Company Quick10K Filing
Quick10K
BB&T
Closing Price ($) Shares Out (MM) Market Cap ($MM)
$51.78 763 $39,530
10-Q 2018-09-30 Quarter: 2018-09-30
10-Q 2018-06-30 Quarter: 2018-06-30
10-Q 2018-03-31 Quarter: 2018-03-31
10-K 2017-12-31 Annual: 2017-12-31
10-Q 2017-09-30 Quarter: 2017-09-30
10-Q 2017-06-30 Quarter: 2017-06-30
10-Q 2017-03-31 Quarter: 2017-03-31
10-K 2016-12-31 Annual: 2016-12-31
10-Q 2016-09-30 Quarter: 2016-09-30
10-Q 2016-06-30 Quarter: 2016-06-30
10-Q 2016-03-31 Quarter: 2016-03-31
10-K 2015-12-31 Annual: 2015-12-31
8-K 2019-02-07 Enter Agreement, Officers, Exhibits
8-K 2019-02-07 Other Events, Exhibits
8-K 2019-01-29 Amend Bylaw, Exhibits
8-K 2019-01-17 Earnings, Exhibits
8-K 2018-12-31 Officers
8-K 2018-12-10 Regulation FD, Exhibits
8-K 2018-12-06 Other Events, Exhibits
8-K 2018-10-22 Officers, Exhibits
8-K 2018-10-18 Earnings, Exhibits
8-K 2018-09-13 Regulation FD, Exhibits
8-K 2018-08-07 Regulation FD, Exhibits
8-K 2018-07-19 Earnings, Exhibits
8-K 2018-06-28 Other Events
8-K 2018-06-05 Other Events, Exhibits
8-K 2018-06-01 Other Events, Exhibits
8-K 2018-04-24 Shareholder Vote, Exhibits
8-K 2018-04-19 Earnings, Exhibits
8-K 2018-01-18 Earnings, Exhibits
8-K 2017-12-31
ZION Zions Bancorporation
CPF Central Pacific Financial
MSBI Midland States Bancorp
CATC Cambridge Bancorp
CFFI C & F Financial
OPBK OP Bancorp
STND Standard Avb Financial
CBAN Colony Bankcorp
SSFN Stewardship Financial
OPHC Optimumbank Holdings
BBT 2018-09-30
Item 1. Financial Statements
Note 1. Basis of Presentation
Note 2. Securities
Note 3. Loans and Acl
Note 4. Goodwill and Other Intangible Assets
Note 5. Loan Servicing
Note 6. Deposits
Note 7. Long-Term Debt
Note 8. Shareholders' Equity
Note 9. Aoci
Note 10. Income Taxes
Note 11. Benefit Plans
Note 12. Commitments and Contingencies
Note 13. Fair Value Disclosures
Note 14. Derivative Financial Instruments
Note 15. Computation of Eps
Note 16. Operating Segments
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
Item 4. Controls and Procedures
Part II. Other Information
Item 1A. Risk Factors
EX-12 ex12-earn2fixedcharge_3q18.htm
EX-31.1 ex311-certification_3q18.htm
EX-31.2 ex312-certification_3q18.htm
EX-32 ex32-certification_3q18.htm

BB&T Earnings 2018-09-30

BBT 10Q Quarterly Report

Balance SheetIncome StatementCash Flow

10-Q 1 form10-q_3q18.htm 10-Q Document


 
 
 
 
 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_____________________________
FORM 10-Q
_____________________________

Quarterly Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the quarterly period ended: September 30, 2018
Commission File Number: 1-10853
_____________________________
BB&T CORPORATION
(Exact name of registrant as specified in its charter)
_____________________________
North Carolina
56-0939887
(State or other jurisdiction of incorporation or organization)
(I.R.S. Employer Identification No.)
200 West Second Street
Winston-Salem, North Carolina
27101
(Address of principal executive offices)
(Zip Code)
(336) 733-2000
(Registrant's telephone number, including area code)
______________________________
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  ý   No  ¨
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes  ý   No  ¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company" and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Large accelerated filer
ý
 
Accelerated filer
¨
Non-accelerated filer
¨
 
Smaller reporting company
¨
 
 
 
Emerging growth company
¨
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes  ¨   No  ý
At September 30, 2018, 770,619,748 shares of the registrant's common stock, $5 par value, were outstanding.
 
 
 
 
 



TABLE OF CONTENTS
BB&T CORPORATION
FORM 10-Q
September 30, 2018
 
 
Page No.
PART I - Financial Information
 
Glossary of Defined Terms
 
Forward-Looking Statements
Item 1.
Financial Statements
 
 
Consolidated Balance Sheets (Unaudited)
 
Consolidated Statements of Income (Unaudited)
 
Consolidated Statements of Comprehensive Income (Unaudited)
 
Consolidated Statements of Changes in Shareholders' Equity (Unaudited)
 
Consolidated Statements of Cash Flows (Unaudited)
 
Notes to Consolidated Financial Statements (Unaudited)
 
