses		Fair Value
	(Dollars in millions)
Securities available for sale:
U.S. government-sponsored entities (GSE)	$	1,320	$	13	$	—	$	1,333
Mortgage-backed securities issued by GSE		27,117		338		25		27,430
States and political subdivisions		2,413		8		344		2,077
Non-agency mortgage-backed securities		1,573		—		475		1,098
Equity and other securities		937		2		34		905

Total securities available for sale	$	33,360	$	361	$	878	$	32,843

Covered securities include $861 million of non-agency mortgage-backed securities and $315 million of municipal securities acquired as part of the Colonial Bank transaction. All covered securities are covered by one of the FDIC loss share agreements as further discussed in Note 2 to these consolidated financial statements.

At September 30, 2009 and December 31, 2008, securities with carrying value of approximately $15.2 billion and $16.1 billion were pledged to secure municipal deposits, securities sold under agreements to repurchase, other borrowings, and for other purposes as required or permitted by law.

BB&T had certain investments in marketable debt securities and mortgage-backed securities issued by Fannie Mae and Freddie Mac that exceeded ten percent of shareholders’ equity at September 30, 2009. The Fannie Mae investments had total amortized cost and fair values of $17.7 billion and $17.9 billion, respectively at September 30, 2009, while Freddie Mac investments had total amortized cost and fair values of $7.0 billion and $7.1 billion, respectively.

At September 30, 2009, non-agency mortgage-backed securities primarily consisted of residential mortgage-backed securities. Equity securities include investments in stock issued by the FHLB of Atlanta. At September 30, 2009 and December 31, 2008, BB&T held $656 million and $479 million, respectively, of investments in FHLB stock.

Proceeds from sales of securities available for sale during the first nine months of 2009 and 2008 were $17.1 billion and $12.4 billion, respectively. Gross gains of $241 million and gross losses of $1 million were realized in 2009 and $136 million of gross gains and $29 million of gross losses were realized in 2008.

The amortized cost and estimated fair value of the debt securities portfolio at September 30, 2009, by contractual maturity, are shown in the accompanying table. The expected life of mortgage-backed securities will differ from contractual maturities because borrowers may have the right to call or prepay the underlying mortgage loans with or without call or prepayment penalties. For purposes of the maturity table, mortgage-backed securities, which are not due at a single maturity date, have been included in maturity groupings based on the contractual maturity.


	September 30, 2009
	Available for Sale
	Amortized Cost		Fair Value
	(Dollars in millions)
Debt Securities:
Due in one year or less	$	617	$	619
Due after one year through five years		222		228
Due after five years through ten years		3,651		3,745
Due after ten years		28,809		28,666

Total debt securities		33,299		33,258
Total securities with no stated maturity		856		875

Total securities	$	34,155	$	34,133

The following tables reflect the gross unrealized losses and fair values of BB&T’s investments, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position, at the dates presented.


	September 30, 2009
	Less than 12 months				12 months or more				Total
	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
	(Dollars in millions)
Securities:
U.S. government-sponsored entities (GSE)	$	1	$	—	$	—	$	—	$	1	$	—
Mortgage-backed securities issued by GSE		9,114		51		611		3		9,725		54
States and political subdivisions		224		70		289		58		513		128
Non-agency mortgage-backed securities		185		74		858		258		1,043		332
Equity and other securities		4		1		1		—		5		1
Covered securities		565		11		—		—		565		11

Total temporarily impaired securities	$	10,093	$	207	$	1,759	$	319	$	11,852	$	526


	December 31, 2008
	Less than 12 months				12 months or more				Total
	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
	(Dollars in millions)
Securities:
Mortgage-backed securities issued by GSE	$	4,388	$	24	$	191	$	1	$	4,579	$	25
States and political subdivisions		1,174		174		328		170		1,502		344
Non-agency mortgage-backed securities		629		235		469		240		1,098		475
Equity and other securities		159		33		20		1		179		34

Total temporarily impaired securities	$	6,350	$	466	$	1,008	$	412	$	7,358	$	878

BB&T periodically evaluates available-for-sale securities for other-than-temporary impairment. Based on its evaluations during the first nine months of 2009, BB&T recorded $40 million of other-than-temporary impairments related to certain debt and equity securities. As of September 30, 2009, BB&T had recognized $1 million of other-than-temporary impairments on certain debt securities where a portion of the impairment was recorded in other comprehensive income.

