{"title":"ITEM\n7. MANAGEMENT\u2019S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.","text":"RevenueFor the year ended December 31, 2020, revenues\nincreased by $3,257,887 or 26.01%, as compared to the year ended December 31, 2019. The increase was primarily attributable to\nincreases in the sale of personal protective equipment due to the COVID-19 pandemic and Corrugated through our Ferguson Containers,\nInc.Cost\nof RevenuesFor\nthe year ended December 31, 2020, cost of revenues increased by $3,879,805 or 51.57%, as compared to the year ended December\n31, 2019. The increase was primarily attributable to the increase in the sale of personal protective equipment in total\nconsolidated revenues.Gross\nProfitFor the year ended December 31, 2020, gross\nprofit decreased by $612,918, or 12.28%, as compared to the year ended December 31, 2019. The decrease was primarily attributable\nto the lower margin products during 2020 related to the sale of personal protective equipment. The Company\u2019s higher margin\nbranded business was down during the year due to the impacts of COVID-19.Operating\nExpensesSelling, general and administrative expenses\nwere $12,280,192 and $14,085,195 for the years ended December 31, 2020 and 2019, respectively, representing a decrease\nof $1,805,003, or 12.81%. The decrease was primarily attributable to reductions in workforce and reduced\nspending due to cost controlling measures implemented in 2020. Decreases included payroll and related costs of $692,443,\ntravel of $295,122, freight and postage of 131,152 and professional fees of $2,199,605. The reduction in expenses was\noffset by increases in stock-based compensation expense of $966,848, bad debts of $123,385 and selling expenses of $384,039.Impairment\nFor\nthe year ended December 31, 2019, impairment charges of $4,443,000 relate to an impairment charge related to our annual impairment\nassessment of our brands business which is the only reporting unit with Goodwill. The amount recognized for impairment\nis equal to the difference between the carrying value and the asset\u2019s fair value. There were no impairment charges for\nthe year ended December 31, 2020 related our brands business.Gain\non Change in Fair Value of EarnoutFor the year ended December 31, 2019, a gain\nof $520,000 was recognized related to a change in fair value of the earnout liability. The decrease in the earnout is due\nto decreased actual revenues as compared to anticipated revenues at the time of acquisition of the Cloud\nB business in 2019 and going forward. The impairment above was attributable to the lower than anticipated revenues going forward. Field: Page; Sequence: 40; Value: 2 Rental\n IncomeRental\nincome was $102,815 for both the years ended December 31, 2020 and 2019.Interest\nexpenseInterest\nexpense was $3,378,131 for the year ended December 31, 2020 versus $1,299,153 in the previous year ended December\n31, 2019. The increase in interest expense was related to increased borrowings of debt during 2020.Income\ntax expenseIncome\ntax expense was $19,197 for the year ended December 31, 2020, an increase of $41,552 or 185.72%, compared\nto a benefit of $22,373 for the year ended December 31, 2019. The increase from an income tax benefit to income\ntax expense is due to current year state income taxes in 2020 versus current year state income taxes in 2019 offset by a refund\nfor required payments for estimated foreign income taxes. Income (Loss) from discontinued operationsIncome (loss) from discontinued operations\nrepresents the operations of divestiture of SRM Entertainment Limited. The Company made the decision to divest the amusement park\nbusiness due to the slow re-openings of amusement parks around the world and the investment that would have been needed to remain\nopen and the even greater investment to relaunch the business as the amusement parks begin to get back to full capacity. Income\n(Loss) from discontinued operations increased to a $0.6 million loss in Fiscal 2020, compared to a loss of $0.008 million in Fiscal\n2019.Gain\non Divestiture from discontinued operationsGain\nfrom divestiture of the discontinued operations represents the gain recognized on the sale of SRM Entertainment Limited, which consisted\nof 200,000 shares of common stock of a NASDAQ listed company and the net liabilities disposed of due to the sale.Non-GAAP\nMeasuresEBITDA\nand Adjusted EBITDAThe\nCompany defines EBITDA as net loss before interest, taxes and depreciation and amortization. The Company defines Adjusted EBITDA\nas EBITDA, further adjusted to eliminate the impact of certain non-recurring items and other items that we do not consider in\nour evaluation of our ongoing operating performance from period to period. These items will include stock-based compensation,\nrestructuring and severance costs, transaction costs, acquisition costs, certain other non-recurring charges and gains that the\nCompany does not believe reflects the underlying business performance.For\nthe years ended December 31, 2020 and 2019, EBITDA and Adjusted EBITDA consisted of the following:","markdown_table":"\n\n| | | **Years Ended December 31,** | | | | | | | | **Period over Period Change** | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | **2020** | | | | **2019** | | | | **$** | | | | **%** | | |\n| **Revenues, net** | | $ | 15,781,319 | | | $ | 12,523,432 | | | $ | 3,257,887 | | | | 26.01 | % |\n| Cost of revenues | | | 11,403,474 | | | | 7,523,669 | | | | 3,879,805 | | | | 51.57 | % |\n| **Gross profit** | | | 4,377,845 | | | | 4,990,763 | | | | (612,918 | ) | | | -12.28 | % |\n| | | | | | | | | | | | | | | | | |\n| **Operating expenses:** | | | | | | | | | | | | | | | | |\n| Selling, general and administrative | | | 12,280,192 | | | | 14,085,195 | | | | (1,805,003 | ) | | | -12.81 | % |\n| Impairment | | | - | | | | 4,443,000 | | | | (4,443,000 | ) | | | -100.00 | % |\n| Gain on change in fair value of earnout liability | | | - | | | | (520,000 | ) | | | 520,000 | | | | 100.00 | % |\n| Total operating expenses | | | 12,280,192 | | | | 18,008,195 | | | | (5,728,003 | ) | | | -31.81 | % |\n| Operating loss | | | (7,902,347 | ) | | | (13,017,432 | ) | | | (5,115,085 | ) | | | -39.29 | % |\n| | | | | | | | | | | | | | | | | |\n| **Other (expense) income:** | | | | | | | | | | | | | | | | |\n| Rental income | | | 102,815 | | | | 102,815 | | | | - | | | | 0.00 | % |\n| Interest expense | | | (3,378,131 | ) | | | (1,299,153 | ) | | | (2,078,978 | ) | | | 160.03 | % |\n| Change in fair value of investment | | | (22,000 | ) | | | - | | | | (22,000 | ) | | | -100.00 | % |\n| Gain on divestiture | | | 4,911,760 | | | | - | | | | 4,911,760 | | | | 100.00 | % |\n| Other income | | | - | | | | 3,054 | | | | (3,054 | ) | | | -100.00 | % |\n| Total other income (expense) | | | 1,614,444 | | | | (1,193,284 | ) | | | 2,807,728 | | | | -235.29 | % |\n| Loss before income taxes | | | (6,287,903 | ) | | | (14,210,716 | ) | | | 7,922,813 | | | | -64.49 | % |\n| Income tax (expense) benefit | | | (19,197 | ) | | | 22,373 | | | | (41,552 | ) | | | -185.72 | % |\n| **Net loss from continuing operations** | | | (6,307,100 | ) | | | (14,188,343 | ) | | | 9,123,157 | | | | -55.75 | % |\n| **Net loss attributable to noncontrolling interests** | | | (554,382 | ) | | | (1,269,274 | ) | | | 714,892 | | | | -56.32 | % |\n| **Net loss from continuing operations attributable to Vinco Ventures, Inc.** | | | (5,752,718 | ) | | | (12,919,069 | ) | | | 7,166,351 | | | | -55.47 | % |\n| **Net loss from discontinued operations attributable to Vinco Ventures, Inc.** | | | (642,632 | ) | | | (7,811 | ) | | | (634,821 | ) | | | 8,127.27 | % |\n| **Gain on divestiture from discontinued operations** | | | 1,241,914 | | | | - | | | | 1,241,914 | | | | 100.00 | % |\n| **Net loss attributable to Vinco Ventures, Inc.** | | $ | (5,153,436 | ) | | $ | (12,929,706 | ) | | $ | 7,776,270 | | | | -60.14 | % |\n\n","source":"BBIG\/10-K\/0001493152-21-008880"} {"title":"ITEM\n7. MANAGEMENT\u2019S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.","text":"EBITDA\nand Adjusted EBITDA is a financial measure that is not calculated in accordance with accounting principles generally accepted\nin the United States of America (\u201cU.S. GAAP\u201d). Management believes that because Adjusted EBITDA excludes (a) certain\nnon-cash expenses (such as depreciation, amortization and stock-based compensation) and (b) expenses that are not reflective of\nthe Company\u2019s core operating results over time (such as restructuring costs, litigation or dispute settlement charges or\ngains, and transaction-related costs), this measure provides investors with additional useful information to measure the Company\u2019s\nfinancial performance, particularly with respect to changes in performance from period to period. The Company\u2019s management\nuses EBITDA and Adjusted EBITDA (a) as a measure of operating performance, (b) for planning and forecasting in future periods,\nand (c) in communications with the Company\u2019s board of directors concerning the Company\u2019s financial performance. The\nCompany\u2019s presentation of EBITDA and Adjusted EBITDA are not necessarily comparable to other similarly titled captions of\nother companies due to different methods of calculation and should not be used by investors as a substitute or alternative to\nnet income or any measure of financial performance calculated and presented in accordance with U.S. GAAP. Instead, management\nbelieves EBITDA and Adjusted EBITDA should be used to supplement the Company\u2019s financial measures derived in accordance\nwith U.S. GAAP to provide a more complete understanding of the trends affecting the business.Although\nAdjusted EBITDA is frequently used by investors and securities analysts in their evaluations of companies, Adjusted EBITDA has\nlimitations as an analytical tool, and investors should not consider it in isolation or as a substitute for, or more meaningful\nthan, amounts determined in accordance with U.S. GAAP. Some of the limitations to using non-GAAP measures as an analytical tool\nare (a) they do not reflect the Company\u2019s interest income and expense, or the requirements necessary to service interest\nor principal payments on the Company\u2019s debt, (b) they do not reflect future requirements for capital expenditures or contractual\ncommitments, and (c) although depreciation and amortization charges are non-cash charges, the assets being depreciated and amortized\nwill often have to be replaced in the future, and non-GAAP measures do not reflect any cash requirements for such replacements. Field: Page; Sequence: 41; Value: 2 Liquidity\nand Capital ResourcesFor the year ended December 31, 2020,\nour operations lost $7,902,347 of which $4,623,130 was non-cash and $1,131,975 related to restructuring, severance,\ntransaction costs and non-recurring items.At December 31, 2020, we had total current\nassets of $5,342,183 and current liabilities of $11,285,663 resulting in negative working capital of $5,943,480. At December 31,\n2020, we had total assets of $28,028,207 and total liabilities of $14,505,506 resulting in stockholders\u2019 equity of $13,522,701.The foregoing factors raise substantial\ndoubt about the Company\u2019s ability to continue as a going concern for at least the next twelve months from the date of issuance\nof these financial statements. The ability to continue as a going concern is dependent upon the Company\u2019s ability to attract\nsignificant new sources of capital, attain a reasonable threshold of operating efficiencies and achieve profitable operations\nfrom the sale of its products.Subsequent to December 31, 2020, the Company\nmitigated any substantial doubt about the Company\u2019s ability to continue as a going concern through the raise of additional\nfunds of $25,300,000 through 3 separate private placements. The following are the amounts raised under each private placement:\n\n\u00a0\n\u25cf\nIn\n January 2021, the Company completed closing of a debt private placement offering of $12,000,000, receiving net proceeds of $10,770,000.\n\n\u00a0\n\u00a0\n\u00a0\n\n\u00a0\n\u25cf\nIn\n January 2021, the Company completed closing of a equity private placement offering of $3,300,000, receiving net proceeds of $3,255,000.\n\n\u00a0\n\u00a0\n\u00a0\n\n\u00a0\n\u25cf\nIn\n February 2021, the Company completed the closing of a debt private placement offering of $10,000,000, receiving net proceeds of $8,950,000.\nIn\naddition, management has considered possible mitigating factors within our management plan on our ability to continue for at least\na year from the date these financial statements are filed. The following items are management plans to alleviate any going concern\nissues:\n\n\u00a0\n\u00a0\n\u00a0\n\n\u00a0\n\u25cf\nRaise\n further capital through the sale of additional equity or the exercise of outstanding warrants.\n\n\u00a0\n\u00a0\n\u00a0\n\n\u00a0\n\u25cf\nBorrow\n money under debt securities. \n\n\u00a0\n\u00a0\n\u00a0\n\n\u00a0\n\u25cf\nThe\n deferral of payments to related party debt holders for both principal and related interest expense.\n\n\u00a0\n\u00a0\n\u00a0\n\n\u00a0\n\u25cf\nFurther\n reduction of headcount.\n\n\u00a0\n\u00a0\n\u00a0\n\n\u00a0\n\u25cf\nPossible\n sale of certain brands to other manufacturers.\n\n\u00a0\n\u00a0\n\u00a0\n\n\u00a0\n\u25cf\nEntry\n into other business opportunities.\nOur\noperating needs include the planned costs to operate our business, including amounts required to fund working capital and capital\nexpenditures. Our future capital requirements and the adequacy of our available funds will depend on many factors, including our\nability to successfully commercialize our products and services, competing technological and market developments, and the need\nto enter into collaborations with other companies or acquire other companies or technologies to enhance or complement our product\nand service offerings.At\nDecember 31, 2020, we had a cash and cash equivalents balance of $249,356. The Company believes through the subsequent capital\nraise that the funds available to it are adequate to meet its working capital needs, debt service and capital requirements for\nthe next 12 months from the date of this filing.Cash\nFlowsDuring\nthe years ended December 31, 2020 and 2019, our sources and uses of cash were as follows:Cash\nFlows from Operating ActivitiesNet cash used in operating activities from\ncontinuing operations for the year ended December 31, 2020 was $2,260,441, which included a net loss of $6,307,100\nthat included $1,091,849 of cash provided by changes in operating assets and liabilities which also included\nstock-based compensation of $3,241,554, depreciation and amortization of $1,353,822 and amortization of debt issuance costs\nof $2,357,879 offset by gains of divestitures of $4,911,761. Net cash used in operating activities from continuing operations\nfor the year ended December 31, 2019 was $4,641,748, which included a net loss of $14,188,343 that included\n$799,886 of cash provided by changes in operating assets and liabilities which also included stock-based compensation\nof $2,229,915, depreciation and amortization of $1,284,251 and amortization of debt issuance costs of $944,437.Net cash used in operating activities from\ndiscontinued operations for the year ended December 31, 2020 and 2019 was $178,485 and $394,707, respectively.Cash\nFlows from Investing ActivitiesNet cash used in investing activities was\n$1,648,489 and $151,502 for the years ended December 31, 2020 and 2019, respectively. Cash used in investing activities\nwas mostly attributable to purchases of licensing agreements in 2020 as compared to purchases of property and equipment\nin 2019.Net cash used in investing activities from\ndiscontinued operations for the year ended December 31, 2020 and 2019 was $0 and $8,436, respectively.Cash\nFlows from Financing ActivitiesCash provided by financing activities for\nthe year ended December 31, 2020 totaled $3,924,052, which related mostly to borrowings from notes payable, credit lines,\nnotes payable related parties and borrowings from convertible notes payable. Cash provided by financing activities\nfor the year ended December 31, 2019 totaled $3,556,381, which related mostly to borrowings from notes payable.Net cash provided by financing activities\nfrom discontinued operations for the year ended December 31, 2020 and 2019 was $0 and $0, respectively.Off-Balance\nSheet ArrangementsWe\ndid not have, during the periods presented, and we do not currently have, any relationships with any organizations or financial\npartnerships, such as structured finance or special purpose entities, that would have been established for the purpose of facilitating\noff-balance sheet arrangements or other contractually narrow or limited purposes.","markdown_table":"\n\n| | | **For the Years Ended** **December 31,** | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | **2020** | | | | **2019** | | |\n| Net loss from continuing operations | | $ | (6,307,100 | ) | | $ | (14,188,343 | ) |\n| Net loss from discontinued operations | | | 599,282 | | | | (10,637 | ) |\n| Interest expense, net | | | 3,378,131 | | | | 1,298,168 | |\n| Income tax expense (benefit) | | | 19,197 | | | | (22,373 | ) |\n| Income tax expense (benefit) from discontinued operations | | | 12,940 | | | | 2,826 | |\n| Depreciation and amortization | | | 1,381,366 | | | | 1,321,186 | |\n| **EBITDA** | | | (916,184 | ) | | | (11,599,173 | ) |\n| Stock-based compensation | | | 3,241,764 | | | | 2,299,915 | |\n| Impairment | | | - | | | | 4,443,000 | |\n| Restructuring and severance costs | | | 765,867 | | | | 446,114 | |\n| Transaction and acquisition costs | | | 258,639 | | | | 447,908 | |\n| Other non-recurring costs | | | 107,469 | | | | 1,520,777 | |\n| Gain on divestiture | | | (6,153,674 | ) | | | - | |\n| **Adjusted EBITDA** | | $ | (2,696,119 | ) | | $ | (2,441,459 | ) |\n\n","source":"BBIG\/10-K\/0001493152-21-008880"} {"title":"OPERATIONS AND OIL TANKER MARKETS","text":"U.S. refinery throughput increased by about 0.6 million b\/d to 17.1\nmillion b\/d in the fourth quarter of 2017 compared with the comparable quarter in 2016. U.S. crude oil imports decreased by about\n0.4 million b\/d in the fourth quarter of 2017 compared with the comparable quarter of 2016 with imports from OPEC countries decreasing\nby 0.4 million b\/d, a 13.8% decrease from the comparable quarter in 2016.Chinese imports of crude oil continued increasing, with 2017 showing\na 10.2% increase from 2016 with imports averaging 8.4 million b\/d compared with 7.7 million b\/d in 2016.During the fourth quarter of 2017, the International Flag tanker\nfleet of vessels over 10,000 deadweight tons (\u201cdwt\u201d) increased by 1.3 million dwt as the crude fleet increased by 1.0\nmillion dwt, while the product carrier fleet expanded by 0.3 million dwt. Year over year, the size of the tanker fleet increased\nby 26.7 million dwt with the largest increases in the VLCC, Suezmax, Aframax and MR sectors.During the fourth quarter of 2017, the International Flag crude\ntanker orderbook increased by 1.4 million dwt, and the product carrier orderbook remained flat.From the end of the fourth quarter of 2016 through the end of the\nfourth quarter of 2017, the total tanker orderbook declined by 8.1 million dwt due to a high level of vessel deliveries combined\nwith relatively fewer new orders being placed in 2017.VLCC freight rates initially saw a strengthening during the fourth\nquarter of 2017, reaching a peak of around $23,000 per day in October before beginning to decrease to below $10,000 per day by\nthe end of the quarter. This was primarily attributable to increased newbuilding deliveries further exacerbating the oversupply\nsituation coupled with reduced OPEC exports. Other crude segments had similar earnings patterns, although the Panamax sector, where\nearnings were poor at the beginning of the quarter, saw improvement throughout the quarter and product carrier rates also improved\nduring the quarter from a low of around $8,000 per day in October to over $12,000 per day during December. Since OPEC has announced\ntheir intention to continue to restrict production, and 2018 will see continued newbuilding deliveries, albeit at a lower rate\nthan during 2017, 2018 will likely continue to see a weakened rate environment.","markdown_table":"\n\n| 39 | | |\n| --- | --- | --- |\n| International Seaways, Inc. | | |\n\n","source":"INSW\/10-K\/0001144204-18-013984"} {"title":"RESULTS FROM VESSEL OPERATIONS","text":"International Crude Tankers","markdown_table":"\n\n| 40 | | |\n| --- | --- | --- |\n| International Seaways, Inc. | | |\n\n","source":"INSW\/10-K\/0001144204-18-013984"} {"title":"RESULTS FROM VESSEL OPERATIONS","text":"(a)Adjusted income\/(loss) from vessel operations by segment is before general and administrative expenses, technical management\ntransition costs, third-party debt modification fees, separation and transition costs, and loss on disposal of vessels and other\nproperty, including impairments.\n(b)The average is calculated to reflect the addition and disposal of vessels during the year.\n(c)Revenue days represent ship-operating days less days that vessels were not available for employment due to repairs, drydock\nor lay-up. Revenue days are weighted to reflect the Company\u2019s interest in chartered-in vessels.\n(d)Ship-operating days represent calendar days.\n(e)Vessels spot chartered-in under operating leases are related to the Company\u2019s Crude Tankers Lightering business.The following table provides a breakdown of TCE rates achieved for\nthe years ended December 31, 2017, 2016 and 2015 between spot and fixed earnings and the related revenue days. The information\nin these tables is based, in part, on information provided by the commercial pools in which the segment\u2019s vessels participate\nand excludes revenue and revenue days for which recoveries were recorded by the Company under its loss of hire insurance policies.","markdown_table":"\n\n| | | 2017 | | | | 2016 | | | | 2015 | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| TCE revenues | | $ | 178,812 | | | $ | 258,171 | | | $ | 304,182 | |\n| Vessel expenses | | | (87,236 | ) | | | (84,276 | ) | | | (86,174 | ) |\n| Charter hire expenses | | | (13,651 | ) | | | (9,732 | ) | | | (8,821 | ) |\n| Depreciation and amortization | | | (56,302 | ) | | | (52,395 | ) | | | (51,347 | ) |\n| Adjusted income from vessel operations (a) | | $ | 21,623 | | | $ | 111,768 | | | $ | 157,840 | |\n| Average daily TCE rate | | $ | 20,525 | | | $ | 29,853 | | | $ | 36,839 | |\n| Average number of owned vessels (b) | | | 25.0 | | | | 24.0 | | | | 24.0 | |\n| Average number of vessels chartered-in under operating leases | | | 0.5 | | | | 0.3 | | | | 0.2 | |\n| Number of revenue days: (c) | | | 8,712 | | | | 8,648 | | | | 8,257 | |\n| Number of ship-operating days: (d) | | | | | | | | | | | | |\n| Owned vessels | | | 9,137 | | | | 8,784 | | | | 8,760 | |\n| Vessels bareboat chartered-in under operating leases (e) | | | - | | | | - | | | | - | |\n| Vessels time chartered-in under operating leases | | | - | | | | - | | | | - | |\n| Vessels spot chartered-in under operating leases | | | 173 | | | | 118 | | | | 73 | |\n\n","source":"INSW\/10-K\/0001144204-18-013984"} {"title":"RESULTS FROM VESSEL OPERATIONS","text":"During 2017, TCE revenues for the International Crude Tankers segment\ndecreased by $79,359 or 31%, to $178,812 from $258,171 in 2016. Such decrease principally resulted from the impact of significantly\nlower average blended rates in the VLCC, Aframax, Panamax and ULCC sectors aggregating approximately $84,155. Further contributing\nto the decrease was a decrease in revenue days in the Panamax and Aframax sectors, which had the effect of decreasing revenue by\napproximately $6,428. The decrease in Panamaxes and Aframax revenue days reflects 319 incremental drydock and repair days in the\ncurrent year. These declines in TCE revenues were partially offset by $6,268 in total revenues contributed by the two 2017-built\nSuezmaxes and the 2010-built VLCC, which were acquired by the Company in July 2017 and November 2017, respectively. Also serving\nto offset the decreases in revenue during 2017 was the increased activity levels in the Crude Tankers Lightering business, which\nresulted in a $5,037 increase in Lightering revenues to $25,478 in 2017 from $20,441 in 2016. Current prices of crude oil have\ngenerally been the same or less than future prices since the latter half of 2016 through to the end of 2017 and this has resulted\nin a general decline in demand for storage of oil at sea. Accordingly, we expect to put our ULCC into layup by the end of the first\nquarter of 2018 for a period of up to 18 months as it is unlikely to secure a new time charter contract for storage in the near\nterm.","markdown_table":"\n\n| | | 2017 | | | | | | | | 2016 | | | | | | | | 2015 | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | Spot | | | | Fixed | | | | Spot | | | | Fixed | | | | Spot | | | | Fixed | | |\n| | | Earnings | | | | Earnings | | | | Earnings | | | | Earnings | | | | Earnings | | | | Earnings | | |\n| ULCC: | | | | | | | | | | | | | | | | | | | | | | | | |\n| Average rate | | $ | - | | | $ | 34,867 | | | $ | - | | | $ | 43,613 | | | $ | - | | | $ | 39,000 | |\n| Revenue days | | | 17 | | | | 348 | | | | - | | | | 366 | | | | - | | | | 275 | |\n| VLCC: | | | | | | | | | | | | | | | | | | | | | | | | |\n| Average rate | | $ | 24,871 | | | $ | 33,756 | | | $ | 41,994 | | | $ | 40,737 | | | $ | 54,591 | | | $ | - | |\n| Revenue days | | | 2,525 | | | | 346 | | | | 2,226 | | | | 624 | | | | 2,672 | | | | - | |\n| Suezmax: | | | | | | | | | | | | | | | | | | | | | | | | |\n| Average rate | | $ | 17,910 | | | $ | - | | | $ | - | | | $ | - | | | $ | - | | | $ | - | |\n| Revenue days | | | 317 | | | | - | | | | - | | | | - | | | | - | | | | - | |\n| Aframax: | | | | | | | | | | | | | | | | | | | | | | | | |\n| Average rate | | $ | 13,392 | | | $ | - | | | $ | 21,345 | | | $ | - | | | $ | 34,042 | | | $ | - | |\n| Revenue days | | | 2,419 | | | | - | | | | 2,508 | | | | - | | | | 2,439 | | | | - | |\n| Panamax: | | | | | | | | | | | | | | | | | | | | | | | | |\n| Average rate | | $ | 13,030 | | | $ | 14,093 | | | $ | 19,006 | | | $ | 21,094 | | | $ | 25,226 | | | $ | 15,462 | |\n| Revenue days | | | 1,244 | | | | 1,278 | | | | 1,726 | | | | 1,079 | | | | 1,432 | | | | 1,362 | |\n\n","source":"INSW\/10-K\/0001144204-18-013984"} {"title":"RESULTS FROM VESSEL OPERATIONS","text":"Vessel expenses increased by $2,960 to $87,236 in 2017 from $84,276\nin 2016. The increase was primarily attributable to (i) a $2,418 increase related to the Suezmax acquisitions discussed above,\n(ii) a reserve of $388 which was recorded during the second quarter of 2017 for a potential assessment by the trustees of the Marine\nNavy Ratings Pension Fund (\u201cMNRPF\u201d), as discussed in Note 20, \u201cContingencies\u201d, to the accompanying consolidated\nfinancial statements, (iii) a $1,367 increase in drydock deviation costs incurred for the Panamax fleet, and (iv) a $900 increase\ndue to increased activity in the Crude Tankers Lightering business. Such increases were partially offset by a $2,079 favorable\nvariance in net insurance claim deductible costs in the Panamax fleet in the current year. Charter hire expenses increased by $3,919\nto $13,651 in 2017 from $9,732 in 2016 as a result of an increase in chartered-in Aframaxes and workboats employed in the Crude\nTankers Lightering business in the current year. The only vessels in the segment chartered-in by the Company in either period were\nthe vessels chartered-in by the Crude Tankers Lightering business. Depreciation and amortization increased by $3,907 to $56,302\nin 2017 from $52,395 in 2016. Such increase reflects the delivery of the two Suezmaxes and one VLCC noted above, and increased\ndrydock amortization.Excluding depreciation and amortization, and general and administrative\nexpenses, operating income for the Crude Tankers Lightering business was $5,062 for 2017 and $4,822 for 2016. Although there was\nan increase in the number of full service lighterings performed in 2017, 27 as compared to 19 in 2016, the growth in operating\nincome between 2016 and 2017 was relatively flat, primarily due to lower margins earned on jobs performed in the third quarter\nof 2017. The lower margins were as a result of increased charter hire expense, as Aframaxes were spot chartered-in at higher rates\nbecause of significant hurricane activity during the third quarter of 2017. In addition, there were more time chartered-in workboats\nin the six months ended December 31, 2017 compared to the same period in the prior year. However, the higher level of lightering\nactivity anticipated in the second half of 2017 did not materialize as the number of service-only and full service lighterings\ndeclined in the second half of 2017 compared with the first six months of 2017.During 2016, TCE revenues for the International Crude Tankers segment\ndecreased by $46,011, or 15%, to $258,171 from $304,182 in 2015 primarily as a result of lower average daily rates in the VLCC\nand Aframax sectors, which accounted for a decrease in revenue of approximately $65,267. Such decrease was mitigated to an extent\nby an increase of 246 revenue days for the VLCC and Aframax fleets, which resulted from fewer drydock and repair days in 2016 and\nincreased revenue by approximately $11,623. Also serving to partially offset the decline in rates were increased activity levels\nin the Crude Tankers Lightering business in 2016, which resulted in a $4,552 increase in revenue, and the Company\u2019s ULCC\nexiting lay-up and commencing an 11-month time charter for storage in April 2015, which was subsequently extended for 21 months\nfollowing the expiry of the initial charter period. A full year of service for the ULCC accounted for an increase in revenue of\n$5,242 in 2016.Vessel expenses decreased by $1,898 to $84,276 in 2016 from $86,174\nin 2015. The change in vessel expenses is primarily due to a reserve of $1,450 recorded in the third quarter of 2015 for an assessment\nby the MNRPF. Charter hire expenses increased by $911 to $9,732 in 2016 from $8,821 in 2015, resulting from an increase in spot\nchartered-in Aframaxes by the Crude Tankers Lightering business for utilization in the performance of full-service lighterings\nduring 2016. The only vessels in the segment chartered-in by the Company during either period were Aframaxes and workboats employed\nin the Crude Tankers Lightering business.","markdown_table":"\n\n| 41 | | |\n| --- | --- | --- |\n| International Seaways, Inc. | | |\n\n","source":"INSW\/10-K\/0001144204-18-013984"} {"title":"RESULTS FROM VESSEL OPERATIONS","text":"The following table provides a breakdown of TCE rates achieved for\nthe years ended December 31, 2017, 2016 and 2015 between spot and fixed earnings and the related revenue days. The information\nis based, in part, on information provided by the commercial pools in which certain of the segment\u2019s vessels participate\nand excludes revenue and revenue days for which recoveries were recorded by the Company under its loss of hire insurance policies.","markdown_table":"\n\n| 42 | | |\n| --- | --- | --- |\n| International Seaways, Inc. | | |\n\n","source":"INSW\/10-K\/0001144204-18-013984"} {"title":"RESULTS FROM VESSEL OPERATIONS","text":"During 2017, TCE revenues for the International Product Carriers\nsegment decreased by $30,131, or 24%, to $96,183 from $126,314 in 2016. This resulted primarily from declining average daily blended\nrates earned in all Product Carrier fleet sectors, which accounted for $27,625 of the overall decrease. A 230-day decrease in revenue\ndays in the segment also contributed approximately $2,506 of the overall decrease. The decline in revenue days was driven by the\nCompany\u2019s sale of a 2001-built MR, which was delivered to buyers in August 2017, and a 2004-built MR, which was delivered\nto buyers in November 2017.Vessel expenses decreased by $4,512 to $54,100 in 2017 from $58,612\nin 2016. The two MRs sold during 2017 had an aggregate vessel expense reduction of $1,841 year-over-year. The remaining decline\nis principally attributable to a $2,991 favorable variance in net insurance claim deductible costs in the segment in the current\nyear. Charter hire expenses increased by $371 to $28,050 in 2017 from $27,679 in 2016, reflecting an increase in the daily charter\nhire rates for the Company\u2019s bareboat chartered-in MR fleet, which was effective beginning in the fourth quarter of 2016,\npartially offset by decreases in the daily charter hire rates for the Company\u2019s time chartered-in MR fleet which were effective\nbeginning in the third quarter of 2017. Depreciation and amortization decreased by $4,278 to $22,418 in 2017 from $26,696 in 2016.\nSuch decrease reflects (i) the impact of reductions in vessel bases that resulted from impairment charges on nine vessels recorded\nin the third and fourth quarters of 2016 and two vessels in the third quarter of 2017, and (ii) the sale of the two MRs during\n2017 discussed above.During 2016, TCE revenues for the International Product Carriers\nsegment decreased by $45,294, or 26%, to $126,314 from $171,608 in 2015. This decrease resulted primarily from a year-over-year\ndecrease in average daily blended rates earned by the MR fleet, which accounted for $41,291 of the total decrease, and a 255-day\ndecrease in MR fleet revenue days, which accounted for $4,667 of the total decrease. The reduction in revenue days was driven by\nthe sale of a 1998-built MR in July 2015 as well as the redelivery of an MR to its owners at the expiry of its time charter in\nMarch 2015.Depreciation and amortization decreased by $2,067 to $26,696 in\n2016 from $28,763 in 2015, principally due to the impact of reductions in vessel bases that resulted from impairment charges on\ntwo vessels in the segment recorded in the third quarter of 2016, and the MR sale in 2015 discussed above.","markdown_table":"\n\n| | | 2017 | | | | | | | | 2016 | | | | | | | | 2015 | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | Spot | | | | Fixed | | | | Spot | | | | Fixed | | | | Spot | | | | Fixed | | |\n| | | Earnings | | | | Earnings | | | | Earnings | | | | Earnings | | | | Earnings | | | | Earnings | | |\n| LR2 | | | | | | | | | | | | | | | | | | | | | | | | |\n| Average rate | | $ | 13,813 | | | $ | - | | | $ | 21,153 | | | $ | - | | | $ | 32,075 | | | $ | - | |\n| Revenue days | | | 364 | | | | - | | | | 365 | | | | - | | | | 365 | | | | - | |\n| LR1 | | | | | | | | | | | | | | | | | | | | | | | | |\n| Average rate | | $ | 12,871 | | | $ | 17,040 | | | $ | 20,599 | | | $ | 21,107 | | | $ | 27,465 | | | $ | 17,337 | |\n| Revenue days | | | 808 | | | | 615 | | | | 361 | | | | 1,029 | | | | 327 | | | | 929 | |\n| MR | | | | | | | | | | | | | | | | | | | | | | | | |\n| Average rate | | $ | 11,001 | | | $ | 5,342 | | | $ | 13,107 | | | $ | 11,309 | | | $ | 19,490 | | | $ | 7,004 | |\n| Revenue days | | | 6,496 | | | | 366 | | | | 6,431 | | | | 705 | | | | 6,949 | | | | 442 | |\n\n","source":"INSW\/10-K\/0001144204-18-013984"} {"title":"GENERAL AND ADMINISTRATIVE EXPENSES","text":"During 2016, general and administrative expenses decreased by $9,898\nto $31,618 from $41,516 in 2015. The decrease was principally attributable to an approximately $11,300 decrease in non-compensation\nand benefits related overhead costs incurred and allocated by OSG to INSW during the 11-month period ended November 30, 2016 that\nINSW was included as a part of consolidated OSG compared with 2015. Such decrease reflected lower accounting, legal and consulting\nfees incurred in the 2016 period. Further contributing to the decrease was an approximately $2,200 decline in the annual incentive\nbonus expense in 2016. Certain individuals that departed OSG in conjunction with the spin-off of INSW did not receive an annual\nincentive bonus for 2016, and instead received severance payments in accordance with their respective employment agreements. Partially\noffsetting the above reductions was a $2,262 net increase in accounting, consulting and legal fees incurred directly by the Company\nin 2016, along with an increase in foreign exchange losses in 2016 of $473 and the inclusion in the 2015 period of approximately\n$604 in insurance premium credits.","markdown_table":"\n\n| 43 | | |\n| --- | --- | --- |\n| International Seaways, Inc. | | |\n\n","source":"INSW\/10-K\/0001144204-18-013984"} {"title":"EQUITY IN INCOME OF AFFILIATED COMPANIES","text":"Revenue generated by the FSO joint ventures for the future years\nis expected to be lower than revenue generated during 2017, as charter rates in the five-year service contracts with NOC, which\ncommenced in the third quarter of 2017, are lower than the charter rates included in the service contracts under which the FSO\njoint ventures operated previously.Overall, over the term of the five-year service contracts with NOC\ndescribed above, the FSO joint ventures are expected to generate in excess of $180,000 of EBITDA for the Company.","markdown_table":"\n\n| 44 | | |\n| --- | --- | --- |\n| International Seaways, Inc. | | |\n\n","source":"INSW\/10-K\/0001144204-18-013984"} {"title":"INTEREST EXPENSE","text":"Interest expense was $40,438 in 2017, compared with $39,476 in 2016.\nInterest expense for the year ended December 31, 2017 is higher than interest expense for the year ended December 31, 2016 primarily\ndue to the higher average interest rates and outstanding principal balances under the 2017 Debt Facilities, which replaced the\nINSW Facilities in June 2017. This was partially offset by lower amortization of deferred finance costs in the 2017 period aggregating\n$220 attributable to costs incurred to amend the INSW Facilities in 2016 and costs related to the 2017 Debt Facilities. Refer to\nNote 8, \u201cDebt,\u201d in the accompanying consolidated financial statements for additional information.Interest expense was $39,476 in 2016 compared with $42,970 in 2015.