 
Note 1. Basis of Presentation
 
Note 2. Securities
 
Note 3. Loans and ACL
 
Note 4. Goodwill and Other Intangible Assets
 
Note 5. Loan Servicing
 
Note 6. Deposits
 
Note 7. Long-Term Debt
 
Note 8. Shareholders' Equity
 
Note 9. AOCI
 
Note 10. Income Taxes
 
Note 11. Benefit Plans
 
Note 12. Commitments and Contingencies
 
Note 13. Fair Value Disclosures
 
Note 14. Derivative Financial Instruments
 
Note 15. Computation of EPS
 
Note 16. Operating Segments
Item 2.
Management's Discussion and Analysis of Financial Condition and Results of Operations
Item 3.
Quantitative and Qualitative Disclosures About Market Risk (see Market Risk Management)
Item 4.
Controls and Procedures
PART II - Other Information
Item 1.
Legal Proceedings (see Note 12)
Item 1A.
Risk Factors
Item 2.
Unregistered Sales of Equity Securities and Use of Proceeds (see Share Repurchase Activity)
Item 3.
Defaults Upon Senior Securities - (none)
 
Item 4.
Mine Safety Disclosures - (not applicable)
 
Item 5.
Other Information - (none to be reported)
 
Item 6.
Exhibits




Glossary of Defined Terms
The following terms may be used throughout this Report, including the consolidated financial statements and related notes. 
Term
Definition
2018 Repurchase Plan
Plan for the repurchase of up to $1.7 billion of BB&T's common stock for the one-year period ended June 30, 2019
ACL
Allowance for credit losses
AFS
Available-for-sale
Agency MBS
Mortgage-backed securities issued by a U.S. government agency or GSE
ALLL
Allowance for loan and lease losses
AOCI
Accumulated other comprehensive income (loss)
Basel III
Global regulatory standards on bank capital adequacy and liquidity published by the BCBS
BB&T
BB&T Corporation and subsidiaries
BCBS
Basel Committee on Banking Supervision
BHC
Bank holding company
BHCA
Bank Holding Company Act of 1956, as amended
Branch Bank
Branch Banking and Trust Company
BSA/AML
Bank Secrecy Act/Anti-Money Laundering
BU
Business Unit
CB-Commercial
Community Banking Commercial, an operating segment
CB-Retail
Community Banking Retail and Consumer Finance, an operating segment
CCAR
Comprehensive Capital Analysis and Review
CD
Certificate of deposit
CDI
Core deposit intangible assets
CEO
Chief Executive Officer
CFO
Chief Financial Officer
CET1
Common equity Tier 1
CFPB
Consumer Financial Protection Bureau
CMO
Collateralized mortgage obligation
Colonial
Collectively, certain assets and liabilities of Colonial Bank acquired by BB&T in 2009
Company
BB&T Corporation and subsidiaries (interchangeable with "BB&T" above)
CRA
Community Reinvestment Act of 1977
CRE
Commercial real estate
CRO
Chief Risk Officer
CRMC
Credit Risk Management Committee
CROC
Compliance Risk Oversight Committee
DIF
Deposit Insurance Fund administered by the FDIC
Dodd-Frank Act
Dodd-Frank Wall Street Reform and Consumer Protection Act
DOL
United States Department of Labor
EPS
Earnings per common share
EVE
Economic value of equity
Exchange Act
Securities Exchange Act of 1934, as amended
FASB
Financial Accounting Standards Board
FATCA
Foreign Account Tax Compliance Act
FDIC
Federal Deposit Insurance Corporation
FHA
Federal Housing Administration
FHC
Financial Holding Company
FHLB
Federal Home Loan Bank
FHLMC
Federal Home Loan Mortgage Corporation
FINRA
Financial Industry Regulatory Authority
FNMA
Federal National Mortgage Association
FRB
Board of Governors of the Federal Reserve System
FS&CF
Financial Services and Commercial Finance, an operating segment
FTE
Full-time equivalent employee
FTP
Funds transfer pricing
GAAP
Accounting principles generally accepted in the United States of America
GNMA
Government National Mortgage Association
Grandbridge
Grandbridge Real Estate Capital, LLC

BB&T Corporation 1



Term
Definition
GSE
U.S. government-sponsored enterprise
HFI
Held for investment
HMDA
Home Mortgage Disclosure Act
HTM
Held-to-maturity
IDI
Insured depository institution
IH&PF
Insurance Holdings and Premium Finance, an operating segment
IPV
Independent price verification
IRC
Internal Revenue Code
IRS
Internal Revenue Service
ISDA
International Swaps and Derivatives Association, Inc.
LCR
Liquidity Coverage Ratio
LHFS
Loans held for sale
LIBOR
London Interbank Offered Rate
MBS
Mortgage-backed securities
MRLCC
Market Risk, Liquidity and Capital Committee
MSR
Mortgage servicing right
MSRB
Municipal Securities Rulemaking Board
N/A
Not applicable
NCCOB
North Carolina Office of the Commissioner of Banks
NIM
Net interest margin, computed on a TE basis
NM
Not meaningful
NPA
Nonperforming asset
NPL
Nonperforming loan
NSFR
Net stable funding ratio
NYSE
NYSE Euronext, Inc.
OAS
Option adjusted spread
OCI
Other comprehensive income (loss)
OPEB
Other post-employment benefit
OREO
Other real estate owned
ORMC
Operational Risk Management Committee
OT&C
Other, Treasury and Corporate
OTTI
Other-than-temporary impairment
Parent Company
BB&T Corporation, the parent company of Branch Bank and other subsidiaries
Patriot Act
Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001
PCI
Purchased credit impaired loans
PSU
Performance share units
Re-REMICs
Re-securitizations of Real Estate Mortgage Investment Conduits
Regions Insurance
Regions Insurance Group, acquired by BB&T effective July 2, 2018
RMC
Risk Management Committee
RMO
Risk Management Organization
RSU
Restricted stock unit
RUFC
Reserve for unfunded lending commitments
SBIC
Small Business Investment Company
SEC
Securities and Exchange Commission
Short-Term Borrowings
Federal funds purchased, securities sold under repurchase agreements and other short-term borrowed funds with original maturities of less than one year
Simulation
Interest sensitivity simulation analysis
TBA
To be announced
TDR
Troubled debt restructuring
TE
Taxable-equivalent
U.S.
United States of America
U.S. Treasury
United States Department of the Treasury
UPB
Unpaid principal balance
VaR
Value-at-risk
VIE
Variable interest entity

