Full Description

BB&T Corporation (BB&T) is a financial holding company. The Company conducts its business operations primarily through its commercial banking subsidiary, Branch Banking and Trust Company (Branch Bank). Branch Bank provides a range of banking and trust services for retail and commercial clients in its geographic markets, including small and mid-size businesses, public agencies, local governments and individuals. As of December 31, 2008, Branch Bank provided services through 1,511 offices located in North Carolina, South Carolina, Virginia, Maryland, Georgia, Kentucky, Florida, West Virginia, Tennessee, Washington D.C., Alabama and Indiana. In August 2009, BB&T acquired the banking operations of Colonial Bank of Montgomery.

At December 31, 2008, the principal operating subsidiaries of the Company included BB&T Equipment Finance Corporation, BB&T Investment Services, Inc., BB&T Insurance Services, Inc., Stanley, Hunt, DuPree & Rhine, Inc., Prime Rate Premium Finance Corporation, Inc., Grandbridge Real Estate Capital, LLC, Lendmark Financial Services, Inc., CRC Insurance Services, Inc. and McGriff, Seibels & Williams, Inc. The primary services offered by BB&T’s subsidiaries include small business lending, commercial middle market lending, real estate lending, retail lending, home equity lending, sales finance, home mortgage lending, commercial mortgage lending, equipment finance, asset management, retail and wholesale agency insurance and institutional trust services. The services offered by the Company also include wealth management/private banking, investment brokerage services, capital markets services, commercial finance, consumer finance, international banking services, payment solutions, treasury services, venture capital, bankcard and merchant services, insurance premium finance, supply chain management and payroll processing.

Lending Activities

BB&T’s loan portfolio is approximately 50% commercial and 50% retail by design, and is divided into six major categories, commercial, sales finance, revolving credit, direct retail, mortgage and specialized lending. BB&T lends to a diverse customer base that is substantially located within the Company’s primary market area. The commercial loan and lease portfolio represents the largest category of the Company’s total loan portfolio. BB&T’s commercial lending program is generally targeted to serve small-to-middle market businesses with sales of $200 million or less. In addition, BB&T’s Corporate Banking Group provides lending solutions to large corporate clients. Commercial and small business loans are primarily originated through BB&T’s banking network. Approximately 92% of BB&T’s commercial loans are secured by real estate, business equipment, inventories and other types of collateral. BB&T’s commercial leases consist of investments in various types of leveraged lease transactions.

The direct retail loan portfolio consists of a wide variety of loan products offered through BB&T’s banking network. The Company offers a variety of consumer loan products. The consumer loan portfolio consists of three primary sub-portfolios, direct retail, revolving credit and sales finance. The direct retail category consists mainly of home equity loans and lines of credit, which are secured by residential real estate. It also includes installment loans and some unsecured lines of credit other than credit cards. The revolving credit category consists of the outstanding balances on credit cards and BB&T’s checking account overdraft protection product, Constant Credit. Such balances are generally unsecured and managed by BB&T Bankcard Corporation. The sales finance category primarily includes secured indirect installment loans to consumers for the purchase of automobiles. Such loans are originated through approved franchised and independent automobile dealers throughout the BB&T market area, and to a lesser degree, states outside BB&T’s market area. The sales finance category also includes loans for the purchase of boats and recreational vehicles originated through dealers in BB&T’s market area. Substantially all consumer loans, excluding the revolving credit portfolio, are secured.

BB&T originates residential mortgage loans, with originations totaling $16.4 billion during the year ended December 31, 2008. Branch Bank offers various types of fixed- and adjustable-rate loans for the purpose of constructing, purchasing or refinancing residential properties. BB&T primarily originates conforming mortgage loans, and higher quality jumbo and construction-to-permanent loans for owner-occupied properties. The Company’s specialized lending portfolio consists of loans originated through six wholly owned subsidiaries that provide specialty finance alternatives to consumers and businesses, including dealer-based financing of equipment for small businesses and consumers, commercial equipment leasing and finance, direct and indirect consumer finance, insurance premium finance, indirect sub-prime automobile finance and full-service commercial mortgage banking. BB&T offers these services to bank clients, as well as to non-bank clients within and outside BB&T’s primary geographic market area.

Investment Activities

Investment securities represent a significant portion of BB&T’s assets. These securities include obligations of the United States Treasury, the United States Government agencies, the United States Government-sponsored entities, including mortgage-backed securities, bank eligible obligations of any state or political subdivision, privately issued mortgage-backed securities, structured notes, and bank eligible corporate obligations, including corporate debentures, commercial paper, negotiable certificates of deposit, bankers acceptances, mutual funds and limited types of equity securities. Scott & Stringfellow, Inc., BB&T’s full-service brokerage and investment banking subsidiary, engages in the underwriting, trading and sales of equity and debt securities.

Funding Activities

Deposits are the primary source of funds for lending and investing activities. Federal Home Loan Bank (FHLB) advances, other secured borrowings, federal funds purchased and other short-term borrowed funds, as well as longer-term debt issued through the capital markets, all provide supplemental liquidity sources. Deposits are attracted principally from clients within BB&T’s branch network through the offering of a selection of deposit instruments to individuals and businesses, including non-interest-bearing checking accounts, interest-bearing checking accounts, savings accounts, money rate savings accounts, investor deposit accounts, certificates of deposit and individual retirement accounts. In addition, the Company gathers a portion of its deposit base through wholesale funding products, which include negotiable certificates of deposit and Eurodollar deposits through the use of a Cayman branch facility. At December 31, 2008, these sources of deposits represented approximately 15% of BB&T’s total deposits.

The Company’s short-term borrowings include federal funds purchased, securities sold under repurchase agreements, master notes, short-term FHLB advances, the United States Treasury tax and loan depository note accounts and other short-term borrowings. BB&T also utilizes longer-term borrowings. Its long-term borrowings include long-term FHLB advances to Branch Bank; senior and subordinated debt issued by BB&T and Branch Bank, and junior subordinated debt underlying trust preferred securities and capital leases.