\nThe decrease in interest expense reflected the impact of the Company\u2019s repurchases and prepayments of $152,754 in aggregate\nprincipal amount of the INSW Term Loan in 2016.","markdown_table":"\n\n| | | 2017 | | | | 2016 | | | | 2015 | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| Interest before impact of interest rate caps | | $ | 40,307 | | | $ | 38,959 | | | $ | 42,970 | |\n| Impact of interest rate caps | | | 131 | | | | 517 | | | | - | |\n| Interest expense | | $ | 40,438 | | | $ | 39,476 | | | $ | 42,970 | |\n\n","source":"INSW\/10-K\/0001144204-18-013984"} {"title":"INCOME TAX EXPENSE","text":"EBITDA and Adjusted EBITDAEBITDA represents net income\/(loss) before interest expense, income\ntaxes and depreciation and amortization expense. Adjusted EBITDA consists of EBITDA adjusted for the impact of certain items that\nwe do not consider indicative of our ongoing operating performance. EBITDA and Adjusted EBITDA are presented to provide investors\nwith meaningful additional information that management uses to monitor ongoing operating results and evaluate trends over comparative\nperiods. EBITDA and Adjusted EBITDA do not represent, and should not be considered a substitute for, net income or cash flows from\noperations determined in accordance with GAAP. EBITDA and Adjusted EBITDA have limitations as analytical tools, and should not\nbe considered in isolation, or as a substitute for analysis of our results reported under GAAP. Some of the limitations are:\n\u00b7EBITDA and Adjusted EBITDA do not reflect our cash expenditures, or future requirements for capital expenditures or contractual\ncommitments;\n\u00b7EBITDA and Adjusted EBITDA do not reflect changes in, or cash requirements for, our working capital needs; and\n\u00b7EBITDA and Adjusted EBITDA do not reflect the significant interest expense, or the cash requirements necessary to service interest\nor principal payments, on our debt.While EBITDA and Adjusted EBITDA are frequently used by companies\nas a measure of operating results and performance, neither of those items as prepared by the Company is necessarily comparable\nto other similarly titled captions of other companies due to differences in methods of calculation.The following table reconciles net (loss)\/income, as reflected in\nthe consolidated statements of operations set forth in Item 8, \u201cFinancial Statements and Supplementary Data,\u201d to EBITDA\nand Adjusted EBITDA:","markdown_table":"\n\n| 45 | | |\n| --- | --- | --- |\n| International Seaways, Inc. | | |\n\n","source":"INSW\/10-K\/0001144204-18-013984"} {"title":"LIQUIDITY AND SOURCES OF CAPITAL","text":"Liquidity\nWorking capital at December 31, 2017 was approximately $85,000 compared\nwith $126,000 at December 31, 2016. Current assets are highly liquid, consisting principally of cash, interest-bearing deposits\nand receivables. The Company\u2019s total cash decreased by approximately $32,000 during 2017. This decrease reflects $4,983 in\nscheduled quarterly amortization of the INSW Term Loan and 2017 Term Loan Facility and the repayment of the $458,416 remaining\nprincipal balance of the INSW Term Loan as of June 22, 2017. In addition, $173,535 in cash was used for vessel acquisitions and\nbetterments, $3,825 in cash was used in operating activities and $3,177 in cash was used in repurchases of the Company\u2019s\ncommon stock. Such cash outflows were partially offset by proceeds from the issuance of the 2017 Debt Facilities (described below),\nnet of issuance and deferred financing costs, of $534,933, net proceeds from drawdown and repayment activity under the 2017 Revolver\nFacility (described below) of $30,000, net distributions received from affiliated companies of $40,750 and net proceeds of $18,344\nfrom the sales of a 2001-built and a 2004-built MR.As of December 31, 2017, we had total liquidity on a consolidated\nbasis of $90,606 comprised of $70,606 of cash (including $10,579 of restricted cash) and $20,000 of remaining undrawn revolver\ncapacity. Our cash and cash equivalents balances generally exceed Federal Deposit Insurance Corporation insured limits. We place\nour cash and cash equivalents in what we believe to be credit-worthy financial institutions. In addition, certain of our money\nmarket accounts invest in U.S. Treasury securities or other obligations issued or guaranteed by the U.S. government or its agencies,\nfloating rate and variable demand notes of U.S. and foreign corporations, commercial paper rated in the highest category by Moody\u2019s\nInvestor Services and Standard & Poor\u2019s, certificates of deposit and time deposits, and repurchase agreements.Restricted cash of $10,579 as of December 31, 2017 represents legally\nrestricted cash relating to the 2017 Debt Facilities. The 2017 Debt Facilities stipulate that if annual aggregate cash proceeds\nof INSW asset sales exceed $5,000, cash proceeds from each such sale are required to be reinvested in vessels within twelve months\nof such sale or be used to prepay the principal balance outstanding of the INSW Facilities. Restricted cash increased to $28,509\nin February 2018 following the sale of a 2002-built MR and a 2004-built MR.As of December 31, 2017, we had total debt outstanding (net of original\nissue discount and deferred financing costs) of $552,937 and a total debt to total capitalization of 33.7%, which compares with\n26.6% at December 31, 2016. Our debt profile reflects actions taken during 2017 (discussed further below) as well as minimal required\nprincipal amortization.Sources, Uses and Management of CapitalNet cash used in operating activities in the year ended December\n31, 2017 was $3,825. In addition to future operating cash flows, our other current sources of funds are proceeds from issuances\nof equity securities, additional borrowings as permitted under our loan agreements and proceeds from the opportunistic sales of\nour vessels. As described in Note 8, \u201cDebt,\u201d in the accompanying consolidated financial statements, in June 2017 INSW,\nalong with its wholly owned subsidiary, International Seaways Operating Corporation (the \u201cAdministrative Borrower\u201d\nor \u201cISOC\u201d) and certain of its subsidiaries entered into secured debt facilities with a syndicate of lenders party thereto,\nconsisting of (i) a revolving credit facility of $50,000 and (ii) a term loan of $500,000 containing an accordion feature whereby\nthe 2017 Term Loan Facility could be increased up to an additional $50,000 subject to certain conditions. The 2017 Term Loan Facility\nmatures on June 22, 2022, and the 2017 Revolver Facility matures on December 22, 2021. The maturity dates for the 2017 Debt Facilities\nare subject to acceleration upon the occurrence of certain events (as described in the credit agreement). This refinancing extended\nthe maturity of the Company\u2019s debt facilities by approximately three years and provided the Company with certain structural\nbenefits as well.On June 22, 2017, the 2017 Term Loan Facility was drawn and the\nproceeds therefrom were used to repay the $458,416 outstanding balance under the INSW Facilities and to pay certain expenses related\nto the refinancing. The remaining proceeds were used for general corporate purposes, including fleet renewal and growth.On July 19, 2017, the Company drew down $50,000 under the 2017 Revolver\nFacility, and on July 24, 2017, the Company entered into an amendment of the 2017 Debt Facilities to effect the increase of the\n2017 Term Loan Facility by $50,000, pursuant to the accordion feature described above. Except as related to such increase, no other\nterms of the 2017 Debt Facilities were amended. The net proceeds from such borrowings were used in part to finance the purchase\nof two 2017-built Suezmax tankers that were delivered to the Company in July 2017. On August 18, 2017, the outstanding balance\nunder the 2017 Revolver Facility was repaid in full using cash on hand and proceeds of the 2001-built MR described above.We financed the purchase of the 2010-built VLCC, which was delivered\nin November 2017, through a combination of cash-on-hand and a $30,000 draw on the 2017 Revolver Facility.","markdown_table":"\n\n| 46 | | |\n| --- | --- | --- |\n| International Seaways, Inc. | | |\n\n","source":"INSW\/10-K\/0001144204-18-013984"} {"title":"LIQUIDITY AND SOURCES OF CAPITAL","text":"Our current uses of funds are to fund working capital requirements,\nmaintain the quality of our vessels, purchase vessels, comply with international shipping standards and environmental laws and\nregulations, repurchase our outstanding shares and repay or repurchase our outstanding loan facilities. Fifty percent of Excess\nCash Flow (as defined in the 2017 Debt Facilities credit agreement) must be used to prepay the outstanding principal balance of\n2017 Term Loan Facility. To the extent permitted under the terms of the 2017 Debt Facilities we may also use cash generated by\noperations to finance capital expenditures to modernize and grow our fleet.As set forth in the 2017 Debt Facilities credit agreement, the 2017\nDebt Facilities contain certain restrictions relating to new borrowings and INSW\u2019s ability to receive cash dividends, loans\nor advances from ISOC and its subsidiaries that are Restricted Subsidiaries. As of December 31, 2017, the permitted cash dividends\nthat can be distributed to INSW by ISOC under the 2017 Term Loan Facility was $15,000.Outlook We believe the actions we have taken have strengthened our balance\nsheet as well as increased our flexibility to actively pursue fleet renewal or potential strategic opportunities that may arise\nwithin the diverse sectors in which we operate and at the same time positioned us to continue to generate sufficient cash to support\nour operations over the next twelve months ending December 31, 2018. Our balanced fleet deployment and a moderate level of predictable\ncash flows from our joint ventures and contracted fixed-rate charters will enable the Company to both optimize revenue through\nthe current tanker market cycle and benefit from a market recovery in both the product and crude tanker sectors. We or our subsidiaries\nmay in the future complete additional transactions consistent with achieving the objectives of our business plan.In December 2017, the Company entered into a binding letter of intent\nto acquire the holding companies for six 300,000 DWT VLCCs with an average age of 1.7 years from Euronav in connection with the\nclosing of Euronav\u2019s announced acquisition of Gener8 Maritime, Inc. (\u201cGNRT\u201d). The $434,000 transaction (inclusive\nof assumed debt) is subject to a number of closing conditions, including (i) consummation of Euronav\u2019s announced acquisition\nof GNRT, (ii) amendment of the Company\u2019s existing credit facility as required to consummate the transaction, (iii) the Company\u2019s\nreceipt of financing necessary to consummate the transaction, (iv) completion of the Company\u2019s due diligence to its reasonable\nsatisfaction, (v) execution of a definitive stock purchase agreement and (vi) receipt of all required third-party consents, third-party\napprovals and regulatory approvals. The transaction is expected to close in the second quarter of 2018. Either party is permitted\nto terminate the LOI on or after March 31, 2018 if the parties have not entered into a definitive stock purchase agreement by such\ndate and the party terminating the LOI is not otherwise in breach thereof. INSW intends to fund the transaction with a combination\nof available liquidity, the assumption of all or part of the debt (that is currently secured by the vessels) with an expected March\n31, 2018 outstanding balance of $311,000, maturing between 2027 and 2028 and carrying a fixed annual interest rate of LIBOR plus\n2.0% and other financing sources such as the proceeds from the financing of the 2010-built VLCC acquired in November 2017, as permitted\nunder the Company\u2019s existing term loan, and the sale and leaseback of two modern Aframax vessels.Carrying Value of VesselsAll except one of the Company\u2019s owned vessels are pledged\nas collateral under the INSW Facilities. The following table presents information with respect to the carrying amount of the Company\u2019s\nvessels by type and indicates whether their fair market values, which are estimated by taking an average of two third-party vessel\nappraisals, are below their carrying values as of December 31, 2017. The carrying value of each of the Company\u2019s vessels\ndoes not necessarily represent its fair market value or the amount that could be obtained if the vessel were sold. The Company\u2019s\nestimates of market values for its vessels assume that the vessels are all in good and seaworthy condition without need for repair\nand, if inspected, would be certified as being in class without notations. In addition, because vessel values are highly volatile,\nthese estimates may not be indicative of either the current or future prices that the Company could achieve if it were to sell\nany of the vessels. The Company would not record a loss for any of the vessels for which the fair market value is below its carrying\nvalue unless and until the Company either determines to sell the vessel for a loss or determines that the vessel is impaired as\ndiscussed below in \u201c\u2014\u00a0Critical Accounting Policies\u00a0\u2014\u00a0Vessel Impairment.\u201d The Company believes\nthat the future undiscounted cash flows expected to be earned over the estimated remaining useful lives for those vessels that\nhave experienced declines in market values below their carrying values would exceed such vessels\u2019 carrying values.","markdown_table":"\n\n| 47 | | |\n| --- | --- | --- |\n| International Seaways, Inc. | | |\n\n","source":"INSW\/10-K\/0001144204-18-013984"} {"title":"LIQUIDITY AND SOURCES OF CAPITAL","text":"Footnotes to the following table exclude those vessels with an estimated\nmarket value in excess of their carrying value.","markdown_table":"\n\n| 48 | | |\n| --- | --- | --- |\n| International Seaways, Inc. | | |\n\n","source":"INSW\/10-K\/0001144204-18-013984"} {"title":"LIQUIDITY AND SOURCES OF CAPITAL","text":"(1)As of December 31, 2017, the Crude Tankers segment includes vessels with an aggregate carrying value of $581,461, which the\nCompany believes exceeds their aggregate market value of approximately $459,000 by $122,461.\n(2)As of December 31, 2017, the Product Carriers segment includes vessels with an aggregate carrying value of $281,383, which\nthe Company believes exceeds their aggregate market value of approximately $209,375 by $72,008. This excludes a 2002-built MR which\nwas held for sale as of December 31, 2017 and delivered to its buyer in January 2018.Off-Balance Sheet Arrangements As of December 31, 2017, the LNG Joint Venture had total bank debt\noutstanding of $597,129 that was nonrecourse to the Company. The FSO Joint Venture\u2019s debt matured in July 2017 and was accordingly\nrepaid, together with all amounts remaining under related interest rate swap agreements, by the FSO Joint Venture.The FSO Joint Venture is a party to a number of contracts: (a) the\nFSO Joint Venture is an obligor pursuant to a guarantee facility agreement dated as of July 14, 2017, by and among the FSO Joint\nVenture, ING Belgium NV\/SA, as issuing bank, and Euronav and INSW, as guarantors (the \u2018\u2018Guarantee Facility\u2019\u2019);\nand (b) the FSO Joint Venture is party to two service contracts with NOC (the \u2018\u2018NOC Service Contracts\u2019\u2019).INSW severally guarantees the obligations of the FSO Joint Venture\npursuant to the Guarantee Facility and severally guarantees the obligations of the FSO Joint Venture to Maersk Oil Qatar AS (\u201cMOQ\u201d)\nunder the MOQ service contracts, which contracts were novated to NOC in July 2017 (the \u2018\u2018MOQ Guarantee\u2019\u2019)\nfor the period beginning on the novation date and severally guarantees the obligations of the FSO Joint Venture under the NOC Service\nContracts. INSW continues the MOQ Guarantee to MOQ for the period ended on the novation date of the service contracts for MOQ,\nwhich guarantee will end when Qatari authorities determine that the FSO Joint Venture has paid all Qatari taxes owed by the FSO\nJoint Venture under such service contracts through the novation date.INSW maintains a guarantee in favor of Qatar Liquefied Gas Company\nLimited (2) (\u2018\u2018LNG Charterer\u2019\u2019) relating to certain LNG Tanker Time Charter Party Agreements with the LNG\nCharterer and each of Overseas LNG H1 Corporation, Overseas LNG H2 Corporation, Overseas LNG S1 Corporation and Overseas LNG S2\nCorporation (such agreements, the \u2018\u2018LNG Charter Party Agreements,\u2019\u2019 and such guarantee, the \u2018\u2018LNG\nPerformance Guarantee\u2019\u2019). INSW will pay QGTC an annual fee of $100 until such time that QGTC ceases to provide a guarantee\nin favor of the LNG charterer relating to performance under the LNG Charter Party Agreements.OSG continues to provide a guarantee in favor of the LNG Charterer\nrelating to the LNG Charter Party Agreements (such guarantees, the \u2018\u2018OSG LNG Performance Guarantee\u2019\u2019).\nINSW will indemnify OSG for liabilities arising from the OSG LNG Performance Guarantee pursuant to the terms of the Separation\nand Distribution Agreement. In connection with the OSG LNG Performance Guarantee, INSW will pay a $125 fee per year to OSG, which\nwill increase to $135 per year in 2018 and will be terminated if OSG ceases to provide the OSG LNG Performance Guarantee.See Note 12, \u201cRelated Parties,\u201d to the Company\u2019s\nconsolidated financial statements set forth in Item 8, \u201cFinancial Statements and Supplementary Data\u201d for additional\ninformation.","markdown_table":"\n\n| As of December 31, 2017 | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| Vessel Type | | Average Vessel Age (weighted by dwt) | | | | Number of Owned Vessels | | | | Carrying Value | | |\n| | | | | | | | | | | | | |\n| Crude Tankers | | | | | | | | | | | | |\n| VLCC (includes ULCC) | | | 12.5 | | | | 10 | | | $ | 453,914 | |\n| Suezmax | | | 0.4 | | | | 2 | | | | 115,438 | |\n| Aframax | | | 12.6 | | | | 7 | | | | 146,082 | |\n| Panamax | | | 15.3 | | | | 8 | | | | 60,582 | |\n| *Total Crude Tankers(1)* | | | 12.1 | | | | 27 | | | $ | 776,016 | |\n| | | | | | | | | | | | | |\n| Product Carriers | | | | | | | | | | | | |\n| LR2 | | | 3.4 | | | | 1 | | | $ | 64,376 | |\n| LR1 | | | 9.0 | | | | 4 | | | | 93,054 | |\n| MR | | | 11.5 | | | | 10 | | | | 168,827 | |\n| *Total Product Carriers(2)* | | | 9.6 | | | | 15 | | | $ | 326,257 | |\n\n","source":"INSW\/10-K\/0001144204-18-013984"} {"title":"LIQUIDITY AND SOURCES OF CAPITAL","text":"In addition and pursuant to an agreement between INSW and the trustees\nof the OSG Ship Management (UK) Ltd. Retirement Benefits Plan (the \u201cScheme\u201d), INSW guarantees the obligations of OSG\nShip Management (UK) Ltd., a subsidiary of INSW, to make payments to the Scheme. See Note 16, \u201cPension and other postretirement\nbenefit plans,\u201d to the Company\u2019s consolidated financial statements set forth in Item 8, \u201cFinancial Statements\nand Supplementary Data,\u201d for additional information.Aggregate Contractual ObligationsA summary of the Company\u2019s long-term contractual obligations\nas of December 31, 2017 follows:","markdown_table":"\n\n| 49 | | |\n| --- | --- | --- |\n| International Seaways, Inc. | | |\n\n","source":"INSW\/10-K\/0001144204-18-013984"} {"title":"LIQUIDITY AND SOURCES OF CAPITAL","text":"(1)Amounts shown include contractual interest obligations of floating rate debt estimated based on the aggregate effective LIBOR\nrate as of December 31, 2017 of 1.35% and applicable margins of 5.5% and 3.5% for the 2017 Term Loan Facility, due 2022 and the\n2017 Revolver Facility due 2021, respectively. Management estimates that no prepayment will be required for the 2017 Term Loan\nFacility as a result of estimated Excess Cash Flow for the year ended December 31, 2017. Amounts shown for the 2017 Term Loan Facility\nfor years subsequent to 2018 exclude any estimated repayment as a result of Excess Cash Flow.\n(2)As of December 31, 2017, the Company had charter-in commitments for\nsix vessels on leases that are accounted for as operating leases. Certain of these leases provide the Company with various renewal\nand purchase options. The future minimum commitments for time charters-in have been reduced to reflect estimated days that the\nvessels will not be available for employment due to drydock.","markdown_table":"\n\n| | | | | | | | | | | | | | | | | | | | | | | Beyond | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | 2018 | | | | 2019 | | | | 2020 | | | | 2021 | | | | 2022 | | | | 2022 | | | | Total | | |\n| 2017 Debt Facilities(1) | | $ | 67,425 | | | $ | 65,752 | | | $ | 63,879 | | | $ | 91,680 | | | $ | 454,837 | | | $ | - | | | $ | 743,573 | |\n| Operating lease obligations (2) | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Bareboat Charter-ins | | | 1,841 | | | | - | | | | - | | | | - | | | | - | | | | - | | | | 1,841 | |\n| Time Charter-ins | | | 11,849 | | | | - | | | | - | | | | - | | | | - | | | | - | | | | 11,849 | |\n| Office space | | | 1,249 | | | | 1,166 | | | | 1,152 | | | | 665 | | | | - | | | | - | | | | 4,232 | |\n| Total | | $ | 82,364 | | | $ | 66,918 | | | $ | 65,031 | | | $ | 92,345 | | | $ | 454,837 | | | $ | - | | | $ | 761,495 | |\n\n","source":"INSW\/10-K\/0001144204-18-013984"} {"title":"RISK MANAGEMENT","text":"Fuel price volatility risk Historically, the Company managed its exposure to future increases\nin fuel prices in the normal course of its business by entering into standalone bunker swaps. The Company\u2019s deployment of\nmost of its conventional tanker fleet in commercial pools and time charters currently limits the Company\u2019s direct exposure\nto fluctuations in fuel prices as a component of voyage expenses.","markdown_table":"\n\n| 50 | | |\n| --- | --- | --- |\n| International Seaways, Inc. | | |\n\n","source":"INSW\/10-K\/0001144204-18-013984"} {"title":"INTEREST RATE SENSITIVITY","text":"As of December 31, 2017, the Company had a secured term loan (2017\nTerm Loan) and a revolving credit facility (2017 Revolver Facility) under which borrowings bear interest at a rate based on LIBOR,\nplus the applicable margin, as stated in the respective loan agreements. There was $30,000 outstanding under the 2017 Revolver\nFacility as of December 31, 2017.","markdown_table":"\n\n| | | | | | | | | | | | | | | | | | | | | | | | | | | Fair Value at | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | | | | | | | | | | | | | | | | | Beyond | | | | | | | | Dec. 31, | | |\n| At December 31, 2017 | | 2018 | | | | 2019 | | | | 2020 | | | | 2021 | | | | 2021 | | | | Total | | | | 2017 | | |\n| Liabilities | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Debt | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Variable rate debt | | $ | 24.1 | | | $ | 27.5 | | | $ | 27.5 | | | $ | 57.5 | | | $ | 440.0 | | | $ | 576.6 | | | $ | 580.9 | |\n| Average interest rate | | | 6.95 | % | | | 6.95 | % | | | 6.95 | % | | | 5.91 | % | | | 6.95 | % | | | | | | | | |\n\n","source":"INSW\/10-K\/0001144204-18-013984"} {"title":"CRITICAL ACCOUNTING POLICIES","text":"For the Company\u2019s vessels operating in Commercial Pools, revenues\nand voyage expenses are pooled and allocated to each pool\u2019s participants on a time charter equivalent basis in accordance\nwith an agreed-upon formula. The formulas in the pool agreements for allocating gross shipping revenues net of voyage expenses\nare based on points allocated to participants\u2019 vessels based on cargo carrying capacity and other technical characteristics,\nsuch as speed and fuel consumption. The selection of charterers, negotiation of rates and collection of related receivables and\nthe payment of voyage expenses are the responsibility of the pools. The pools may enter into contracts that earn either voyage\ncharter revenue or time charter revenue. Each of the pools follows the same revenue recognition principles, as applied by the Company,\nin determining shipping revenues and voyage expenses, including recognizing revenue only after a charter has been agreed to by\nboth the pool and the customer, even if the vessel has discharged its cargo and is sailing to the anticipated load port on its\nnext voyage.For the pools in which the Company participates, management monitors,\namong other things, the relative proportion of the Company\u2019s vessels operating in each of the pools to the total number of\nvessels in each of the respective pools and assesses whether or not the Company\u2019s participation interest in each of the pools\nis sufficiently significant so as to determine that the Company has effective control of the pool.The adoption of ASC 606, Revenue from Contracts with Customers,\nin the first quarter of 2018 will not materially change the Company\u2019s current revenue recognition for time charters, bareboat\ncharters and commercial pool arrangements. However, revenue recognition for voyage charters will most likely change depending on\nwhether such charters are determined to be service only contracts or operating leases. Such determination will require management\nto exercise a significant level of judgment when evaluating the specific terms and conditions of a charter agreement. Refer to\nNote 2, Summary of Significant Accounting Policies, to the accompanying consolidated financial statements for additional discussion\nof the impact of the adoption of the new revenue recognition standard.Vessel Lives and Salvage ValuesThe carrying value of each of the Company\u2019s vessels represents\nits original cost at the time it was delivered or purchased less depreciation calculated using an estimated useful life of 25 years\n(except for FSO service vessels for which estimated useful lives of 30 years are used and LNG Carriers for which estimated useful\nlives of 35 years are used) from the date such vessel was originally delivered from the shipyard. A vessel\u2019s carrying value\nis reduced to its new cost basis (i.e. its current fair value) if a vessel impairment charge is recorded.If the estimated economic lives assigned to the\nCompany\u2019s vessels prove to be too long because of new regulations, an extended period of weak markets, the broad\nimposition of age restrictions by the Company\u2019s customers, or other future events, it could result in higher\ndepreciation expense and impairment losses in future periods related to a reduction in the useful lives of any affected\nvessels. Company management estimates the scrap value of all of its vessels to be $300 per lightweight ton. The\nCompany\u2019s assumptions used in the determination of estimated salvage value take into account current scrap prices, the\nhistoric pattern of annual average scrap rates over the five years ended December 31, 2017, which ranged from $235 to $495\nper lightweight ton, estimated changes in future market demand for scrap steel and estimated future demand for vessels. Scrap\nprices also fluctuate depending upon type of ship, bunkers on board, spares on board and delivery range. Market conditions\nthat could influence the volume and pricing of scrapping activity in 2018 and beyond include the combined impact of scheduled\nnewbuild deliveries and charter rate expectations for vessels potentially facing age restrictions imposed by oil majors as\nwell as the impact of ballast water treatment systems regulatory requirements and requirements for the use of low sulphur\nfuels. These factors will influence owners\u2019 decisions to accelerate the disposal of older vessels, especially those\nwith upcoming special surveys.Although management believes that the assumptions used to determine\nthe scrap rate for its International Flag vessels are reasonable and appropriate, such assumptions are highly subjective, in part,\nbecause of the cyclicality of the nature of future demand for scrap steel.Vessel ImpairmentThe carrying values of the Company\u2019s vessels may not represent\ntheir fair market value or the amount that could be obtained by selling the vessel at any point in time since the market prices\nof second-hand vessels tend to fluctuate with changes in charter rates and the cost of newbuildings. Historically, both charter\nrates and vessel values tend to be cyclical. Management evaluates the carrying amounts of vessels held and used by the Company\nfor impairment only when it determines that it will sell a vessel or when events or changes in circumstances occur that cause management\nto believe that future cash flows for any individual vessel will be less than its carrying value. In such instances, an impairment\ncharge would be recognized if the estimate of the undiscounted future cash flows expected to result from the use of the vessel\nand its eventual disposition is less than the vessel\u2019s carrying amount. This assessment is made at the individual vessel\nlevel as separately identifiable cash flow information for each vessel is available.","markdown_table":"\n\n| 51 | | |\n| --- | --- | --- |\n| International Seaways, Inc. | | |\n\n","source":"INSW\/10-K\/0001144204-18-013984"} {"title":"CRITICAL ACCOUNTING POLICIES","text":"In developing estimates of future cash flows, the Company must make\nassumptions about future performance, with significant assumptions being related to charter rates, ship operating expenses, utilization,\ndrydocking requirements, residual value and the estimated remaining useful lives of the vessels. These assumptions are based on\nhistorical trends as well as future expectations. Specifically, in estimating future charter rates, management takes into consideration\nrates currently in effect for existing time charters and estimated daily time charter equivalent rates for each vessel class for\nthe unfixed days over the estimated remaining lives of each of the vessels. The estimated daily time charter equivalent rates used\nfor unfixed days are based on a combination of (i) internally forecasted rates that are consistent with forecasts provided to the\nCompany\u2019s senior management and Board of Directors, and (ii) the trailing 12-year historical average rates, based on monthly\naverage rates published by a third party maritime research service. The internally forecasted rates are based on management\u2019s\nevaluation of current economic data and trends in the shipping and oil and gas industries. Management uses the published 12-year\nhistorical average rates in its assumptions because it is management\u2019s belief that the 12-year period captures a distribution\nof strong and weak charter rate periods, which results in the use of an average mid-cycle rate that is more in line with management\u2019s\nforecast of a return to mid-cycle charter rate levels in the medium term. Recognizing that the transportation of crude oil and\npetroleum products is cyclical and subject to significant volatility based on factors beyond the Company\u2019s control, management\nbelieves the use of estimates based on the combination of internally forecasted rates and 12-year historical average rates calculated\nas of the reporting date to be reasonable.Estimated outflows for operating expenses and drydocking requirements\nare based on historical and budgeted costs and are adjusted for assumed inflation. Utilization is based on historical levels achieved\nand estimates of a residual value for recyclings are based upon published 12-year historical data or the pattern of scrap rates\nused in management\u2019s evaluation of salvage value for purposes of recording depreciation. Finally, for vessels that are being\nconsidered for disposal before the end of their respective useful lives, the Company utilizes weighted probabilities assigned to\nthe possible outcomes for such vessels being sold or scraped before the end of their respective useful lives.The determination of fair value is highly judgmental. In estimating\nthe fair value of INSW\u2019s vessels for purposes of Step 2 of the impairment tests, the Company considered the market and income\napproaches by using a combination of third party appraisals and discounted cash flow models prepared by the Company. In preparing\nthe discounted cash flow models, the Company uses a methodology consistent with the methodology discussed above in relation to\nthe undiscounted cash flow models prepared by the Company, and discounts the cash flows using its current estimate of INSW\u2019s\nweighted average cost of capital, which ranged from 9.0% to 9.5% over the three years ended December 31, 2017.The more significant factors that could impact management\u2019s\nassumptions regarding time charter equivalent rates include (i) loss or reduction in business from significant customers, (ii)\nunanticipated changes in demand for transportation of crude oil and petroleum products, (iii) changes in production of or demand\nfor oil and petroleum products, generally or in particular regions, (iv) greater than anticipated levels of tanker newbuilding\norders or lower than anticipated levels of tanker scrappings, and (v) changes in rules and regulations applicable to the tanker\nindustry, including legislation adopted by international organizations such as IMO and the EU or by individual countries. Although\nmanagement believes that the assumptions used to evaluate potential impairment are reasonable and appropriate at the time they\nwere made, such assumptions are highly subjective and likely to change, possibly materially, in the future.2017 Impairment Evaluation\u00a0\u2014\u00a0Management gave\nconsideration to the following events and changes in circumstances in determining whether there were any indicators that the carrying\namounts of the vessels in the Company\u2019s fleet were not recoverable as of December 31, 2017. Factors considered included declines\nin valuations during 2017 for vessels of certain sizes and ages, any negative changes in forecasted near term charter rates, and\nan increase in the likelihood that the Company will sell certain of its vessels before the end of their estimated useful lives\nin conjunction with the Company\u2019s fleet renewal program. The Company concluded that the above indicators constituted impairment\ntrigger events for eighteen vessels (one ULCC, one VLCC, six Aframaxes, eight Panamaxes and two LR1s) as of December 31, 2017 and\nthree vessels (one Panamax and two MRs) as of September 30, 2017.In developing estimates of undiscounted future cash flows for performing\nStep 1 of the impairment tests, the Company utilized the methodology described above. In estimating the fair value of the vessels\nfor the purposes of Step 2 of the impairment tests, the Company considered the market and income approaches by using a combination\nof third party appraisals, current recycling market data, and discounted cash flow models prepared by the Company. In preparing\nthe discounted cash flow models, the Company used a methodology consistent with the methodology described above and a weighted\naverage cost of capital discount rate of 9.5%. Based on the tests performed, impairment charges totaling $81,062 and $7,346 were\nrecorded on twelve vessels (one ULCC, one VLCC, four Aframaxes and six Panamaxes) at December 31, 2017 and three vessels (one Panamax\nand two MRs) as of September 30, 2017, respectively to write-down their carrying values to their estimated fair values.","markdown_table":"\n\n| 52 | | |\n| --- | --- | --- |\n| International Seaways, Inc. | | |\n\n","source":"INSW\/10-K\/0001144204-18-013984"} {"title":"CRITICAL ACCOUNTING POLICIES","text":"2016 Impairment Evaluations\u00a0\u2014 The Company had\nbeen monitoring the industry wide decline in vessel valuations during 2016 and specifically from June 30, 2016 to September 30,\n2016, and September 30, 2016 to December 31, 2016, as well as the decline in forecasted near term charter rates, and concluded\nthat the declines in vessel valuations and in forecasted near term charter rates constituted impairment trigger events for 28 vessels\nas of September 30, 2016 and 24 vessels as of December 31, 2016. In developing estimates of undiscounted future cash flows for\nperforming Step 1 of the impairment tests, the Company utilized the methodology described above. In estimating the fair value of\nthe vessels for the purposes of Step 2 of the September 30, 2016 impairment tests, the Company developed fair value estimates that\nutilized a market approach which considered an average of two vessel appraisals. Based on the tests performed, impairment charges\ntotaling $49,640 were recorded on two LR1s, an Aframax and a Panamax to write-down their carrying values to their estimated fair\nvalues at September 30, 2016. In estimating the fair values of the vessels for the purposes of Step 2 of the December 31, 2016\nimpairment tests, the Company considered the market and income approaches by using a combination of third party appraisals and\ndiscounted cash flow models prepared by the Company. In preparing the discounted cash flow models, the Company used a methodology\nconsistent with the methodology described above and a weighted average cost of capital discount rate of 9.0%. Based on the tests\nperformed, impairment charges aggregating $29,602 were recorded on one Panamax and seven MRs to write-down their carrying values\nto their estimated fair values at December 31, 2016.2015 Impairment Evaluation\u00a0\u2014\u00a0Management gave\nconsideration as to whether any events and changes in circumstances existed as of December 31, 2015 that could be viewed as indicators\nthat the carrying amounts of the vessels in the Company\u2019s International Flag fleet were not recoverable as of December 31,\n2015 and determined there were no such events or changes in circumstances.Impairment of Equity Method InvestmentsWhen events and circumstances warrant, investments accounted for\nunder the equity method of accounting are evaluated for impairment. If a determination is made that an other-than-temporary impairment\nexists, the investment should be written down to its fair value in accordance with ASC 820, Fair Value Measurements and Disclosures,\nwhich establishes a new cost basis. In December 2016, evidence of an other-than-temporary decline in the fair value of the Company\u2019s\ninvestments in its FSO joint ventures below their carrying values was identified by the Company. Specifically, management concluded\nthat the lower charter rate expected over the duration of the recently awarded five-year service contracts commencing in the third\nquarter of 2017 was negative evidence indicating that the excess of the carrying value of the Company\u2019s investment in these\njoint ventures over their fair value was other-than-temporary as of December 31, 2016.As the Company determined that other-than-temporary impairments\nexisted in relation to its investments in the FSO joint ventures, impairment charges aggregating $30,475 were recorded to write\ndown the investments to their estimated fair values as of December 31, 2016. Such charges are included in equity in income of affiliated\ncompanies in the accompanying consolidated statements of operations. In estimating the fair value of the Company\u2019s investments\nin the FSO joint ventures as of December 31, 2016, the Company utilized an income approach, by preparing discounted cash flow models\nsince there is a lack of comparable market transactions for the specially built assets held by the joint ventures. In preparing\nthe discounted cash flows models, the Company used a methodology largely consistent with the methodology and assumptions detailed\nin the \u201cVessel Impairment\u201d section above, with the exception being that as the assets owned by the joint ventures serve\nunder specific service contracts, the estimated charter rates for periods after the expiry of the existing contracts are based\nupon management\u2019s internally forecasted rates. The cash flows were discounted using the estimated weighted average cost of\ncapital for each joint venture, which approximated 9.5% and took into consideration country risk, entity size and uncertainty with\nrespect to the cash flows for periods beyond the current charter expiries.DrydockingWithin the shipping industry, there are two methods that are used\nto account for dry dockings: (1) capitalize drydocking costs as incurred (deferral method) and amortize such costs over the period\nto the next scheduled drydocking, and (2) expense drydocking costs as incurred. Since drydocking cycles typically extend over two\nand a half years or five years, management uses the deferral method because management believes it provides a better matching of\nrevenues and expenses than the expense-as-incurred method.\u00a0Pension BenefitsThe Company has obligations outstanding under the OSG Ship Management\n(UK) Ltd. Retirement Benefits Plan (the \u201cScheme\u201d), a defined benefit pension plan maintained by a subsidiary in the\nU.K., who is the principal employer of the Scheme. The plan has been closed to new entrants and accrual since December 2007. The\nCompany has recorded pension benefit costs based on valuations developed by its actuarial consultants. These valuations are based\non key estimates and assumptions, including those related to the discount rates, the rates expected to be earned on investments\nof plan assets and the life expectancy\/mortality of plan participants. The Company is required to consider market conditions in\nselecting a discount rate that is representative of the rates of return currently available on high-quality fixed income investments.\nA higher discount rate would result in a lower benefit obligation and a lower rate would result in a higher benefit obligation.\nThe expected rate of return on plan assets is management\u2019s best estimate of expected returns on plan assets. A decrease in\nthe expected rate of return will increase net periodic benefit costs and an increase in the expected rate of return will decrease\nbenefit costs. The mortality assumption is management\u2019s best estimate of the expected duration of future benefit payments\nat the measurement date. The estimate is based on the specific demographics and other relevant facts and circumstances of the Scheme\nand considers all relevant information available at the measurement date. Longer life expectancies would result in higher benefit\nobligations and a decrease in life expectancies would result in lower benefit obligations.","markdown_table":"\n\n| 53 | | |\n| --- | --- | --- |\n| International Seaways, Inc. | | |\n\n","source":"INSW\/10-K\/0001144204-18-013984"} {"title":"CRITICAL ACCOUNTING POLICIES","text":"In determining the benefit obligations at the end of year measurement\ndate, the Company continues to use an equivalent single weighted-average discount rate, at December 31, 2017 (2.40%) and 2016 (2.60%),\nrespectively. Management believes these rates to be appropriate for ongoing plans with a long duration such as Scheme. The Company\nalso assumed a long-term rate of return on the Scheme assets of 3.85% and 3.85% at December 31, 2017 and 2016, respectively, based\non the asset mix as of such dates and management\u2019s estimate of the long term rate of return that could be achieved over the\nremaining duration of the Scheme.Newly Issued Accounting StandardsSee Note 2, \u201cSummary of Significant Accounting Policies,\u201d\nto the Company\u2019s consolidated financial statements set forth in Item 8, \u201cFinancial Statements and Supplementary Data.