2 BB&T Corporation


Forward-Looking Statements
 
This Quarterly Report on Form 10-Q contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995, regarding the financial condition, results of operations, business plans and the future performance of BB&T that are based on the beliefs and assumptions of the management of BB&T and the information available to management at the time that these disclosures were prepared. Words such as "anticipates," "believes," "estimates," "expects," "forecasts," "intends," "plans," "projects," "may," "will," "should," "could," and other similar expressions are intended to identify these forward-looking statements. Such statements are subject to factors that could cause actual results to differ materially from anticipated results. Such factors include, but are not limited to, the following:
l 
general economic or business conditions, either nationally or regionally, may be less favorable than expected, resulting in, among other things, slower deposit and/or asset growth, and a deterioration in credit quality and/or a reduced demand for credit, insurance or other services;
l 
disruptions to the national or global financial markets, including the impact of a downgrade of U.S. government obligations by one of the credit ratings agencies, the economic instability and recessionary conditions in Europe, the eventual exit of the United Kingdom from the European Union;
l 
changes in the interest rate environment, including interest rate changes made by the Federal Reserve, as well as cash flow reassessments may reduce net interest margin and/or the volumes and values of loans and deposits as well as the value of other financial assets and liabilities;
l 
competitive pressures among depository and other financial institutions may increase significantly;
l 
legislative, regulatory or accounting changes, including changes resulting from the adoption and implementation of the Dodd-Frank Act may adversely affect the businesses in which BB&T is engaged;
l 
local, state or federal taxing authorities may take tax positions that are adverse to BB&T;
l 
a reduction may occur in BB&T's credit ratings;
l 
adverse changes may occur in the securities markets;
l 
competitors of BB&T may have greater financial resources or develop products that enable them to compete more successfully than BB&T and may be subject to different regulatory standards than BB&T;
l 
cybersecurity risks could adversely affect BB&T's business and financial performance or reputation, and BB&T could be liable for financial losses incurred by third parties due to breaches of data shared between financial institutions;
l 
higher-than-expected costs related to information technology infrastructure or a failure to successfully implement future system enhancements could adversely impact BB&T's financial condition and results of operations and could result in significant additional costs to BB&T;
l 
natural or other disasters, including acts of terrorism, could have an adverse effect on BB&T, materially disrupting BB&T's operations or the ability or willingness of customers to access BB&T's products and services;
l 
costs related to the integration of the businesses of BB&T and its merger partners may be greater than expected;
l 
failure to execute on strategic or operational plans, including the ability to successfully complete and/or integrate mergers and acquisitions or fully achieve expected cost savings or revenue growth associated with mergers and acquisitions within the expected time frames could adversely impact financial condition and results of operations;
l 
significant litigation and regulatory proceedings could have a material adverse effect on BB&T;
l 
unfavorable resolution of legal proceedings or other claims and regulatory and other governmental investigations or other inquiries could result in negative publicity, protests, fines, penalties, restrictions on BB&T's operations or ability to expand its business and other negative consequences, all of which could cause reputational damage and adversely impact BB&T's financial conditions and results of operations;
l 
risks resulting from the extensive use of models;
l 
risk management measures may not be fully effective;
l 
deposit attrition, customer loss and/or revenue loss following completed mergers/acquisitions may exceed expectations; and
l 
widespread system outages, caused by the failure of critical internal systems or critical services provided by third parties, could adversely impact BB&T's financial condition and results of operations.

These and other risk factors are more fully described in this report and in BB&T's Annual Report on Form 10-K for the year ended December 31, 2017 under the sections entitled "Item 1A. Risk Factors" and from time to time, in other filings with the SEC. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this report. Actual results may differ materially from those expressed in or implied by any forward-looking statement. Except to the extent required by applicable law or regulation, BB&T undertakes no obligation to revise or update publicly any forward-looking statements for any reason. Readers should, however, consult any further disclosures of a forward-looking nature BB&T may make in any subsequent Annual Reports on Form 10‑K, Quarterly Reports on Form 10‑Q, or Current Reports on Form 8‑K.


BB&T Corporation 3



ITEM 1. FINANCIAL STATEMENTS
CONSOLIDATED BALANCE SHEETS
BB&T CORPORATION AND SUBSIDIARIES
Unaudited
(Dollars in millions, except per share data, shares in thousands)
September 30, 2018
 
December 31, 2017
Assets
 
 
 
Cash and due from banks
$
2,123

 
$
2,243

Interest-bearing deposits with banks
748

 
343

Cash equivalents
135

 
127

Restricted cash
147

 
370

AFS securities at fair value
24,286

 
24,547

HTM securities (fair value of $20,263 and $22,837 at September 30, 2018 and December 31, 2017, respectively)
21,082

 
23,027

LHFS at fair value
1,022

 
1,099

Loans and leases
146,690

 
143,701

ALLL
(1,538
)
 
(1,490
)
Loans and leases, net of ALLL
145,152

 
142,211

Premises and equipment
2,154

 
2,055

Goodwill
9,832

 
9,618

CDI and other intangible assets
789

 
711

MSRs at fair value
1,179

 
1,056

Other assets
14,236

 
14,235

Total assets
$
222,885

 
$
221,642

Liabilities
 
 
 