On September 30, 2009, BB&T held certain investment securities having continuous unrealized loss positions for more than 12 months. As of September 30, 2009, the unrealized losses on these securities totaled $319 million. Substantially all of these losses were in non-agency mortgage-backed and municipal securities. At September 30, 2009, all of the available-for-sale debt securities in an unrealized loss position were investment grade with the exception of (a) one auction rate security with a book value of $1 million; (b) two municipal bonds with a book value of $9 million and (c) eleven non-agency mortgage-backed securities with a book value of $890 million. All of the non-investment grade securities referenced above were initially investment grade and have been downgraded since purchase. BB&T evaluated all of its debt securities for credit impairment. During the third quarter of 2009, BB&T determined that the non-investment grade auction rate security had credit losses evident and recorded other-than-temporary impairment. As of September 30, 2009, BB&T’s evaluation of the other securities with continuous unrealized losses indicated that there were no credit losses evident. Furthermore, BB&T does not intend to sell and it is more likely than not that the Company will not be required to sell these debt securities before the anticipated recovery of the amortized cost basis. See the “Summary Analysis Supporting Conclusions” section below for further details regarding BB&T’s below investment grade securities with significant unrealized losses.

BB&T conducts periodic reviews to identify and evaluate each investment that has an unrealized loss for other-than-temporary impairment. An unrealized loss exists when the current fair value of an individual security is less than its amortized cost basis. Unrealized losses that are determined to be temporary in nature are recorded, net of tax, in accumulated other comprehensive income for available-for-sale securities.

Factors considered in determining whether a loss is temporary include:

•

The financial condition and near–term prospects of the issuer, including any specific events that may influence the operations of the issuer;

•

BB&T’s intent to sell and whether it is more likely than not that the Company will be required to sell these debt securities before the anticipated recovery of the amortized cost basis;

•

The length of the time and the extent to which the market value has been less than cost;

•

Whether the decline in fair value is attributable to specific conditions, such as conditions in an industry or in a geographic area;

•

Whether a debt security has been downgraded by a rating agency;

•

Whether the financial condition of the issuer has deteriorated;

•

The seniority of the security;

•

Whether dividends have been reduced or eliminated, or scheduled interest payments on debt securities have not been made; and

•

Any other relevant available information.

For certain U.S. mortgage-backed securities (and in particular for non-agency Alt-A, Prime and other mortgage-backed securities that have significant unrealized losses as a percentage of amortized cost), credit impairment is assessed using a cash flow model that estimates the cash flows on the underlying mortgage pools, using security-specific structure information. The model estimates cash flows from the underlying mortgage loan pools and distributes those cash flows to the various tranches of securities, considering the transaction structure and any subordination and credit enhancements that exist in each structure. The cash flow model projects the remaining cash flows using a number of assumptions, including default rates, prepayment rates and recovery rates (on foreclosed properties).

Management reviews the result of the cash flow model, internal credit analysis and other market observable information in its estimation of possible future credit losses. If management does not expect to recover the entire amortized cost basis of a mortgage-backed security, the Company records other-than-temporary impairment equal to the amount of expected credit losses in the mortgage-backed security.

Where a mortgage-backed security is not deemed to be credit impaired, management performs additional analysis to assess whether it intends to sell and it is more likely than not that the Company will be required to sell these debt securities before anticipated recovery of the amortized cost basis. In making this determination, BB&T considers its expected liquidity and capital needs, including its asset/liability management needs, forecasts, strategies and other relevant information.

Summary Analysis Supporting Conclusions

In all instances, the senior holders of these securities have excess value through subordination inherent in the structure and the cash flow valuation was higher than amortized cost. The following table presents a detailed analysis of non-investment grade securities with significant unrealized losses that are not covered by a loss sharing arrangement. The expected loss represents the remaining current losses plus estimated future losses on the underlying mortgage pools. The subordination coverage of expected losses represents the amount of losses the subordinate security holders are obligated to absorb (original subordination less losses incurred to date) divided by the expected losses.