\u201d","markdown_table":"\n\n| 54 | | |\n| --- | --- | --- |\n| International Seaways, Inc. | | |\n\n","source":"INSW\/10-K\/0001144204-18-013984"} {"title":"Crude Tankers","text":"TCE rates during the fourth quarter of 2018 were strong on the back of increasing demand for crude oil and a record number of tanker removals through scrapping.\u00a0 That strength carried forward into the first quarter of 2019, resulting in firm TCE rates for VLCCs, Suezmaxes, Aframaxes and Panamaxes.\u00a0\u00a0A combination of events, including a large influx of newbuilding deliveries during the first quarter, OPEC production quota reductions and lackluster demand due in part to the U.S.-China trade war, caused the market to soften during the second and third quarters of 2019.\u00a0U.S. sanctions on Venezuela imposed at the start of 2019\u00a0also hurt the crude oil tanker markets, particularly the VLCC and Aframax sectors.\u00a0 Strong TCE rates in the fourth quarter of 2019 \u00a0were driven by increasing crude oil demand on the back of improving trade conditions and the end of a prolonged period of refinery maintenance ahead of IMO 2020,\u00a0as well as external geopolitical factors including U.S. sanctions imposed on certain entities owned by China Ocean Shipping Company (\u201cCOSCO\u201d) due to alleged trading with Iran and the drone attack on a Saudi Arabian crude oil processing plant at Abqaiq.","markdown_table":"\n\n| | | | | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | Quarter Ended | | | | | | | | | | | | | |\n| | | December 31, 2018 | | | March 31, 2019 | | | June 30,2019 | | | September 30,2019 | | | December 31,2019 | |\n| VLCC: | | | | | | | | | | | | | | | |\n| Average rate | | $ | 31,728 | | $ | 31,993 | | $ | 20,038 | | $ | 22,434 | | $ | 54,102 |\n| Revenue days | | | 1,187 | | | 1,134 | | | 1,065 | | | 1,068 | | | 986 |\n| Suezmax: | | | | | | | | | | | | | | | |\n| Average rate | | $ | 30,606 | | $ | 28,935 | | $ | 20,772 | | $ | 18,470 | | $ | 50,871 |\n| Revenue days | | | 184 | | | 180 | | | 182 | | | 184 | | | 183 |\n| Aframax: | | | | | | | | | | | | | | | |\n| Average rate | | $ | 18,968 | | $ | 20,905 | | $ | 13,540 | | $ | 15,342 | | $ | 31,302 |\n| Revenue days | | | 425 | | | 398 | | | 318 | | | 368 | | | 303 |\n| Panamax: | | | | | | | | | | | | | | | |\n| Average rate | | $ | 14,866 | | $ | 17,558 | | $ | 12,095 | | $ | 7,846 | | $ | 29,144 |\n| Revenue days | | | 139 | | | 73 | | | 113 | | | 92 | | | 92 |\n\n","source":"INSW\/10-K\/0001558370-20-001928"} {"title":"Product Carriers","text":"Aside of the events described above for the Crude Tankers segment, the Product Carriers market was negatively impacted during the second and third quarters of 2019 as many refineries began long maintenance periods in anticipation of IMO 2020\u2019s implementation. MR tankers were particularly negatively impacted by the U.S. imposition of sanctions on Venezuela as a key trade of U.S. refined product exports to Venezuela became prohibited.\u00a0 A return of stronger demand during the latter half of 2019 and the geopolitical events discussed in the crude tanker section above helped lift rates in the Product Carriers sector during the fourth quarter of 2019.\n\nSee Note 4, \u201cBusiness and Segment Reporting,\u201d to the Company\u2019s consolidated financial statements as set forth in Item 8, \u201cFinancial Statements and Supplementary Data,\u201d for additional information on the Company\u2019s segments, including equity in income of affiliated companies and reconciliations of (i) time charter equivalent revenues to shipping revenues and (ii) adjusted income\/(loss) from vessel operations for the segments to loss before income taxes, as reported in the consolidated statements of operations.","markdown_table":"\n\n| | | | | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | Quarter Ended | | | | | | | | | | | | | |\n| | | December 31, 2018 | | | March 31, 2019 | | | June 30,2019 | | | September 30,2019 | | | December 31,2019 | |\n| LR2 | | | | | | | | | | | | | | | |\n| Average rate | | $ | 15,575 | | $ | 22,090 | | $ | 17,746 | | $ | 17,253 | | $ | 23,222 |\n| Revenue days | | | 92 | | | 90 | | | 72 | | | 87 | | | 92 |\n| LR1 | | | | | | | | | | | | | | | |\n| Average rate | | $ | 22,165 | | $ | 24,017 | | $ | 17,271 | | $ | 15,475 | | $ | 28,652 |\n| Revenue days | | | 354 | | | 339 | | | 347 | | | 506 | | | 534 |\n| MR | | | | | | | | | | | | | | | |\n| Average rate | | $ | 12,905 | | $ | 13,462 | | $ | 11,571 | | $ | 11,430 | | $ | 14,028 |\n| Revenue days | | | 978 | | | 889 | | | 847 | | | 673 | | | 604 |\n\n","source":"INSW\/10-K\/0001558370-20-001928"} {"title":"Crude Tankers","text":"(a)\n\n\n\nAdjusted income\/(loss) from vessel operations by segment is before general and administrative expenses, provision for credit losses, third-party debt modification fees, and loss on disposal of vessels and other property, including impairments.\n\n (b)\n\n\n\nThe average is calculated to reflect the addition and disposal of vessels during the\u00a0year.","markdown_table":"\n\n| | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- |\n| | | 2019 | | | 2018 | |\n| TCE revenues | | $ | 259,517 | | $ | 175,524 |\n| Vessel expenses | | | (93,672) | | | (95,090) |\n| Charter hire expenses | | | (35,114) | | | (23,809) |\n| Depreciation and amortization | | | (59,387) | | | (54,431) |\n| Adjusted income from vessel operations (a) | | $ | 71,344 | | $ | 2,194 |\n| Average daily TCE rate | | $ | 26,765 | | $ | 17,780 |\n| Average number of owned vessels (b) | | | 25.0 | | | 26.1 |\n| Average number of vessels chartered-in under operating leases | | | 3.9 | | | 2.6 |\n| Number of revenue days: (c) | | | 9,696 | | | 9,872 |\n| Number of ship-operating days: (d) | | | | | | |\n| Owned vessels | | | 9,125 | | | 9,544 |\n| Vessels bareboat chartered-in under operating leases | | | 730 | | | 578 |\n| Vessels time chartered-in under operating leases (e) | | | 359 | | | 190 |\n| Vessels spot chartered-in under operating leases (e) | | | 331 | | | 174 |\n\n","source":"INSW\/10-K\/0001558370-20-001928"} {"title":"Crude Tankers","text":"During 2019, TCE revenues for the Crude Tankers segment increased by $83,993, or 48%, to $259,517 from $175,524 in 2018, principally as a result of significantly higher average blended rates in the VLCC, Suezmax, Aframax, and Panamax sectors aggregating approximately $77,105. Further contributing to the increase was the impact of a 259-day increase in VLCC revenue days aggregating $4,685, and a $13,655 increase in revenue in the Crude Tankers Lightering business during the current year. The net increase in VLCC days was the result of the acquisitions of one 2015-built and five 2016-built VLCCs which were delivered to the Company in June 2018, partially offset by the disposals of one 2000-built and one 2001-built VLCC in 2018, and 294 more drydock, repair and other off-hire days in the current year. Partially offsetting the revenue increases was a 961-day decrease in revenue days for the Aframax and Panamax sectors, which accounted for a revenue decrease of approximately $11,487, and was driven primarily by the sale of two 2001-built Aframaxes and a 2002-built Panamax between May and October 2018 along with the re-deployment of the Company\u2019s 2002-built Aframax into its Crude Tankers Lightering business.\n\nOf the total 294 day increase in VLCC off-hire days highlighted above, 164 days related to five VLCCs which were out of service to have scrubbers installed during the fourth quarter of 2019. The Company expects approximately 330 and 230 of VLCC off-hire days in the first and second quarters of 2020, respectively, as it completes scrubber installations on its 10 modern VLCCs in China.\u00a0The expected off-hire days are subject to change due to impacts of the coronavirus (COVID-19) and other scheduling changes.\n\nVessel expenses decreased by $1,418 to $93,672 in 2019 from $95,090 in 2018. The primary drivers of the decrease were (a) a $10,734 decrease in vessel expenses which resulted from the VLCC, Aframax and Panamax sales noted above and (b) the sale of the Company\u2019s only ULCC, which was idle in 2018 prior to its sale in June 2018 and accounted for approximately $1,255 of the decrease in vessel expenses. Such decreases were partially offset by a $8,053 increase in vessel expenses associated with the VLCC acquisitions described above and increased drydock deviation costs of $2,377. \u00a0Charter hire expenses increased by $11,305 to $35,114 in 2019 from $23,809 in 2018. The primary driver of the increase was a significant increase in spot and short-term time chartered-in vessels in the Crude Tankers Lightering business to support anticipated increased full service lightering activity, with an additional factor being the impact of executing sale and lease back transactions for two 2009-built Aframaxes in March 2018. Depreciation and amortization increased by $4,956 to $59,387 in 2019 from $54,431 in 2018, principally resulting from the impact of the VLCC acquisitions described above aggregating $7,072, partially offset by a reduction of $3,432 relating to the vessel sales noted above.","markdown_table":"\n\n| | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | 2019 | | | | | | 2018 | | | | |\n| | | Spot Earnings | | | Fixed Earnings | | | Spot Earnings | | | Fixed Earnings | |\n| VLCC: | | | | | | | | | | | | |\n| Average rate | | $ | 31,726 | | $ | - | | $ | 18,881 | | $ | 13,221 |\n| Revenue days | | | 4,254 | | | - | | | 3,854 | | | 97 |\n| Suezmax: | | | | | | | | | | | | |\n| Average rate | | $ | 29,762 | | $ | - | | $ | 18,973 | | $ | - |\n| Revenue days | | | 729 | | | - | | | 730 | | | - |\n| Aframax: | | | | | | | | | | | | |\n| Average rate | | $ | 20,011 | | $ | - | | $ | 12,808 | | $ | - |\n| Revenue days | | | 1,386 | | | - | | | 2,020 | | | - |\n| Panamax: | | | | | | | | | | | | |\n| Average rate | | $ | 16,263 | | $ | 13,471 | | $ | 12,988 | | $ | 11,419 |\n| Revenue days | | | 330 | | | 2,031 | | | 685 | | | 1,984 |\n\n","source":"INSW\/10-K\/0001558370-20-001928"} {"title":"Product Carriers","text":"The following table provides a breakdown of TCE rates achieved for the\u00a0years ended December\u00a031,\u00a02019 and 2018 between spot and fixed earnings and the related revenue\u00a0days. The information is based, in part, on information provided by the commercial pools in which the segment\u2019s vessels participate and excludes commercial pool fees\/commissions averaging approximately $486, \u00a0and $444 per day in 2019 and 2018, respectively, as well as\u00a0revenue and revenue\u00a0days for which recoveries were recorded by the Company under its loss of hire insurance policies.","markdown_table":"\n\n| | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- |\n| | | 2019 | | | 2018 | |\n| TCE revenues | | $ | 80,402 | | $ | 67,576 |\n| Vessel expenses | | | (29,533) | | | (40,615) |\n| Charter hire expenses | | | (22,398) | | | (21,101) |\n| Depreciation and amortization | | | (16,152) | | | (17,862) |\n| Adjusted (loss)\/income from vessel operations | | $ | 12,319 | | $ | (12,002) |\n| Average daily TCE rate | | $ | 15,652 | | $ | 10,594 |\n| Average number of owned vessels | | | 9.9 | | | 13.3 |\n| Average number of vessels chartered-in under operating leases | | | 4.5 | | | 4.8 |\n| Number of revenue days | | | 5,137 | | | 6,379 |\n| Number of ship-operating days: | | | | | | |\n| Owned vessels | | | 3,630 | | | 4,872 |\n| Vessels bareboat chartered-in under operating leases | | | - | | | 302 |\n| Vessels time chartered-in under operating leases | | | 1,654 | | | 1,457 |\n\n","source":"INSW\/10-K\/0001558370-20-001928"} {"title":"Product Carriers","text":"(1)\n\n\n\nDuring the 2019 and 2018 periods, each of the Company\u2019s LR1s participated in the Panamax International pool and transported crude oil cargoes exclusively.\nDuring 2019, TCE revenues for the Product Carriers segment increased by $12,826, or 19%, to $80,402 from $67,576 in 2018. Approximately $22,584 of such increase was attributable to increased average blended rates earned across all Product Carrier fleets, which was partially offset by a $9,799 decline in TCE revenues driven by a 1,242-day decrease in segment revenue days. The decline in revenue days reflects the impact of (i) a 1,585-day decrease in MR revenue days in the current period, resulting primarily from the sales of seven MRs between the first quarter of 2018 and the third quarter of 2019, and the redeliveries of one time chartered-in MR during the third quarter of 2019 and two bareboat chartered-in MRs during the second quarter of 2018, partially offset by (ii) a 367-","markdown_table":"\n\n| | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | 2019 | | | | | | 2018 | | | | |\n| | | Spot Earnings | | | Fixed Earnings | | | Spot Earnings | | | Fixed Earnings | |\n| LR2 | | | | | | | | | | | | |\n| Average rate | | $ | 20,242 | | $ | - | | $ | 12,729 | | $ | - |\n| Revenue days | | | 341 | | | - | | | 365 | | | - |\n| LR1 (1) | | | | | | | | | | | | |\n| Average rate | | $ | 21,490 | | $ | - | | $ | 14,875 | | $ | - |\n| Revenue days | | | 1,766 | | | - | | | 1,416 | | | - |\n| MR | | | | | | | | | | | | |\n| Average rate | | $ | 12,590 | | $ | - | | $ | 10,125 | | $ | 5,294 |\n| Revenue days | | | 3,013 | | | - | | | 4,257 | | | 340 |\n\n","source":"INSW\/10-K\/0001558370-20-001928"} {"title":"INTEREST EXPENSE","text":"Interest expense was $66,267 in 2019, compared with $60,231 in 2018. Interest expense incurred on the debt facilities entered into by the Company during the second quarter of 2018 (See Note 8, \u201cDebt,\u201d to the accompanying consolidated financial statements as set forth in Item 8, \u201cFinancial Statements and Supplementary Data\u201d) accounted for substantially all of the period over period increases before the impact of pension and interest rate collar\/cap and swaps. Partially offsetting such increases was a decrease related to the 2017 Term Loan Facility due to a $10,000 prepayment made on July 31, 2019 and a $100,000 prepayment made on October 8, 2019, both using restricted cash set aside from the proceeds of vessel sales and a portion of the proceeds from the sale of the Company\u2019s equity interest in the LNG Joint Venture, and lower average LIBOR rates during the 2019 periods compared with the comparable periods in 2018. \u00a0\n\nFollowing the refinancing completed in January 2020, we anticipate cash interest expense to further decrease by approximately $15,000 on an annual basis based on current interest rates by lowering our average interest rates on the refinanced portion of our debt by 350 basis points, and our overall average interest rates by 200 basis points.","markdown_table":"\n\n| | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- |\n| | | 2019 | | | 2018 | |\n| Interest before items shown below | | $ | 64,085 | | $ | 58,964 |\n| Interest cost on defined benefit pension obligation | | | 681 | | | 701 |\n| Impact of interest rate hedge derivatives | | | 1,501 | | | 566 |\n| Interest expense | | $ | 66,267 | | $ | 60,231 |\n\n","source":"INSW\/10-K\/0001558370-20-001928"} {"title":"Carrying Value of Vessels","text":"(1)\n\n\n\nAs of December\u00a031, 2019, the Crude Tankers segment includes vessels with an aggregate carrying value of $305,866, which the Company believes exceeds their aggregate market value of approximately $253,125 by $52,741.\n\n (2)\n\n\n\nAs of December\u00a031, 2019, the Product Carriers segment includes vessels with an aggregate carrying value of $257,496, which the Company believes exceeds their aggregate market value of approximately $206,500 by $50,996.","markdown_table":"\n\n| | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| At December 31, 2019 | | | Average Vessel Age (weighted by dwt) | | | Number of Owned Vessels | | | Carrying Value |\n| Crude Tankers | | | | | | | | | |\n| VLCC | | | 8.6 | | | 13 | | $ | 792,543 |\n| Suezmax | | | 2.4 | | | 2 | | | 107,331 |\n| Aframax | | | 14.1 | | | 3 | | | 73,167 |\n| Panamax | | | 17.2 | | | 7 | | | 53,958 |\n| Total Crude Tankers(1) | | | 9.4 | | | 25 | | $ | 1,026,999 |\n| | | | | | | | | | |\n| Product Carriers | | | | | | | | | |\n| LR2 | | | 5.4 | | | 1 | | $ | 58,967 |\n| LR1 | | | 11.0 | | | 4 | | | 83,956 |\n| MR | | | 9.0 | | | 4 | | | 114,573 |\n| Total Product Carriers(2) | | | 9.3 | | | 9 | | $ | 257,496 |\n\n","source":"INSW\/10-K\/0001558370-20-001928"} {"title":"Aggregate Contractual Obligations","text":"(1)\n\n\n\nAmounts shown include contractual interest obligations of floating rate debt estimated based on the applicable margin for the 2017 Term Loan Facility of 6.0% plus the estimated floating rates during the periods. The estimated floating rate through December 31, 2020 is 1.98% (which is both the cap and the floor rate under the Company\u2019s interest rate collar for such period) and 1.80% thereafter, which is based on one-month LIBOR as of December 31, 2019 (which falls between the cap and floor rate under the Company\u2019s interest rate collar for the period from January 1, 2021 through December 31, 2022).\u00a0\n\n (2)\n\n\n\nAmounts shown include contractual interest obligations of floating rate debt estimated based on the aggregate effective three-month LIBOR rate as of December 31, 2019 of 1.89% and applicable margin for the ABN Term Loan facility of 3.25%.\n\n (3)\n\n\n\nAmounts shown include contractual interest obligations of floating rate debt estimated based on (i) the fixed rate stated in the related floating-to-fixed interest rate swap through the maturity date of March 21, 2025, or (ii) the effective three-month LIBOR rate for periods after the swap maturity date, plus the applicable margin for the Sinosure Credit Facility of 2.00%. The Company is a party to a floating-to-fixed interest rate swap covering the balance outstanding under the Sinosure Credit Facility that effectively converts the Company\u2019s interest rate exposure under the Sinosure Credit Facility from a floating rate based on three-month LIBOR to a fixed LIBOR rate of 2.76%.\n\n (4)\n\n\n\nAs of December 31, 2019, the Company had charter-in commitments for six vessels\u00a0and one workboat employed in the Crude Tankers Lightering business on leases that are accounted for as operating leases. \u00a0Certain of these leases provide the Company with various renewal and purchase options. The future minimum commitments for time charters-in have been reduced to reflect estimated days that the vessels will not be available for employment due to drydock and any days paid for in advance. Upon adoption of ASU 2016-02 Leases (ASC 842) on January 1, 2019, the full amounts due under bareboat charter-ins, office and other space leases, and lease component of the amounts due under long term time charter-ins are discounted and reflected on the Company\u2019s consolidated balance sheet as lease liabilities with corresponding right of use asset balances.\n\n (5)\n\n\n\nRepresents the Company\u2019s commitments for the purchase and installation of ballast water treatment systems on 18 vessels, \u00a0the purchase and installation of scrubbers on 10 of its VLCC tankers, and the acquisition of one 2009-built LR1 which was delivered to the Company during the first quarter of 2020.\u00a0In addition, the Company is party to an agreement granting INSW the option to purchase an additional ballast water treatment system for installation before December 2020. If exercised, such option could increase the Company\u2019s commitments by approximately $2,100. \nAs described above in Sources, Uses and Management of Capital, on January 28, 2020, the available amounts under the Core Term Loan Facility and the Transition Term Loan Facility were drawn in full, and $20,000 of the $40,000 available under the Core Revolving Facility was also drawn. Those proceeds, together with available cash, were used to repay or repurchase the outstanding principal balances and accrued interest payable under (i) the 2017 Debt Facilities, (ii) the ABN Term Loan Facility, and (iii) the Company\u2019s 10.75% subordinated notes due 2023. The following table depicts the principal amortization and estimated interest payable under 2020 Debt Facilities for the next 5 years and beyond:","markdown_table":"\n\n| | | | | | | | | | | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | | | | | | | | | | | | | | | | | Beyond | | | |\n| | | | 2020 | | | 2021 | | | 2022 | | | 2023 | | | 2024 | | | 2024 | | | Total |\n| 2017 Term Loan - floating rate(1) | | $ | 68,200 | | $ | 40,707 | | $ | 279,787 | | $ | - | | $ | - | | $ | - | | $ | 388,694 |\n| ABN Term Loan - floating rate(2) | | | 4,622 | | | 4,438 | | | 4,257 | | | 13,116 | | | - | | | - | | | 26,433 |\n| Sinosure Credit Facility - floating rate(3) | | | 36,140 | | | 35,035 | | | 33,897 | | | 32,758 | | | 31,643 | | | 167,517 | | | 336,990 |\n| 8.5% Senior Notes - fixed rate | | | 2,125 | | | 2,125 | | | 2,125 | | | 26,063 | | | - | | | - | | | 32,438 |\n| 10.75% Subordinated Notes - fixed rate | | | 3,003 | | | 3,631 | | | 3,631 | | | 29,747 | | | - | | | - | | | 40,012 |\n| Operating lease obligations (4) | | | | | | | | | | | | | | | | | | | | | |\n| Bareboat Charter-ins | | | 6,295 | | | 6,278 | | | 6,278 | | | 4,532 | | | - | | | - | | | 23,383 |\n| Time Charter-ins | | | 14,084 | | | 4,660 | | | - | | | - | | | - | | | - | | | 18,744 |\n| Office space | | | 1,166 | | | 838 | | | 173 | | | 178 | | | 178 | | | - | | | 2,533 |\n| Vessel & vessel betterment commitments(5) | | | 50,234 | | | 349 | | | 118 | | | - | | | - | | | - | | | 50,701 |\n| Total | | $ | 185,869 | | $ | 98,061 | | $ | 330,266 | | $ | 106,394 | | $ | 31,821 | | $ | 167,517 | | $ | 919,928 |\n\n","source":"INSW\/10-K\/0001558370-20-001928"} {"title":"Aggregate Contractual Obligations","text":"(a)\n\n\n\nAmounts shown include contractual interest obligations of floating rate debt estimated based on (i) the applicable margin for the Core Term Loan Facility of 2.60% through August 15, 2020 and 2.40% thereafter, and (ii) the fixed rate stated in the related floating-to-fixed interest rate swap of 1.97% for the $250,000 notional amount covered in the interest rate swap (as described below under Risk Management) and the effective three-month LIBOR rate of 1.80% as of January 28, 2020 for the remaining outstanding balance.\n\n (b)\n\n\n\nAmounts shown include contractual interest obligations of floating rate debt estimated based on the applicable margin for the Core Revolving Facility of 2.60% plus the effective three-month LIBOR rate of 1.80% as of January 28, 2020, assuming that amounts drawn on January 28, 2020 are repaid March 31, 2020.\n\n (c)\n\n\n\nAmounts shown include contractual interest obligations of floating rate debt estimated based on the applicable margin for the Transition Term Loan Facility of 3.50% \u00a0plus the effective three-month LIBOR rate of 1.80% as of January 28, 2020.","markdown_table":"\n\n| | | | | | | | | | | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | | | | | | | | | | | | | | | | | Beyond | | | |\n| | | | 2020 | | | 2021 | | | 2022 | | | 2023 | | | 2024 | | | 2024 | | | Total |\n| Core Term Loan - floating rate(a) | | $ | 40,665 | | $ | 49,192 | | $ | 47,558 | | $ | 45,869 | | $ | 44,255 | | $ | 120,300 | | $ | 347,839 |\n| Core Revolving Facility - floating rate(b) | | | 20,154 | | | - | | | - | | | - | | | - | | | - | | | 20,154 |\n| Transition Term Loan - floating rate(c) | | | 22,070 | | | 21,204 | | | 10,200 | | | - | | | - | | | - | | | 53,474 |\n| Total | | $ | 82,889 | | $ | 70,396 | | $ | 57,758 | | $ | 45,869 | | $ | 44,255 | | $ | 120,300 | | $ | 421,467 |\n\n","source":"INSW\/10-K\/0001558370-20-001928"} {"title":"Principal (Notional) Amount (dollars in millions) by Expected Maturity and Average Interest (Swap) Rate","text":"(1)\n\n\n\nIncludes amounts outstanding under the Sinosure Credit Facility as floating rate debt estimated based on (i) the fixed rate stated in the related floating-to-fixed interest rate swap through the swap maturity date of March 21, 2025, or (ii) the effective three-month LIBOR rate for periods after the swap maturity date, plus the applicable margin for the Sinosure Credit Facility of 2.00%.\nAs of December 31, 2019, the Company had secured term loans (the 2017 Term Loan Facility, the Sinosure Credit Facility, and the ABN Term Loan Facility) and a revolving credit facility (2017 Revolver Facility) under which borrowings bear interest at a rate based on LIBOR, plus the applicable margin, as stated in the respective loan agreements. As discussed in Interest rate risk section above, the Company entered into an interest rate collar agreement for 2017 Term Loan and an interest rate swap agreement for Sinosure Credit Facility to limit the floating interest rate exposure associated with the debt facilities. There was no outstanding balance under the 2017 Revolver Facility as of December 31, 2019.\n\nThe outstanding balance of the 2017 Term Loan Facility, the ABN Term Loan Facility, and 10.75% Subordinated Notes were paid off following the debt refinance transactions completed on January 28, 2020 (as discussed above). In addition, in connection with its entry into the Core Term Loan Facility, the Company also amended its existing interest rate hedging arrangements in respect of the 2017 Debt Facilities to among other things decrease the notional hedged amount to an amount of $250,000 and extend the term of such hedging arrangement to coincide with the maturity of the Core Term Loan Facility. The following table gives effect of the refinancing transaction on the Company\u2019s debt:","markdown_table":"\n\n| | | | | | | | | | | | | | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | | | | | | | | | | | | | | | | Beyond | | | | | | Fair Value at | |\n| At December 31, 2019 | | 2020 | | | 2021 | | | 2022 | | | 2023 | | | 2024 | | | 2024 | | | Total | | | Dec. 31, 2019 | |\n| Liabilities | | | | | | | | | | | | | | | | | | | | | | | | |\n| Debt | | | | | | | | | | | | | | | | | | | | | | | | |\n| Fixed rate debt | | $ | - | | $ | - | | $ | - | | $ | 52.9 | | $ | - | | $ | - | | $ | 52.9 | | $ | 58.8 |\n| Average interest rate | | | 9.69% | | | 9.84% | | | 10.87% | | | 10.78% | | | | | | | | | | | | |\n| Variable rate debt (1) | | $ | 70.4 | | $ | 45.5 | | $ | 296.8 | | $ | 36.4 | | $ | 23.6 | | $ | 151.8 | | $ | 624.5 | | $ | 626.2 |\n| Average interest rate (1) | | | 6.54% | | | 6.45% | | | 5.94% | | | 4.84% | | | 4.83% | | | 4.13% | | | | | | |\n\n","source":"INSW\/10-K\/0001558370-20-001928"} {"title":"OPERATIONS AND OIL TANKER MARKETS","text":"U.S. refinery throughput decreased by about 0.1 million b\/d to 18.8\nmillion b\/d in the fourth quarter of 2016 compared with the comparable quarter in 2015. U.S. crude oil imports increased by about\n0.7 million b\/d in the fourth quarter of 2016 compared with the comparable quarter of 2015 with imports from OPEC countries increasing\nby 0.3 million b\/d, an 11.8% increase from the comparable quarter in 2015.Chinese imports of crude oil continued increasing, with 2016 showing\na 13.6% increase from 2015 as a result of increased strategic or commercial reserve buildup and increased imports by privately\nowned refineries. December imports reached 8.6 million b\/d.During the fourth quarter of 2016, the International Flag tanker\nfleet of vessels over 10,000 deadweight tons (\u201cdwt\u201d) increased by 6.9 million dwt as the crude fleet increased by 5.5\nmillion dwt, while the product carrier fleet expanded by 1.4 million dwt. Year over year, the size of the tanker fleet increased\nby 31.3 million dwt with the largest increases in the VLCCs, MRs and Aframax sectors.During the fourth quarter of 2016, the International Flag crude\ntanker orderbook decreased by 6.1 million dwt, and the product carrier orderbook decreased by 1.7 million dwt.From the end of the fourth quarter of 2015 through the end of the\nfourth quarter of 2016, the total tanker orderbook declined by 28.6 million dwt. due to a combination of vessel deliveries combined\nwith a large reduction in new orders placed in 2016, although 2016 saw limited amounts of scrappings.VLCC freight rates saw a strengthening during the fourth quarter\nof 2016, reaching a peak of around $63,000 per day in December before beginning to decrease to around $50,000 per day by the end\nof the quarter. This was attributable to the record Chinese imports experienced during the quarter. Other crude segments had similar\nearnings patterns, although the Panamax sector saw continuous improvement throughout the quarter and product carriers also improved\nduring the quarter from a low of around $6,500 per day in October to around $13,000 per day by the end of the quarter. The previously\nannounced OPEC-led production cuts will begin to impact the tanker markets during the first quarter of 2017. In addition, 2017\nwill likely see the peak of the orderbook delivery schedule. The combination of these factors could put downward pressure on freight\nrates.","markdown_table":"\n\n| 38 | |\n| --- | --- |\n| International Seaways, Inc. | |\n\n","source":"INSW\/10-K\/0001144204-17-017875"} {"title":"RESULTS FROM VESSEL OPERATIONS","text":"The increase in 2015 vessel expenses by $10,153, or 8%, to $143,925\nfrom $133,772 resulted primarily from (i) $3,621 of additional reactivation and operating costs incurred in conjunction with the\nCompany\u2019s ULCC being taken out of lay-up in the first quarter of 2015 and commencing a time charter in April 2015, (ii) $3,451\nof incremental costs relating to the redelivery of one of the Company\u2019s Panamaxes that had previously been bareboat chartered-out,\n(iii) the recording of a $1,450 reserve in 2015 for an assessment by a multi-employer defined benefit pension plan covering British\ncrew members that served onboard INSW vessels (as well as vessels of other owners) more than 20 years ago, (iv) a $1,402 increase\nin vessel expenses associated with a newbuild LR2 that was delivered in the second quarter of 2014, and (v) an increase in technical\nmanagement fees paid to V.Ships. As discussed in further detail in Note 18, \u201cSeverance Costs,\u201d to the Company\u2019s\nconsolidated financial statements set forth in Item 8, \u201cFinancial Statements and Supplementary Data,\u201d the Company began\ntransferring management of its International Flag conventional tankers to V.Ships in March 2014 and completed the transfers by\nSeptember of 2014. Vessel operating expenses in 2015 included approximately $7,200 in technical management fees, compared with\napproximately $4,100 in 2014. These increases in vessel expense were more than offset by a decrease in the cost of providing technical\nand commercial management by the Company\u2019s shore-based staff that were previously included in general and administrative\nexpenses.The $3,278, or 4%, decrease in depreciation and amortization to\n$81,653 in 2015 from $84,931 in 2014 was primarily due to a $5,065 decrease in depreciation expense associated with the vessel\nsales noted above. This decrease was partially offset by a $1,513 increase in depreciation expense associated with the LR2 newbuild\ndelivery referred to above.See Note 5, \u201cBusiness and Segment Reporting,\u201d to the\nCompany\u2019s consolidated financial statements as set forth in Item 8, \u201cFinancial Statements and Supplementary Data\u201d,\nfor additional information on the Company\u2019s segments, including equity in income of affiliated companies and reconciliations\nof (i) time charter equivalent revenues to shipping revenues and (ii) adjusted income from vessel operations for the segments to\nincome\/(loss) before income taxes, as reported in the consolidated statements of operations. \u00a0International Crude Tankers","markdown_table":"\n\n| 39 | |\n| --- | --- |\n| International Seaways, Inc. | |\n\n","source":"INSW\/10-K\/0001144204-17-017875"} {"title":"RESULTS FROM VESSEL OPERATIONS","text":"(a)Adjusted income from vessel operations by segment is before general and administrative expenses, technical management transition\ncosts, severance costs, separation and transition costs, and (loss)\/gain on disposal of vessels and other property, including impairments.\n(b)The average is calculated to reflect the addition and disposal of vessels during the year.\n(c)Revenue days represent ship-operating days less days that vessels were not available for employment due to repairs, drydock\nor lay-up. Revenue days are weighted to reflect the Company\u2019s interest in chartered-in vessels.\n(d)Ship-operating days represent calendar days.","markdown_table":"\n\n| | | 2016 | | | | 2015 | | | | 2014 | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| TCE revenues | | $ | 258,171 | | | $ | 304,182 | | | $ | 228,296 | |\n| Vessel expenses | | | (84,276 | ) | | | (86,174 | ) | | | (79,271 | ) |\n| Charter hire expenses | | | (9,732 | ) | | | (8,821 | ) | | | (27,283 | ) |\n| Depreciation and amortization | | | (52,395 | ) | | | (51,347 | ) | | | (56,280 | ) |\n| Adjusted income from vessel operations (a) | | $ | 111,768 | | | $ | 157,840 | | | $ | 65,462 | |\n| Average daily TCE rate | | $ | 29,853 | | | $ | 36,839 | | | $ | 19,836 | |\n| Average number of owned vessels (b) | | | 24.0 | | | | 24.0 | | | | 27.8 | |\n| Average number of vessels chartered-in under operating leases | | | 0.3 | | | | 0.2 | | | | 5.5 | |\n| Number of revenue days: (c) | | | 8,648 | | | | 8,257 | | | | 11,509 | |\n| Number of ship-operating days: (d) | | | | | | | | | | | | |\n| Owned vessels | | | 8,784 | | | | 8,760 | | | | 10,134 | |\n| Vessels bareboat chartered-in under operating leases | | | - | | | | - | | | | 217 | |\n| Vessels time chartered-in under operating leases | | | - | | | | - | | | | 1,555 | |\n| Vessels spot chartered-in under operating leases | | | 118 | | | | 73 | | | | 246 | |\n\n","source":"INSW\/10-K\/0001144204-17-017875"} {"title":"RESULTS FROM VESSEL OPERATIONS","text":"The following table provides a breakdown of TCE rates achieved for\nthe years ended December 31, 2016, 2015 and 2014 between spot and fixed earnings and the related revenue days. The information\nin these tables is based, in part, on information provided by the commercial pools in which the segment\u2019s vessels participate.","markdown_table":"\n\n| 40 | |\n| --- | --- |\n| International Seaways, Inc. | |\n\n","source":"INSW\/10-K\/0001144204-17-017875"} {"title":"RESULTS FROM VESSEL OPERATIONS","text":"(a)The average rates reported in the above tables for\nVLCCs in 2014 represent VLCCs less than 15 years of age. The average spot TCE rates earned by the Company\u2019s VLCCs on an overall\nbasis during 2014 was $24,358. \n(b)The average rates reported for Aframaxes exclude TCE revenue from the Company\u2019s International\nFlag Lightering business.During 2016, TCE revenues for the International Crude Tankers segment\ndecreased by $46,011, or 15%, to $258,171 from $304,182 in 2015 primarily as a result of lower average daily rates in the VLCC\nand Aframax sectors, which accounted for a decrease in revenue of approximately $65,267. Such decrease was mitigated to an extent\nby an increase of 246 revenue days for the VLCC and Aframax fleets, which resulted from fewer drydock and repair days in the current\nyear and increased revenue by approximately $11,623. Also serving to partially offset the decline in rates were increased activity\nlevels in the Crude Tankers Lightering business in the current year, which resulted in a $4,552 increase in revenue, and the Company\u2019s\nULCC exiting lay-up and commencing an 11-month time charter for storage in April 2015, which has subsequently been extended for\n21 months following the expiry of the initial charter period. A full year of service for the ULCC accounted for an increase in\nrevenue of $5,242 in the current year.Vessel expenses decreased by $1,898 to $84,276 in 2016 from $86,174\nin 2015. The change in vessel expenses is primarily due to the Marine Navy Ratings Pension Fund (\u201cMNRPF\u201d) assessment\ndescribed further below. Charter hire expenses increased by $911 to $9,732 in 2016 from $8,821 in 2015, resulting from an increase\nin spot chartered-in Aframaxes by the Crude Tankers Lightering business for utilization in the performance of full-service lighterings\nduring 2016. The only vessels in the segment chartered-in by the Company during either period were Aframaxes and workboats employed\nin the Crude Tankers Lightering business.During 2015, TCE revenues for the International Crude Tankers segment\nincreased by $75,886, or 33%, to $304,182 from $228,296 in 2014. Higher average daily TCE rates across all fleets in the segment\nin the current year, particularly in the VLCC fleet sector, increased TCE revenues by approximately $135,676. Further contributing\nto the increase in 2015 was the Company\u2019s ULCC exiting lay-up and commencing an 11-month time charter for storage in April\n2015. Partially offsetting the impact of the positive factors was a $70,500 decrease in TCE revenues attributable to a 3,530-day\ndecrease in revenue days. The decrease in revenue days reflected a contraction in the International Crude Tankers Lightering fleet\nassociated with reductions in the Company\u2019s full service International Flag Lightering business upon the expiry of its Lightering\ncontracts in September 2014. Such reduction included the sales of two 1994-built Aframaxes that had been utilized in the International\nFlag Lightering business, one in March 2014 and the second in September 2014, and resulted in a reduction in TCE revenue of $3,921\nduring 2015. Also contributing to the decrease in revenue days were 1,289 fewer chartered-in days in the Aframax fleet, as well\nas the Company\u2019s sale of a 1996-built VLCC, a 1997-built VLCC and a 2004-built Panamax in December 2014, and a 356-day increase\nin drydock and repair days in 2015 compared with 2014.Vessel expenses increased by $6,903 to $86,174 in 2015 from $79,271\nin 2014. The increase in vessel expenses reflects a reserve of $1,450 recorded in the third quarter of 2015 for an assessment by\nthe MNRPF. The MNRPF is a multi-employer defined benefit pension plan covering British crew members that served onboard INSW\u2019s\nvessels (as well as vessels of other owners) more than 20 years ago. During 2014 the trustees of the MNRPF sought court approval\nfor a new deficit reduction regime for participating employers. Participating employers include current employers, historic employers\nthat have made voluntary contributions, and historic employers such as INSW that have made no deficit contributions. The trustees\nreceived court approval of the new deficit reduction regime in February 2015. Although the Company has not been an active member\nof the plan for a number of years, because the plan is underfunded, additional assessments are possible in future years. Also contributing\nto the variance in vessel expenses were an increase of $1,670 in management fees paid to V.Ships, and a $7,071 increase associated\nwith the reactivation in the first quarter of 2015 of the ULCC discussed above and with one of the Company\u2019s Panamaxes that\nhad previously been bareboat chartered-out. Such increases were partially offset by a 1,591-day decrease in owned and bareboat\nchartered-in vessels resulting from the fleet changes noted above. Charter hire expenses decreased by $18,462 to $8,821 in 2015\nfrom $27,283 in 2014, resulting from a decrease of 1,945 chartered-in days in the current year, driven principally by the return\nof vessels discussed above. The only vessels in the segment that were time chartered-in by the Company during 2015 were workboats\nemployed in the International Flag Lightering business.","markdown_table":"\n\n| | | 2016 | | | | | | | | 2015 | | | | | | | | 2014 | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | Spot | | | | Fixed | | | | Spot | | | | Fixed | | | | Spot | | | | Fixed | | |\n| | | Earnings | | | | Earnings | | | | Earnings | | | | Earnings | | | | Earnings | | | | Earnings | | |\n| ULCCs: | | | | | | | | | | | | | | | | | | | | | | | | |\n| Average rate | | $ | - | | | $ | 43,613 | | | $ | - | | | $ | 39,000 | | | $ | - | | | $ | - | |\n| Revenue days | | | - | | | | 366 | | | | - | | | | 275 | | | | - | | | | - | |\n| VLCCs: (a) | | | | | | | | | | | | | | | | | | | | | | | | |\n| Average rate | | $ | 41,994 | | | $ | 40,737 | | | $ | 54,591 | | | $ | - | | | $ | 25,803 | | | $ | 16,748 | |\n| Revenue days | | | 2,226 | | | | 624 | | | | 2,672 | | | | - | | | | 3,484 | | | | 10 | |\n| Suezmaxes: | | | | | | | | | | | | | | | | | | | | | | | | |\n| Average