Deposits
$
154,556

 
$
157,371

Short-term borrowings
9,652

 
4,938

Long-term debt
23,236

 
23,648

Accounts payable and other liabilities
5,434

 
5,990

Total liabilities
192,878

 
191,947

Commitments and contingencies (Note 12)

 

Shareholders' Equity
 
 
 
Preferred stock, $5 par, liquidation preference of $25,000 per share
3,053

 
3,053

Common stock, $5 par
3,853

 
3,910

Additional paid-in capital
7,221

 
7,893

Retained earnings
17,673

 
16,259

AOCI, net of deferred income taxes
(1,852
)
 
(1,467
)
Noncontrolling interests
59

 
47

Total shareholders' equity
30,007

 
29,695

Total liabilities and shareholders' equity
$
222,885

 
$
221,642

Common shares outstanding
770,620

 
782,006

Common shares authorized
2,000,000

 
2,000,000

Preferred shares outstanding
126

 
126

Preferred shares authorized
5,000

 
5,000


The accompanying notes are an integral part of these consolidated financial statements.

4 BB&T Corporation



CONSOLIDATED STATEMENTS OF INCOME
BB&T CORPORATION AND SUBSIDIARIES
Unaudited
(Dollars in millions, except per share data, shares in thousands)
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
 
2018
 
2017
 
2018
 
2017
Interest Income
 
 
 
 
 
 
 
 
Interest and fees on loans and leases
 
$
1,772

 
$
1,591

 
$
5,064

 
$
4,632

Interest and dividends on securities
 
283

 
276

 
868

 
806

Interest on other earning assets
 
14

 
10

 
52

 
38

Total interest income
 
2,069

 
1,877

 
5,984

 
5,476

Interest Expense
 
 
 
 
 
 
 
 
Interest on deposits
 
172

 
91

 
438

 
240

Interest on short-term borrowings
 
29

 
15

 
72

 
22

Interest on long-term debt
 
181

 
124

 
497

 
323

Total interest expense
 
382

 
230

 
1,007

 
585

Net Interest Income
 
1,687

 
1,647

 
4,977

 
4,891

Provision for credit losses
 
135

 
126

 
420

 
409

Net Interest Income After Provision for Credit Losses
 
1,552

 
1,521

 
4,557

 
4,482

Noninterest Income
 
 
 
 
 
 
 
 
Insurance income
 
448

 
397

 
1,365

 
1,336

Service charges on deposits
 
183

 
179

 
527

 
523

Mortgage banking income
 
79

 
114

 
272

 
311

Investment banking and brokerage fees and commissions
 
116

 
103

 
338

 
299

Trust and investment advisory revenues
 
71

 
68

 
215

 
206

Bankcard fees and merchant discounts
 
72

 
70

 
213

 
204

Checkcard fees
 
56

 
54

 
165

 
159

Operating lease income
 
37

 
36

 
110

 
109

Income from bank-owned life insurance
 
27

 
28

 
88

 
89

Other income
 
150

 
117

 
347

 
321

Securities gains (losses), net
 
 
 
 
 
 
 
 
Gross realized gains
 

 
17

 
1

 
17

Gross realized losses
 

 
(17
)
 

 
(17
)
OTTI charges
 

 

 

 

Non-credit portion recognized in OCI
 

 

 

 

Total securities gains (losses), net
 

 

 
1

 

Total noninterest income
 
1,239

 
1,166

 
3,641

 
3,557

Noninterest Expense
 
 
 
 
 
 
 
 
Personnel expense
 
1,104

 
1,051

 
3,217

 
3,154

Occupancy and equipment expense
 
189

 
198

 
570

 
589

Software expense
 
70

 
62

 
202

 
177

Outside IT services
 
33

 
34

 
97

 
122

Regulatory charges
 
37

 
40

 
116

 
115

Amortization of intangibles
 
33

 
34

 
97

 
108

Loan-related expense
 
28

 
32

 
83

 
98

Professional services
 
33

 
27

 
95

 
87

Merger-related and restructuring charges, net
 
18

 
47

 
70

 
93

Loss (gain) on early extinguishment of debt
 

 

 

 
392

Other expense
 
197

 
220

 
601

 
654

Total noninterest expense
 
1,742

 
1,745

 
5,148

 
5,589

Earnings
 
 
 
 
 
 
 
 
Income before income taxes
 
1,049

 
942

 
3,050

 
2,450

Provision for income taxes
 
210

 
294

 
598

 
702

Net income
 
839

 
648

 
2,452

 
1,748

Noncontrolling interests
 
7

 
8

 
13

 
12

Dividends on preferred stock
 
43

 
43

 
130

 
130

Net income available to common shareholders
 
$
789

 
$
597

 
$
2,309

 
$
1,606

Basic EPS
 
$
1.02

 
$
0.75

 
$
2.98

 
$
2.00

Diluted EPS
 
$
1.01

 
$
0.74

 
$
2.94

 
$
1.97

Cash dividends declared per share
 
$
0.405

 
$
0.330

 
$
1.155

 
$
0.930

Basic weighted average shares outstanding
 
771,562

 
794,558

 
775,642

 
804,424

Diluted weighted average shares outstanding
 
781,867

 
806,124

 
786,140

 
816,029


The accompanying notes are an integral part of these consolidated financial statements.