Non-investment grade securities with significant unrealized losses

As of September 30, 2009

(Dollars in millions)


Security	Amortized Cost		Fair Value		Unrealized Loss			Moody’s	Credit Rating S&P	Fitch	Expected Loss		Subordination Coverage of Expected Loss	Cash Flow Valuation
Security	Amortized Cost		Fair Value		Unrealized Loss			Moody’s	Credit Rating S&P	Fitch	Expected Loss		Subordination Coverage of Expected Loss	Cash Flow Valuation
RMBS 1	$	64	$	51	$	(13	)		CCC	CC	2.60	%	1.5x	$	74
RMBS 2		132		77		(55	)		CCC	CCC	2.60	%	1.5x		153
RMBS 3		64		19		(45	)	Caa1	CCC	CC	5.30	%	1.0x		73
RMBS 4		64		51		(13	)	Ba2	B	CCC	1.70	%	2.5x		74
RMBS 5		119		99		(20	)	Caa2	CCC		6.00	%	.9x		135
RMBS 6		51		38		(13	)	B3	CCC		7.50	%	.8x		59
RMBS 7		165		124		(41	)	Caa1	CCC		7.50	%	.8x		191
RMBS 8		59		38		(21	)	Caa2		C	8.90	%	.6x		68
RMBS 9		123		72		(51	)		CCC	CCC	3.30	%	1.9x		143

NOTE 4. Loans and Leases

9 Months Ended

Sep. 30, 2009

USD / shares

Notes to Financial Statements [Abstract]

NOTE 4. Loans and Leases

NOTE 4. Loans and Leases

The following table provides a breakdown of BB&T’s loan portfolio as of September 30, 2009 and December 31, 2008:


	September 30, 2009		December 31, 2008
	(Dollars in millions)
Loans and leases, net of unearned income:
Commercial loans and leases	$	49,591	$	50,480
Sales finance		6,493		6,354
Revolving credit		1,929		1,777
Direct retail		14,482		15,454
Residential mortgage loans		15,463		17,091
Specialized lending		7,497		6,089
Other acquired loans		141		—

Total loans and leases held for investment (excluding covered loans)		95,596		97,245
Covered loans		8,305		—

Total loans and leases held for investment		103,901		97,245
Loans held for sale		3,126		1,424

Total loans and leases	$	107,027	$	98,669

Covered loans represent loans acquired from the FDIC subject to one of the loss sharing agreements. Other acquired loans represent consumer loans acquired from the FDIC that are not subject to one of the loss sharing agreements.

BB&T evaluated purchased loans for impairment in accordance with the provisions of FASB Topic 310-30: Loans and Debt Securities Acquired with Deteriorated Credit Quality (“Topic 310-30”). Purchased loans with evidence of credit deterioration since origination and for which it is probable that all contractually required payments will not be collected are considered impaired. The following table reflects the carrying value of all purchased impaired and nonimpaired loans as of September 30, 2009:


	Purchased Impaired Loans		Purchased Nonimpaired Loans		Total
	(Dollars in millions)
Residential mortgage loans	$	819	$	899	$	1,718
Commercial real estate loans		2,653		2,780		5,433
Commercial loans		93		1,061		1,154

Total covered loans		3,565		4,740		8,305
Other acquired loans		17		124		141

Total	$	3,582	$	4,864	$	8,446

As of August 14, 2009, the preliminary estimate of the contractually required payments receivable for all purchased impaired loans acquired in the Colonial Bank transaction, including those covered and not covered under loss sharing agreements with the FDIC, were $8.0 billion, the cash flows expected to be collected were $4.4 billion including interest, and the estimated fair value of the loans was $3.6 billion. These amounts were determined based upon the estimated remaining life of the underlying loans, which includes the effects of estimated prepayments. At September 30, 2009, none of these loans were classified as nonperforming assets. Therefore, interest income, through accretion of the difference between the carrying amount of the loans and the expected cash flows, is being recognized on all purchased impaired loans. There was no allowance for credit losses related to the purchased impaired loans at September 30, 2009. Because of the short time period between the execution of the Purchase and Assumption Agreement and September 30, 2009, certain amounts related to the purchased impaired loans are preliminary estimates. BB&T expects to finalize its analysis of these loans during the fourth quarter of 2009, and, therefore, adjustments to the estimated amounts may occur.

Changes in the carrying amount and accretable yield for purchased impaired and nonimpaired loans were as follows for both the three and nine months ended September 30, 2009:

Purchased Impaired

Purchased Nonimpaired(1)

Accretable
Yield

Carrying
Amount
of Loans

Accretable
Yield

Carrying
Amount of
Loans