rate | | $ | - | | | $ | - | | | $ | - | | | $ | - | | | $ | 15,603 | | | $ | - | |\n| Revenue days | | | - | | | | - | | | | - | | | | - | | | | 38 | | | | - | |\n| Aframaxes: (b) | | | | | | | | | | | | | | | | | | | | | | | | |\n| Average rate | | $ | 21,345 | | | $ | - | | | $ | 34,042 | | | $ | - | | | $ | 20,440 | | | $ | - | |\n| Revenue days | | | 2,508 | | | | - | | | | 2,439 | | | | - | | | | 3,702 | | | | - | |\n| Panamaxes: | | | | | | | | | | | | | | | | | | | | | | | | |\n| Average rate | | $ | 19,006 | | | $ | 21,094 | | | $ | 25,226 | | | $ | 15,462 | | | $ | 22,414 | | | $ | 12,064 | |\n| Revenue days | | | 1,726 | | | | 1,079 | | | | 1,432 | | | | 1,362 | | | | 1,443 | | | | 1,765 | |\n\n","source":"INSW\/10-K\/0001144204-17-017875"} {"title":"RESULTS FROM VESSEL OPERATIONS","text":"Depreciation expense decreased by $4,933 to $51,347 in 2015 from\n$56,280 in 2014, reflecting the 2014 vessel sales noted above.","markdown_table":"\n\n| 41 | |\n| --- | --- |\n| International Seaways, Inc. | |\n\n","source":"INSW\/10-K\/0001144204-17-017875"} {"title":"RESULTS FROM VESSEL OPERATIONS","text":"The following table provides a breakdown of TCE rates achieved for\nthe years ended December 31, 2016, 2015 and 2014 between spot and fixed earnings and the related revenue days. The information\nis based, in part, on information provided by the commercial pools in which certain of the segment\u2019s vessels participate.","markdown_table":"\n\n| International Product Carriers | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | 2016 | | | | 2015 | | | | 2014 | | |\n| TCE revenues | | $ | 126,314 | | | $ | 171,608 | | | $ | 118,669 | |\n| Vessel expenses | | | (58,612 | ) | | | (58,118 | ) | | | (54,711 | ) |\n| Charter hire expenses | | | (27,679 | ) | | | (27,981 | ) | | | (33,679 | ) |\n| Depreciation and amortization | | | (26,696 | ) | | | (28,763 | ) | | | (26,893 | ) |\n| Adjusted income from vessel operations | | $ | 13,327 | | | $ | 56,746 | | | $ | 3,386 | |\n| Average daily TCE rate | | $ | 14,206 | | | $ | 19,043 | | | $ | 12,544 | |\n| Average number of owned vessels | | | 18.0 | | | | 18.6 | | | | 18.4 | |\n| Average number of vessels chartered-in under operating leases | | | 6.9 | | | | 7.2 | | | | 8.3 | |\n| Number of revenue days | | | 8,891 | | | | 9,012 | | | | 9,460 | |\n| Number of ship-operating days: | | | | | | | | | | | | |\n| Owned vessels | | | 6,588 | | | | 6,782 | | | | 6,730 | |\n| Vessels bareboat chartered-in under operating leases | | | 1,098 | | | | 1,095 | | | | 1,095 | |\n| Vessels time chartered-in under operating leases | | | 1,433 | | | | 1,530 | | | | 1,934 | |\n\n","source":"INSW\/10-K\/0001144204-17-017875"} {"title":"RESULTS FROM VESSEL OPERATIONS","text":"During 2016, TCE revenues for the International Product Carriers\nsegment decreased by $45,294, or 26%, to $126,314 from $171,608 in 2015. This decrease resulted primarily from a year-over-year\ndecrease in average daily blended rates earned by the MR fleet, which accounted for $41,291 of the total decrease, and a 255-day\ndecrease in MR fleet revenue days, which accounted for $4,667 of the total decrease. The reduction in revenue days was driven by\nthe MR sale and redelivery discussed above.Depreciation and amortization decreased by $2,067 to $26,696 in\n2016 from $28,763 in 2015, principally due to the impact of reductions in vessel bases that resulted from impairment charges on\ntwo vessels in the segment recorded in the third quarter of 2016, and the MR sale in 2015 discussed above.During 2015, TCE revenues for the International Product Carriers\nsegment increased by $52,939, or 45%, to $171,608 from $118,669 in 2014. Approximately $48,927 of this increase in TCE revenues\nresulted primarily from a significant year over year increase in average daily blended rates earned by the MR fleet. Partially\noffsetting the stronger rates for the MR fleet was a $5,663 decrease associated with a 486-day decrease in MR fleet revenue days,\nprimarily due to two time chartered-in vessels that were returned to their owners at the expiry of their charters. The delivery\nof a newbuilt LR2 in July 2014 also resulted in $9,198 of increased TCE revenues during 2015.","markdown_table":"\n\n| | | 2016 | | | | | | | | 2015 | | | | | | | | 2014 | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | Spot | | | | Fixed | | | | Spot | | | | Fixed | | | | Spot | | | | Fixed | | |\n| | | Earnings | | | | Earnings | | | | Earnings | | | | Earnings | | | | Earnings | | | | Earnings | | |\n| LR2 | | | | | | | | | | | | | | | | | | | | | | | | |\n| Average rate | | $ | 21,153 | | | $ | - | | | $ | 32,075 | | | $ | - | | | $ | 16,094 | | | $ | - | |\n| Revenue days | | | 365 | | | | - | | | | 365 | | | | - | | | | 146 | | | | - | |\n| LR1 | | | | | | | | | | | | | | | | | | | | | | | | |\n| Average rate | | $ | 20,599 | | | $ | 21,107 | | | $ | 27,465 | | | $ | 17,337 | | | $ | 27,050 | | | $ | 13,829 | |\n| Revenue days | | | 361 | | | | 1,029 | | | | 327 | | | | 929 | | | | 374 | | | | 1,063 | |\n| MR | | | | | | | | | | | | | | | | | | | | | | | | |\n| Average rate | | $ | 13,107 | | | $ | 11,309 | | | $ | 19,490 | | | $ | 7,004 | | | $ | 12,036 | | | $ | 10,630 | |\n| Revenue days | | | 6,431 | | | | 705 | | | | 6,949 | | | | 442 | | | | 7,101 | | | | 776 | |\n\n","source":"INSW\/10-K\/0001144204-17-017875"} {"title":"RESULTS FROM VESSEL OPERATIONS","text":"International Product Carriers segment vessel expenses increased\nby $3,407 to $58,118 in 2015 from $54,711 in 2014. Such variance resulted from an increase of owned and bareboat chartered-in days\nof 52 days, primarily attributable to the LR2 delivery discussed above, partially offset by the sale of a 1998-built MR in July\n2015. Also contributing to the variance was an increase in average daily vessel expenses of $404 per day, which primarily related\nto management fees paid to V.Ships, higher crew costs, and the timing of the delivery of stores and spares. Charter hire expenses\ndecreased by $5,698 to $27,981 in 2015 from $33,679 in 2014 reflecting 404 fewer chartered-in days in the MR fleet, as vessels\nwere returned to their owners at the expiry of their charters. Depreciation and amortization increased by $1,870 to $28,763 in\n2015 from $26,893 in 2014, principally due to $1,513 associated with the LR2 delivery discussed above.","markdown_table":"\n\n| 42 | |\n| --- | --- |\n| International Seaways, Inc. | |\n\n","source":"INSW\/10-K\/0001144204-17-017875"} {"title":"INTEREST EXPENSE","text":"Interest expense was $39,476 in 2016 compared with $42,970 in 2015.\nThe decrease in interest expense in the current year reflects the impact of the Company\u2019s repurchases and prepayments of\n$152,754 in aggregate principal amount of the INSW Term Loan in 2016. Interest expense is expected to decrease further in 2017\nas a result of the principal prepayments and open market repurchases made during 2016. Refer to Note 9, \u201cDebt\u201d to the\nCompany\u2019s consolidated financial statements as set forth in Item 8, \u201cFinancial Statements and Supplementary Data\u201d\nfor additional information.Interest expense, including amortization of issuance and deferred\nfinancing costs, commitment, administrative and other fees, was $42,970 in 2015 and was comprised primarily of $42,688 relating\nto the INSW Facilities.Interest expense in 2014 was $56,258, including $17,085 associated\nwith the INSW Facilities. The balance of interest expense recognized during 2014 represented contractual post-petition interest\nfrom the Petition Date through the effective date of the Equity Plan on allowed claims associated with our pre-reorganized INSW\nloan agreements of $32,015 and certain rejected executory contracts. Accordingly, interest expense for the year ended December\n31, 2014 is not comparable to either 2016 or 2015.","markdown_table":"\n\n| | | 2016 | | | | 2015 | | | | 2014 | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| Interest before impact of interest rate caps | | $ | 38,959 | | | $ | 42,970 | | | $ | 56,258 | |\n| Impact of interest rate caps | | | 517 | | | | - | | | | - | |\n| Interest expense | | $ | 39,476 | | | $ | 42,970 | | | $ | 56,258 | |\n\n","source":"INSW\/10-K\/0001144204-17-017875"} {"title":"INCOME TAX EXPENSE","text":"EBITDA and Adjusted EBITDAEBITDA represents net income\/(loss) before interest expense, income\ntaxes and depreciation and amortization expense. Adjusted EBITDA consists of EBITDA adjusted for the impact of certain items that\nwe do not consider indicative of our ongoing operating performance. EBITDA and Adjusted EBITDA are presented to provide investors\nwith meaningful additional information that management uses to monitor ongoing operating results and evaluate trends over comparative\nperiods. EBITDA and Adjusted EBITDA do not represent, and should not be considered a substitute for, net income or cash flows from\noperations determined in accordance with GAAP. EBITDA and Adjusted EBITDA have limitations as analytical tools, and should not\nbe considered in isolation, or as a substitute for analysis of our results reported under GAAP. Some of the limitations are:\n\u00b7EBITDA and Adjusted EBITDA do not reflect our cash expenditures, or future requirements for capital expenditures or contractual\ncommitments;\n\u00b7EBITDA and Adjusted EBITDA do not reflect changes in, or cash requirements for, our working capital needs; and\n\u00b7EBITDA and Adjusted EBITDA do not reflect the significant interest expense, or the cash requirements necessary to service interest\nor principal payments, on our debt.While EBITDA and Adjusted EBITDA are frequently used by companies\nas a measure of operating results and performance, neither of those items as prepared by the Company is necessarily comparable\nto other similarly titled captions of other companies due to differences in methods of calculation.The following table reconciles net income\/(loss), as reflected in\nthe consolidated statements of operations set forth in Item 8, \u201cFinancial Statements and Supplementary Data,\u201d to EBITDA\nand Adjusted EBITDA:","markdown_table":"\n\n| 44 | |\n| --- | --- |\n| International Seaways, Inc. | |\n\n","source":"INSW\/10-K\/0001144204-17-017875"} {"title":"LIQUIDITY AND SOURCES OF CAPITAL","text":"Liquidity\nWorking capital at December 31, 2016 was approximately $126,000\ncompared with $348,000 at December 31, 2015. Current assets are highly liquid, consisting principally of cash, interest-bearing\ndeposits and receivables. The Company\u2019s total cash (including restricted cash) decreased by $225,846 during the year ended\nDecember 31, 2016. As further described below, this decrease reflects the use of $155,232 for repurchases, prepayments and regular\nprincipal amortization of outstanding debt and $202,000 for dividends paid to OSG, offset by cash flows provided by operating activities.As of December 31, 2016, we had total liquidity on a consolidated\nbasis of $142,001 comprised of $92,001 of unrestricted cash and $50,000 of undrawn revolver capacity. Our cash and cash equivalents\nbalances generally exceed Federal Deposit Insurance Corporation insured limits. We place our cash and cash equivalents in what\nwe believe to be credit-worthy financial institutions. In addition, certain of our money market accounts invest in U.S. Treasury\nsecurities or other obligations issued or guaranteed by the U.S. government, or its agencies.As of December 31, 2016, we had total debt outstanding (net of original\nissue discount and deferred financing costs) of $439,651 and a total debt to total capitalization of 26.6%, which compares with\n30.1% at December 31, 2015. Our debt profile reflects recent actions (discussed further below) to deleverage our balance sheet\nas well as minimal scheduled amortization requirements before 2018.Restricted cash as of December 31, 2015 was legally restricted under\nthe INSW Facilities. The INSW Facilities stipulate that if annual aggregate cash proceeds of INSW asset sales exceed $5,000, the\nnet cash proceeds from each such sale are required to be reinvested in vessels within twelve months of such sale or be used to\nprepay the principal balance outstanding of the INSW Facilities. In June 2016, INSW utilized restricted cash to prepay $8,832 of\noutstanding principal under the INSW Term Loan.Sources, Uses and Management of CapitalNet cash provided by operating activities for the year ended December\n31, 2016 was $116,768. In addition to operating cash flows, our other sources of funds are proceeds from issuances of equity securities,\nadditional borrowings as permitted under the INSW Facilities and proceeds from the opportunistic sales of our vessels. We or our\nsubsidiaries may in the future complete transactions consistent with achieving the objectives of our business plan discussed in\nItem 1, \u201cBusiness \u2013 Strategy.\u201dOur current uses of funds are to fund working capital requirements,\nmaintain the quality of our vessels, comply with international shipping standards and environmental laws and regulations and repay\nor repurchase our outstanding loan facilities. The INSW Facilities require that a portion of Excess Cash Flow (as defined in the\nloan agreement) be used to prepay the outstanding principal balance of each such loan. To the extent permitted under the terms\nof the INSW Facilities we may also use cash generated by operations to finance capital expenditures to modernize and grow our fleet.From our Emergence Date in August 2014 through December 2016, we\nhave generated and used cash through the following investing and financing activities:\n\u00b7INSW FacilitiesUpon our emergence from Bankruptcy, we closed on the INSW\nFacilities and drew down the full amount available under the INSW Term Loan of $628,375 and received proceeds net of issuance and\ndeferred financing costs of $605,561. We combined such funds with cash and cash equivalents on hand to make payments relating to\nthe Chapter 11 Cases.The INSW Term Loan amortizes in equal quarterly installments\nin aggregate annual amounts equal to 1% of the original principal amount of the loans, adjusted for mandatory pre-payments. The\nINSW Facilities require that a portion of Excess Cash Flow (as defined in the term loan agreement) be used to prepay the outstanding\nprincipal balance of such loan, commencing with the six-month period beginning July 1, 2015 (as described below), and annual periods\nthereafter. We have remaining unused credit availability under the INSW Revolver Facility of $50,000.The INSW Facilities have a covenant to maintain the aggregate\nFair Market Value of the Collateral Vessels at greater than or equal to $500,000 at the end of each fiscal quarter. The Company\nhad substantial headroom under this covenant at December 31, 2016.The INSW Term Loan matures on August 5, 2019 and the INSW\nRevolver Facility matures on February 5, 2019. The maturity dates for the INSW Facilities are subject to acceleration upon the\noccurrence of certain events, including a change in control event or other events of default as defined in the respective loan\nagreements.","markdown_table":"\n\n| 45 | |\n| --- | --- |\n| International Seaways, Inc. | |\n\n","source":"INSW\/10-K\/0001144204-17-017875"} {"title":"LIQUIDITY AND SOURCES OF CAPITAL","text":"\u00b7Amendments to INSW FacilitiesThe first amendment to the INSW Facilities entered into\non June 3, 2015, among other things, provided for the following, subject to certain conditions described therein: (i) permitted\nINSW to pay a cash dividend to OSG no later than June 30, 2015; (ii) permitted INSW to retain net cash proceeds up to $78,000 from\nthe sales of certain assets that occurred prior to June 3, 2015; and (iii) altered the periods during which Excess Cash Flow (as\ndefined in the loan agreement for the INSW Facilities) must be used to prepay the outstanding principal balance of the INSW Facilities,\nfrom an annual period beginning January 1, 2015 to a six-month period beginning July 1, 2015 and annual periods thereafter.Pursuant to the June 3, 2015 amendment to the INSW Facilities,\nINSW paid a cash dividend of $200,000 to OSG on June 26, 2015. Such amendment reduced the base Available Amount (as defined in\nthe loan agreement for the INSW Facilities) from $25,000 to $0. Therefore, as of December 31, 2015, no cash dividends, loans or\nadvances to OSG were permitted under the INSW Term Loan. The Available Amount under the INSW Term Loan increased to $132,200 in\nthe first quarter of 2016, after the required reports were filed with the banks.On July 18, 2016, the Company entered into a second amendment\n(the \u201cSecond INSW Credit Agreement Amendment\u201d) to the INSW Facilities. The Second INSW Credit Agreement Amendment,\namong other things, amended the conditions under which the INSW Facilities permitted OSG to spin off INSW. In particular, the Second\nINSW Credit Agreement Amendment permitted the distribution of OSG\u2019s equity interests in INSW to OSG\u2019s shareholders\nin conjunction with the transfer of substantially all of INSW\u2019s assets (subject to certain exceptions) to a new wholly-owned\nsubsidiary of INSW, subject to the satisfaction of other conditions set forth in the INSW Facilities and the Second INSW Credit\nAgreement Amendment.On September 20, 2016, the Company entered into a third\namendment (the \u201cThird INSW Credit Agreement Amendment\u201d) to the INSW Facilities. The Third INSW Credit Agreement Amendment,\namong other things, (i) permitted INSW to dividend up to an aggregate amount of $100,000 to OSG prior to October 14, 2016; (ii)\nreduced the maximum amount of Incremental Term Loans and Incremental Revolving Loans (as defined in the INSW Facilities) the Borrowers\nmay obtain under the INSW Facilities to $200,000 and alters certain conditions for providing such loans; (iii) increased the amount\nof certain investments the Company and its subsidiaries may make under the INSW Facilities; and (iv) required the Company to prepay\noutstanding Initial Term Loans (as defined in the INSW Facilities) in an aggregate principal amount equal to $75,000 substantially\nsimultaneously with the effective date of the Third INSW Credit Agreement Amendment. The dividend distribution of $100,000 to OSG\nand the $75,000 prepayment of the outstanding principal balance of the INSW Term Loan were completed as of September 30, 2016.On November 30, 2016, the Company entered into a fourth\namendment (the \u201cFourth INSW Credit Agreement Amendment\u201d) to the INSW Facilities primarily to reflect the spin-off of\nthe Company from OSG. The Fourth INSW Credit Agreement Amendment, among other things, (i) removed OSG as guarantor of and party\nunder the facility; (ii) replaced restrictions on the movement of funds to OSG with limitations on the use of the Available Amount\nto pay dividends to shareholders; (iii) restricted payments of dividends from INSW\u2019s subsidiaries to INSW and (iv) added\nor modified certain definitions.In addition to the dividend distribution described above, during\nthe year ended December 31, 2016, we used cash to opportunistically repurchase and retire $68,922 of the outstanding principal\nunder the INSW Term Loan, at an aggregate discounted price of $65,167 (a financing activity). We also made mandatory principal\nprepayments of the INSW Term Loan of $83,832 (which includes $8,832 relating to restricted cash described above). The net loss\nof $1,342 realized on these transactions for the year ended December 31, 2016 is included in other (expense)\/income in the consolidated\nstatement of operations. The net loss reflects a $5,097 write-off of unamortized original issue discount and deferred financing\ncosts associated with the principal reductions, which were treated as partial extinguishments. Third party legal and consulting\nfees (aggregating $225) incurred by the Company in relation to the open market repurchases and INSW Term Loan amendments are included\nin general and administrative expenses in the consolidated statement of operations for the year ended December 31, 2016.The Available Amount for cash dividends permitted under the INSW\nTerm Loan was $30,200 as of December 31, 2016, after INSW\u2019s dividend distributions to OSG of $102,000 during the year ended\nDecember 31, 2016. Management expects that the Available Amount will increase to approximately $70,236 by the end of the first\nquarter of 2017, after the required reports are filed with the banks.Outlook We believe the actions we have taken have strengthened our balance\nsheet as well as increased our flexibility to actively pursue fleet renewal or potential strategic opportunities that may arise\nwithin the diverse sectors in which we operate and at the same time positioned us to generate sufficient cash to support our operations\nover the next twelve months ending December 31, 2017. Also, as we monitor the maturity profile of Company\u2019s outstanding debt,\nwe will evaluate opportunities to extend or refinance the INSW Facilities in the next 12 to 15 months.","markdown_table":"\n\n| 46 | |\n| --- | --- |\n| International Seaways, Inc. | |\n\n","source":"INSW\/10-K\/0001144204-17-017875"} {"title":"LIQUIDITY AND SOURCES OF CAPITAL","text":"Carrying Value of VesselsAll except one of the Company\u2019s owned vessels are pledged\nas collateral under the INSW Facilities. The following table presents information with respect to the carrying amount of the Company\u2019s\nvessels by type and indicates whether their market values, which are estimated by taking an average of two third-party vessel appraisals,\nare below their carrying values as of December 31, 2016. The carrying value of each of the Company\u2019s vessels does not necessarily\nrepresent its fair market value or the amount that could be obtained if the vessel were sold. The Company\u2019s estimates of\nmarket values for its International Flag vessels assume that the vessels are all in good and seaworthy condition without need for\nrepair and, if inspected, would be certified as being in class without notations. In addition, because vessel values are highly\nvolatile, these estimates may not be indicative of either the current or future prices that the Company could achieve if it were\nto sell any of the vessels. The Company would not record a loss for any of the vessels for which the fair market value is below\nits carrying value unless and until the Company either determines to sell the vessel for a loss or determines that the vessel is\nimpaired as discussed below in \u201c\u2014\u00a0Critical Accounting Policies\u00a0\u2014\u00a0Vessel Impairment.\u201d The\nCompany believes that the future undiscounted cash flows expected to be earned over the estimated remaining useful lives for those\nvessels that have experienced declines in market values below their carrying values would exceed such vessels\u2019 carrying values.Footnotes to the following table exclude those vessels with an estimated\nmarket value in excess of their carrying value.","markdown_table":"\n\n| 47 | |\n| --- | --- |\n| International Seaways, Inc. | |\n\n","source":"INSW\/10-K\/0001144204-17-017875"} {"title":"LIQUIDITY AND SOURCES OF CAPITAL","text":"(1)As of December 31, 2016, the International Flag Crude Tankers segment includes vessels with an aggregate carrying value of\n$722,883, which the Company believes exceeds their aggregate market value of approximately $556,625 by $166,258.\n(2)As of December 31, 2016, the International Flag Product Carriers segment includes vessels with an aggregate carrying value\nof $306,450, which the Company believes exceeds their aggregate market value of approximately $228,125 by $78,325.Off-Balance Sheet Arrangements As of December 31, 2016, the affiliated companies in which INSW\nheld an equity interest had total bank debt outstanding of $714,170 of which $638,827 was nonrecourse to the Company.As of December 31, 2016, the maximum potential amount of future\nprincipal payments (undiscounted) that INSW could be required to make relating to equity method investees secured bank debt was\n$38,789 and the carrying amount of the liability related to this guarantee was $0.INSW has an interest in two joint ventures each of which converted\na ULCC into a Floating Storage and Offloading Service vessel (together, the \u201cFSO Joint Venture\u201d). Prior to the spin-off,\nthe FSO Joint Venture was party to a number of contracts to which OSG served as guarantor: (a) the FSO Joint Venture is the borrower\npursuant to a loan agreement, as amended and restated, with OSG and Euronav, each as guarantors, certain other parties thereto\nand ING Bank N.V. as agent and security trustee (the \u2019\u2018Loan Agreement\u2019\u2019); (b) the FSO Joint Venture is\nan obligor pursuant to a guarantee facility agreement, by and among, the FSO Joint Venture, those banks and financial institutions\nlisted therein, Nordea Bank Finland PLC, as issuing bank, Nordea Bank Norge ASA as agent and ING Bank N.V. as Security Trustee\n(the \u2019\u2018Guarantee Facility\u2019\u2019); and (c) the FSO Joint Venture is party to two service contracts with Maersk\nOil Qatar AS (the \u2019\u2018MOQ Service Contracts\u2019\u2019).","markdown_table":"\n\n| As of December 31, 2016 | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| Vessel Type | | Average Vessel Age (weighted by dwt) | | | | Number of Owned Vessels | | | | Carrying Value | | |\n| | | | | | | | | | | | | |\n| International Flag Crude Tankers | | | | | | | | | | | | |\n| VLCC (includes ULCC) | | | 12.1 | | | | 9 | | | $ | 446,732 | |\n| Aframax | | | 11.6 | | | | 7 | | | | 180,920 | |\n| Panamax | | | 14.3 | | | | 8 | | | | 103,304 | |\n| *Total International Flag Crude Tankers(1)* | | | 12.3 | | | | 24 | | | $ | 730,956 | |\n| | | | | | | | | | | | | |\n| International Flag Product Carriers | | | | | | | | | | | | |\n| LR2 | | | 2.4 | | | | 1 | | | $ | 67,080 | |\n| LR1 | | | 8.1 | | | | 4 | | | | 97,702 | |\n| MR | | | 11.2 | | | | 13 | | | | 201,753 | |\n| *Total International Flag Product Carriers(2)* | | | 9.3 | | | | 18 | | | $ | 366,535 | |\n\n","source":"INSW\/10-K\/0001144204-17-017875"} {"title":"LIQUIDITY AND SOURCES OF CAPITAL","text":"In connection with the Distribution on November 30, 2016, INSW now\nguarantees the obligations of the FSO Joint Venture pursuant to the Loan Agreement and the Guarantee Facility (together, the \u2019\u2018ING\nand Nordea Guarantees\u2019\u2019) and guarantees the obligations of the FSO Joint Venture pursuant to the MOQ Service Contracts\n(the \u2019\u2018MOQ Guarantee\u2019\u2019, together with the ING and Nordea Guarantees, the \u2019\u2018INSW FSO Guarantees\u2019\u2019).\nOSG will continue to guarantee the obligations of the FSO Joint Venture pursuant to the Loan Agreement and the Guarantee Facility\n(together, the \u2019\u2018OSG FSO Guarantees\u2019\u2019).INSW entered into guarantee arrangements in connection with the\nspin-off on November 30, 2016, in favor of Qatar Liquefied Gas Company Limited (2) (\u2019\u2018LNG Charterer\u2019\u2019)\nand relating to certain LNG Tanker Time Charter Party Agreements with the LNG Charterer and each of Overseas LNG H1 Corporation,\nOverseas LNG H2 Corporation, Overseas LNG S1 Corporation and Overseas LNG S2 Corporation (such agreements, the \u2019\u2018LNG\nCharter Party Agreements\u2019\u2019, and such guarantee, the \u2019\u2018LNG Performance Guarantee\u2019\u2019). OSG will\ncontinue to provide a guarantee in favor of the LNG Charterer relating to the LNG Charter Party Agreements (such guarantee, the\n\u2019\u2018OSG LNG Performance Guarantee\u2019\u2019 and collectively, with the OSG FSO Guarantees the \u2019\u2018Continuing\nOSG Guarantees\u2019\u2019).In connection with the Continuing OSG Guarantees, INSW will pay\na $125 fee per year to OSG, which is subject to escalation after 2017 and will be terminated if OSG ceases to provide the OSG LNG\nPerformance Guarantee. INSW will indemnify OSG for liabilities arising from the Continuing OSG Guarantees pursuant to the terms\nof the Separation and Distribution Agreement.See Note 13, \u201cRelated Parties,\u201d to the Company\u2019s\nconsolidated financial statements set forth in Item 8, \u201cFinancial Statements and Supplementary Data\u201d for additional\ninformation.In addition and pursuant to an agreement between INSW and the trustees\nof the OSG Ship Management (UK) Ltd. Retirement Benefits Plan (the \u201cScheme\u201d), INSW guarantees the obligations of OSG\nShip Management (UK) Ltd., a subsidiary of INSW, to make payments to the Scheme. See Note 17, \u201cPension Plans,\u201d to the\nCompany\u2019s consolidated financial statements set forth in Item 8, \u201cFinancial Statements and Supplementary Data,\u201d\nfor additional information.Aggregate Contractual ObligationsA summary of the Company\u2019s long-term contractual obligations\nas of December 31, 2016 follows:","markdown_table":"\n\n| 48 | |\n| --- | --- |\n| International Seaways, Inc. | |\n\n","source":"INSW\/10-K\/0001144204-17-017875"} {"title":"LIQUIDITY AND SOURCES OF CAPITAL","text":"(1)Amounts shown include contractual interest obligations of floating rate debt estimated based on the aggregate LIBOR floor rate\nof 1% and applicable margins for the INSW Term Loan of 4.75%. Management estimates that no prepayment will be required for the\nINSW Term Loan as a result of estimated Excess Cash Flow for the year ended December 31, 2016. Amounts shown for the INSW Term\nLoan for years subsequent to 2017 exclude any estimated repayment as a result of Excess Cash Flow.\n(2)As\nof December 31, 2016, the Company had charter-in commitments for 7 vessels on leases that are accounted for as operating leases.\nCertain of these leases provide the Company with various renewal and purchase options. The future minimum commitments for time\ncharters-in have been reduced to reflect estimated days that the vessels will not be available for employment due to drydock.","markdown_table":"\n\n| | | | | | | | | | | | | | | | | | | | | | | Beyond | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | 2017 | | | | 2018 | | | | 2019 | | | | 2020 | | | | 2021 | | | | 2021 | | | | Total | | |\n| INSW Term Loan - floating rate(1) | | $ | 32,843 | | | | 32,484 | | | | 467,074 | | | | - | | | | - | | | | - | | | $ | 532,401 | |\n| Operating lease obligations (2) | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Bareboat Charter-ins | | | 7,016 | | | | 1,841 | | | | - | | | | - | | | | - | | | | - | | | | 8,857 | |\n| Time Charter-ins | | | 15,440 | | | | - | | | | - | | | | - | | | | - | | | | - | | | | 15,440 | |\n| Office space | | | 1,088 | | | | 998 | | | | 998 | | | | 998 | | | | 665 | | | | - | | | | 4,747 | |\n| Total | | $ | 56,387 | | | $ | 35,323 | | | $ | 468,072 | | | $ | 998 | | | $ | 665 | | | $ | - | | | $ | 561,445 | |\n\n","source":"INSW\/10-K\/0001144204-17-017875"} {"title":"RISK MANAGEMENT","text":"At December 31, 2016 and 2015, INSW was party to an Interest Rate\nCap agreement with a start date of February 5, 2015 with a major financial institution covering a notional amount of $400,000 to\nlimit the floating interest rate exposure associated with the INSW Term Loan. The Interest Rate Cap agreement contains no leverage\nfeatures. The INSW Interest Rate Cap, which expired on February 5, 2017, had a cap rate of 2.5%.Currency and exchange rate risk The shipping industry\u2019s functional currency is the U.S. dollar.\nAll of the Company\u2019s revenues and most of its operating costs are in U.S. dollars. The Company incurs certain operating expenses,\nsuch as vessel and general and administrative expenses, in currencies other than the U.S. Dollar, and the foreign exchange risk\nassociated with these operating expenses is immaterial. If foreign exchange risk becomes material in the future, the Company may\nseek to reduce its exposure to fluctuations in foreign exchange rates through the use of short-term currency forward contracts\nand through the purchase of bulk quantities of currencies at rates that management considers favorable. For contracts which qualify\nas cash flow hedges for accounting purposes, hedge effectiveness would be assessed based on changes in foreign exchange spot rates\nwith the change in fair value of the effective portions being recorded in accumulated other comprehensive loss.Fuel price volatility risk Historically, the Company managed its exposure to future increases\nin fuel prices in the normal course of its business by entering into standalone bunker swaps. The Company\u2019s deployment of\nmost of its conventional tanker fleet in commercial pools and time charters currently limits the Company\u2019s direct exposure\nto fluctuations in fuel prices as a component of voyage expenses.","markdown_table":"\n\n| 49 | |\n| --- | --- |\n| International Seaways, Inc. | |\n\n","source":"INSW\/10-K\/0001144204-17-017875"} {"title":"INTEREST RATE SENSITIVITY","text":"*Including current portion.As of December 31, 2016, the Company had a secured term loan (INSW\nTerm Loan) and a revolving credit facility (INSW Revolver Facility) under which borrowings bear interest at a rate based on LIBOR,\nplus the applicable margin, as stated in the respective loan agreements. There were no amounts outstanding under the INSW Revolver\nFacility as of December 31, 2016.","markdown_table":"\n\n| | | | | | | | | | | | | | | | | | | | | | | | | | | Fair Value at | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | | | | | | | | | | | | | | | | | Beyond | | | | | | | | Dec. 31, | | |\n| At December 31, 2016 | | 2017 | | | | 2018 | | | | 2019 | | | | 2020 | | | | 2020 | | | | Total | | | | 2016 | | |\n| Liabilities | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Long-term debt \\* | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Variable rate debt | | $ | 6.2 | | | $ | 6.2 | | | $ | 447.6 | | | $ | - | | | $ | - | | | $ | 460.0 | | | $ | 447.9 | |\n| Average interest rate | | | 5.83 | % | | | 5.83 | % | | | 5.83 | % | | | - | | | | - | | | | | | | | | |\n\n","source":"INSW\/10-K\/0001144204-17-017875"} {"title":"CRITICAL ACCOUNTING POLICIES","text":"Revenue RecognitionThe Company generates a majority of its revenue from voyage charters,\nincluding vessels in pools that predominantly perform voyage charters. Within the shipping industry, there are two methods used\nto account for voyage charter revenue: (1) ratably over the estimated length of each voyage and (2) completed voyage. The recognition\nof voyage revenues ratably over the estimated length of each voyage is the most prevalent method of accounting for voyage revenues\nin the shipping industry and the method used by the Company. Under each method, voyages may be calculated on either a load-to-load\nor discharge-to-discharge basis. In applying its revenue recognition method, management believes that the discharge-to-discharge\nbasis of calculating voyages more accurately estimates voyage results than the load-to-load basis. Since, at the time of discharge,\nmanagement generally knows the next load port and expected discharge port, the discharge-to-discharge calculation of voyage revenues\ncan be estimated with a greater degree of accuracy. The Company does not begin recognizing voyage revenue until a charter has been\nagreed to by both the Company and the customer, even if the vessel has discharged its cargo and is sailing to the anticipated load\nport on its next voyage, because it is at this time an obligation to perform is established, the charter rate is determinable for\nthe specified load and discharge ports and collectability is reasonably assured.Revenues from time charters and bareboat charters are accounted\nfor as operating leases and are thus recognized ratably over the rental periods of such charters, as service is performed. The\nCompany does not recognize time charter revenues during periods that vessels are off hire.For the Company\u2019s vessels operating in Commercial Pools, revenues\nand voyage expenses are pooled and allocated to each pool\u2019s participants on a time charter equivalent basis in accordance\nwith an agreed-upon formula. The formulas in the pool agreements for allocating gross shipping revenues net of voyage expenses\nare based on points allocated to participants\u2019 vessels based on cargo carrying capacity and other technical characteristics,\nsuch as speed and fuel consumption. The selection of charterers, negotiation of rates and collection of related receivables and\nthe payment of voyage expenses are the responsibility of the pools. The pools may enter into contracts that earn either voyage\ncharter revenue or time charter revenue. Each of the pools follows the same revenue recognition principles, as applied by the Company,\nin determining shipping revenues and voyage expenses, including recognizing revenue only after a charter has been agreed to by\nboth the pool and the customer, even if the vessel has discharged its cargo and is sailing to the anticipated load port on its\nnext voyage.For the pools in which the Company participates, management monitors,\namong other things, the relative proportion of the Company\u2019s vessels operating in each of the pools to the total number of\nvessels in each of the respective pools, and assesses whether or not the Company\u2019s participation interest in each of the\npools is sufficiently significant so as to determine that the Company has effective control of the pool. Company management determined\nthat as of June 30, 2013, it had effective control of one of the pools in which the Company participated. Such pool was not a legal\nentity but operated under a contractual agreement. Therefore, effective July 1, 2013 through June 30, 2014, when the Company\u2019s\nparticipation in this pool ended, the Company\u2019s allocated TCE revenues for such pool were reported on a gross basis as voyage\ncharter revenues and voyage expenses in the consolidated statement of operations. The impact of this method of presenting earnings\nfor this pool for the year ended December 31, 2014 was an increase in both voyage charter revenues and voyage expenses of $40,454.Vessel Lives and Salvage ValuesThe carrying value of each of the Company\u2019s vessels represents\nits original cost at the time it was delivered or purchased less depreciation calculated using an estimated useful life of 25 years\n(except for FSO service vessels for which estimated useful lives of 30 years are used and LNG Carriers for which estimated useful\nlives of 35 years are used) from the date such vessel was originally delivered from the shipyard. A vessel\u2019s carrying value\nis reduced to its new cost basis (i.e. its current fair value) if a vessel impairment charge is recorded.If the estimated economic lives assigned to the\nCompany\u2019s vessels prove to be too long because of new regulations, an extended period of weak markets, the broad\nimposition of age restrictions by the Company\u2019s customers, or other future events, it could result in higher\ndepreciation expense and impairment losses in future periods related to a reduction in the useful lives of any affected\nvessels. Company management estimates the scrap value of all of its vessels to be $300 per lightweight ton. The\nCompany\u2019s assumptions used in the determination of estimated salvage value take into account current scrap prices, the\nhistoric pattern of annual average scrap rates over the five years ended December 31, 2016, which ranged from $235 to $495\nper lightweight ton, estimated changes in future market demand for scrap steel and estimated future demand for vessels. Scrap\nprices also fluctuate depending upon type of ship, bunkers on board, spares on board and delivery range. Market conditions\nthat could influence the volume and pricing of scrapping activity in 2017 and beyond include the combined impact of scheduled\nnewbuild deliveries and charter rate expectations for vessels potentially facing age restrictions imposed by oil majors.