BB&T Corporation 5



CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
BB&T CORPORATION AND SUBSIDIARIES
Unaudited
(Dollars in millions)
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
 
2018
 
2017
 
2018
 
2017
Net income
 
$
839

 
$
648

 
$
2,452

 
$
1,748

OCI, net of tax:
 
 

 
 

 
 

 
 

Change in unrecognized net pension and postretirement costs
 
(12
)
 
8

 
15

 
29

Change in unrealized net gains (losses) on cash flow hedges
 
20

 
9

 
124

 
(27
)
Change in unrealized net gains (losses) on AFS securities
 
(155
)
 
18

 
(522
)
 
90

Other, net
 
1

 
2

 
(2
)
 
4

Total OCI
 
(146
)
 
37

 
(385
)
 
96

Total comprehensive income
 
$
693

 
$
685

 
$
2,067

 
$
1,844

Income Tax Effect of Items Included in OCI:
 
 
 
 
 
 
 
 
Change in unrecognized net pension and postretirement costs
 
$
(5
)
 
$
3

 
$
4

 
$
17

Change in unrealized net gains (losses) on cash flow hedges
 
6

 
5

 
40

 
(16
)
Change in unrealized net gains (losses) on AFS securities
 
(48
)
 
9

 
(163
)
 
51

Other, net
 

 

 
1

 


The accompanying notes are an integral part of these consolidated financial statements.


6 BB&T Corporation



CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
BB&T CORPORATION AND SUBSIDIARIES
Unaudited
(Dollars in millions, shares in thousands)
Shares of Common Stock
 
Preferred Stock
 
Common Stock
 
Additional Paid-In Capital
 
Retained Earnings
 
AOCI
 
Noncontrolling Interests
 
Total Shareholders' Equity
Balance, January 1, 2017
809,475

 
$
3,053

 
$
4,047

 
$
9,104

 
$
14,809

 
$
(1,132
)
 
$
45

 
$
29,926

Net income

 

 

 

 
1,736

 

 
12

 
1,748

OCI

 

 

 

 

 
96

 

 
96

Issued in connection with equity awards, net
7,201

 

 
37

 
67

 

 

 

 
104

Repurchase of common stock
(27,755
)
 

 
(139
)
 
(1,101
)
 

 

 

 
(1,240
)
Cash dividends declared on common stock

 

 

 

 
(747
)
 

 

 
(747
)
Cash dividends declared on preferred stock

 

 

 

 
(130
)
 

 

 
(130
)
Equity-based compensation expense

 

 

 
109

 

 

 

 
109

Other, net

 

 

 
13

 
(12
)
 

 
(14
)
 
(13
)
Balance, September 30, 2017
788,921

 
$
3,053

 
$
3,945

 
$
8,192

 
$
15,656

 
$
(1,036
)
 
$
43

 
$
29,853

Balance, January 1, 2018
782,006

 
$
3,053

 
$
3,910

 
$
7,893

 
$
16,259

 
$
(1,467
)
 
$
47

 
$
29,695

Net income

 

 

 

 
2,439

 

 
13

 
2,452

OCI

 

 

 

 

 
(385
)
 

 
(385
)
Issued in connection with equity awards, net
4,163

 

 
21

 
(22
)
 

 

 

 
(1
)
Repurchase of common stock
(15,549
)
 

 
(78
)
 
(752
)
 

 

 

 
(830
)
Cash dividends declared on common stock

 

 

 

 
(895
)
 

 

 
(895
)
Cash dividends declared on preferred stock

 

 

 

 
(130
)
 

 

 
(130
)
Equity-based compensation expense

 

 

 
113

 

 

 

 
113

Other, net

 

 

 
(11
)
 

 

 
(1
)
 
(12
)
Balance, September 30, 2018
770,620

 
$
3,053

 
$
3,853

 
$
7,221

 
$
17,673

 
$
(1,852
)
 
$
59

 
$
30,007


The accompanying notes are an integral part of these consolidated financial statements.

BB&T Corporation 7



CONSOLIDATED STATEMENTS OF CASH FLOWS
BB&T CORPORATION AND SUBSIDIARIES
Unaudited
(Dollars in millions)
 
Nine Months Ended September 30,
 
2018
 
2017
Cash Flows From Operating Activities:
 
 
 
 
Net income
 
$
2,452

 
$
1,748

Adjustments to reconcile net income to net cash from operating activities:
 
 

 
 
Provision for credit losses
 
420

 
409

Depreciation
 
316

 
305

Loss (gain) on early extinguishment of debt
 

 
392

Amortization of intangibles
 
97

 
108

Equity-based compensation expense
 
113

 
109

(Gain) loss on securities, net
 
(1
)
 

Net change in operating assets and liabilities:
 
 

 
 
LHFS
 
77

 
499

Trading and equity securities
 
(503
)
 
(341
)
Other assets, accounts payable and other liabilities
 
221

 
(342
)
Other, net
 
(214
)
 
72

Net cash from operating activities
 
2,978

 
2,959

Cash Flows From Investing Activities:
 
 

 
 
Proceeds from sales of AFS securities
 
294

 
4,896

Proceeds from maturities, calls and paydowns of AFS securities
 
2,919

 
3,707

Purchases of AFS securities
 
(3,630
)
 
(4,700
)
Proceeds from maturities, calls and paydowns of HTM securities
 
1,919

 
1,845

Purchases of HTM securities
 
(39
)
 
(8,640
)
Originations and purchases of loans and leases, net of principal collected
 
(3,657
)
 
(121
)
Other, net
 
(539
)
 
(189
)
Net cash from investing activities
 
(2,733
)
 
(3,202
)
Cash Flows From Financing Activities:
 