\nThese factors will influence owners\u2019 decisions to accelerate the disposal of older vessels, especially those with\nupcoming special surveys including first generation double hull vessels.","markdown_table":"\n\n| 50 | |\n| --- | --- |\n| International Seaways, Inc. | |\n\n","source":"INSW\/10-K\/0001144204-17-017875"} {"title":"CRITICAL ACCOUNTING POLICIES","text":"Although management believes that the assumptions used to determine\nthe scrap rate for its International Flag vessels are reasonable and appropriate, such assumptions are highly subjective, in part,\nbecause of the cyclicality of the nature of future demand for scrap steel.Vessel ImpairmentThe carrying values of the Company\u2019s vessels may not represent\ntheir fair market value or the amount that could be obtained by selling the vessel at any point in time since the market prices\nof second-hand vessels tend to fluctuate with changes in charter rates and the cost of newbuildings. Historically, both charter\nrates and vessel values tend to be cyclical. Management evaluates the carrying amounts of vessels held and used by the Company\nfor impairment only when it determines that it will sell a vessel or when events or changes in circumstances occur that cause management\nto believe that future cash flows for any individual vessel will be less than its carrying value. In such instances, an impairment\ncharge would be recognized if the estimate of the undiscounted future cash flows expected to result from the use of the vessel\nand its eventual disposition is less than the vessel\u2019s carrying amount. This assessment is made at the individual vessel\nlevel as separately identifiable cash flow information for each vessel is available.In developing estimates of future cash flows, the Company must\nmake assumptions about future performance, with significant assumptions being related to charter rates, ship operating expenses,\nutilization, drydocking requirements, residual value and the estimated remaining useful lives of the vessels. These assumptions\nare based on historical trends as well as future expectations. Specifically, in estimating future charter rates, management takes\ninto consideration rates currently in effect for existing time charters and estimated daily time charter equivalent rates for each\nvessel class for the unfixed days over the estimated remaining lives of each of the vessels. The estimated daily time charter equivalent\nrates used for unfixed days are based on a combination of (i) internally forecasted rates that are consistent with forecasts provided\nto the Company\u2019s senior management and Board of Directors, and (ii) the trailing 12-year historical average rates, based\non monthly average rates published by a third party maritime research service. The internally forecasted rates are based on management\u2019s\nevaluation of current economic data and trends in the shipping and oil and gas industries. Management used the published 12-year\nhistorical average rates in its assumptions because it is management\u2019s belief that the 12-year period captures an even distribution\nof strong and weak charter rate periods, which results in the use of an average mid-cycle rate that is more in line with management\u2019s\nforecast of a return to mid-cycle charter rate levels in the medium term. Recognizing that the transportation of crude oil and\npetroleum products is cyclical and subject to significant volatility based on factors beyond the Company\u2019s control, management\nbelieves the use of estimates based on the combination of internally forecasted rates and 12-year historical average rates calculated\nas of the reporting date to be reasonable.Estimated outflows for operating expenses and drydocking requirements\nare based on historical and budgeted costs and are adjusted for assumed inflation. Finally, utilization is based on historical\nlevels achieved and estimates of a residual value are consistent with the pattern of scrap rates used in management\u2019s evaluation\nof salvage value.The determination of fair value is highly judgmental. In estimating\nthe fair value of INSW\u2019s vessels for purposes of Step 2 of the impairment tests, the Company considered the market and income\napproaches by using a combination of third party appraisals and discounted cash flow models prepared by the Company. In preparing\nthe discounted cash flow models, the Company uses a methodology consistent with the methodology discussed above in relation to\nthe undiscounted cash flow models prepared by the Company, and discounts the cash flows using its current estimate of INSW\u2019s\nweighted average cost of capital, of 9%.The more significant factors that could impact management\u2019s\nassumptions regarding time charter equivalent rates include (i) loss or reduction in business from significant customers, (ii)\nunanticipated changes in demand for transportation of crude oil and petroleum products, (iii) changes in production of or demand\nfor oil and petroleum products, generally or in particular regions, (iv) greater than anticipated levels of tanker newbuilding\norders or lower than anticipated levels of tanker scrappings, and (v) changes in rules and regulations applicable to the tanker\nindustry, including legislation adopted by international organizations such as IMO and the EU or by individual countries. Although\nmanagement believes that the assumptions used to evaluate potential impairment are reasonable and appropriate at the time they\nwere made, such assumptions are highly subjective and likely to change, possibly materially, in the future.2016 Impairment Evaluations\u00a0\u2014 The Company\nhas been monitoring the industry wide decline in vessel valuations during 2016 and specifically from June 30, 2016 to September\n30, 2016, and September 30, 2016 to December 31, 2016, as well as the decline in forecasted near term charter rates, and concluded\nthat the declines in vessel valuations and in forecasted near term charter rates constituted impairment trigger events for 28 vessels\nas of September 30, 2016 and 24 vessels as of December 31, 2016. In developing estimates of undiscounted future cash flows for\nperforming Step 1 of the impairment tests, the Company utilized the methodology described above. In estimating the fair value of\nthe vessels for the purposes of Step 2 of the September 30, 2016 impairment tests, the Company developed fair value estimates that\nutilized a market approach which considered an average of two vessel appraisals. Based on the tests performed, impairment charges\ntotaling $49,640 were recorded on two LR1s, an Aframax and a Panamax to write-down their carrying values to their estimated fair\nvalues at September 30, 2016. In estimating the fair values of the vessels for the purposes of Step 2 of the December 31, 2016\nimpairment tests, the Company considered the market and income approaches by using a combination of third party appraisals and\ndiscounted cash flow models prepared by the Company. In preparing the discounted cash flow models, the Company used a methodology\nconsistent with the methodology described above. Based on the tests performed, impairment charges aggregating $29,602 were recorded\non one Panamax and seven MRs to write-down their carrying values to their estimated fair values at December 31, 2016.","markdown_table":"\n\n| 51 | |\n| --- | --- |\n| International Seaways, Inc. | |\n\n","source":"INSW\/10-K\/0001144204-17-017875"} {"title":"CRITICAL ACCOUNTING POLICIES","text":"2015 Impairment Evaluation\u00a0\u2014\u00a0Management\ngave consideration as to whether any events and changes in circumstances existed as of December 31, 2015 that could be viewed as\nindicators that the carrying amounts of the vessels in the Company\u2019s International Flag fleet were not recoverable as of\nDecember 31, 2015 and determined there were no such events or changes in circumstances.2014 Impairment Evaluation\u00a0\u2014\u00a0Management\ngave consideration to the following events and changes in circumstances in determining whether there were any indicators that the\ncarrying amounts of the vessels in the Company\u2019s International Flag fleet were not recoverable as of December 31, 2014:\n(i)A significant year-over-year decline in third party valuation appraisals for four MRs securing the INSW Term Loan;\n(ii)the impact, if any, of management\u2019s intent to dispose of or continue to trade certain vessels during 2015; and\n(iii)the impact, if any, of outsourcing technical and commercial management of the Company\u2019 International Flag conventional\ntanker fleet.Management determined that the latter two factors had no impact\non the carrying value of the Company\u2019s International Flag fleet as of December 31, 2014. However, the decline in the third\nparty valuation appraisals on four modern MRs, which were built between 2009 and 2011, was deemed to be an impairment indicator\nrequiring the need to test the recoverability of the carrying value of these vessels. Based on tests performed, it was determined\nthat the vessels would generate undiscounted cash flows in excess of their December 31, 2014 carrying values over the remainder\nof their useful lives.Impairment of Equity Method InvestmentsWhen events and circumstances warrant, investments accounted\nfor under the equity method of accounting are evaluated for impairment. If a determination is made that an other-than-temporary\nimpairment exists, the investment should be written down to its fair value in accordance with ASC 820, Fair Value Measurements\nand Disclosures, which establishes a new cost basis. In December 2016, evidence of an other-than-temporary decline in the fair\nvalue of the Company\u2019s investments in its FSO joint ventures below their carrying values was identified by the Company. Specifically,\nmanagement concluded that the lower charter rate expected over the duration of the recently awarded five-year service contracts\ncommencing in the third quarter of 2017 was negative evidence indicating that the excess of the carrying value of the Company\u2019s\ninvestment in these joint ventures over their fair value was other-than-temporary as of December 31, 2016.As the Company determined that other-than-temporary impairments\nexisted in relation to its investments in the FSO joint ventures, impairment charges aggregating $30,475 were recorded to write\ndown the investments to their estimated fair values as of December 31, 2016. Such charges are included in equity in income of affiliated\ncompanies in the accompanying consolidated statements of operations. In estimating the fair value of the Company\u2019s investments\nin the FSO joint ventures as of December 31, 2016, the Company utilized an income approach, by preparing discounted cash flow models\nsince there is a lack of comparable market transactions for the specially built assets held by the joint ventures. In preparing\nthe discounted cash flows models, the Company used a methodology largely consistent with the methodology and assumptions detailed\nin the \u201cVessel Impairment\u201d section above, with the exception being that as the assets owned by the joint ventures serve\nunder specific service contracts, the estimated charter rates for periods after the expiry of the existing contracts are based\nupon management\u2019s internally forecasted rates. The cash flows were discounted using the current estimated weighted average\ncost of capital for each joint venture, which approximated 9.5% and took into consideration country risk, entity size and uncertainty\nwith respect to the cash flows for periods beyond the current charter expiries.DrydockingWithin the shipping industry, there are two methods that are\nused to account for dry dockings: (1) capitalize drydocking costs as incurred (deferral method) and amortize such costs over the\nperiod to the next scheduled drydocking, and (2) expense drydocking costs as incurred. Since drydocking cycles typically extend\nover two and a half years or five years, management uses the deferral method because management believes it provides a better matching\nof revenues and expenses than the expense-as-incurred method.","markdown_table":"\n\n| 52 | |\n| --- | --- |\n| International Seaways, Inc. | |\n\n","source":"INSW\/10-K\/0001144204-17-017875"} {"title":"CRITICAL ACCOUNTING POLICIES","text":"Pension BenefitsThe Company has obligations outstanding under the OSG Ship Management\n(UK) Ltd. Retirement Benefits Plan (the \u201cScheme\u201d), a defined benefit pension plan maintained by a subsidiary in the\nU.K., who is the principal employer of the Scheme. The plan has been closed to new entrants and accrual since December 2007. The\nCompany has recorded pension benefit costs based on complex valuations developed by its actuarial consultants. These valuations\nare based on key estimates and assumptions, including those related to the discount rates, the rates expected to be earned on investments\nof plan assets and the life expectancy\/mortality of plan participants. The Company is required to consider market conditions in\nselecting a discount rate that is representative of the rates of return currently available on high-quality fixed income investments.\nA higher discount rate would result in a lower benefit obligation and a lower rate would result in a higher benefit obligation.\nThe expected rate of return on plan assets is management\u2019s best estimate of expected returns on plan assets. A decrease in\nthe expected rate of return will increase net periodic benefit costs and an increase in the expected rate of return will decrease\nbenefit costs. The mortality assumption is management\u2019s best estimate of the expected duration of future benefit payments\nat the measurement date. The estimate is based on the specific demographics and other relevant facts and circumstances of the Scheme\nand considers all relevant information available at the measurement date. Longer life expectancies would result in higher benefit\nobligations and a decrease in life expectancies would result in lower benefit obligations.In determining the benefit obligations at the end of year measurement\ndate, the Company continues to use an equivalent single weighted-average discount rate, at December 31, 2016 (2.60%) and 2015 (3.80%),\nrespectively. Management believes these rates to be appropriate for ongoing plans with a long duration such as Scheme. The Company\nalso assumed a long term rate of return on the Scheme assets of 3.85% and 5.62% at December 31, 2016 and 2015, respectively, based\non the asset mix as of such dates and management\u2019s estimate of the long term rate of return that could be achieved over the\nremaining duration of the Scheme.Newly Issued Accounting StandardsSee Note 3, \u201cSummary of Significant Accounting Policies,\u201d\nto the Company\u2019s consolidated financial statements set forth in Item 8, \u201cFinancial Statements and Supplementary Data.\u201d","markdown_table":"\n\n| 53 | |\n| --- | --- |\n| International Seaways, Inc. | |\n\n","source":"INSW\/10-K\/0001144204-17-017875"} {"title":"OPERATIONS AND OIL TANKER MARKETS","text":"Chinese crude oil imports reached a record\n10.4 million b\/d in November 2018, followed by 10.3 million b\/d in December. For the year, imports averaged 9.2 million b\/d, an\nincrease of 10.1% from the 2017 average.During the fourth quarter of 2018, the tanker\nfleet of vessels over 10,000 deadweight tons (\u201cdwt\u201d) increased by 1.8 million dwt as the crude fleet increased by 1.5\nmillion dwt, with VLCCs growing by 2.2 million dwt while the Suezmax and Aframax fleets saw declines of 0.2 and 0.6 million dwt,\nrespectively. The product carrier fleet expanded by 0.4 million dwt with LR1s declining by 0.2 million dwt and MRs increasing by\n0.6 million dwt. Year over year, the size of the tanker fleet increased by 6.2 million dwt with the largest increases in the VLCC,\nSuezmax and MR sectors, while Aframaxes and Panamaxes saw modest growth in the fleet size as scrapping during the period tempered\nnewbuilding deliveries.During the fourth quarter of 2018, the crude\ntanker orderbook decreased by 1.4 million dwt overall led by declines in the VLCC orderbook of 2.5 million dwt, with Aframaxes\nshowing a decline of 0.3 million dwt, while the Suezmax orderbook increased by 1.4 million dwt. The product carrier orderbook decreased\nby 0.6 million dwt, with the Panamax orderbook increasing by 0.1 million dwt and the MR orderbook decreasing by 0.7 million dwt.From the end of the fourth quarter of 2017\nthrough the end of the fourth quarter of 2018, the total tanker orderbook declined by 7.3 million dwt, with declines in all sectors:\nVLCC 0.8 million dwt, Suezmax 1.4 million dwt, Aframax 3.2 million dwt, Panamax 0.1 million dwt and MR 1.8 million dwt.VLCC freight rates were significantly better\nduring the fourth quarter of 2018 compared with the third quarter of 2018, reaching two-year highs. Other crude sectors showed\nsimilar strength. Continued strength in oil demand, reduced crude inventories, and a spike in OPEC production in the third quarter\nall led to the strength in the market. MR rates began the quarter on a weak note then gradually strengthened through the rest of\nthe quarter and into the first quarter of 2019. The first quarter of 2019 similarly began with strength, however the OPEC cuts\nduring the fourth quarter have put downward pressure on rates.","markdown_table":"\n\n| 43 | |\n| --- | --- |\n| International Seaways, Inc. | |\n\n","source":"INSW\/10-K\/0001144204-19-013398"} {"title":"RESULTS FROM VESSEL OPERATIONS","text":"Crude Tankers","markdown_table":"\n\n| 44 | |\n| --- | --- |\n| International Seaways, Inc. | |\n\n","source":"INSW\/10-K\/0001144204-19-013398"} {"title":"RESULTS FROM VESSEL OPERATIONS","text":"(a)Adjusted income from vessel operations by segment is before general and administrative expenses,\nthird-party debt modification fees, separation and transition costs, and loss on disposal of vessels and other property, including\nimpairments.\n(b)The average is calculated to reflect the addition and disposal of vessels during the year.\n(c)Revenue days represent ship-operating days less days that vessels were not available for employment\ndue to repairs, drydock or lay-up. Revenue days are weighted to reflect the Company\u2019s interest in chartered-in vessels.\n(d)Ship-operating days represent calendar days.\n(e)Vessels time and spot chartered-in under operating leases are related to the Company\u2019s Crude\nTankers Lightering business.The following table provides a breakdown of\nTCE rates achieved for the years ended December 31, 2018, 2017 and 2016 between spot and fixed earnings and the related revenue\ndays. The information in these tables is based, in part, on information provided by the commercial pools in which the segment\u2019s\nvessels participate and excludes commercial pool fees\/commissions averaging approximately $721, $726 and $748 per day in 2018,\n2017 and 2016, respectively, as well as revenue and revenue days for which recoveries were recorded by the Company under its loss\nof hire insurance policies.","markdown_table":"\n\n| | | 2018 | | | | 2017 | | | | 2016 | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| TCE revenues | | $ | 175,524 | | | $ | 178,812 | | | $ | 258,171 | |\n| Vessel expenses | | | (95,090 | ) | | | (87,236 | ) | | | (84,276 | ) |\n| Charter hire expenses | | | (23,809 | ) | | | (13,651 | ) | | | (9,732 | ) |\n| Depreciation and amortization | | | (54,431 | ) | | | (56,302 | ) | | | (52,395 | ) |\n| Adjusted income from vessel operations (a) | | $ | 2,194 | | | $ | 21,623 | | | $ | 111,768 | |\n| Average daily TCE rate | | $ | 17,780 | | | $ | 20,525 | | | $ | 29,853 | |\n| Average number of owned vessels (b) | | | 26.1 | | | | 25.0 | | | | 24.0 | |\n| Average number of vessels chartered-in under operating leases | | | 2.6 | | | | 0.5 | | | | 0.3 | |\n| Number of revenue days: (c) | | | 9,872 | | | | 8,712 | | | | 8,648 | |\n| Number of ship-operating days: (d) | | | | | | | | | | | | |\n| Owned vessels | | | 9,544 | | | | 9,137 | | | | 8,784 | |\n| Vessels bareboat chartered-in under operating leases | | | 578 | | | | - | | | | - | |\n| Vessels time chartered-in under operating leases (e) | | | 190 | | | | - | | | | - | |\n| Vessels spot chartered-in under operating leases (e) | | | 174 | | | | 173 | | | | 118 | |\n\n","source":"INSW\/10-K\/0001144204-19-013398"} {"title":"RESULTS FROM VESSEL OPERATIONS","text":"During 2018, TCE revenues for the Crude Tankers\nsegment decreased by $3,288, or 2%, to $175,524 from $178,812 in 2017. Such decrease resulted from (i) lower average blended rates\nin the VLCC, Aframax and Panamax sectors aggregating approximately $32,657, with the decline for the VLCCs being the most significant,\n(ii) a decrease in revenue of $11,948 associated with the sale of the Company\u2019s only ULCC, which was idle in 2018 prior to\nits sale in June 2018, and (iii) a 424-day reduction in Aframax revenue days, which led to a revenue decline of $5,368 and was\ndriven by the sales of two 2001-built Aframaxes during 2018. These decreases in TCE revenues were offset substantially by an increase\nof $36,792 relating to a 1,682-day increase in VLCC, Suezmax and Panamax revenue days, and a $9,134 increase in revenue in the\nCrude Tankers Lightering business during the current year. The increased revenue days primarily reflected the acquisitions of (a)\ntwo 2017-built Suezmaxes, each of which delivered to the Company in July 2017, (b) one 2010-built VLCC which delivered to the Company\nin November 2017, (c) a 2015-built and five 2016-built VLCCs which delivered to the Company in June 2018, and (d) 347 fewer drydock\ndays in the Panamax fleet in 2018 compared with 2017. The disposals of a 2001-built VLCC that was held-for-sale as of the end of\nAugust 2018 through its sale in October 2018, a 2000-built VLCC in April 2018 and a 2002-built Panamax in September 2018 partially\noffset the impact of the increased revenue days described above. In addition, the Company sold two 2001-built Aframaxes during\n2018. There was a larger disparity in the spot rates earned by the Company\u2019s modern and older VLCCs in the current year versus\n2017. VLCCs aged 15 years or less earned an average daily rate of $21,813 per day as compared to the rate for older VLCCs of $12,477\nper day in 2018, while in 2017 the VLCCs under 15 years of age earned $26,968 per day as compared to the rate for older VLCCs of\n$21,898 per day. The market conditions for VLCCs improved significantly during the fourth quarter of 2018 as compared to the first\nthree quarters of 2018 and the disparity in rates tightened, as the VLCCs aged 15 years or less earned a rate of $33,276 per day\nas compared to a rate of $26,583 for the older VLCCs.Vessel expenses increased by $7,854 to $95,090\nin 2018 from $87,236 in 2017. An increase of approximately $12,840 was attributable to the VLCC and Suezmax sectors and was driven\nprincipally by the vessel acquisitions discussed above. Such increase was offset by a decrease of $3,459 in the Panamax fleet primarily\nrelating to lower drydock deviation costs, the timing of repairs and the delivery of spares, and the sale of a 2002-built Panamax\nin September 2018. The sale of the ULCC noted above also resulted in a $1,805 decrease in vessel expenses in 2018. Charter hire\nexpenses increased by $10,158 to $23,809 in 2018 from $13,651 in 2017 resulting from the impact of the Company executing sale and\nleaseback transactions for two 2009-built Aframaxes in March 2018 and an increase in chartered-in vessels in the Crude Tankers\nLightering business to support increased full service lightering activity, either on a spot or short-term time charter basis which\naccounted for $5,316 of the increase. The bareboat charters associated with the sold and leased back Aframaxes are for periods\nranging from 70 to 73 months and contain purchase options executable by the Company, commencing in the first quarter of 2021. Depreciation\nand amortization decreased by $1,871 to $54,431 in 2018 from $56,302 in 2017, principally resulting from the impact of reductions\nin depreciable vessel bases that resulted from impairment charges on 13 vessels recorded in the third and fourth quarters of 2017\nand the vessel sales and sale and leaseback transactions described above. These factors were offset to a large extent by the vessel\nacquisitions described above.Excluding depreciation and amortization, and\ngeneral and administrative expenses, operating income for the Crude Tankers Lightering business was $8,122 for 2018 and $5,062\nfor 2017, with the performance in the second half of 2018 ending up much stronger than the first half. To support its operations,\nthe Crude Tankers Lightering business time chartered in an Aframax on a short-term basis in late June 2018. This proved to be timely\nsince rates on Aframaxes in the Caribbean spiked later in the year. The increase in the current year\u2019s operating income as\ncompared to the prior year primarily reflects a higher volume of full service and service support only lighterings in the current\nyear. In 2018, 49 full service and 355 service support only lighterings were performed, as compared to 27 full service and 325\nservice support only lighterings in 2017. Additionally, during 2018 the Crude Tankers Lightering business utilized one of its chartered-in\nAframaxes on seven spot voyages, there were no such spot voyages performed in 2017. Increased U.S. exports will likely continue\nto require transshipment during 2019, regardless of the eventuality of any deep-water terminals.During 2017, TCE revenues for the Crude Tankers\nsegment decreased by $79,359 or 31%, to $178,812 from $258,171 in 2016. Such decrease principally resulted from the impact of significantly\nlower average blended rates in the VLCC, Aframax, Panamax and ULCC sectors aggregating approximately $84,155. Further contributing\nto the decrease was a decrease in revenue days in the Panamax and Aframax sectors, which had the effect of decreasing revenue by\napproximately $6,428. The decrease in Panamaxes and Aframax revenue days reflects 319 incremental drydock and repair days in 2017.\nThese declines in TCE revenues were partially offset by $6,268 in total revenues contributed by the two 2017-built Suezmaxes and\nthe 2010-built VLCC, which were acquired by the Company in July 2017 and November 2017, respectively. Also serving to offset the\ndecreases in revenue during 2017 were the increased activity levels in the Crude Tankers Lightering business, which resulted in\na $5,037 increase in Lightering revenues to $25,478 in 2017 from $20,441 in 2016.Vessel expenses increased by $2,960 to $87,236\nin 2017 from $84,276 in 2016. The increase was primarily attributable to (i) a $2,418 increase related to the Suezmax acquisitions\ndiscussed above, (ii) a reserve of $388 which was recorded during the second quarter of 2017 for a potential assessment by the\ntrustees of the Marine Navy Ratings Pension Fund (\u201cMNRPF\u201d), as discussed in Note 20, \u201cContingencies,\u201d to\nthe Company\u2019s consolidated financial statements as set forth in Item 8, \u201cFinancial Statements and Supplementary Data,\u201d\n(iii) a $1,367 increase in drydock deviation costs incurred for the Panamax fleet, and (iv) a $900 increase due to increased activity\nin the Crude Tankers Lightering business. Such increases were partially offset by a $2,079 favorable variance in net insurance\nclaim deductible costs in the Panamax fleet in 2017. Charter hire expenses increased by $3,919 to $13,651 in 2017 from $9,732 in\n2016 as a result of an increase in chartered-in Aframaxes and workboats employed in the Crude Tankers Lightering business in the\n2017. The only vessels in the segment chartered-in by the Company in either 2017 or 2016 were the vessels chartered-in by the Crude\nTankers Lightering business. Depreciation and amortization increased by $3,907 to $56,302 in 2017 from $52,395 in 2016. Such increase\nreflects the delivery of the two Suezmaxes and one VLCC noted above and increased drydock amortization.","markdown_table":"\n\n| 45 | |\n| --- | --- |\n| International Seaways, Inc. | |\n\n","source":"INSW\/10-K\/0001144204-19-013398"} {"title":"RESULTS FROM VESSEL OPERATIONS","text":"Excluding depreciation and amortization, and\ngeneral and administrative expenses, operating income for the Crude Tankers Lightering business was $5,062 for 2017 and $4,822\nfor 2016. Although there was an increase in the number of full service lighterings performed in 2017, 27 as compared to 19 in 2016,\nthe growth in operating income between 2016 and 2017 was relatively flat, primarily due to lower margins earned on jobs performed\nin the third quarter of 2017. The lower margins were as a result of increased charter hire expense, as Aframaxes were spot chartered-in\nat higher rates because of significant hurricane activity during the third quarter of 2017. In addition, there were more time chartered-in\nworkboats in the six months ended December 31, 2017 compared to the same period in 2016. However, the higher level of lightering\nactivity anticipated in the second half of 2017 did not materialize as the number of service-only and full service lighterings\ndeclined in the second half of 2017 compared with the first six months of 2017.Product Carriers","markdown_table":"\n\n| 46 | |\n| --- | --- |\n| International Seaways, Inc. | |\n\n","source":"INSW\/10-K\/0001144204-19-013398"} {"title":"RESULTS FROM VESSEL OPERATIONS","text":"The following table provides a breakdown of\nTCE rates achieved for the years ended December 31, 2018, 2017 and 2016 between spot and fixed earnings and the related revenue\ndays. The information is based, in part, on information provided by the commercial pools in which certain of the segment\u2019s\nvessels participate and excludes commercial pool fees\/commissions averaging approximately $444, $404 and $442 per day in 2018,\n2017 and 2016, respectively, as well as revenue and revenue days for which recoveries were recorded by the Company under its loss\nof hire insurance policies.","markdown_table":"\n\n| | | 2018 | | | | 2017 | | | | 2016 | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| TCE revenues | | $ | 67,576 | | | $ | 96,183 | | | $ | 126,314 | |\n| Vessel expenses | | | (40,615 | ) | | | (54,100 | ) | | | (58,612 | ) |\n| Charter hire expenses | | | (21,101 | ) | | | (28,050 | ) | | | (27,679 | ) |\n| Depreciation and amortization | | | (17,862 | ) | | | (22,418 | ) | | | (26,696 | ) |\n| Adjusted (loss)\/income from vessel operations | | $ | (12,002 | ) | | $ | (8,385 | ) | | $ | 13,327 | |\n| Average daily TCE rate | | $ | 10,594 | | | $ | 11,105 | | | $ | 14,206 | |\n| Average number of owned vessels | | | 13.3 | | | | 17.5 | | | | 18.0 | |\n| Average number of vessels chartered-in under operating leases | | | 4.8 | | | | 6.9 | | | | 6.9 | |\n| Number of revenue days | | | 6,379 | | | | 8,662 | | | | 8,891 | |\n| Number of ship-operating days: | | | | | | | | | | | | |\n| Owned vessels | | | 4,872 | | | | 6,378 | | | | 6,588 | |\n| Vessels bareboat chartered-in under operating leases | | | 302 | | | | 1,093 | | | | 1,098 | |\n| Vessels time chartered-in under operating leases | | | 1,457 | | | | 1,408 | | | | 1,433 | |\n\n","source":"INSW\/10-K\/0001144204-19-013398"} {"title":"RESULTS FROM VESSEL OPERATIONS","text":"During 2018, TCE revenues for the Product\nCarriers segment decreased by $28,607, or 30%, to $67,576 from $96,183 in 2017. A 2,265-day decrease in MR revenue days, driven\nby the sales of seven MRs between August 2017 and December 2018 and the redelivery of three MRs to their owners between December\n2017 and June 2018 at the expiry of their respective bareboat charters, contributed approximately $23,288 of the overall decrease.\nPeriod-over-period decreases in average daily blended rates earned by all Product Carrier fleet sectors also accounted for a decrease\nin revenue of approximately $5,012.Vessel expenses decreased by $13,485 to $40,615\nin 2018 from $54,100 in 2017, which was principally attributable to a 2,297-day decrease in owned and bareboat chartered-in days,\nas detailed above. Charter hire expenses decreased by $6,949 to $21,101 in 2018 from $28,050 in 2017, reflecting the redeliveries\ndescribed above along with decreases in the daily charter rates for the Company\u2019s time chartered-in MR fleet, which were\neffective in the third quarter of 2017. Depreciation and amortization decreased by $4,556 to $17,862 in 2018 from $22,418 in 2017\nresulting primarily from the vessel sales noted above and reductions in depreciable vessel bases that resulted from impairment\ncharges on two vessels recorded in the third quarter of 2017.","markdown_table":"\n\n| | | 2018 | | | | | | | | 2017 | | | | | | | | 2016 | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | Spot | | | | Fixed | | | | Spot | | | | Fixed | | | | Spot | | | | Fixed | | |\n| | | Earnings | | | | Earnings | | | | Earnings | | | | Earnings | | | | Earnings | | | | Earnings | | |\n| LR2 | | | | | | | | | | | | | | | | | | | | | | | | |\n| Average rate | | $ | 12,729 | | | $ | - | | | $ | 13,813 | | | $ | - | | | $ | 21,153 | | | $ | - | |\n| Revenue days | | | 365 | | | | - | | | | 364 | | | | - | | | | 365 | | | | - | |\n| LR1 | | | | | | | | | | | | | | | | | | | | | | | | |\n| Average rate | | $ | 14,875 | | | $ | - | | | $ | 12,871 | | | $ | 17,040 | | | $ | 20,599 | | | $ | 21,107 | |\n| Revenue days | | | 1,416 | | | | - | | | | 808 | | | | 615 | | | | 361 | | | | 1,029 | |\n| MR | | | | | | | | | | | | | | | | | | | | | | | | |\n| Average rate | | $ | 10,125 | | | $ | 5,294 | | | $ | 11,001 | | | $ | 5,342 | | | $ | 13,107 | | | $ | 11,309 | |\n| Revenue days | | | 4,257 | | | | 340 | | | | 6,496 | | | | 366 | | | | 6,431 | | | | 705 | |\n\n","source":"INSW\/10-K\/0001144204-19-013398"} {"title":"RESULTS FROM VESSEL OPERATIONS","text":"During 2017, TCE revenues for the International\nProduct Carriers segment decreased by $30,131, or 24%, to $96,183 from $126,314 in 2016. This resulted primarily from declining\naverage daily blended rates earned in all Product Carrier fleet sectors, which accounted for $27,625 of the overall decrease. A\n230-day decrease in revenue days in the segment also contributed approximately $2,506 of the overall decrease. The decline in revenue\ndays was driven by the Company\u2019s sale of a 2001-built MR, which was delivered to buyers in August 2017, and a 2004-built\nMR, which was delivered to buyers in November 2017.Vessel expenses decreased by $4,512 to $54,100\nin 2017 from $58,612 in 2016. The two MRs sold during 2017 had an aggregate vessel expense reduction of $1,841 year-over-year.\nThe remaining decline was principally attributable to a $2,991 favorable variance in net insurance claim deductible costs in the\nsegment in 2017. Charter hire expenses increased by $371 to $28,050 in 2017 from $27,679 in 2016, reflecting an increase in the\ndaily charter hire rates for the Company\u2019s bareboat chartered-in MR fleet, which was effective beginning in the fourth quarter\nof 2016, partially offset by decreases in the daily charter hire rates for the Company\u2019s time chartered-in MR fleet, which\nwere effective beginning in the third quarter of 2017. Depreciation and amortization decreased by $4,278 to $22,418 in 2017 from\n$26,696 in 2016. Such decrease reflects (i) the impact of reductions in depreciable vessel bases that resulted from impairment\ncharges on nine vessels recorded in the third and fourth quarters of 2016 and two vessels in the third quarter of 2017, and (ii)\nthe sale of the two MRs during 2017 discussed above.","markdown_table":"\n\n| 47 | |\n| --- | --- |\n| International Seaways, Inc. | |\n\n","source":"INSW\/10-K\/0001144204-19-013398"} {"title":"SEPARATION AND TRANSITION COSTS","text":"INSW and OSG also entered into a transition\nservices agreement (the \u201cTSA\u201d or \u201cTransition Services Agreement\u201d) pursuant to which both parties agreed\nto provide each other with specified services for a limited time to help ensure an orderly transition following the Distribution.\nThe Transition Services Agreement specifies the calculation of the costs for these services. Pursuant to the terms of the agreement,\nOSG provided certain administrative services, including administrative support services related to benefit plans, human resources\nand legal services, for a transitional period after the spin-off. Similarly, INSW agreed to provide certain limited transition\nservices to OSG, including services relating to accounting activities and information and data provision services. The Transition\nServices Agreement terminated on June 30, 2017.During the year ended December 31, 2017 and\n2016, INSW earned fees totaling $63 and $27, respectively, for services provided to OSG pursuant to the terms of the Transition\nServices Agreement and incurred fees totaling $731and $31, respectively, for services received from OSG, including INSW\u2019s\nshare of the compensation costs of former OSG corporate employees providing services to one or both companies during the defined\ntransitional period, which ended on June 30, 2017.","markdown_table":"\n\n| 48 | |\n| --- | --- |\n| International Seaways, Inc. | |\n\n","source":"INSW\/10-K\/0001144204-19-013398"} {"title":"OTHER EXPENSE","text":"Other expense of $1,346 for the year ended\nDecember 31, 2016 was primarily related to a net loss of $1,342 realized on the repurchases and mandatory principal prepayments\nof the then outstanding INSW Term Loan, which included a $5,097 write-off of unamortized original issue discount and deferred financing\ncosts associated with such principal reductions, net of $3,755 discount on repurchase of debt. These transactions were accounted\nfor as partial extinguishments of debt.","markdown_table":"\n\n| 49 | |\n| --- | --- |\n| International Seaways, Inc. | |\n\n","source":"INSW\/10-K\/0001144204-19-013398"} {"title":"INTEREST EXPENSE","text":"Interest expense was $60,231 in 2018, compared\nwith $41,247 in 2017. Interest expense incurred on the debt facilities entered into by the Company during the second quarter of\n2018 (as discussed in Note 8, \u201cDebt,\u201d to the accompanying consolidated financial statements as set forth in Item 8,\n \u201cFinancial Statements and Supplementary Data\u201d) accounted for $12,802 of the increase, and the balance of the increase\nbefore the impact of pension and interest rate caps and swaps was primarily due to the higher average interest rates and average\noutstanding principal balances under the 2017 Debt Facilities, which replaced the INSW Facilities in June 2017.Interest expense for the year ended December\n31, 2017 was higher than interest expense for the year ended December 31, 2016 primarily due to the higher average interest rates\nand outstanding principal balances under the 2017 Debt Facilities, which replaced the INSW Facilities in June 2017. This was partially\noffset by lower amortization of deferred finance costs in the 2017 period aggregating $220 attributable to costs incurred to amend\nthe INSW Facilities in 2016 and costs related to the 2017 Debt Facilities. Refer to Note 8, \u201cDebt,\u201d in the accompanying\nconsolidated financial statements as set forth in Item 8, \u201cFinancial Statements and Supplementary Data\u201d for additional\ninformation.","markdown_table":"\n\n| | | 2018 | | | | 2017 | | | | 2016 | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| Interest before items shown below | | $ | 58,964 | | | $ | 40,307 | | | $ | 38,959 | |\n| Interest cost on benefit obligation | | | 701 | | | | 809 | | | | 886 | |\n| Impact of interest rate caps and swaps | | | 566 | | | | 131 | | | | 517 | |\n| Interest expense | | $ | 60,231 | | | $ | 41,247 | | | $ | 40,362 | |\n\n","source":"INSW\/10-K\/0001144204-19-013398"} {"title":"EBITDA AND ADJUSTED EBITDA","text":"\u00b7EBITDA and Adjusted EBITDA do not reflect our cash expenditures, or future requirements for capital\nexpenditures or contractual commitments;\n\u00b7EBITDA and Adjusted EBITDA do not reflect changes in, or cash requirements for, our working capital\nneeds; and\n\u00b7EBITDA and Adjusted EBITDA do not reflect the significant interest expense, or the cash requirements\nnecessary to service interest or principal payments, on our debt.While EBITDA and Adjusted EBITDA are frequently\nused by companies as a measure of operating results and performance, neither of those items as prepared by the Company is necessarily\ncomparable to other similarly titled captions of other companies due to differences in methods of calculation.The following table reconciles net loss, as\nreflected in the consolidated statements of operations set forth in Item 8, \u201cFinancial Statements and Supplementary Data,\u201d\nto EBITDA and Adjusted EBITDA:","markdown_table":"\n\n| 50 | |\n| --- | --- |\n| International Seaways, Inc. | |\n\n","source":"INSW\/10-K\/0001144204-19-013398"} {"title":"LIQUIDITY AND SOURCES OF CAPITAL","text":"Restricted cash of $59,331 as of December\n31, 2018 represents legally restricted cash relating to the 2017 Term Loan, the Sinosure Credit Facility, the ABN Term Loan Facility,\nand the 10.75% Subordinated Notes. Such facilities stipulate that cash accounts be maintained which are limited in their use to\npay expenses related to drydocking the vessels and servicing the debt facilities and, in the case of the 2017 Term loan, that cash\nproceeds from the sale of collateral vessels be reinvested in vessels within 12 months of such sale or be used to prepay the principal\namount outstanding of the INSW Facilities.As of December 31, 2018, we had total debt\noutstanding (net of original issue discount and deferred financing costs) of $810,667 and a total debt to total capitalization\nof 44.5%, which compares with 33.7% at December 31, 2017. Our debt profile reflects actions taken during 2018 as discussed further\nbelow.Sources, Uses and Management of CapitalWe have maintained a strong balance sheet\nwhich has allowed us to take advantage of attractive strategic opportunities during the low end of the tanker cycle. Through disciplined\ncapital allocation and without issuing equity, we successfully funded over $600,000 worth of vessel acquisitions between July 2017\nand June 2018 using cash generated from operations, proceeds from the sale of older vessels and the issuance or assumption of debt\nwhile maintaining what we believe to be a reasonable financial leverage for the current point in the tanker cycle and one of the\nlowest loan to value profiles in public company shipping sector.In addition to future operating cash flows,\nour other future sources of funds are proceeds from issuances of equity securities, additional borrowings as permitted under our\nloan agreements and proceeds from the opportunistic sales of our vessels.Our current uses of funds are to fund working\ncapital requirements, maintain the quality of our vessels, purchase vessels, comply with international shipping standards and environmental\nlaws and regulations, repurchase our outstanding shares and repay or repurchase our outstanding loan facilities.The Company has contractual commitments for\nthe purchase and installation of marine exhaust gas cleaning systems (\u201cScrubbers\u201d) on 10 of its modern VLCCs. The Company\nalso has contractual commitments for the purchase and installation of ballast water treatment systems on 15 vessels with options\nfor the purchase and installation of systems for up to an additional 10 vessels in the Company\u2019s fleet as of December 31,\n2018. These systems are intended to be funded with available liquidity, proceeds from the sales of vessels, and proceeds from the\nissuance of equity and\/or debt as permitted under the Company\u2019s existing debt facilities. As of December 31, 2018, the Company\u2019s\naggregate purchase commitments for these systems are approximately $50,931 (see Aggregate Contractual Obligations Table below)\nand could increase by up to an additional $14,000 if all the remaining options for the additional units are exercised. Such options\nexpire between May 2019 and December 2020.On October 19, 2018, the Company filed a Registration\nStatement on Form S-3 (\u201cShelf Registration\u201d) with the Securities and Exchange Commission (\u201cSEC\u201d). Following\nthe effective date of the Shelf Registration, the Company may from time to time offer equity or debt securities at an aggregate\noffering price not to exceed $100,000. This Shelf Registration replaced the remaining $75,000 balance of a shelf registration on\nForm S-3 that was declared effective in May 2018.As described in Item 5, \u201cMarket for\nRegistrant\u2019s Common Equity, Related Stock Matters and Issuer Purchases of Equity Securities,\u201d on January 9, 2019, the\nCompany entered into an Equity Distribution Agreement (the \u201cDistribution Agreement\u201d) with Evercore Group L.L.C. and\nJefferies LLC, as our sales agents, relating to the common shares of the Company. In accordance with the terms of the Distribution\nAgreement, we may offer and sell common shares having an aggregate offering price of up to $25,000 from time to time through the\nsales agents.The sales agents are not required to sell\nany specific number or dollar amount of our common shares but will use their commercially reasonable efforts, as our agents and\nsubject to the terms of the Distribution Agreement, to sell the common shares offered, as instructed by us.We intend to use the net proceeds of this\noffering, after deducting the sales agents\u2019 commissions and our offering expenses, for general corporate purposes. This may\ninclude, among other things, additions to working capital, repayment or refinancing of existing indebtedness or other corporate\nobligations, financing of capital expenditures (including the purchase of marine exhaust gas cleaning systems that reduce sulfur\nemissions to comply with upcoming implementation of new IMO standards) and acquisitions and investment in existing and future projects.\nAs of the date hereof, the Company has neither sold or undertaken to sell any shares pursuant to the Distribution Agreement.","markdown_table":"\n\n| 51 | |\n| --- | --- |\n| International Seaways, Inc. | |\n\n","source":"INSW\/10-K\/0001144204-19-013398"} {"title":"LIQUIDITY AND SOURCES OF CAPITAL","text":"Also, on March 5, 2019, the Company\u2019s\nBoard of Directors approved a resolution to reauthorizing the Company\u2019s $30,000 stock repurchase program for another 24-month\nperiod ending March 5, 2021.As described in Item 1, \u201cBusiness\u00a0\u2014\u00a0Overview\nand Recent Developments,\u201d on April 18, 2018, the Company entered into a stock purchase and sale agreement with Euronav for\nthe purchase of the holding companies for six VLCCs from Euronav for an aggregate price of $434,000, inclusive of any assumed debt,\nin connection with the closing of Euronav\u2019s acquisition of Gener8 Maritime, Inc. (the \u2018Transaction\u201d). In connection\nwith the Transaction and in order to finance portions of the consideration in connection therewith, and for other general corporate\npurposes, as applicable, the Company completed the following transactions during the first half of 2018:\n(i)Sale of five of its vessels comprising one VLCC tanker, one Aframax tanker, and three MR tankers (one\nof which the Company agreed to sell in 2017) for approximately $54,850 in net proceeds;\n(ii)Entry into sale-leaseback transactions yielding approximately $39,300 in net proceeds in respect of\ntwo Aframax tankers in the first quarter of 2018;\n(iii)Refinancing of its FSO Joint Venture pursuant to which on March 29, 2018, the FSO Joint Venture entered\ninto a $220,000 Senior Secured Credit Facility. Such agreement is made up of a term loan of $110,000 and a revolving credit facility\nof $110,000 available to the FSO Joint Venture. The FSO Joint Venture drew down the facility in full on April 26, 2018 and distributed\n$110,000 of the loan proceeds to the Company;\n(iv)Sale of $25,000 of its 8.50% notes (the \"8.50% Senior Notes\") in an SEC-registered offering\non May 31, 2018;\n(v)Sale of $30,000 of its 10.75% subordinated step-up notes due 2023 (the \"10.75% Subordinated Notes\")\nin a private placement to certain funds and accounts managed by BlackRock, Inc. (\"BlackRock\") on June 13, 2018;\n(vi)Entry into a credit agreement, secured by the Seaways Raffles, a 2010-built VLCC tanker, and dated\nas of June 7, 2018, by and among Seaways Shipping Corporation, a Marshall Islands corporation and wholly-owned subsidiary of the\nCompany, the Company (as a guarantor), certain other guarantors which are subsidiaries of the Company, lenders named therein and\nABN AMRO Capital USA LLC as lead arranger and facility agent (the \"ABN Term Loan Facility\"), and the related $28,463\ndrawdown thereunder on June 12, 2018;\n(vii)Entry into a second amendment (the \"2017 Debt Facilities Second Amendment\") of the Credit\nAgreement dated as of June 22, 2017 (as amended by that certain First Amendment to Credit Agreement dated as of July 24, 2017 and\nby the 2017 Debt Facilities Second Amendment, the \"2017 Term Loan Facility\"), by and among the Company, International\nSeaways Operating Corporation (\"ISOC\"), OIN Delaware LLC, the Subsidiary Guarantors from time to time party thereto,\nthe Lenders from time to time party thereto, Jefferies Finance LLC, as administrative agent for the Lenders and as collateral agent\nand mortgage trustee for the Secured Parties, Skandinaviska Enskilda Banken AB (publ), as swingline lender with effect as of the\nClosing Date;\n(viii)The assumption of outstanding debt under the Sinosure Credit Facility (as defined below) with effect\nas of June 14, 2018; and\n(ix)Sale of the Seaways Laura Lynn, to Euronav in late June 2018 for approximately $32,300 in net proceeds.The balance payable to Euronav for the other\nassets and liabilities of the vessel holding companies acquired was determined to be $20,935 and was paid in full to Euronav in\nOctober 2018.The following is a summary description\nof some of the key terms of the various debt facilities that were sources of capital to the Company during 2018. See Note 8, \u201cDebt,\u201d\nin the accompanying consolidated financial statements as set forth in Item 8, \u201cFinancial Statements and Supplementary Data,\u201d\nfor additional information.ABN Term Loan FacilityOn June 7, 2018, the Company entered into\nthe ABN Term Loan Facility.\u00a0Subsequently on June 12, 2018, the Company borrowed approximately $28,463 secured by the Seaways\nRaffles vessel. The ABN Term Loan Facility bears interest at a rate of 3-month LIBOR plus a margin of 3.25% and is repayable in\n19 quarterly installments of approximately $869 with a balloon repayment payable on the maturity date in 2023. Additionally, the\nABN Term Loan Facility includes certain financial covenants and is guaranteed by the Company. The Company's guarantee is unsecured.\nThe Company used the proceeds from the ABN Term Loan Facility to fund a portion of the Transaction.2017 Debt Facilities Second AmendmentOn June 14, 2018, the Company entered into\nthe 2017 Debt Facilities Second Amendment. The amendment (i) increased the interest rate margin from 4.50% per annum to 5.00% per\nannum for loans determined by the Alternate Base Rate (as defined in the 2017 Term Loan Facility) and from 5.50% per annum to 6.00%\nper annum for any loan determined by reference to the LIBOR Rate and (ii) allowed a dividend of $110,000 to be made from the Company's\nFSO Joint Venture to the Company without incorporating such funds into the cash sweep provisions of the 2017 Term Loan Facility,\n(iii) permitted the acquisition of the holding companies of the six VLCCs as Unrestricted Subsidiaries and permitted those entities\nand their assets to be subject to the Sinosure Credit Facility and be subject to its liens and permitted the funding of the certain\nliquidity and other accounts in connection with that acquisition and (iv) made certain other amendments to covenants under the\n2017 Term Loan Facility. As a condition to the effectiveness of the 2017 Debt Facilities Second Amendment, the Company prepaid\n$60,000 of the amount outstanding under the facility together with a premium equal to 1% of the $60,000 prepayment and paid a fee\nto the lenders of 1% of the 2017 Term Loan Facility debt outstanding after that repayment.","markdown_table":"\n\n| 52 | |\n| --- | --- |\n| International Seaways, Inc. | |\n\n","source":"INSW\/10-K\/0001144204-19-013398"} {"title":"LIQUIDITY AND SOURCES OF CAPITAL","text":"Seventy-five percent of Excess Cash Flow (as\ndefined in the 2017 Debt Facilities credit agreement) must be used to prepay the outstanding principal balance of 2017 Term Loan\nFacility. To the extent permitted under the terms of the 2017 Debt Facilities we may also use cash generated by operations to finance\ncapital expenditures to modernize and grow our fleet. The 2017 Debt Facilities contain certain restrictions relating to new borrowings\nand INSW\u2019s ability to receive cash dividends, loans or advances from ISOC and its subsidiaries that are Restricted Subsidiaries.\nAs of December 31, 2018, the permitted cash dividends that can be distributed to INSW by ISOC under the 2017 Term Loan Facility\nwas $12,500.Sinosure Credit FacilityAs part of the Transaction, the Company acceded\nas a guarantor to that certain China Export & Credit Insurance Corporation (\"Sinosure\") facility agreement originally\ndated November 30, 2015, as supplemented by a supplemental agreement dated December 28, 2015, as amended and restated by an amending\nand restating deed dated June 29, 2016, as supplemented by a supplemental agreement dated November 8, 2017, as supplemented by\na consent, supplemental and amendment letter, dated April 2, 2018 (the facility agreement as of such date, the \"Original Sinosure\nFacility\") and as amended and restated by an amending and restating agreement dated June 13, 2018 (the \"2018 Amending\nand Restating Agreement\"), by and among Gener8 Maritime Subsidiary VII, Inc., Seaways Holding Corporation, a wholly owned\nsubsidiary of the Company, the Company, Citibank, N.A. (London Branch), The Export-Import Bank of China and Bank of China (New\nYork Branch) (and its successors and assigns) and certain other parties thereto (the \"Sinosure Credit Facility\"). The\nSinosure Credit Facility is a term loan facility comprised of six loans, each secured by one of the six VLCCs acquired. As of June\n14, 2018, it had a principal amount outstanding of approximately $310,968 and bears interest at a rate of LIBOR plus a margin of\n2%. Each loan under the Sinosure Credit Facility requires quarterly amortization payments of 12\/3% (based\non the original outstanding amount of each Vessel loan) together with a balloon repayment payable on the termination date of each\nloan. Each of the loans under the Sinosure Credit Facility will mature 144 months after its initial utilization date. The 2018\nAmending and Restating Agreement effects certain amendments to the Original Sinosure Facility as agreed between the parties thereto\nand necessitated by the Transaction. The Sinosure Credit Facility is guaranteed by the Company and Seaways Holding Corporation.In conjunction with the Transaction, the Company\nacquired a pay-fixed, receive-variable interest rate swap agreement with a major financial institution that effectively fixes the\ninterest rate on the entire variable interest rate borrowings outstanding under the Sinosure Credit Facility. The Interest Rate\nSwap contains no leverage features. In July 2018, the Company amended the interest rate swap agreement to increase the fixed rate\nfrom 2.05% to 2.99%, effective September 21, 2018. The maturity date of March 21, 2022 remained unchanged. In conjunction with\nsuch amendment, the Company received a cash settlement of $7,677 from the counterparty to the transaction.The Sinosure Credit Facility contains certain\ncollateral maintenance and financial covenants with which the obligors (as defined in the Sinosure Credit Facility) are required\nto comply. One such covenant is the Interest Expense Coverage Ratio covenant (the \u201cICR Covenant\u201d), which for Seaways\nHolding Corporation, shall not be less than 2.00 to 1.00 during the period commencing on July 1, 2018 through June 30, 2019 and\nwill be calculated on a trailing six, nine and twelve-month basis from December 31, 2018, March 31, 2019 and June 30, 2019, respectively.\nFor the Company, the interest expense coverage ratio shall not be less than 2.25 to 1.00 for the period commencing on July 1, 2019\nthrough June 30, 2020 and no less than 2.50 to 1.00 for the period commencing on July 1, 2020 and thereafter and shall be calculated\non a trailing twelve-month basis. Under the terms of the Sinosure Credit Facility, a potential breach of the ICR Covenant by an\nObligor on a test date (December 31, March 31, June 30 and September 30) (a \u201cTest Date\u201d) falling on or prior December\n31, 2019 can be cured or remedied by the deposit of additional cash and cash equivalents into a restricted Minimum Liquidity Account.\nThe amount of cash and cash equivalents required to be so deposited is calculated by reference to the Consolidated EBITDA of Seaways\nHolding Corporation (the \u201cICR Cure Mechanism\u201d). However, any such remedy and the form of the same for a potential breach\nof the ICR Covenant on a Test Date falling on or after January 1, 2020, shall be considered and determined by the Lenders in their\nabsolute discretion.On March 1,\u00a02019, the Sinosure Credit\nFacility lenders consented to extending the ICR Cure Mechanism discussed above based on the\u00a0Consolidated EBITDA\u00a0of Seaways\nHolding Corporation for an additional period of one year to Test Dates falling on or prior to December 31, 2020.\u00a08.5% Senior NotesOn May 31, 2018, the Company completed a registered\npublic offering of $25,000 aggregate principal amount of its 8.50% senior unsecured notes due 2023 (the \u201c8.5% Senior Notes\u201d),\nwhich resulted in aggregate net proceeds to the Company of approximately $23,458, after deducting commissions and estimated expenses.","markdown_table":"\n\n| 53 | |\n| --- | --- |\n| International Seaways, Inc. | |\n\n","source":"INSW\/10-K\/0001144204-19-013398"} {"title":"LIQUIDITY AND SOURCES OF CAPITAL","text":"The Company issued the Notes under an indenture\ndated as of May 31, 2018 (the \u201cBase Indenture\u201d), between the Company and The Bank of New York Mellon, as trustee (the\n \u201cTrustee\u201d), as supplemented by a supplemental indenture dated as of May 31, 2018 (the \u201cFirst Supplemental Indenture\u201d\nand, together with the Base Indenture, the \u201cIndenture\u201d), between the Company and the Trustee. The Notes will mature\non June 30, 2023 and bear interest at a rate of 8.50% per annum. Interest on the Notes will be payable in arrears on March 30,\nJune 30, September 30 and December 30 of each year, commencing on September 30, 2018. The terms of the Indenture, among other things,\nlimit the Company\u2019s ability to merge, consolidate or sell assets.The Company may redeem the Notes at its option,\nin whole or in part, at any time on or after June 30, 2020 at a redemption price equal to 100% of their principal amount, plus\naccrued and unpaid interest to, but excluding, the redemption date. In addition, if the Company undergoes a Change of Control (as\ndefined in the Indenture) the Company may be required to repurchase all of the Notes at a purchase price equal to 101% of the principal\namount of the Notes, plus accrued and unpaid interest (including additional interest, if any), to, but excluding, the repurchase\ndate.The Indenture contains certain restrictive\ncovenants, including covenants that, subject to certain exceptions and qualifications, restrict our ability to make certain payments\nif a default under the Indenture has occurred and is continuing or will result therefrom and require us to limit the amount of\ndebt we incur, maintain a certain minimum net worth and provide certain reports. The Indenture also provides for certain customary\nevents of default (subject, in certain cases, to receipt of notice of default and\/or customary grace or cure periods).10.75% Subordinated NotesOn June 13, 2018, the Company completed the\nPrivate Placement to certain funds and accounts managed by BlackRock. The 10.75% Subordinated Notes were issued under an indenture\n(the \"Subordinated Notes Indenture\"), between the Company and GLAS Trust Company LLC, as trustee (the \"Subordinated\nNotes Trustee\"). The 10.75% Subordinated Notes are unsecured and rank junior to the 8.5% Senior Notes, the Company's guarantees\nof the 2017 Term Loan Facility, the ABN Term Loan Facility and Sinosure Credit Facility and other unsubordinated indebtedness of\nthe Company. The Private Placement resulted in aggregate proceeds to the Company of approximately $28,000, after deducting fees\npaid to the purchasers of those notes and estimated expenses. The Company used the net proceeds from the Private Placement, together\nwith the net proceeds from the 8.5% Senior Notes, to fund a portion of the Transaction and the offer to prepay a portion of the\nobligation of ISOC under the 2017 Term Loan Facility.The 10.75% Subordinated Notes bear interest\nfrom June 13, 2018 at an annual rate of 10.75%; provided that the 10.75% Subordinated Notes shall bear interest at the rate of\n13.00% per annum beginning on the earlier of (i) December 15, 2020 and (ii) if the Refinance Date (as defined below) has occurred,\nthe later of the Refinance Date and June 15, 2020. Interest on the 10.75% Subordinated Notes is payable quarterly in arrears on\nthe 15th day of March, June, September and December of each year, commencing on September 15, 2018.The stated maturity date of the 10.75% Subordinated\nNotes is June 15, 2023; provided that in certain circumstances after the indebtedness outstanding under the 2017 Term Loan Facility\n(as amended by the 2017 Debt Facilities Second Amendment) ceases to be outstanding (such date, the \"Refinance Date\"),\nthe stated maturity of the 10.75% Subordinated Notes will become June 15, 2022. The 10.75% Subordinated Notes may be redeemed,\nin whole or in part, at any time prior to June 15, 2020, at a redemption price equal to 100% of the aggregate principal amount\nof the 10.75% Subordinated Notes being redeemed, plus accrued and unpaid interest to, but not including, the date of redemption,\nplus a \"make-whole\" premium.\u00a0\u00a0On or after June 15, 2020, the Subordinated Notes may be redeemed at par, plus\naccrued and unpaid interest.The Subordinated Notes Indenture contains\ncovenants restricting the ability of the Company and its subsidiaries to incur additional indebtedness, sell assets, incur liens,\namend the 2017 Term Loan Facility, enter into sale and leaseback transactions and enter into certain extraordinary transactions.\nIn addition, the Subordinated Notes Indenture prohibits the Company from paying any dividends unless certain financial and other\nconditions are satisfied. The Subordinated Notes Indenture also contains events of default consistent with those under the 2017\nTerm Loan Facility.The 10.75% Subordinated Notes have not been\nregistered under the Securities Act of 1933, as amended (the \"Securities Act\"), and may not be offered or sold except\npursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act.On September 17, 2018, the Company repurchased\n$2,069 of the 10.75% Subordinated Notes at a price equal to 100% of the principal amount.","markdown_table":"\n\n| 54 | |\n| --- | --- |\n| International Seaways, Inc. | |\n\n","source":"INSW\/10-K\/0001144204-19-013398"} {"title":"LIQUIDITY AND SOURCES OF CAPITAL","text":"On December 28, 2018, the Company entered\ninto a supplemental indenture (the \u201cFirst Supplemental Indenture\u201d) with the Subordinated Notes Trustee to amend the\nterms of the 10.75% Subordinated Notes to, among other matters, more closely reflect the asset sale provisions of the 2017 Term\nLoan Facility. As a condition to the effectiveness of the First Supplemental Amendment, the Company paid a fee to the holders of\nthe Notes of 0.50% of the outstanding amounts of the Notes.Outlook We believe our balance sheet gives us flexibility\nto continue pursuing fleet renewal or potential strategic opportunities that may arise within the diverse sectors in which we operate\nand at the same time positions us to generate sufficient cash to support our operations over the next twelve months. We or our\nsubsidiaries may in the future complete transactions consistent with achieving the objectives of our business plan.Carrying Value of VesselsAll of the Company\u2019s owned vessels are\npledged as collateral under certain of the Company\u2019s debt facilities including the 2017 Debt Facilities, Sinosure Credit\nFacility, and ABN Term Loan Facility. The following table presents information with respect to the carrying amount of the Company\u2019s\npledged vessels by type and indicates whether their fair market values, which are estimated by taking an average of two third-party\nvessel appraisals, are below their carrying values as of December 31, 2018. The carrying value of each of the Company\u2019s vessels\ndoes not necessarily represent its fair market value or the amount that could be obtained if the vessel were sold. The Company\u2019s\nestimates of market values for its vessels assume that the vessels are all in good and seaworthy condition without need for repair\nand, if inspected, would be certified as being in class without notations. In addition, because vessel values are highly volatile,\nthese estimates may not be indicative of either the current or future prices that the Company could achieve if it were to sell\nany of the vessels. The Company would not record a loss for any of the vessels for which the fair market value is below its carrying\nvalue unless and until the Company either determines to sell the vessel for a loss or determines that the vessel is impaired as\ndiscussed below in \u201cCritical Accounting Policies\u00a0\u2014\u00a0Vessel Impairment.\u201d The Company believes that the\nfuture undiscounted cash flows expected to be earned over the estimated remaining useful lives for those vessels that have experienced\ndeclines in market values below their carrying values would exceed such vessels\u2019 carrying values.Footnotes to the following table exclude\nthose vessels with an estimated market value in excess of their carrying value.","markdown_table":"\n\n| 55 | |\n| --- | --- |\n| International Seaways, Inc. | |\n\n","source":"INSW\/10-K\/0001144204-19-013398"} {"title":"LIQUIDITY AND SOURCES OF CAPITAL","text":"(1)As of December 31, 2018, the Crude Tankers segment includes vessels with an aggregate carrying\nvalue of $429,045, which the Company believes exceeds their aggregate market value of approximately $341,625 by $87,420.\n(2)As of December 31, 2018, the Product Carriers segment includes vessels with an aggregate carrying\nvalue of $269,645, which the Company believes exceeds their aggregate market value of approximately $202,300 by $67,345.","markdown_table":"\n\n| As of December 31, 2018 | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| Vessel Type | | Average Vessel Age (weighted by dwt) | | | | **Number of Owned** **Vessels** | | | | Carrying Value | | |\n| | | | | | | | | | | | | |\n| Crude Tankers | | | | | | | | | | | | |\n| VLCC | | | 7.6 | | | | 13 | | | $ | 797,332 | |\n| Suezmax | | | 1.4 | | | | 2 | | | | 111,425 | |\n| Aframax | | | 13.1 | | | | 3 | | | | 76,793 | |\n| Panamax | | | 16.2 | | | | 7 | | | | 53,910 | |\n| *Total Crude Tankers(1)* | | | 8.4 | | | | 25 | | | $ | 1,039,460 | |\n| | | | | | | | | | | | | |\n| Product Carriers | | | | | | | | | | | | |\n| LR2 | | | 4.4 | | | | 1 | | | $ | 61,672 | |\n| LR1 | | | 10.0 | | | | 4 | | | | 88,604 | |\n| MR | | | 10.0 | | | | 6 | | | | 135,148 | |\n| *Total Product Carriers(2)* | | | 9.1 | | | | 11 | | | $ | 285,424 | |\n\n","source":"INSW\/10-K\/0001144204-19-013398"} {"title":"LIQUIDITY AND SOURCES OF CAPITAL","text":"Off-Balance Sheet Arrangements As of December 31, 2018, the FSO Joint Venture\nand the LNG Joint Venture had total bank debt outstanding of $739,071, of which $646,038 was nonrecourse to the Company.The FSO Joint Venture is a party to a number\nof contracts: (a) the FSO Joint Venture is an obligor pursuant to a guarantee facility agreement dated as of July 14, 2017, by\nand among, the FSO Joint Venture, ING Belgium NV\/SA, as issuing bank, and Euronav and INSW, as guarantors (the \u2018\u2018Guarantee\nFacility\u2019\u2019); (b) the FSO Joint Venture is party to two service contracts with NOC (the \u2018\u2018NOC Service Contracts\u2019\u2019);\nand (c) the FSO Joint Venture is a borrower under a $220,000 secured credit facility by and among TI Africa and TI Asia, as joint\nand several borrowers, ABN AMRO Bank N.V. and ING Belgium SA\/NV, as Lenders, Mandated Lead Arrangers and Swap Banks, and ING Bank\nN.V., as Agent and as Security Trustee.INSW severally guarantees the obligations\nof the FSO Joint Venture pursuant to the Guarantee Facility and severally guarantees the obligations of the FSO Joint Venture to\nMaersk Oil Qatar AS (\u201cMOQ\u201d) under the MOQ service contracts, which contracts were novated to NOC in July 2017 (the\n \u2018\u2018MOQ Guarantee\u2019\u2019) for the period beginning on the novation date and severally guarantees the obligations\nof the FSO Joint Venture under the NOC Service Contracts. The MOQ Guarantee expired following the receipt of the notification letter\nfrom the Qatari tax authorities in January 2019 that the FSO Joint Venture has paid all Qatari taxes owed by the FSO Joint Venture\nunder such service contracts through the novation date.The FSO Joint Venture drew down on a $220,000\nsecured credit facility on April 26, 2018 (See Note 6, \u201cEquity Method Investments\u201d to the Company\u2019s consolidated\nfinancial statements as set forth in Item 8, \u201cFinancial Statements and Supplementary Data\u201d) The Company provided a\nguarantee for the $110,000 FSO Term Loan portion of the facility, which has an interest rate of LIBOR plus two percent and amortizes\nover the remaining terms of the NOC Service Contracts, which expire in July 2022 and September 2022. INSW\u2019s guarantee of\nthe FSO Term Loan has financial covenants that provide (i) INSW\u2019s Liquid Assets shall not be less than the higher of $50,000\nand 5% of Total Indebtedness of INSW, (ii) INSW shall have Cash of at least $30,000 and (iii) INSW is in compliance with the Loan\nto Value Test (as such capitalized terms are defined in the Company guarantee or in the case of the Loan to Value Test, as defined\nin the credit agreement underlying the Company\u2019s 2017 Debt Facilities (see Note 8, \u201cDebt,\u201d to the accompanying\nconsolidated financial statements). The FSO Joint Venture has entered into floating-to-fixed interest rate swap agreements with\nthe aforementioned Swap Banks, which cover the notional amounts outstanding under the FSO Loan Facility and pay fixed rates of\napproximately 4.858% and receive a floating rate based on LIBOR. These agreements have an effective date of June 29, 2018, and\nmaturity dates ranging from July to September 2022. As of December 31, 2018, the maximum aggregate amount of potential secured\nbank debt principal payments (undiscounted) and interest rate swap obligations that INSW could be required to make was $93,548\nand the carrying value of the Company\u2019s guaranty in the accompanying consolidated balance sheet was $673.INSW maintains a guarantee in favor of Qatar\nLiquefied Gas Company Limited (2) (\u2018\u2018LNG Charterer\u2019\u2019) relating to certain LNG Tanker Time Charter Party\nAgreements with the LNG Charterer and each of Overseas LNG H1 Corporation, Overseas LNG H2 Corporation, Overseas LNG S1 Corporation\nand Overseas LNG S2 Corporation (such agreements, the \u2018\u2018LNG Charter Party Agreements,\u2019\u2019 and such guarantee,\nthe \u2018\u2018LNG Performance Guarantee\u2019\u2019). INSW will pay QGTC an annual fee of $100 until such time that QGTC\nceases to provide a guarantee in favor of the LNG charterer relating to performance under the LNG Charter Party Agreements.OSG continues to provide a guarantee in favor\nof the LNG Charterer relating to the LNG Charter Party Agreements (such guarantees, the \u2018\u2018OSG LNG Performance Guarantee\u2019\u2019).\nINSW will indemnify OSG for liabilities arising from the OSG LNG Performance Guarantee pursuant to the terms of the Separation\nand Distribution Agreement. In connection with the OSG LNG Performance Guarantee, INSW paid a $135 annual fee to OSG for 2018,\nwhich will increase to $145 in 2019 and will be terminated if OSG ceases to provide the OSG LNG Performance Guarantee.See Note 12, \u201cRelated Parties,\u201d\nto the Company\u2019s consolidated financial statements set forth in Item 8, \u201cFinancial Statements and Supplementary Data\u201d\nfor additional information.In addition and pursuant to an agreement between\nINSW and the trustees of the OSG Ship Management (UK) Ltd. Retirement Benefits Plan (the \u201cScheme\u201d), INSW guarantees\nthe obligations of INSW Ship Management UK Ltd., a subsidiary of INSW, to make payments to the Scheme. See Note 17, \u201cPension\nand other postretirement benefit plans,\u201d to the Company\u2019s consolidated financial statements set forth in Item 8, \u201cFinancial\nStatements and Supplementary Data,\u201d for additional information.","markdown_table":"\n\n| 56 | |\n| --- | --- |\n| International Seaways, Inc. | |\n\n","source":"INSW\/10-K\/0001144204-19-013398"} {"title":"LIQUIDITY AND SOURCES OF CAPITAL","text":"Aggregate Contractual ObligationsA summary of the Company\u2019s long-term\ncontractual obligations as of December 31, 2018 follows:","markdown_table":"\n\n| 57 | |\n| --- | --- |\n| International Seaways, Inc. | |\n\n","source":"INSW\/10-K\/0001144204-19-013398"} {"title":"LIQUIDITY AND SOURCES OF CAPITAL","text":"(1)Amounts shown include contractual interest obligations of floating rate debt estimated based on the\naggregate effective one-month LIBOR rate as of December 31, 2018 of 2.53% and applicable margin for the 2017 Term Loan Facility\nof 6.0%. Management estimates that no prepayment will be required in 2019 for the 2017 Term Loan Facility as a result of estimated\nExcess Cash Flow for the year ended December 31, 2018. Amounts shown for 2020 and beyond exclude any estimated repayment as a result\nof Excess Cash Flow.\n(2)Amounts shown include contractual interest obligations of floating rate debt estimated based on the\naggregate effective three-month LIBOR rate as of December 31, 2018 of 2.78% and applicable margin for the ABN Term Loan facility\nof 3.25%.\n(3)Amounts shown include contractual interest obligations of floating rate debt estimated based on (i)\nthe fixed rate stated in the related floating-to-fixed interest rate swap through the swap maturity date of March 21, 2022, or\n(ii) the effective three-month LIBOR rate for periods after the swap maturity date, plus the applicable margin for the Sinosure\nCredit Facility of 2.00%. The Company is a party to a floating-to-fixed interest rate swap covering the entire variable interest\nrate borrowings outstanding under the Sinosure Credit Facility that effectively converts the Company\u2019s interest rate exposure\nunder the Sinosure Credit Facility from a floating rate based on 3-month LIBOR to a fixed LIBOR rate of 2.99%.\n(4)As of December 31, 2018, the Company had charter-in commitments for six vessels on leases that are\naccounted for as operating leases. Certain of these leases provide the Company with various renewal and purchase options. The future\nminimum commitments for time charters-in have been reduced to reflect estimated days that the vessels will not be available for\nemployment due to drydock. Upon adoption of ASU 2018-11, Leases (ASC 842), on January 1, 2019, a majority of the amounts\ndue under these operating lease obligations will be reflected on the Company\u2019s consolidated balance sheet as lease liabilities\nwith corresponding right of use asset balances. See Note 2, \u201cSummary of Significant Accounting Policies,\u201d in the accompanying\nconsolidated financial statements set forth in Item 8, \u201cFinancial Statements and Supplementary Data,\u201d for additional\ninformation relating to the impact of the Company\u2019s adoption of ASC 842.\n(5)Represents the Company\u2019s commitments for the purchase and installation of ballast water treatment\nsystems on 15 vessels and the purchase and installation of scrubbers on 10 of its VLCC tankers. In addition, the Company is party\nto agreements granting INSW the option to purchase additional ballast water treatment systems for installation between 2019 and\n2021 on 10 vessels. If exercised, these options could increase the Company\u2019s commitments by up to approximately $14,000.\nThe Company\u2019s ability to exercise the options expires between May 2019 and December 2020.","markdown_table":"\n\n| | | | | | | | | | | | | | | | | | | | | | | Beyond | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | 2019 | | | | 2020 | | | | 2021 | | | | 2022 | | | | 2023 | | | | 2023 | | | | Total | | |\n| 2017 Term Loan - floating rate(1) | | $ | 63,865 | | | | 61,847 | | | | 59,624 | | | | 406,777 | | | | - | | | | - | | | $ | 592,113 | |\n| ABN Term Loan - floating rate(2) | | | 5,029 | | | | 4,820 | | | | 4,604 | | | | 4,392 | | | | 13,168 | | | | - | | | | 32,013 | |\n| Sinosure Credit Facility - floating rate(3) | | | 37,957 | | | | 36,802 | | | | 35,573 | | | | 33,955 | | | | 32,810 | | | | 202,297 | | | | 379,394 | |\n| 8.5% Senior Notes - fixed rate | | | 2,125 | | | | 2,125 | | | | 2,125 | | | | 2,125 | | | | 26,063 | | | | - | | | | 34,563 | |\n| 10.75% Subordinated Notes - fixed rate | | | 3,003 | | | | 3,003 | | | | 3,631 | | | | 3,631 | | | | 29,747 | | | | - | | | | 43,015 | |\n| Operating lease obligations (4) | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Bareboat Charter-ins | | | 6,278 | | | | 6,295 | | | | 6,278 | | | | 6,278 | | | | 4,782 | | | | - | | | | 29,911 | |\n| Time Charter-ins | | | 12,934 | | | | - | | | | - | | | | - | | | | - | | | | - | | | | 12,934 | |\n| Office space | | | 1,219 | | | | 1,152 | | | | 665 | | | | - | | | | - | | | | - | | | | 3,036 | |\n| Vessel betterment commitments(5) | | | 42,134 | | | | 8,561 | | | | 118 | | | | 118 | | | | - | | | | - | | | | 50,931 | |\n| Total | | $ | 174,544 | | | $ | 124,605 | | | $ | 112,618 | | | $ | 457,276 | | | $ | 106,570 | | | $ | 202,297 | | | $ | 1,177,910 | |\n\n","source":"INSW\/10-K\/0001144204-19-013398"} {"title":"RISK MANAGEMENT","text":"The Company is party to an Interest Rate Cap\nagreement with a major financial institution covering a notional amount of $350,000 to limit the floating interest rate exposure\nassociated with the 2017 Term Loan. The Interest Rate Cap agreement contains no leverage features and has a cap rate of 2.605%\nthrough the termination date of December 31, 2020. Additionally, the Company is party to an Interest Rate Swap agreement with a\nmajor financial institution covering the entire currently outstanding notional amount of the Sinosure Credit Facility. The Interest\nRate Swap agreement contains no leverage features and has a fixed rate of 2.99% through the termination date of March 21, 2022.Currency and exchange rate risk The shipping industry\u2019s functional currency\nis the U.S. dollar. All of the Company\u2019s revenues and most of its operating costs are in U.S. dollars. The Company incurs\ncertain operating expenses, such as vessel and general and administrative expenses, in currencies other than the U.S. Dollar, and\nthe foreign exchange risk associated with these operating expenses is immaterial. If foreign exchange risk becomes material in\nthe future, the Company may seek to reduce its exposure to fluctuations in foreign exchange rates through the use of short-term\ncurrency forward contracts and through the purchase of bulk quantities of currencies at rates that management considers favorable.