 

 
 
Net change in deposits
 
(2,806
)
 
(4,084
)
Net change in short-term borrowings
 
4,714

 
6,510

Proceeds from issuance of long-term debt
 
1,770

 
5,500

Repayment of long-term debt
 
(1,845
)
 
(6,984
)
Repurchase of common stock
 
(830
)
 
(1,240
)
Cash dividends paid on common stock
 
(895
)
 
(747
)
Cash dividends paid on preferred stock
 
(130
)
 
(130
)
Other, net
 
(153
)
 
121

Net cash from financing activities
 
(175
)
 
(1,054
)
Net Change in Cash, Cash Equivalents and Restricted Cash
 
70

 
(1,297
)
Cash, Cash Equivalents and Restricted Cash, January 1
 
3,083

 
4,424

Cash, Cash Equivalents and Restricted Cash, September 30
 
$
3,153

 
$
3,127

Supplemental Disclosure of Cash Flow Information:
 
 
 
 
Net cash paid (received) during the period for:
 
 
 
 
Interest expense
 
$
948

 
$
540

Income taxes
 
(34
)
 
276

Noncash investing activities:
 
 

 
 
Transfers of loans to foreclosed assets
 
183

 
203


The accompanying notes are an integral part of these consolidated financial statements.

8 BB&T Corporation



NOTE 1. Basis of Presentation

General
 
See the Glossary of Defined Terms at the beginning of this Report for terms used herein. These consolidated financial statements and notes are presented in accordance with the instructions for Form 10-Q and, therefore, do not include all information and notes necessary for a complete presentation of financial position, results of operations and cash flow activity required in accordance with GAAP. 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. The year-end consolidated balance sheet data was derived from audited financial statements but does not include all disclosures required by GAAP. The information contained in the financial statements and notes included in the Annual Report on Form 10-K for the year ended December 31, 2017 should be referred to in connection with these unaudited interim consolidated financial statements.
 
Reclassifications

The Consolidated Statements of Cash Flows has been reclassified to include restricted cash in cash and cash equivalents. Certain other amounts reported in prior periods' consolidated financial statements have been reclassified to conform to the current presentation.
 
Use of Estimates in the Preparation of Financial Statements
 
The preparation of financial statements in conformity with GAAP 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. Actual results could differ from those estimates. Material estimates that are particularly susceptible to significant change include the determination of the ACL, determination of fair value for financial instruments, valuation of MSRs, goodwill, intangible assets and other purchase accounting related adjustments, benefit plan obligations and expenses, and tax assets, liabilities and expense.

Derivative Financial Instruments

In conjunction with the adoption of new hedge accounting guidance in the first quarter of 2018, the shortcut method was added to the methods BB&T uses to assess effectiveness. The selection of hedge effectiveness methods depends on the facts and circumstances specific to each hedge. The shortcut method is applied to hedges with matched terms that permit the assumption of perfect offset. For hedges that are not eligible for the shortcut method, an initial quantitative analysis is performed to demonstrate that the hedges are expected to be highly effective in offsetting corresponding changes in either the fair value or cash flows of the hedged item. At least quarterly thereafter, qualitative analyses are performed to ensure that each hedge remains highly effective. When applicable, quantitative analyses, referred to as a long-haul methodology, are performed and include techniques such as regression analysis and hypothetical derivatives.

Revenue Recognition

In addition to lending and related activities, BB&T offers various services to customers that generate revenue. Contract performance typically occurs in one year or less. Incremental costs of obtaining a contract are expensed when incurred when the amortization period is one year or less. As of September 30, 2018, remaining performance obligations consisted primarily of insurance and investment banking services for contracts with an original expected length of one year or less.

Insurance income

Insurance commissions are received on the sale of insurance products, and revenue is recognized upon the placement date of the insurance policies. Payment is normally received within the policy period. In addition to placement, BB&T also provides insurance policy related risk management services. Revenue is recognized as these services are provided. Performance-based commissions are recognized when received or earlier when, upon consideration of past results and current conditions, the revenue is deemed not probable of reversal.

Transaction and service based revenues

Transaction and service based revenues include service charges on deposits, investment banking and brokerage fees and commissions, trust and investment advisory revenues, bankcard fees and merchant discounts, and checkcard fees. Revenue is recognized when the transactions occur or as services are performed over primarily monthly or quarterly periods. Payment is typically received in the period the transactions occur or, in some cases, within 90 days of the service period. Fees may be fixed or, where applicable, based on a percentage of transaction size or managed assets.


BB&T Corporation 9



Changes in Accounting Principles and Effects of New Accounting Pronouncements
Standard/Adoption Date
Description
Effects on the Financial Statements
Standards Adopted During the Current Year
Revenue from Contracts with Customers
Jan 1, 2018
Requires an entity to recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services.
BB&T adopted this guidance using the modified retrospective approach for in-scope contracts at the date of adoption. The impact was not material.
Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost
Jan 1, 2018
Requires that the service cost component of net benefit costs of pension and postretirement benefit plans be reported in the same line item as other compensation costs in the Consolidated Statements of Income. The other components of net benefit cost are required to be presented in a separate line item.