\nFor contracts which qualify as cash flow hedges for accounting purposes, hedge effectiveness would be assessed based on changes\nin foreign exchange spot rates with the change in fair value of the effective portions being recorded in accumulated other comprehensive\nloss.Fuel price volatility risk Historically, the Company managed its exposure\nto future increases in fuel prices in the normal course of its business by entering into standalone bunker swaps. The Company\u2019s\ndeployment of most of its conventional tanker fleet in commercial pools and time charters currently limits the Company\u2019s\ndirect exposure to fluctuations in fuel prices as a component of voyage expenses. As discussed in Item 1, \u201cBusiness\u00a0\u2014\u00a0Overview\nand Recent Developments,\u201d there is considerable uncertainty about the impact that the low-sulfur fuel oil requirements of\nthe IMO 2020 Regulations set to take effect on January 1, 2020 will have on fuel prices, particularly the forecasted spread between\nHFO and low-sulfur fuel between 2020 and 2023. In addition to the Company\u2019s current plans to install scrubbers on certain\nvessels in its fleet, significant consideration will also be given to other ways of managing the risk of volatility in the price\nspread between HFO and low-sulfur fuel as well as the risk of limited supply of compliant fuel along the routes that the Company\u2019s\nvessels typically travel.","markdown_table":"\n\n| 58 | |\n| --- | --- |\n| International Seaways, Inc. | |\n\n","source":"INSW\/10-K\/0001144204-19-013398"} {"title":"INTEREST RATE SENSITIVITY","text":"(1)Includes amounts outstanding under the Sinosure Credit Facility as floating rate debt estimated based\non (i) the fixed rate stated in the related floating-to-fixed interest rate swap through the swap maturity date of March 21, 2022,\nor (ii) the effective three-month LIBOR rate for periods after the swap maturity date, plus the applicable margin for the Sinosure\nCredit Facility of 2.00%.","markdown_table":"\n\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Fair Value at | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | | | | | | | | | | | | | | | | | | | | | Beyond | | | | | | | | Dec. 31, | | |\n| At December 31, 2018 | | 2019 | | | | 2020 | | | | 2021 | | | | 2022 | | | | 2023 | | | | 2023 | | | | Total | | | | 2018 | | |\n| Liabilities | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Debt | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Fixed rate debt | | $ | - | | | $ | - | | | $ | - | | | $ | - | | | $ | 52.9 | | | $ | - | | | $ | 52.9 | | | $ | 52.1 | |\n| Average interest rate | | | 9.69 | % | | | 9.69 | % | | | 9.85 | % | | | 10.87 | % | | | 10.78 | % | | | | | | | | | | | | |\n| Variable rate debt (1) | | $ | 51.6 | | | $ | 51.6 | | | $ | 51.6 | | | $ | 417.9 | | | $ | 36.4 | | | $ | 175.3 | | | $ | 784.4 | | | $ | 779.7 | |\n| Average interest rate (1) | | | 7.13 | % | | | 7.16 | % | | | 7.19 | % | | | 6.52 | % | | | 4.82 | % | | | 4.79 | % | | | | | | | | |\n\n","source":"INSW\/10-K\/0001144204-19-013398"} {"title":"INTEREST RATE SENSITIVITY","text":"As of December 31, 2018, the Company had secured\nterm loans (the 2017 Term Loan Facility, the Sinosure Credit Facility, and the ABN Term Loan Facility) and a revolving credit facility\n(2017 Revolver Facility) under which borrowings bear interest at a rate based on LIBOR, plus the applicable margin, as stated in\nthe respective loan agreements. As discussed in Interest Rate Risk section above, the Company entered into an Interest Rate Cap\nagreement for 2017 Term Loan and an Interest Rate Swap agreement for Sinosure Credit Facility to limit the floating interest rate\nexposure associated with the debt facilities. There was no outstanding balance under the 2017 Revolver Facility as of December\n31, 2018.","markdown_table":"\n\n| 59 | |\n| --- | --- |\n| International Seaways, Inc. | |\n\n","source":"INSW\/10-K\/0001144204-19-013398"} {"title":"CRITICAL ACCOUNTING POLICIES","text":"As the Company\u2019s performance obligations\nare services which are received and consumed by its customers as it performs such services, revenues are recognized over time proportionate\nto the days elapsed since the service commencement compared to the total days anticipated to complete the service. The minimum\nduration of services is less than one year for each of the Company\u2019s current contracts.Demurrage earned during a voyage charter represents\nvariable consideration. The Company estimates demurrage at contract inception using either the expected value or most likely amount\napproaches. Such estimate is reviewed and updated over the term of the voyage charter contract.The Company has elected the practical expedient\nto expense costs to obtain a contract with a customer (e.g. broker commissions) as incurred rather than defer and amortize such\ncosts as the amortization period would be expected to be one year or less.\u00a0Vessel Lives and Salvage ValuesThe carrying value of each of the Company\u2019s\nvessels represents its original cost at the time it was delivered or purchased less depreciation calculated using an estimated\nuseful life of 25 years (except for FSO service vessels for which estimated useful lives of 30 years are used and LNG Carriers\nfor which estimated useful lives of 35 years are used) from the date such vessel was originally delivered from the shipyard. A\nvessel\u2019s carrying value is reduced to its new cost basis (i.e. its current fair value) if a vessel impairment charge is recorded.If the estimated economic lives assigned to\nthe Company\u2019s vessels prove to be too long because of new regulations, an extended period of weak markets, the broad imposition\nof age restrictions by the Company\u2019s customers, or other future events, it could result in higher depreciation expense and\nimpairment losses in future periods related to a reduction in the useful lives of any affected vessels. Company management estimates\nthe scrap value of all of its vessels to be $300 per lightweight ton. The Company\u2019s assumptions used in the determination\nof estimated salvage value take into account current scrap prices, the historic pattern of annual average scrap rates over the\nfive years ended December 31, 2018, which ranged from $235 to $495 per lightweight ton, estimated changes in future market demand\nfor scrap steel and estimated future demand for vessels. Scrap prices also fluctuate depending upon type of ship, bunkers on board,\nspares on board and delivery range. Market conditions that could influence the volume and pricing of scrapping activity in 2019\nand beyond include the combined impact of scheduled newbuild deliveries and charter rate expectations for vessels potentially facing\nage restrictions imposed by oil majors as well as the impact of ballast water treatment systems regulatory requirements and IMO\n2020 requirements for the use of low-sulfur fuels. These factors will influence owners\u2019 decisions to accelerate the disposal\nof older vessels, especially those with upcoming special surveys.Although management believes that the assumptions\nused to determine the scrap rate for its vessels are reasonable and appropriate, such assumptions are highly subjective, in part,\nbecause of the cyclicality of the nature of future demand for scrap steel.Vessel ImpairmentThe carrying values of the Company\u2019s\nvessels may not represent their fair market value or the amount that could be obtained by selling the vessel at any point in time\nsince the market prices of second-hand vessels tend to fluctuate with changes in charter rates and the cost of newbuildings. Historically,\nboth charter rates and vessel values tend to be cyclical. Management evaluates the carrying amounts of vessels held and used by\nthe Company for impairment only when it determines that it will sell a vessel or when events or changes in circumstances occur\nthat cause management to believe that future cash flows for any individual vessel will be less than its carrying value. In such\ninstances, an impairment charge would be recognized if the estimate of the undiscounted future cash flows expected to result from\nthe use of the vessel and its eventual disposition is less than the vessel\u2019s carrying amount. This assessment is made at\nthe individual vessel level as separately identifiable cash flow information for each vessel is available.In developing estimates of future cash flows,\nthe Company must make assumptions about future performance, with significant assumptions being related to charter rates, ship operating\nexpenses, utilization, drydocking requirements, residual value and the estimated remaining useful lives of the vessels. These assumptions\nare based on historical trends as well as future expectations. Specifically, in estimating future charter rates, management takes\ninto consideration rates currently in effect for existing time charters and estimated daily time charter equivalent rates for each\nvessel class for the unfixed days over the estimated remaining lives of each of the vessels. The estimated daily time charter equivalent\nrates used for unfixed days are based on a combination of (i) internally forecasted rates that are consistent with forecasts provided\nto the Company\u2019s senior management and Board of Directors, and (ii) the trailing 12-year historical average rates, based\non monthly average rates published by a third party maritime research service. The internally forecasted rates are based on management\u2019s\nevaluation of current economic data and trends in the shipping and oil and gas industries. Management uses the published 12-year\nhistorical average rates in its assumptions because it is management\u2019s belief that the 12-year period captures a distribution\nof strong and weak charter rate periods, which results in the use of an average mid-cycle rate that is more in line with management\u2019s\nforecast of a return to mid-cycle charter rate levels in the medium term. Recognizing that the transportation of crude oil and\npetroleum products is cyclical and subject to significant volatility based on factors beyond the Company\u2019s control, management\nbelieves the use of estimates based on the combination of internally forecasted rates and 12-year historical average rates calculated\nas of the reporting date to be reasonable.","markdown_table":"\n\n| 60 | |\n| --- | --- |\n| International Seaways, Inc. | |\n\n","source":"INSW\/10-K\/0001144204-19-013398"} {"title":"CRITICAL ACCOUNTING POLICIES","text":"Estimated outflows for operating expenses\nand drydocking requirements are based on historical and budgeted costs and are adjusted for assumed inflation. Utilization is based\non historical levels achieved and estimates of a residual value for recyclings are based upon published 12-year historical data\nor the pattern of scrap rates used in management\u2019s evaluation of salvage value for purposes of recording depreciation. Finally,\nfor vessels that are being considered for disposal before the end of their respective useful lives, the Company utilizes weighted\nprobabilities assigned to the possible outcomes for such vessels being sold or scraped before the end of their respective useful\nlives.The determination of fair value is highly\njudgmental. In estimating the fair value of INSW\u2019s vessels for purposes of Step 2 of the impairment tests, the Company considers\nthe market and income approaches by using a combination of third party appraisals and discounted cash flow models prepared by the\nCompany. In preparing the discounted cash flow models, the Company uses a methodology consistent with the methodology discussed\nabove in relation to the undiscounted cash flow models prepared by the Company and discounts the cash flows using its current estimate\nof INSW\u2019s weighted average cost of capital.The more significant factors that could impact\nmanagement\u2019s assumptions regarding time charter equivalent rates include (i) loss or reduction in business from significant\ncustomers, (ii) unanticipated changes in demand for transportation of crude oil and petroleum products, (iii) changes in production\nof or demand for oil and petroleum products, generally or in particular regions, (iv) greater than anticipated levels of tanker\nnewbuilding orders or lower than anticipated levels of tanker scrappings, and (v) changes in rules and regulations applicable to\nthe tanker industry, including legislation adopted by international organizations such as IMO and the EU or by individual countries.\nAlthough management believes that the assumptions used to evaluate potential impairment are reasonable and appropriate at the time\nthey were made, such assumptions are highly subjective and likely to change, possibly materially, in the future.2018 Impairment Evaluation\u00a0\u2014\u00a0Management\ngave consideration on a quarterly basis to the following events and changes in circumstances in determining whether there were\nany indicators that the carrying amounts of the vessels in the Company\u2019s fleet were not recoverable. Factors considered included\ndeclines in valuations during 2018 for vessels of certain sizes and ages, any negative changes in forecasted near term charter\nrates, and an increase in the likelihood that the Company will sell certain of its vessels before the end of their estimated useful\nlives in conjunction with the Company\u2019s fleet renewal program. The Company concluded that the increased likelihood of disposal\nprior to the end of their respective useful lives constituted impairment triggering events for one Panamax and two Aframaxes that\nwere being actively marketed for sale as of June 30, 2018; one VLCC that was held-for-sale as of September 30, 2018; and as of\nDecember 31, 2018, one MR that has an increased likelihood of disposal prior to the end of its useful life.In developing estimates of undiscounted future\ncash flows for performing Step 1 of the impairment tests as of June 30, 2018, the Company utilized weighted probabilities assigned\nto possible outcomes for each of the three vessels for which impairment trigger events were determined to exist. The Company entered\ninto a memorandum of agreement for the sale of the Panamax vessel in early July 2018. Accordingly, a 100% probability was attributed\nto the vessel being sold before the end of its useful life. As the Company is considering selling the other two vessels as a part\nof its fleet renewal program, 50% probabilities were assigned to the possibility that the two Aframax vessels would be sold prior\nto the end of their respective useful lives. In estimating the fair value of the vessels for the purposes of Step 2 of the impairment\ntests, the Company considered the market approach by using the sales price per the memorandum of agreement. Based on the tests\nperformed, the sum of the undiscounted cash flows for each of the two Aframax vessels was more than its carrying value as of June\n30, 2018 and the sum of the undiscounted cash flows for the Panamax vessel was less than its carrying value as of June 30, 2018.\nAccordingly, an impairment charge totaling $948 was recorded for the Panamax vessel to write-down its carrying value to its estimated\nfair value at June 30, 2018.Held-for-sale impairment charges aggregating\n$16,419 were recorded during the third quarter of 2018 including (i) a charge of $14,226 to write the value of the VLCC held-for-sale\nat September 30, 2018 down to its estimated fair value; (ii) a charge of $361 for estimated costs to sell the vessel; and (iii)\na charge of $1,832 for the write-off of other assets associated with the operations of the vessel. The amount of the charge to\nwrite down the vessel to its fair value was determined using the market approach by utilizing the sales price as per the memorandum\nof agreement associated with the sale of the vessel.In developing estimates of undiscounted future\ncash flows for performing Step 1 of the impairment test as of December 31, 2018, the Company utilized weighted probabilities assigned\nto possible outcomes for the MR for which an impairment triggering event was determined to exist. As the Company is considering\nselling the MR as a part of its fleet renewal program, a 50% probability was assigned to the possibility that the vessel will be\nsold prior to the end of its useful life. In estimating the fair value of the vessel for the purposes of Step 2 of the impairment\ntest, the Company considered the market approach by utilizing a combination of third party appraisals and recently executed vessel\nsale transactions. Based on the tests performed, the sum of the undiscounted cash flows for the vessel was less than its carrying\nvalue as of December 31, 2018. Accordingly, an impairment charge totaling $1,670 was recorded to write-down the vessel\u2019s\ncarrying value to its estimated fair value at December 31, 2018.","markdown_table":"\n\n| 61 | |\n| --- | --- |\n| International Seaways, Inc. | |\n\n","source":"INSW\/10-K\/0001144204-19-013398"} {"title":"CRITICAL ACCOUNTING POLICIES","text":"2017 Impairment Evaluation\u00a0\u2014\u00a0Management\ngave consideration to the following events and changes in circumstances in determining whether there were any indicators that the\ncarrying amounts of the vessels in the Company\u2019s fleet were not recoverable as of December 31, 2017. Factors considered included\ndeclines in valuations during 2017 for vessels of certain sizes and ages, any negative changes in forecasted near term charter\nrates, and an increase in the likelihood that the Company will sell certain of its vessels before the end of their estimated useful\nlives in conjunction with the Company\u2019s fleet renewal program. The Company concluded that the above indicators constituted\nimpairment trigger events for eighteen vessels (one ULCC, one VLCC, six Aframaxes, eight Panamaxes and two LR1s) as of December\n31, 2017 and three vessels (one Panamax and two MRs) as of September 30, 2017.In developing estimates of undiscounted future\ncash flows for performing Step 1 of the impairment tests, the Company utilized the methodology described above. In estimating the\nfair value of the vessels for the purposes of Step 2 of the impairment tests, the Company considered the market and income approaches\nby using a combination of third party appraisals, current recycling market data, and discounted cash flow models prepared by the\nCompany. In preparing the discounted cash flow models, the Company used a methodology consistent with the methodology described\nabove and a weighted average cost of capital discount rate of 9.5%. Based on the tests performed, impairment charges totaling $81,062\nand $7,346 were recorded on twelve vessels (one ULCC, one VLCC, four Aframaxes and six Panamaxes) at December 31, 2017 and three\nvessels (one Panamax and two MRs) as of September 30, 2017, respectively to write-down their carrying values to their estimated\nfair values.2016 Impairment Evaluations\u00a0\u2014\nThe Company had been monitoring the industry wide decline in vessel valuations during 2016 and specifically from June 30, 2016\nto September 30, 2016, and September 30, 2016 to December 31, 2016, as well as the decline in forecasted near term charter rates,\nand concluded that the declines in vessel valuations and in forecasted near term charter rates constituted impairment trigger events\nfor 28 vessels as of September 30, 2016 and 24 vessels as of December 31, 2016. In developing estimates of undiscounted future\ncash flows for performing Step 1 of the impairment tests, the Company utilized the methodology described above. In estimating the\nfair value of the vessels for the purposes of Step 2 of the September 30, 2016 impairment tests, the Company developed fair value\nestimates that utilized a market approach which considered an average of two vessel appraisals. Based on the tests performed, impairment\ncharges totaling $49,640 were recorded on two LR1s, an Aframax and a Panamax to write-down their carrying values to their estimated\nfair values at September 30, 2016. In estimating the fair values of the vessels for the purposes of Step 2 of the December 31,\n2016 impairment tests, the Company considered the market and income approaches by using a combination of third party appraisals\nand discounted cash flow models prepared by the Company. In preparing the discounted cash flow models, the Company used a methodology\nconsistent with the methodology described above and a weighted average cost of capital discount rate of 9.0%. Based on the tests\nperformed, impairment charges aggregating $29,602 were recorded on one Panamax and seven MRs to write-down their carrying values\nto their estimated fair values at December 31, 2016.Impairment of Equity Method InvestmentsWhen events and circumstances warrant, investments\naccounted for under the equity method of accounting are evaluated for impairment. If a determination is made that an other-than-temporary\nimpairment exists, the investment should be written down to its fair value in accordance with ASC 820, Fair Value Measurements\nand Disclosures, which establishes a new cost basis. There were no indicators of an other-than-temporary impairment of the\nCompany\u2019s equity method investments as of December 31, 2018 and 2017, respectively.In December 2016, evidence of an other-than-temporary\ndecline in the fair value of the Company\u2019s investments in its FSO Joint Venture below its carrying value was identified by\nthe Company. Specifically, management concluded that the lower charter rate expected over the duration of the then recently awarded\nfive-year service contracts commencing in the third quarter of 2017 was negative evidence indicating that the excess of the carrying\nvalue of the Company\u2019s investment in the FSO Joint Venture over its fair value was other-than-temporary as of December 31,\n2016.As the Company determined that other-than-temporary\nimpairments existed in relation to its investment in the FSO Joint Venture, impairment charges aggregating $30,475 were recorded\nto write down the investment to its estimated fair values as of December 31, 2016. Such charges are included in equity in income\nof affiliated companies in the accompanying consolidated statements of operations. In estimating the fair value of the Company\u2019s\ninvestments in the FSO Joint Venture as of December 31, 2016, the Company utilized an income approach, by preparing discounted\ncash flow models since there is a lack of comparable market transactions for the specially built assets held by the FSO Joint Venture.\nIn preparing the discounted cash flows models, the Company used a methodology largely consistent with the methodology and assumptions\ndetailed in the \u201cVessel Impairment\u201d section above, with the exception being that as the assets owned by the FSO Joint\nVenture serve under specific service contracts, the estimated charter rates for periods after the expiry of the existing contracts\nare based upon management\u2019s internally forecasted rates. The cash flows were discounted using the estimated weighted average\ncost of capital for each joint venture, which approximated 9.5% and took into consideration country risk, entity size and uncertainty\nwith respect to the cash flows for periods beyond the current charter expiries.","markdown_table":"\n\n| 62 | |\n| --- | --- |\n| International Seaways, Inc. | |\n\n","source":"INSW\/10-K\/0001144204-19-013398"} {"title":"CRITICAL ACCOUNTING POLICIES","text":"DrydockingWithin the shipping industry, there are two\nmethods that are used to account for dry dockings: (1) capitalize drydocking costs as incurred (deferral method) and amortize such\ncosts over the period to the next scheduled drydocking, and (2) expense drydocking costs as incurred. Since drydocking cycles typically\nextend over two and a half years or five years, management uses the deferral method because management believes it provides a better\nmatching of revenues and expenses than the expense-as-incurred method.\u00a0Pension BenefitsThe Company has obligations outstanding under\nthe OSG Ship Management (UK) Ltd. Retirement Benefits Plan (the \u201cScheme\u201d), a defined benefit pension plan maintained\nby a subsidiary in the U.K., who is the principal employer of the Scheme. The plan has been closed to new entrants and accrual\nsince December 2007. The Company has recorded pension benefit costs based on valuations developed by its actuarial consultants.\nThese valuations are based on key estimates and assumptions, including those related to the discount rates, the rates expected\nto be earned on investments of plan assets and the life expectancy\/mortality of plan participants. The Company is required to consider\nmarket conditions in selecting a discount rate that is representative of the rates of return currently available on high-quality\nfixed income investments. A higher discount rate would result in a lower benefit obligation and a lower rate would result in a\nhigher benefit obligation. The expected rate of return on plan assets is management\u2019s best estimate of expected returns on\nplan assets. A decrease in the expected rate of return will increase net periodic benefit costs and an increase in the expected\nrate of return will decrease benefit costs. The mortality assumption is management\u2019s best estimate of the expected duration\nof future benefit payments at the measurement date. The estimate is based on the specific demographics and other relevant facts\nand circumstances of the Scheme and considers all relevant information available at the measurement date. Longer life expectancies\nwould result in higher benefit obligations and a decrease in life expectancies would result in lower benefit obligations.In determining the benefit obligations at\nthe end of year measurement date, the Company continues to use an equivalent single weighted-average discount rate, at December\n31, 2018 (2.80%) and 2017 (2.40%), respectively. Management believes these rates to be appropriate for ongoing plans with a long\nduration such as Scheme. The Company also assumed a long-term rate of return on the Scheme assets of 4.46% and 3.85% at December\n31, 2018 and 2017, respectively, based on the asset mix as of such dates and management\u2019s estimate of the long-term rate\nof return that could be achieved over the remaining duration of the Scheme.Newly Issued Accounting StandardsSee Note 2, \u201cSummary of Significant\nAccounting Policies,\u201d to the Company\u2019s consolidated financial statements set forth in Item 8, \u201cFinancial Statements\nand Supplementary Data.\u201d","markdown_table":"\n\n| 63 | |\n| --- | --- |\n| International Seaways, Inc. | |\n\n","source":"INSW\/10-K\/0001144204-19-013398"} {"title":"Precious Metals Sales","text":"For the\nyears ended December 31, 2020 and 2019, the EBITDA for precious\nmetals was $174,079 and $194,239, respectively.","markdown_table":"\n\n\n| Precious Metal Sales Silver\/Gold | For the Year Ended December 31, | |\n| --- | --- | --- |\n| | 2020 | 2019 |\n| Ounces Gold Shipped (Au) | 30.79 | 48.13 |\n| Ounces Silver Shipped (Ag) | 11,434 | 11,714 |\n| Revenues | $174,079 | $194,239 |\n\n\n","source":"UAMY\/10-K\/0001654954-21-003567"} {"title":"Precious Metals Sales","text":"During\nthe period ending December 31, 2020, the most significant factors\naffecting our financial performance were as follows:\n\n\n\u25cf\nThe\ndeath of John Lawrence, the Company\u2019s previous President and\nChairman, which created the opportunity to renegotiate existing\nsupply and processing contracts,\n\n\n\n\n\u25cf\nThe\ncontinuing decline of antimony prices,\n\n\n\n\n\u25cf\nAn\nassessment against US Antimony from the Mexican tax authority (SAT)\nin the amount of $1,120,730 regarding a lawsuit the Company had\nbeen in involved in since 2016.\n\n\n\n\n\u25cf\nA\nprivate placement of 5,742,858 shares of the Company\u2019s common\nstock sold in July of 2020.\n\n\n\n\n\u25cf\nA\n50% decrease in Canadian supply of sodium antimonate.\n\n\n\n\n\u25cf\nThe\nconsequences of the Covid-19 pandemic to antimony and zeolite sales\nand corresponding increase costs of freight.\n\n\nDuring the period ended December 31, 2019, the\nmost significant event affecting our financial performance was the\ncontinued low price of antimony. This decrease in prices caused us\nto re-evaluate our commitment to the two antimony mines we were\npurchasing in Mexico. We made the decision that with the depressed\nprices and the cost of developing the mines, it was in our\nbest interest to abandon these properties and look at re-acquiring\nthem in the future if antimony prices improved. It was decided that\nour resources should be directed to completing our precious metals\nfacility at Puerto Blanco and starting precious metals production\nin 2021. In connection with the low antimony prices, we negotiated\na lower cost agreement with our North American supplier which will\nhelp us with future cash flow.\nOur\nplan for the remainder of 2021 is to process\napproximately:\n\n\n\u25cf\n1,300\ntons of mined rock from the Los Juarez property. 2,000 tons have\nalready been moved to the Puerto Blanco facility. It is estimated\nthat we have 10,000 tons of mined rock at the Los Juarez\nproperty.\n\n\n\n\n\u25cf\nAt\nleast 720 tons of ore from the Wadley mines at the Madero Smelting\nfacility.\n\n\n\n\n\u25cf\n300\ntons of milled tailings at the Puerto Blanco facility.\n\n\n\n\n\u25cf\n60\ntons of stibnite ore at Puerto Blanco facility for the generation\nof concentrates specifically for the production of antimony\ntrisulfide for the Defense Logistic Agency (DLA).\n\n\nIn\naddition to the processing goals stated above, US Antimony intends\nto continue to improve its production capacity and sales of zeolite\nat its subsidiary Bear River Zeolite (BRZ). Funds obtained in early\n2021 from two public placements of stock will assist greatly to\nthis goal as well as the improvement of the facilities in Madero,\nThompson Falls, Puerto Blanco, and Los Juarez.\nIn\n2020, we only received 50% of our expected supply from North\nAmerican sources. We anticipated increasing the raw material from\nMexico and the resumption of normal shipments from our North\nAmerican supplier in 2019, but these plans did not materialize due\nto low overall metal prices and the low antimony prices in\nparticular.\nIn both\n2020 and 2019, the Puerto Blanco mill circuits were utilized less\nthan 2% of their capacity, but with the completion of the cyanide\nleach circuit we expect it to be fully utilized processing precious\nmetals ore from the Los Juarez mine. Some antimony will be realized\nas a by-product of processing the Los Juarez ore. In 2020, US\nAntimony has been involved in renegotiating its supply contract\nwith its North American source, that will likely result in a mutual\nimprovement in the supply contract. Additionally, the price of\nantimony in early 2021 is double what it was in 2019.\nThe\nestimated recovery of precious metals per metric ton, after the\ncaustic leach and cyanide leach circuits, is as follows at Los\nJuarez:","markdown_table":"\n\n\n| Earnings before income taxes | | |\n| --- | --- | --- |\n| depreciation and amortization | | |\n| For the years ended December 31, 2020 and 2019 | | |\n| | | |\n| Antimony - Combined USA | | |\n| and Mexico | 2020 | 2019 |\n| Lbs of Antimony Metal USA | 514,837 | 794,770 |\n| Lbs of Antimony Metal Mexico | 300,473 | 771,815 |\n| Total Lbs of Antimony Metal Sold | 815,310 | 1,566,585 |\n| Average Sales Price\/Lb Metal | $3.61 | $3.48 |\n| Net loss\/Lb Metal | $(4.46) | $(2.74) |\n| | | |\n| Gross antimony revenue | $2,942,628 | $5,450,649 |\n| | | |\n| Cost of sales - domestic | (1,722,571) | (2,870,566) |\n| Cost of sales - Mexico | (1,425,383) | (4,103,125) |\n| Operating expenses | (3,134,889) | (1,451,267) |\n| Non-operating expenses | 21,808 | 87,798 |\n| Loss on mineral properties | (318,502) | (1,409,022) |\n| | (6,579,537) | (9,746,182) |\n| | | |\n| Net loss - antimony | (3,636,909) | (4,295,533) |\n| Depreciation,& amortization | 616,388 | 640,457 |\n| EBITDA - antimony | $(3,020,521) | $(3,655,076) |\n| | | |\n| Precious Metals | | |\n| Ounces sold | | |\n| Gold | 31 | 48 |\n| Silver | 11,434 | 11,714 |\n| | | |\n| Gross precious metals revenue | $174,079 | $194,239 |\n| Production costs | (86,835) | (69,067) |\n| Net income - precious metals | 87,244 | 125,172 |\n| Depreciation | 86,835 | 69,067 |\n| EBITDA - precious metals | $174,079 | $194,239 |\n| | | |\n| Zeolite | | |\n| Tons sold | 10,661 | 13,680 |\n| Average Sales Price\/Ton | $198.75 | $191.75 |\n| Net income (Loss)\/Ton | $24.66 | $36.36 |\n| | | |\n| Gross zeolite revenue | $2,118,823 | $2,623,117 |\n| Cost of sales | (1,795,043) | (2,041,498) |\n| Operating expenses | (57,049) | (68,567) |\n| Non-operating expenses | (3,870) | (15,582) |\n| Net income - zeolite | 262,861 | 497,470 |\n| Depreciation | 182,620 | 186,466 |\n| EBITDA - zeolite | $445,481 | $683,936 |\n| | | |\n| Company-wide | | |\n| Gross revenue | $5,235,530 | $8,268,005 |\n| Production costs | (5,029,832) | (9,084,256) |\n| Operating expenses | (3,191,938) | (1,519,834) |\n| Non-operating expenses | 17,938 | 72,216 |\n| Loss on mineral properties | (318,502) | (1,409,022) |\n| Net income (loss) | (3,286,804) | (3,672,891) |\n| Depreciation,& amortization | 885,843 | 895,990 |\n| EBITDA | $(2,400,961) | $(2,776,901) |\n\n\n","source":"UAMY\/10-K\/0001654954-21-003567"} {"title":"Financial Condition and Liquidity","text":"Our net\nworking capital increased for the year ended December 31, 2020 from\na negative amount of $2,695,926 at the beginning of the year to a\nnegative amount of $2,669,382 at the end of 2020. Current assets\nincreased due to an increase in cash and cash equivalents. Our\ncurrent liabilities increased by $501,862, which included a\ndecrease of approximately $584,000 in accounts payables and\npayables to related parties, but an overall increase due to Mexican\nexport tax liability. Capital improvements were paid for with cash\nand debt.\nFor the\nyear ending December 31, 2021, we are planning to use funds\nacquired from the two stock offerings raised in Q1 2021 to make\nsignificant improvements to our operations at Madero, Puerto\nBlanco, Bear River Zeolite, and Thompson Falls facilities with the\ngoal of increasing production and decreasing costs.","markdown_table":"\n\n\n| Financial Condition and Liquidity | 2020 | 2019 |\n| --- | --- | --- |\n| | | |\n| Current assets | $1,808,161 | $1,279,755 |\n| Current liabilities | (4,477,543) | (3,975,681) |\n| Net Working Capital | $(2,669,382) | $(2,695,926) |\n| | | |\n| | | |\n| | 2020 | 2019 |\n| Cash provided (used) by operations | $(1,305,664) | $(11,355) |\n| Cash provided (used) by investing: | | |\n| Cash used for capital outlay | (243,091) | (792,925) |\n| Proceeds from sale of land | - | 400,000 |\n| Cash provided (used) by financing: | | |\n| Proceeds from notes payable to bank, net of payments | (97,066) | 13,149 |\n| Principal paid on long-term debt | (46,670) | (127,683) |\n| Advances from related party | - | 237,400 |\n| Payments on advances from related parties | (83,419) | (35,066) |\n| Proceeds from CARES Act note payable | 443,400 | |\n| Stock issued for cash | 1,813,068 | 404,199 |\n| Checks issued and payable | 69,052 | (28,849) |\n| Net change in cash and restricted cash | $549,610 | $58,870 |\n\n\n","source":"UAMY\/10-K\/0001654954-21-003567"} {"title":"HIGHLIGHTS 2015","text":"Precious Metal Sales","markdown_table":"\n\n\n| Antimony Sales in Pounds | | 2011 | | | | 2012 | | | | 2013 | | | | 2014 | | | | 2015 | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| USA | | | 1,179,973 | | | | 103,114 | | | | 931,789 | | | | 1,141,436 | | | | 1,381,971 | |\n| Mexico | | | 221,450 | | | | 372,046 | | | | 647,393 | | | | 596,368 | | | | 1,105,350 | |\n| Total Sale in Pounds | | | 1,401,423 | | | | 1,403,210 | | | | 1,579,182 | | | | 1,727,804 | | | | 2,487,321 | |\n| Total sales in Dollars | | $ | 10,406,636 | | | $ | 8,753,449 | | | $ | 8,375,158 | | | $ | 8,132,410 | | | $ | 9,863,933 | |\n| Average price per pound | | $ | 7.43 | | | $ | 6.24 | | | $ | 530.00 | | | $ | 4.71 | | | $ | 3.97 | |\n\n\n","source":"UAMY\/10-K\/0001354488-16-006768"} {"title":"ANTIMONY MARKET","text":"2.\u00a0\u00a0\n\n\n\nThe \u201cMexican excess production costs\u201d include (1) holding costs for Los Juarez, Wadley, Soyatal, Guadalupe, and the Puerto Blanco mill, and (2) the write-down of significant concentrates and direct shipping ore (DSO) mined in 2013 and 2014 at Wadley, Soyatal, and other properties. These costs are included in our production costs and have a very severe impact on profitability. In 2015, they added $1,086,440 to the costs of the production of antimony. These costs amounted to $.98 per pound of antimony production in Mexico.","markdown_table":"\n\u00a0\n\n\n\n| Division | Operation | Description | | Amount | | |\n| --- | --- | --- | --- | --- | --- | --- |\n| BRZ | Zeolite | VSI Line 1 construction | | $ | 67,682 | |\n| BRZ | Zeolite | Caterpillar 235 Excavator | | | 29,831 | |\n| BRZ | Zeolite | Permitting | | | 15,310 | |\n| BRZ | Zeolite | Major Equipment Repairs | | | 83,415 | |\n| USAC Montana | Antimony and precious metals | Plant and Office Equipment | | | 3,728 | |\n| USAC Montana | Antimony and precious metals | Two Caterpillar Forklifts | | | 58,600 | |\n| USAMSA | Madero | Buildings | | | 1,835 | |\n| USAMSA | Madero | Capitalized interest | | | 4,542 | |\n| USAMSA | Madero | Permitting | | | 56,461 | |\n| USAMSA | Madero | Plant construction | | | 3,820 | |\n| USAMSA | Madero | Leach Circuit | | | 107,023 | |\n| USAMSA | Madero | IVA Tax on Equipment | | | 36,619 | |\n| USAMSA | Puerto Blanco | Buildings | | | 10,395 | |\n| USAMSA | Puerto Blanco | Permitting | | | 48,299 | |\n| USAMSA | Puerto Blanco | Leach Circuit | | | 1,734 | |\n| USAMSA | Puerto Blanco | 500 Ton Ball Mill | | | 15,095 | |\n| USAMSA | Puerto Blanco | Land Payments San Miguel | | | 125,000 | |\n| USAMSA | Puerto Blanco | Permitting | | | 20,825 | |\n| USAMSA | Guadalupe | Property purchase | | | 1,559,615 | |\n| USAMSA | Guadalupe | Capitalized amortization | | | 14,591 | |\n| USAMSA | Guadalupe | Permitting | | | 2,502 | |\n| USAMSA | Soyatal | Permitting | | | 2,593 | |\n| USAMSA | Soyatal | Capitalized amortization | | | 42,498 | |\n| USAMSA | Wadley | Plant Improvements | | | 77,333 | |\n| USAMSA | Wadley | Used Truck | | | 1,385 | |\n| USAMSA | OTHER | Software | | | 4,165 | |\n| HILLGROVE | OTHER | Building construction | | | 44,136 | |\n| HILLGROVE | OTHER | Permiting | | | 4,200 | |\n| HILLGROVE | OTHER | Plant | | | 914,069 | |\n| HILLGROVE | OTHER | Equipment | | | 94,016 | |\n| | | | | $ | 3,451,317 | |\n\n\n\n\u00a0\n","source":"UAMY\/10-K\/0001354488-16-006768"} {"title":"ZEOLITE OPERATIONS","text":"The oil and gas and mining industries could become a large application for BRZ zeolite used for remediation.","markdown_table":"\n\n\n| Application | | Percent by dollars | | | | Percent by tons | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| Animal feed | | | 41.46 | | | | 30.35 | |\n| Water filtration | | | 18.34 | | | | 20.00 | |\n| Soil amendment | | | 14.85 | | | | 18.20 | |\n| Traction control | | | 9.02 | | | | 11.20 | |\n| Air filtration | | | 8.68 | | | | 12.50 | |\n| Oil and gas | | | 2.06 | | | | 2.80 | |\n| Home and miscellaneous | | | 1.41 | | | | 0.70 | |\n| Odor control | | | 1.38 | | | | 1.10 | |\n| Synthetic turf | | | 0.83 | | | | 0.80 | |\n| Absorption | | | 0.66 | | | | 0.90 | |\n| Remediation | | | 0.50 | | | | 0.80 | |\n| Litter | | | 0.35 | | | | 0.30 | |\n| Distribution | | | 0.33 | | | | 0.20 | |\n| Pest control | | | 0.25 | | | | 0.30 | |\n| Pigment | | | 0.08 | | | | 0.07 | |\n| Total | | | 100 | | | | 100 | |\n\n\n","source":"UAMY\/10-K\/0001354488-16-006768"} {"title":"Item 1.\u00a0\u00a0Description of Business","text":"Antimony DivisionOur antimony smelter and precious metals plant is located in the Burns Mining District of Sanders County, Montana, approximately 15 miles west of Thompson Falls, MT. We hold 2 patented mill sites where the plant is located.\u00a0\u00a0We have no \"proven reserves\" or \"probable reserves\" of antimony, as these terms are defined by the Securities and Exchange Commission.\u00a0\u00a0Environmental restrictions preclude mining at this site.Mining was suspended in December 1983, because antimony could be purchased more economically from foreign sources.For 2015, and since 1983, we relied on foreign sources for raw materials, and there are risks of interruption in procurement from these sources and\/or volatile changes in world market prices for these materials that are not controllable by us.\u00a0\u00a0We have developed sources of antimony in Mexico but we are still depending on foreign companies for raw material in the future. We expect more raw materials from our own properties for 2016 and later years. We continue working with suppliers in North America, Central America, Europe, Australia, and South America.We currently own 100% of the common stock, equipment, and the leases on real property of United States Antimony, Mexico S.A. de C.V. or USAMSA, which was formed in April 1998.\u00a0\u00a0We currently own 100% of the stock in Antimony de Mexico SA de CV (AM) which owns the San Miguel concession of the Los Juarez property.\u00a0\u00a0USAMSA has three divisions (1) the Madero smelter in Coahuila that started expanded operations in late 2012, (2) the Puerto Blanco flotation mill and oxide circuit in Guanajuato that started operating on a test basis in late 2012 and is ramping up for 2016, and (3) mining properties that include the Los Juarez mineral deposit with concessions in Queretaro, the Wadley mining concessionin San Lis Potosi, the Soyatal deposits in Queretaro, and the Guadalupe properties in Zacatecas.In our existing operations in Montana, we produce antimony oxide, sodium antimonate, antimony metal, and precious metals.\u00a0\u00a0Antimony oxide is a fine, white powder that is used primarily in conjunction with a halogen to form a synergistic flame retardant system for plastics, rubber, fiberglass, textile goods, paints, coatings and paper.\u00a0\u00a0Antimony oxide is also used as a color fastener in paint, as a catalyst for production of polyester resins for fibers and film, as a catalyst for production of polyethelene pthalate in plastic bottles, as a phosphorescent agent in fluorescent light bulbs, and as an opacifier for porcelains.\u00a0\u00a0Sodium antimonate is primarily used as a fining agent (degasser) for glass in cathode ray tubes and as a flame retardant.