The service cost component is included in personnel expense and the other components of net benefit costs are included in other expense in the Consolidated Statements of Income. The prior period was reclassified to conform to the current presentation. See Note 11. Benefit Plans.
Derivatives and Hedging
Jan 1, 2018
Expands the risk management activities that qualify for hedge accounting, and simplifies certain hedge documentation and assessment requirements. Eliminates the concept of separately recording hedge ineffectiveness, and expands disclosure requirements.
BB&T early adopted this guidance using the modified retrospective approach. The impact was not material. New required disclosures have been included in Note 14. Derivative Financial Instruments.
Standards Not Yet Adopted
Leases
Jan 1, 2019
Requires lessees to recognize assets and liabilities related to certain operating leases on the balance sheet, requires additional disclosures by lessees, and contains targeted changes to accounting by lessors.
BB&T expects assets and liabilities will increase $800 million to $1.2 billion, with no material impact to its Consolidated Statements of Income. BB&T expects to adopt on a prospective basis.
Credit Losses
Jan 1, 2020
Replaces the incurred loss impairment methodology with an expected credit loss methodology and requires consideration of a broader range of information to determine credit loss estimates. Financial assets measured at amortized cost will be presented at the net amount expected to be collected by using an allowance for credit losses. Purchased credit deteriorated loans will receive an allowance for expected credit losses. Any credit impairment on AFS debt securities for which the fair value is less than cost will be recorded through an allowance for expected credit losses. The standard also requires expanded disclosures related to credit losses and asset quality.
BB&T expects that the ACL could be materially higher; however, the magnitude of the increase and its impact has not yet been quantified and depends on economic conditions at the time of adoption. Implementation efforts continue with the development, testing and refinement of core models, including the impact of various economic scenarios and reversion techniques, sourcing of data for disclosure requirements, monitoring of guidance interpretation, and consideration of relevant internal processes and controls.


10 BB&T Corporation



NOTE 2. Securities

In conjunction with the adoption of new accounting standards, an immaterial amount of HTM securities was transferred to AFS securities and an immaterial amount of equity securities was transferred from AFS securities to other assets in the first quarter of 2018. The following tables summarize AFS and HTM securities:
September 30, 2018
(Dollars in millions)
 
Amortized Cost
 
Gross Unrealized
 
Fair Value
 
 
Gains
 
Losses
 
AFS securities:
 
 
 
 
 
 
 
 
U.S. Treasury
 
$
2,505

 
$

 
$
127

 
$
2,378

GSE
 
210

 

 
12

 
198

Agency MBS
 
21,582

 
3

 
1,213

 
20,372

States and political subdivisions
 
764

 
24

 
17

 
771

Non-agency MBS
 
335

 
194

 

 
529

Other
 
37

 
1

 

 
38

Total AFS securities
 
$
25,433

 
$
222

 
$
1,369

 
$
24,286

HTM securities:
 
 
 
 
 
 
 
 
U.S. Treasury
 
$
1,099

 
$

 
$
15

 
$
1,084

GSE
 
2,199

 

 
71

 
2,128

Agency MBS
 
17,775

 
31

 
764

 
17,042

States and political subdivisions
 
8

 

 

 
8

Other
 
1

 

 

 
1

Total HTM securities
 
$
21,082

 
$
31

 
$
850

 
$
20,263

 
 
 
 
 
 
 
 
 
December 31, 2017
(Dollars in millions)
 
Amortized Cost
 
Gross Unrealized
 
Fair Value
 
 
Gains
 
Losses
 
AFS securities:
 
 
 
 
 
 
 
 
U.S. Treasury
 
$
2,368

 
$

 
$
77

 
$
2,291

GSE
 
187

 

 
8

 
179

Agency MBS
 
20,683

 
8

 
590

 
20,101

States and political subdivisions
 
1,379

 
37

 
24

 
1,392

Non-agency MBS
 
384

 
192

 

 
576

Other
 
8

 

 

 
8

Total AFS securities
 
$
25,009

 
$
237

 
$
699

 
$
24,547

HTM securities:
 
 
 
 
 
 
 
 
U.S. Treasury
 
$
1,098

 
$
8

 
$

 
$
1,106

GSE
 
2,198

 
11

 
22

 
2,187

Agency MBS
 
19,660

 
33

 
222

 
19,471

States and political subdivisions
 
28

 

 

 
28

Other
 
43

 
2

 

 
45

Total HTM securities
 
$
23,027

 
$
54

 
$
244

 
$
22,837


Certain securities issued by FNMA and FHLMC exceeded 10% of shareholders' equity at September 30, 2018. The FNMA investments had total amortized cost and fair value of $13.6 billion and $12.9 billion, respectively. The FHLMC investments had total amortized cost and fair value of $9.9 billion and $9.4 billion, respectively.

The amortized cost and estimated fair value of the securities portfolio by contractual maturity are shown in the following table. The expected life of MBS may differ from contractual maturities because borrowers have the right to prepay the underlying mortgage loans.
 
 
AFS
 
HTM
September 30, 2018
(Dollars in millions)
 
Amortized Cost
 
Fair Value
 
Amortized Cost
 
Fair Value
Due in one year or less
 
$
481

 
$
479

 
$
1

 
$
1

Due after one year through five years
 
2,114

 
1,991

 
3,190

 
3,109

Due after five years through ten years
 
561

 
547

 
687

 
660

Due after ten years
 
22,277

 
21,269

 
17,204

 
16,493

Total debt securities
 
$
25,433

 
$
24,286

 
$
21,082

 
$
20,263



BB&T Corporation 11



The following tables present the fair values and gross unrealized losses of investments based on the length of time that individual securities have been in a continuous unrealized loss position:
 
 
Less than 12 months
 
12 months or more
 
Total
September 30, 2018
(Dollars in millions)
 
Fair Value
 
Unrealized Losses
 
Fair Value
 
Unrealized Losses
 
Fair Value
 
Unrealized Losses
AFS securities:
 
 
 
 
 
 
 
 
 
 
 
 
U.S. Treasury
 
$
452

 
$
8

 
$
1,926

 
$
119

 
$
2,378

 
$
127

GSE
 
33

 
1

 
165

 
11

 
198

 
12

Agency MBS
 
4,052

 
111

 
15,949

 
1,102

 
20,001

 
1,213

States and political subdivisions
 
146

 
1

 
272

 
16

 
418

 
17

Total
 
$
4,683

 
$
121

 
$
18,312

 
$
1,248

 
$
22,995

 
$
1,369

HTM securities:
 
 

 
 

 
 

 
 

 
 

 
 

U.S. Treasury
 
$
1,084

 
$
15

 
$

 
$

 
$
1,084

 
$
15

GSE
 
900

 
24

 
1,081

 
47

 
1,981

 
71

Agency MBS
 
6,869

 
266

 
8,549

 
498

 
15,418

 
764

Total
 
$
8,853

 
$
305

 
$
9,630

 
$
545

 
$
18,483

 
$
850

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Less than 12 months
 
12 months or more
 
Total
December 31, 2017
(Dollars in millions)
 
Fair Value
 
Unrealized Losses
 
Fair Value
 
Unrealized Losses
 
Fair Value
 
Unrealized Losses
AFS securities:
 
 
 
 
 
 
 
 
 
 
 
 
U.S. Treasury
 
$
634

 
$
4

 
$
1,655

 
$
73

 
$
2,289

 
$
77

GSE
 
9

 

 
170

 
8

 
179

 
8

Agency MBS
 
5,077

 
64

 
13,920

 
526

 
18,997

 
590

States and political subdivisions
 
201

 
1

 
355

 
23

 
556

 
24

Total
 
$
5,921

 
$
69

 
$
16,100

 
$
630

 
$
22,021

 
$
699

HTM securities:
 
 

 
 

 
 

 
 

 
 

 
 

GSE
 
$
1,470

 
$
12

 
$
290

 
$
10

 
$
1,760

 
$
22

Agency MBS
 
10,880

 
77

 
4,631

 
145

 
15,511

 
222

Total
 
$
12,350

 
$
89

 
$
4,921

 
$
155

 
$
17,271

 
$
244


Substantially all of the unrealized losses on the securities portfolio were the result of changes in market interest rates compared to the date the securities were acquired rather than the credit quality of the issuers or underlying loans.

NOTE 3. Loans and ACL

The following tables present loans and leases HFI by aging category:
 
 
Accruing
 
 
 
 
September 30, 2018
(Dollars in millions)
 
Current
 
30-89 Days Past Due
 
90 Days Or More Past Due
 
Nonperforming
 
Total
Commercial:
 
 
 
 
 
 
 
 
 
 
Commercial and industrial
 
$
59,449

 
$
35

 
$

 
$
238

 
$
59,722

CRE
 
21,416

 
4

 

 
46

 
21,466

Lease financing
 
2,021

 
1

 

 
6

 
2,028

Retail:
 
 
 
 
 
 
 
 
 
 
Residential mortgage
 
29,824

 
510

 
367

 
120

 
30,821

Direct
 
11,498

 
59

 
6

 
55

 
11,618

Indirect
 
16,972

 
418

 
6

 
72

 
17,468

Revolving credit
 
3,031

 
27

 
12

 

 
3,070

PCI
 
436

 
21

 
40

 

 
497

Total
 
$
144,647

 
$
1,075

 
$
431

 
$
537

 
$
146,690

 
 
 
 
 
 
 
 
 
 
 

12 BB&T Corporation



 
 
Accruing
 
 
 
 
December 31, 2017
 
Current
 
30-89 Days Past Due
 
90 Days Or More Past Due
 
Nonperforming
 
Total
Commercial:
 
 
 
 
 
 
 
 
 
 
Commercial and industrial
 
$
58,852

 
$
41

 
$
1

 
$
259

 
$
59,153

CRE
 
21,209

 
8

 
1

 
45

 
21,263

Lease financing
 
1,906

 
4

 

 
1

 
1,911

Retail:
 
 

 
 

 
 

 
 

 
 
Residential mortgage
 
27,659

 
472

 
465

 
129

 
28,725

Direct
 
11,756

 
65

 
6

 
64

 
11,891

Indirect
 
16,745

 
412

 
6

 
72

 
17,235

Revolving credit
 
2,837

 
23

 
12

 

 
2,872

PCI
 
567

 
27

 
57

 

 
651

Total
 
$
141,531

 
$
1,052

 
$
548

 
$
570

 
$
143,701


The following table presents the carrying amount of loans by risk rating. PCI loans are excluded because their related ALLL is determined by loan pool performance and revolving credit loans are excluded as the loans are charged-off rather than reclassifying to nonperforming:
 
 
September 30, 2018
 
December 31, 2017
(Dollars in millions)
 
Commercial & Industrial
 
CRE
 
Lease Financing
 
Commercial & Industrial
 
CRE
 
Lease Financing
Commercial:
 
 
 
 
 
 
 
 
 
 
 
 
Pass
 
$
58,609

 
$
21,122

 
$
2,016

 
$
57,700

 
$
20,862

 
$
1,881

Special mention
 
173

 
57

 
2

 
268

 
48

 
6

Substandard-performing
 
702

 
241

 
4

 
926

 
308

 
23

Nonperforming
 
238

 
46

 
6

 
259

 
45

 
1

Total
 
$
59,722

 
$
21,466

 
$
2,028

 
$
59,153