\u00a0\u00a0We also sell antimony metal for use in bearings, storage batteries and ordnance.We estimate (but have not independently confirmed) that our present share of the domestic market and international market for antimony oxide products is approximately 4% and less than 1%, respectively.\u00a0\u00a0We are the only significant U.S. producer of antimony products, while China supplies 92% of the world antimony demand.\u00a0\u00a0We believe we are competitive both domestically and world-wide due to the following:\n\n\n\n\u00b7\n\n\nWe have a reputation for quality products delivered on a timely basis.\n\n\n\n\n\n\n\u00b7\n\n\nWe are a non-Chinese producer of antimony products.\n\n\n\n\n\n\n\u00b7\n\n\nWe have two of the three operating antimony smelters in North and Central America.\n\n\n\n\n\n\n\u00b7\n\n\nWe are the sole domestic producer of antimony products.\n\n\n\n\n\n\n\u00b7\n\n\nWe can ship on short notice to domestic customers.\n\n\n\n\n\n\n\u00b7\n\n\nWe are vertically integrated, with raw materials from our own mines, mills, and smelter in Mexico, along with the raw materials from exclusive supply agreements we have with numerous ore and raw material suppliers.\n\n\n\n\n\n\n\u00b7\n\n\nAs a vertically integrated company, we will have more control over our raw material costs.\n\n\nFollowing is a five year schedule of our antimony sales:","markdown_table":"\n\n\n\n| Precious Metals Sales | | | | | | | | | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| Silver\/Gold | | | | | | | | | | | | | | | | | | | | |\n| Montana | | 2011 | | | | 2012 | | | | 2013 | | | | 2014 | | | | 2015 | | |\n| Ounces Gold Shipped (Au) | | | 161.71 | | | | 102.32 | | | | 59.74 | | | | 64.77 | | | | 89.12 | |\n| Ounces Silver Shipped (Ag) | | | 17,472.99 | | | | 20,237.70 | | | | 22,042.46 | | | | 29,480.22 | | | | 30,420.75 | |\n| Revenues | | $ | 667,813 | | | $ | 647,554 | | | $ | 347,016 | | | $ | 461,083 | | | $ | 491,426 | |\n| Mexico | | | | | | | | | | | | | | | | | | | | |\n| Ounces Gold Shipped (Au) | | | | | | | | | | | 1.780 | | | | | | | | | |\n| Ounces Silver Shipped (Ag) | | | | | | | | | | | 1,053.240 | | | | | | | | | |\n| Revenues | | | | | | | | | | $ | 22,690 | | | | | | | | | |\n| | | | | | | | | | | | | | | | | | | | | |\n| Total Revenues | | $ | 667,813 | | | $ | 647,554 | | | $ | 369,706 | | | $ | 461,083 | | | $ | 491,426 | |\n\n\n\n","source":"UAMY\/10-K\/0001354488-16-006768"} {"title":"Item 1.\u00a0\u00a0Description of Business","text":"Concentration of Sales:During the two years ended December 31, 2015, the following sales were made to our three largest customers:","markdown_table":"\n\n\n\n| Schedule of Antimony Sales | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | Metal | | | | | | | | Average | | |\n| Year | | Contained | | | | $ | | | | Price\/Lb | | |\n| 2015 | | | 2,487,321 | | | $ | 9,863,933 | | | $ | 3.97 | |\n| 2014 | | | 1,727,804 | | | $ | 8,132,410 | | | $ | 4.71 | |\n| 2013 | | | 1,579,182 | | | $ | 8,375,158 | | | $ | 5.30 | |\n| 2012 | | | 1,403,210 | | | $ | 8,753,449 | | | $ | 6.24 | |\n| 2011 | | | 1,401,423 | | | $ | 10,406,636 | | | $ | 7.43 | |\n\n\n\n","source":"UAMY\/10-K\/0001354488-16-006768"} {"title":"Item 1.\u00a0\u00a0Description of Business","text":"While the loss of one of our three largest customers would be a problem in the short term, we have numerous requests from potential buyers that we cannot fill, and we could quickly, in the present market conditions, be able to replace the lost sales.\u00a0\u00a0Loss of all three of our largest customers would be more serious and may affect our profitability.Marketing:\u00a0We employ full-time marketing personnel and have negotiated various commission-based sales agreements with other chemical distribution companies.Antimony Price Fluctuations:\u00a0Our operating results have been, and will continue to be, related to the market prices of antimony metal, which have fluctuated widely in recent years.\u00a0\u00a0The volatility of prices is illustrated by the following table, which sets forth the average prices of antimony metal per pound, as reported by sources deemed reliable by us.","markdown_table":"\n\n\n\n\n| Sales to Three | | For the Year Ended | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| Largest Customers | | December 31, 2015 | | | | December 31, 2014 | | |\n| Alpha Gary Corporation | | $ | 3,142,586 | | | $ | 3,289,766 | |\n| East Penn Manufacturing Inc | | | 1,236,250 | | | | 720,966 | |\n| General Electric | | | | | | | | |\n| Kohler Corporation | | | 1,736,914 | | | | 2,091,565 | |\n| Polymer Products Inc. | | | - | | | | - | |\n| | | $ | 6,115,750 | | | $ | 6,102,297 | |\n| % of Total Revenues | | | 46.65 | % | | | 56.45 | % |\n\n\n\n\n\u00a0\n","source":"UAMY\/10-K\/0001354488-16-006768"} {"title":"Item 1.\u00a0\u00a0Description of Business","text":"A six year price range of our sales prices for antimony oxide and antimony metal, per pound, was as follows:","markdown_table":"\n\n\n| | | USA | | | | Rotterdam | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | Average | | | | Average | | |\n| Year | | Price\/Lb | | | | Price\/Lb | | |\n| 2015 | | $ | 3.41 | | | $ | 3.32 | |\n| 2014 | | $ | 4.40 | | | $ | 4.31 | |\n| 2013 | | $ | 4.73 | | | $ | 4.78 | |\n| 2012 | | $ | 5.86 | | | $ | 5.71 | |\n| 2011 | | $ | 6.97 | | | $ | 7.05 | |\n\n\n","source":"UAMY\/10-K\/0001354488-16-006768"} {"title":"Item 1.\u00a0\u00a0Description of Business","text":"Antimony metal prices are determined by a number of variables over which we have no control.\u00a0\u00a0These include the availability and price of imported metals, the quantity of new metal supply, and industrial and commercial demand.\u00a0\u00a0If metal prices decline and remain depressed, our revenues and profitability may be adversely affected.We use various antimony raw materials to produce our products.\u00a0\u00a0We currently obtain antimony raw material from sources in North America, Mexico, Europe, South America, Central America, and Australia.Zeolite DivisionWe own 100% of Bear River Zeolite Company, (BRZ), an Idaho corporation that was\u00a0\u00a0incorporated on June 1, 2000.\u00a0\u00a0BRZ has a lease with Webster Farm, L.L.C. that entitles BRZ to surface mine and process zeolite on property located near Preston, Idaho, in exchange for a royalty payment.\u00a0\u00a0In 2010 the royalty was adjusted to $10 per ton sold.\u00a0\u00a0The current minimum annual royalty is $60,000.\u00a0\u00a0In addition, BRZ has more zeolite on U.S. Bureau of Land Management land.\u00a0\u00a0A company controlled by the estate of Al Dugan, a significant stockholder and, as such, an affiliate of USAC, receives a payment equal to 3% of net sales on zeolite products. William Raymond and Nancy Couse are paid a royalty that varies from $1 to $5 per ton.\u00a0\u00a0On a combined basis, royalties vary from 8%-13%.\u00a0\u00a0\u00a0BRZ has constructed a processing plant on the property and it has improved its productive capacity. In addition to a large amount of fully depreciated equipment that has been transferred from the USAC division, we have spent approximately $3,712,000 to purchase and construct the processing plant as of December 31, 2015.We have no \"proven reserves\" or \"probable reserves\" of zeolite, as these terms are defined by the Securities and Exchange Commission.\"Zeolite\" refers to a group of industrial minerals that consist of hydrated aluminosilicates that hold cations such as calcium, sodium, ammonium, various heavy metals, and potassium in their crystal lattice.\u00a0\u00a0Water is loosely held in cavities in the lattice.\u00a0\u00a0BRZ zeolite is regarded as one of the best zeolites in the world due to its high CEC of approximately 180 meq\/100 gr., its hardness and high clinoptilolite content, its absence of clay minerals, and its low sodium content.\u00a0\u00a0\u00a0BRZ's zeolite deposits\u2019 characteristics which the mineral useful for a variety of purposes including:\n\n\n\n\u00a0 \n\n\n\u00b7\n\n\nSoil Amendment and Fertilizer.\u00a0\u00a0Zeolite has been successfully used to fertilize golf courses, sports fields, parks and common areas, and high value agricultural crops\n\n\n\n\n\n\n\u00a0 \n\n\n\u00b7\n\n\nWater Filtration.\u00a0\u00a0Zeolite is used for particulate, heavy metal and ammonium removal in swimming pools, municipal water systems, fisheries, fish farms, and aquariums.\n\n\n\n\n\n\n\u00a0 \n\n\n\u00b7\n\n\nSewage Treatment.\u00a0\u00a0Zeolite is used in sewage treatment plants to remove nitrogen and as a carrier for microorganisms.\n\n\n\n\n\n\n\u00a0 \n\n\n\u00b7\n\n\nNuclear Waste and Other Environmental Cleanup.\u00a0\u00a0Zeolite has shown a strong ability to selectively remove strontium, cesium, radium, uranium, and various other radioactive isotopes from solution.\u00a0\u00a0Zeolite can also be used for the cleanup of soluble metals such as mercury, chromium, copper, lead, zinc, arsenic, molybdenum, nickel, cobalt, antimony, calcium, silver and uranium.\n\n\n\n\n\n\n\u00a0 \n\n\n\u00b7\n\n\nOdor Control.\u00a0\u00a0A major cause of odor around cattle, hog, and poultry feed lots is the generation of the ammonium in urea and manure.\u00a0\u00a0The ability of zeolite to absorb ammonium prevents the formation of ammonia gas, which disperses the odor.\n\n\n\n\n\n\n\u00a0 \n\n\n\u00b7\n\n\nGas Separation.\u00a0\u00a0Zeolite has been used for some time to separate gases, to re-oxygenate downstream water from sewage plants, smelters, pulp and paper plants, and fish ponds and tanks, and to remove carbon dioxide, sulfur dioxide and hydrogen sulfide from methane generators as organic waste, sanitary landfills, municipal sewage systems and animal waste treatment facilities.\n\n\n\n\n\n\n\u00a0 \n\n\n\u00b7\n\n\nAnimal Nutrition.\u00a0\u00a0Feeding up to 2% zeolite increases growth rates, decreases conversion rates, prevents worms, and increases longevity.\n\n\n\n\n\n\n\u00a0 \n\n\n\u00b7\n\n\nMiscellaneous Uses.\u00a0\u00a0Other uses include catalysts, petroleum refining, concrete, solar energy and heat exchange, desiccants, pellet binding, horse and kitty litter, floor cleaner and carriers for insecticides, pesticides and herbicides.\n\n\nEnvironmental MattersOur exploration, development and production programs conducted in the United States are subject to local, state and federal regulations regarding environmental protection.\u00a0\u00a0Some of our production and mining activities are conducted on public lands.\u00a0\u00a0We believe that our current discharge of waste materials from our processing facilities is in material compliance with environmental regulations and health and safety standards.\u00a0\u00a0The U.S. Forest Service extensively regulates mining operations conducted in National Forests.\u00a0\u00a0Department of Interior regulations cover mining operations carried out on most other public lands.\u00a0\u00a0All operations by us involving the exploration for or the production of minerals are subject to existing laws and regulations relating to exploration procedures, safety precautions, employee health and safety, air quality standards, pollution of water sources, waste materials, odor, noise, dust and other environmental protection requirements adopted by federal, state and local governmental authorities.\u00a0\u00a0We may be required to prepare and present data to these regulatory authorities pertaining to the effect or impact that any proposed exploration for, or production of, minerals may have upon the environment.\u00a0\u00a0Any changes to our reclamation and remediation plans, which may be required due to changes in state or federal regulations, could have an adverse effect on our operations.\u00a0\u00a0The range of reasonably possible loss in excess of the amounts accrued, by site, cannot be reasonably estimated at this time.We accrue environmental liabilities when the occurrence of such liabilities is probable and the costs are reasonably estimable. The initial accruals for all our sites are based on comprehensive remediation plans approved by the various regulatory agencies in connection with permitting or bonding requirements. Our accruals are further based on presently enacted regulatory requirements and adjusted only when changes in requirements occur or when we revise our estimate of costs to comply with existing requirements. As remediation activity has physically commenced, we have been able to refine and revise our estimates of costs required to fulfill future environmental tasks based on contemporaneous cost information, operating experience, and changes in regulatory requirements. In instances where costs required to complete our remaining environmental obligations are clearly determined to be in excess of the existing accrual, we have adjusted the accrual accordingly. When regulatory agencies require additional tasks to be performed in connection with our environmental responsibilities, we evaluate the costs required to perform those tasks and adjust our accrual accordingly, as the information becomes available. In all cases, however, our accrual at year-end is based on the best information available at that time to develop estimates of environmental liabilities.Antimony Processing SiteWe have environmental remediation obligations at our antimony processing site near Thompson Falls, Montana (\"the Stibnite Hill Mine Site\").\u00a0\u00a0We are under the regulatory jurisdiction of the U.S. Forest Service and subject to the operating permit requirements of the Montana Department of Environmental Quality. At December 31, 2014 and 2015, we have accrued $100,000 to fulfill our environmental responsibilities.","markdown_table":"\n\n\n\n| | | Oxide | | | | Metal | | | | Combined | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | Average | | | | Average | | | | Average | | |\n| Year | | Price\/Lb | | | | Price\/Lb | | | | Price\/Lb | | |\n| 2015 | | $ | 3.34 | | | $ | 3.71 | | | $ | 3.97 | |\n| 2014 | | $ | 4.00 | | | $ | 4.18 | | | $ | 4.71 | |\n| 2013 | | $ | 4.41 | | | $ | 4.69 | | | $ | 5.30 | |\n| 2012 | | $ | 5.14 | | | $ | 5.58 | | | $ | 6.24 | |\n| 2011 | | $ | 6.16 | | | $ | 7.42 | | | $ | 7.43 | |\n| 2010 | | $ | 3.67 | | | $ | 4.42 | | | $ | 4.34 | |\n\n\n\n","source":"UAMY\/10-K\/0001354488-16-006768"} {"title":"LOS JUAREZ GROUP","text":"The concessions collectively constitute 720 hectares. The claims are accessed by roads that lead to highways.","markdown_table":"\n\n\n| 1. | San Miguel I and II are being purchased by a USAC subsidiary, Antimonio de Mexico, S. A. de C. V (AM), for $1,480,500. To date, we have paid $1,415,500 on the property, and have incurred significant permitting costs. The property consists of 40 hectares. |\n| --- | --- |\n| 2. | San Juan I and II are concessions owned by AM and include 466 hectares. |\n| 3. | San Juan III is held by a lease agreement by AM in which we will pay a 10% royalty, based on the net smelter returns from another USAC Mexican subsidiary, named United States Antimony Mexico, S. A. de C. V. or USAMSA.\u00a0\u00a0It consists of 214 hectares. |\n| | |\n\n\n","source":"UAMY\/10-K\/0001354488-16-006768"} {"title":"Item 5\u00a0\u00a0\u00a0Market for Common Equity and Related Stockholder Matters","text":"The approximate number of holders of record of our common stock at March 30, 2016, is 2,500.We have not declared or paid any dividends to our stockholders during the last five years and do not anticipate paying dividends on our common stock in the foreseeable future.\u00a0\u00a0Instead, we expect to retain earnings for the operation and expansion of our business.","markdown_table":"\n\n\n\n| 2015 | | High | | | | Low | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| First Quarter | | $ | 0.91 | | | $ | 0.48 | |\n| Second Quarter | | | 1.65 | | | | 0.52 | |\n| Third Quarter | | | 0.79 | | | | 0.35 | |\n| Fourth Quarter | | | 0.46 | | | | 0.24 | |\n| | | | | | | | | |\n| 2014 | | High | | | | Low | | |\n| First Quarter | | $ | 2.14 | | | $ | 1.67 | |\n| Second Quarter | | | 2.17 | | | | 1.41 | |\n| Third Quarter | | | 1.76 | | | | 1.15 | |\n| Fourth Quarter | | | 1.35 | | | | 0.60 | |\n\n\n\n\u00a0\n","source":"UAMY\/10-K\/0001354488-16-006768"} {"title":"Item 6","text":"Item 7Management's Discussion and Analysis or Plan of Operations","markdown_table":"\n\n\n\n| December 31, | | 2015 | | | | 2014 | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| Balance Sheet Data: | | | | | | | | |\n| Current assets | | $ | 2,136,326 | | | $ | 2,303,669 | |\n| Property, plant, and equipment-net | | | 16,030,333 | | | | 13,511,803 | |\n| Restricted cash | | | 76,012 | | | | 75,754 | |\n| Other assets | | | 17,530 | | | | 653,805 | |\n| Total assets | | $ | 18,260,201 | | | $ | 16,545,031 | |\n| | | | | | | | | |\n| Current liabilities | | $ | 2,429,830 | | | $ | 2,292,640 | |\n| Long-term debt, net of current portion | | | 1,717,745 | | | | 715,328 | |\n| Hillgrove advances payable | | | 1,254,846 | | | | 161,339 | |\n| Stock payable to directors for services | | | 137,500 | | | | 125,000 | |\n| Accrued reclamation costs | | | 260,327 | | | | 255,190 | |\n| Total liabilities | | | 5,800,248 | | | | 3,549,497 | |\n| Shareholders' equity | | | 12,459,953 | | | | 12,995,534 | |\n| Total liabilities and | | | | | | | | |\n| shareholders' equity | | $ | 18,260,201 | | | $ | 16,545,031 | |\n| | | | | | | | | |\n| Income Statement Data: | | | | | | | | |\n| Revenues | | $ | 13,109,003 | | | $ | 10,772,192 | |\n| | | | | | | | | |\n| Cost of revenues | | | 13,521,363 | | | | 11,111,533 | |\n| Operating expenses | | | 1,311,407 | | | | 1,213,548 | |\n| Gain on liability adjustments | | | (914,770 | ) | | | | |\n| Other (income) expense | | | 29,534 | | | | 42,566 | |\n| Total expenses | | | 13,947,534 | | | | 12,367,647 | |\n| | | | | | | | | |\n| Income (loss) before income taxes | | | (838,531 | ) | | | (1,595,455 | ) |\n| Income tax benefit (expense) | | | - | | | | - | |\n| Net income (loss) | | $ | (838,531 | ) | | $ | (1,595,455 | ) |\n| | | | | | | | | |\n| Per Share Data: | | | | | | | | |\n| Net income (loss) per share: | | | | | | | | |\n| Basic and diluted | | $ | (0.01 | ) | | $ | (0.03 | ) |\n| Weighted average shares outstanding: | | | | | | | | |\n| Basic and diluted | | | 66,207,241 | | | | 64,605,253 | |\n\n\n\n\u00a0\n","source":"UAMY\/10-K\/0001354488-16-006768"} {"title":"Item 6","text":"Excess Mexico production costsDuring the two year period ending December 31, 2015, we incurred excess production costs at our Mexico operations.\u00a0\u00a0At the beginning of each year, management determined a standard, or expected, cost to produce antimony products for shipment to Montana for further processing. For 2015 and 2014, the standard costs per pound was $3.95 and $4.45, respectively.\u00a0\u00a0The production costs above the standard costs were calculated and reported in the above schedule of results of operations by division as \u201cexcess Mexico production costs\u201d, which were $1,086,440 and $688,619 in 2015 and 2014, respectively. The excess Mexico production costs are primarily due to holding costs from inactivity at the Wadley and Los Juarez mines, the Puerto Blanco mill, and the loss of production at the Madero smelter from metalurgical testing and experimenting with various production methods and formulas.OverviewOur cost of production was elevated for the years ended December 31, 2015 and 2014, because we were starting a major mining and production facility in Mexico.\u00a0\u00a0The same workers responsible for production were also a significant part of building and testing the manufacturing plants and equipment at Puerto Blanco and Madero, Mexico, which resulted in costs that won\u2019t be incurred when construction and testing is complete.\u00a0\u00a0To a lesser degree, we incurred similar testing costs at our plant in Thompson Falls, Montana.\u00a0\u00a0In Mexico, there will still be some overlapping costs in 2016 because the smelter is finishing a major expansion in its physical plant.\u00a0\u00a0The production from Mexico should be greater for 2016 than 2015 once the plant expansion is complete and the management and crew at the Madero smelter can concentrate their efforts on production activities.The non-cash expense items totaled $1,075,423 for 2015 and included $932,786 for depreciation and amortization, $5,137 for accretion, and $137,500 for director compensation.The non-cash expense items totaled $903,392 for 2014 and included $780,782 for depreciation and amortization, $(2,390) for accretion, and $125,000 for director compensation.We are producing and buying raw materials, which will allow us to ensure a steady flow of products for sale.\u00a0\u00a0Our smelter at Madero, Mexico, was producing a significant portion of our raw materials in 2014 and 2015.\u00a0\u00a0We will still purchase a significant portion of our raw materials from suppliers for our smelter in Montana.We completed installation of a natural gas pipeline to replace propane as the fuel used in our Mexico smelter in the fourth quarter of 2014.\u00a0\u00a0We expected the pipeline to reduce our smelter fuel cost by approximately 75%.\u00a0\u00a0Our smelter fuel cost (propane) in Mexico was approximately $700,000 for 2013 and $690,000 using 8 furnaces for the first nine months of 2014, resulting in a cost of approximately $1.27 per pound.\u00a0\u00a0Our natural gas cost was $348,260 to produce 1,105,350 pounds of antimony in 2015, or approximately $0.32 per pound, a decrease of $0.95 per pound (74.8%).We are proceeding with the installation of a 400 - 500 ton per day flotation mill that we expect to cost between $400,000 and $500,000 to install.\u00a0\u00a0The concrete work for the mill has been completed, and work will be ongoing as we generate cash from operations. This mill will be dedicated to processing ore from the Los Juarez mining property.\u00a0\u00a0We are in a waiting period for approval of permits necessary to process the Los Juarez ore.\u00a0\u00a0We have adequate crushing capacity in place to feed the 500 ton per day mill and the existing mill.\u00a0When approved, the restart of production from Los Juarez will create a significant increase in our precious metals revenue for 2016 and years forward.Our principal smelter, precious metals recovery operation, and our Company headquarters remain in Montana.\u00a0\u00a0With increased production, we expect to widen our base of customers.Results of OperationsComparison of Years ended December 31, 2015and 2014","markdown_table":"\n\n\n| Resulta of Operations by Division | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| Antimony - Combined USA | | | | | | | | |\n| and Mexico | | 2015 | | | | 2014 | | |\n| Lbs of Antimony Metal USA | | | 1,381,971 | | | | 1,141,436 | |\n| Lbs of Antimony Metal Mexico: | | | 1,105,350 | | | | 586,368 | |\n| Total Lbs of Antimony Metal Sold | | | 2,487,321 | | | | 1,727,804 | |\n| Average Sales Price\/Lb Metal | | $ | 3.97 | | | $ | 4.71 | |\n| Net income (loss)\/Lb Metal | | $ | (0.54 | ) | | $ | (1.11 | ) |\n| | | | | | | | | |\n| Gross antimony revenue - net of discount | | $ | 9,863,933 | | | $ | 8,132,410 | |\n| Precious metals revenue | | | 491,426 | | | | 461,083 | |\n| Production costs - USA | | | (4,265,840 | ) | | | (4,864,603 | ) |\n| Product cost - Mexico | | | (4,201,005 | ) | | | (2,609,338 | ) |\n| Direct sales and freight | | | (438,582 | ) | | | (295,334 | ) |\n| General and administrative - operating | | | (428,022 | ) | | | (288,602 | ) |\n| Mexico non-production costs | | | (1,086,440 | ) | | | (688,619 | ) |\n| General and administrative - non-operating | | | (1,481,111 | ) | | | (1,234,597 | ) |\n| Gain on liability adjustment | | | 914,770 | | | | | |\n| Non-operating gains | | | | | | | 14,530 | |\n| Net interest | | | (7,718 | ) | | | 6,496 | |\n| EBITDA | | | (638,589 | ) | | | (1,366,574 | ) |\n| Income taxes | | | | | | | | |\n| Depreciation,& amortization | | | (711,345 | ) | | | (559,552 | ) |\n| Net income (Loss) - antimony | | $ | (1,349,934 | ) | | $ | (1,926,126 | ) |\n| | | | | | | | | |\n| Zeolite | | | 2015 | | | | 2014 | |\n| Tons sold | | | 15,901 | | | | 11,079 | |\n| Average Sales Price\/Ton | | $ | 173.17 | | | $ | 195.83 | |\n| Net income (Loss)\/Ton | | $ | 32.16 | | | $ | 29.85 | |\n| | | | | | | | | |\n| Gross zeolite revenue | | $ | 2,753,644 | | | $ | 2,169,619 | |\n| Production costs | | | (1,266,687 | ) | | | (1,109,386 | ) |\n| Direct sales and freight | | | (286,235 | ) | | | (170,964 | ) |\n| Royalties | | | (279,435 | ) | | | (222,054 | ) |\n| General and administrative - operating | | | (108,847 | ) | | | (81,852 | ) |\n| General and administrative - non-operating | | | (80,229 | ) | | | (63,765 | ) |\n| Non-operating gains | | | | | | | 30,000 | |\n| Net interest | | | 633 | | | | 303 | |\n| EBITDA | | | 732,844 | | | | 551,901 | |\n| Depreciation | | | (221,441 | ) | | | (221,230 | ) |\n| Net income\u00a0\u00a0- Zeolite | | $ | 511,403 | | | $ | 330,671 | |\n| | | | | | | | | |\n| Company-wide | | | 2015 | | | | 2014 | |\n| Gross revenue | | $ | 13,109,003 | | | $ | 10,763,112 | |\n| Production costs | | | (9,733,532 | ) | | | (8,583,327 | ) |\n| Other operating costs | | | (2,627,561 | ) | | | (1,747,425 | ) |\n| General and administrative - non-operating | | | (1,561,340 | ) | | | (1,298,362 | ) |\n| Gain on liability adjustment | | | 914,770 | | | | | |\n| Non-operating gains | | | - | | | | 44,530 | |\n| Net interest | | | (7,085 | ) | | | 6,799 | |\n| EBITDA | | | 94,255 | | | | (814,673 | ) |\n| Income tax benefit (expense) | | | | | | | | |\n| Depreciation & amortization | | | (932,786 | ) | | | (780,782 | ) |\n| Net income\u00a0\u00a0(Loss) | | $ | (838,531 | ) | | $ | (1,595,455 | ) |\n\n\n","source":"UAMY\/10-K\/0001354488-16-006768"} {"title":"Item 6","text":"\u00b7\n\n\n\u00a0During the two year period ended December 31, 2015, the most significant event affecting our financial performance was the decrease in the price of antimony (see table page 6).\u00a0\u00a0During the year ended December 31, 2015, the most significant event was construction and start-up of a plant to process antimony concentrate for Hillgrove LTD of Australia.\u00a0\u00a0The expansion of production at our Mexico operations caused our reported operating costs to be elevated when compared to years when we were not initiating the start-up of new production facilities. The Mexican production of antimony (metal contained) and sold was 586,368 pounds during 2014 compared to 1,105,350 pounds for 2015, an increase of 88.5%.\u00a0\u00a02015 and 2014 are regarded as \u201cstart- up years\u201d during which the holding costs, permitting, and metallurgical research was categorized as a \u201cnon-production\u201d operating expense. During both years, Los Juarez concentrate was not produced and Soyatal oxide ore was in a research phase at the Puerto Blanco oxide circuit. Guadalupe was not in production for most of 2015while they prepared the underground for mining higher grade rock.\u00a0\u00a0The Puerto Blanco mill circuits were utilized less than 10% of their capacity.\u00a0\u00a0Going forward, the increased supply of raw material from Mexico and the metal prices for both antimony and precious metals will be the most significant factors influencing our operations.\u00a0\u00a0The following are highlights of the significant changes during 2015 and the two year period then ended:\n\n\n\n\n\n\na.\u00a0\u00a0\n\n\nOur sales of antimony for 2015 increased by approximately 759,000 pounds (44%) from 2014. Our revenues from antimony increased in 2015 by approximately $1,712,000 (21%) from 2014 due to an increase in the amount of antimony sold.\u00a0\u00a0The average sale price for antimony contained in all products declined from $4.71 in 2014 to $3.96 per pound in 2015, a decrease of $0.75 (15.9%).\n\n\n\n\n\n\nb.\u00a0\u00a0\n\n\nThe metallurgical problem with the Los Juarez feed has been solved, and mining, milling, and smelting will resume when the necessary permits are obtained. This will put the Puerto Blanco mill in operation. During 2015 and 2014, the Puerto Blanco mill was operating at less than 10% of capacity.\n\n\n\n\n\n\nc.\u00a0\u00a0\n\n\nThe Soyatal oxide ore recovery problem has been solved, and high grade oxide concentrates can be produced. Oxide mineralized rock from dumps will be mined and underground development will be started when the need for raw materials increases.\n\n\n\n\n\n\nd.\u00a0\u00a0\n\n\nExplosives were permitted at Guadalupe in 2014, and underground development has started.\n\n\n\n\n\n\n\u00b7\n\n\nAssuming that Guadalupe and Los Juarez feed are going to the Puerto Blanco mill, the 500 ton per day mill that is estimated at 40% of completion will need to be completed.\n\n\n\n\n\n\n\u00b7\n\n\nOur cost of goods sold for antimony increased by approximately $1,958,000 for 2015 because of the increase in antimony sold. For the year ended December 31, 2015, costs of goods sold include operating and non-operating production costs from Mexico operations.\u00a0\u00a0Our switch to natural gas as a fuel for our smelter at Madero in the fourth quarter of 2014 has provided a significant improvement in our Mexico operating costs for 2015.\u00a0\u00a0Prior to 2015, the cost of propane was our second largest operating cost, and the switch to natural gas has decreased the per pound cost by 75%.\u00a0\u00a0The cost of goods sold during both years has been impacted by increases in the cost of operating supplies, fuel, trucking, insurance, refractory costs, and steel.\n\n\n\n\n\n\n\u00b7\n\n\nOur volume of zeolite sold was up 44%, from 11,079 tons in 2014 to 15,901 tons in 2015.\u00a0\u00a0The tons of zeolite sold decreased by approximately 100 tons in 2014 from 2013. Total revenue increased by approximately $584,000 in 2015 and decreased approximately $33,000 in 2014. Our cost of goods sold increased by approximately $452,206 for 2015, and increased by approximately $55,000 for 2014 from 2013.\u00a0\u00a0Cost of sales increased for 2015 primarily because we had an increase in the volume of product sold.\n\n\n\n\n\n\n\u00b7\n\n\nGeneral and administrative costs, as reported in our statement of operations, include fees paid to directors through stock based compensation. In 2015 and 2014, we incurred $40,000 each year in fees to the NYSE MKT that was included in general and administrative expenses.\u00a0\u00a0General and administrative costs for 2015 and 2014 include general and administrative costs related to commencement of production at our facilities in Mexico.\u00a0\u00a0The combined general and administrative costs were 5.6%, and 5.8%, of sales for 2015 and 2014, respectively.\u00a0\u00a0The combined general and administrative salaries were 3.3%, and 3.9% of sales for 2015 and 2014, respectively.\n\n\n\n\n\n\n\u00b7\n\n\nThe increase in professional fees for 2015 (approximately $73,000) was primarily due to increased costs related to our audits and financial statement preparation and for attorney fees related to alleged violations of an operating agreement with our former Investor Relations representative.\n\n\n\n\n\n\n\u00b7\n\n\nFactoring costs decreased in 2015 from approximately $49,000 in 2014 to approximately $41,000. Factoring costs decreased in 2014 by approximately $22,000 as we were able to reduce our collection time for accounts receivable.\u00a0\u00a0The discounts we gave for early payments increased by approximately $23,000 in 2015 from 2014.\n\n\nSubsidiariesThe Company has a 100% investment in two subsidiaries in Mexico, USAMSA and AM, whose mineral property carrying values were assessed at December 31, 2015 and 2014 for impairment.\u00a0\u00a0Management\u2019s assessment of the subsidiaries\u2019 fair value was based on their future benefit to us.","markdown_table":"\n\n\n| | | 2015 | | | | 2014 | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| Antimony Division - United States: | | | | | | | | |\n| Revenues - Antimony (net of discount) | | $ | 9,863,933 | | | $ | 8,132,410 | |\n| Revenues - Other | | | | | | | 9,080 | |\n| Revenues - Precious metals | | | 491,426 | | | | 461,083 | |\n| | | | 10,355,359 | | | | 8,602,573 | |\n| Domestic cost of sales: | | | | | | | | |\n| Production costs | | | 4,265,840 | | | | 4,864,603 | |\n| Depreciation | | | 61,819 | | | | 63,787 | |\n| Freight and delivery | | | 311,027 | | | | 243,606 | |\n| General and administrative | | | 192,298 | | | | 288,602 | |\n| Direct sales expense | | | 65,000 | | | | 51,726 | |\n| Total domestic antimony cost of sales | | | 4,895,984 | | | | 5,512,324 | |\n| | | | | | | | | |\n| Cost of sales - Mexico | | | | | | | | |\n| Production costs | | | 3,765,902 | | | | 2,609,338 | |\n| Depreciation and amortization | | | 649,525 | | | | 495,765 | |\n| Freight and delivery | | | 62,555 | | | | 122,035 | |\n| Reclamation accrual | | | 5,137 | | | | 4,839 | |\n| Land lease expense | | | 435,103 | | | | 407,493 | |\n| Mexico non-production costs | | | 1,086,440 | | | | 22,553 | |\n| General and administrative | | | 363,025 | | | | 131,700 | |\n| Total Mexico antimony cost of sales | | | 6,367,687 | | | | 3,793,723 | |\n| | | | | | | | | |\n| Total revenues - antimony | | | 10,355,359 | | | | 8,602,573 | |\n| Total cost of sales - antimony | | | 11,263,671 | | | | 9,306,047 | |\n| Total gross profit (loss) - antimony | | | (908,312 | ) | | | (703,474 | ) |\n| | | | | | | | | |\n| Zeolite Division: | | | | | | | | |\n| Revenues | | | 2,753,644 | | | | 2,169,619 | |\n| Cost of sales: | | | | | | | | |\n| Production costs | | | 1,266,687 | | | | 1,109,386 | |\n| Depreciation | | | 221,441 | | | | 221,230 | |\n| Freight and delivery | | | 289,927 | | | | 87,355 | |\n| General and administrative | | | 114,102 | | | | 81,852 | |\n| Royalties | | | 279,435 | | | | 222,054 | |\n| Direct sales expense | | | 86,100 | | | | 83,609 | |\n| Total cost of sales | | | 2,257,692 | | | | 1,805,486 | |\n| Gross profit - zeolite | | | 495,952 | | | | 364,133 | |\n| | | | | | | | | |\n| Total revenues - combined | | | 13,109,003 | | | | 10,772,192 | |\n| Total cost of sales - combined | | | 13,521,363 | | | | 11,111,533 | |\n| Total gross profit (loss) - combined | | $ | (412,360 | ) | | $ | (339,341 | ) |\n\n\n","source":"UAMY\/10-K\/0001354488-16-006768"} {"title":"Item 6","text":"Our net working capital decreased for the year ended December 31, 2015, from a positive amount of $48,261 at the beginning of the year to a negative amount of $293,504 at the end of 2015.\u00a0\u00a0Our current assets decreased\u00a0primarily due to an decrease in our inventories in Montana and in Mexico.\u00a0\u00a0The capital improvements were\u00a0paid for with cash and debt.\u00a0\u00a0Our current liabilities increased in most categories during 2015.\n\n\nDuring the year ending December 31, 2016, we are planning to finance our improvements with operating cash flow. Our 2016 improvements are expected to include completion of the installation at the Madero smelter, completion of cyanide leach circuits at both Madero and Puerto Blanco, and completing the installation of a 400 - 500 ton per day flotation mill at Puerto Blanco.\n\n\nIn 2015, cash used by operations was primarily due to our net loss of approximately $840,000 which was mostly offset by depreciation and amortization of approximately $932,000.\u00a0\u00a0We negotiated decreases in our current liabilities for raw material of approximately $915,000 during 2015.The current portion of our long term debt is serviceable from the cash generated by operations.Our stockholders\u2019 equity section makes note that we have a liquidation preference of $5,884,376 for our preferred stock.\u00a0\u00a0This consists of a liquidation payment of $5,281,519 due if we liquidate our company or sell substantially all our assets, and $602,857 of undeclared dividends.\u00a0\u00a0The Board of Directors\u2019 does not intend to declare dividends on preferred stock as due and payable at any time in the near future.\u00a0\u00a0We do not feel that the liquidation preference and undeclared dividends related to our preferred stock will be an impediment to raising capital in the future by issuing additional shares of common stock, and are not going to affect our liquidity.","markdown_table":"\n\n\n\n| Financial Condition and Liquidity | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | 2015 | | | | 2014 | | |\n| Current Assets | | $ | 2,136,326 | | | $ | 2,303,669 | |\n| Current liabilities | | | (2,429,830 | ) | | | (2,255,408 | ) |\n| Net Working Capital | | $ | (293,504 | ) | | $ | 48,261 | |\n| | | | | | | | | |\n| Cash provided (used) by operations | | $ | 358,453 | | | $ | (1,036,375 | ) |\n| Cash used for capital outlay | | | (1,704,037 | ) | | | (1,826,553 | ) |\n| Cash provided (used) by financing: | | | | | | | | |\n| Net payments to factor | | | 468 | | | | (164,387 | ) |\n| Proceeds from notes payable to bank | | | 130,672 | | | | | |\n| Proceeds from Hillgrove advances | | | 1,198,445 | | | | 198,571 | |\n| Payment of notes payable to bank | | | - | | | | (138,520 | ) |\n| Principal paid on long-term debt | | | (94,141 | ) | | | (129,530 | ) |\n| Proceeds from sales of common stock | | | | | | | 3,070,134 | |\n| Proceeds from long-term debt | | | | | | | 130,000 | |\n| Received on notes receivable for stock | | | 120,000 | | | | 0 | |\n| Net change in cash | | $ | 9,860 | | | $ | 103,340 | |\n\n\n\n\u00a0\n","source":"UAMY\/10-K\/0001354488-16-006768"} {"title":"PART III","text":"Business Experience of Directors and Executive OfficersJohn C. Lawrence.\u00a0\u00a0Mr. Lawrence has been the president and a director since our inception in 1969.\u00a0\u00a0Mr. Lawrence was the president and a director of AGAU Mines, Inc., our corporate predecessor.\u00a0\u00a0He is a member of the Society of Mining Engineers and a recipient of the Uuno Sahinen Silver Medallion Award presented by Butte Tech, University of Montana.\u00a0\u00a0He has a vast background in mining, milling, smelting, chemical processing and oil and gas.Gary D. Babbitt.\u00a0\u00a0Mr. Babbitt has experience in the mining industry with approximately 30 years dealing with joint ventures, purchases, royalty leases and contracts. He has a working knowledge of Spanish and has negotiated supply and mining agreements in Mexico.\u00a0\u00a0Mr. Babbitt has a B.A. from the Albertson College of Idaho, and earned his J.D. from the University of Chicago.Russell C. Lawrence.\u00a0\u00a0Mr. Lawrence has experience in applied physics, mining, refining, excavation, electricity, electronics, and building contracting.\u00a0\u00a0He graduated from the University of Idaho in 1994 with a degree in physics, and worked for the Physics Department at the University of Idaho for a period of 10 years. He has also worked as a building contractor and for USAC at the smelter and laboratory at Thompson Falls, for USAMSA in the construction and operation of the USAMSA smelter in Mexico, and for Antimonio de Mexico, S. A. de C. V. at the San Miguel Mine in Mexico.Hart W. Baitis.\u00a0\u00a0Mr. Baitis graduated from the University of Oregon in 1971 with a B.S. in Geology, and was awarded a Ph. D. in Geology in 1976. He has 35 years of experience as an exploration geologist in the United States, Canada, Central America, and Mexico.\u00a0\u00a0Mr. Baitis is experienced in numerous geologic environments and terrains, and has been involved in all phases of exploration, ranging from field geologist, consultant, management, and acquisition team director.Whitney Ferer.\u00a0 Mr. Ferer was nominated to the board of USAC in February 2012. He worked for 34 years for Aaron Ferer & Sons Co. headquartered in Omaha, Nebraska, where he was the Vice President of Operations and Senior Trader, as well \u00a0Vice Chairman of the Board of AF&S Co..\u00a0 He has been involved in the patenting of various processes for the breakdown of plastics and metal recovery, and was Vice President of the Lead & Zinc Division of AF&S.\u00a0 In addition, Mr. Ferer has been active in the trading of all metals, and facilitated the opening of eight offices in the Far East and China for AF&S. \u00a0Mr. Ferer has recently opened his own company W.H. Ferer Co., LLC.\u00a0\u00a0 He is one of the largest traders of antimony metal and oxides in the United States and, additionally, he handles approximately 20-30 elements in various forms and grades.Jeffrey D. Wright.\u00a0\u00a0Mr. Wright graduated from North Carolina University in 1991, and from the University of Southern California, Marshall School of Business (MBA) in 2004.\u00a0\u00a0Mr. Wright was a naval officer from 1991 through 1996, serving aboard the aircraft carrier USS Carl Vinson and the destroyer USS John Young.\u00a0\u00a0After duty in the military, Mr. Wright held successively more responsible positions in the securities and finance industry.\u00a0\u00a0From 2011 through 2013 he was the managing director metals and mining research for Global Hunter Securities, and he held the same position for H.C. Wainwright for 2013 through 2015.Alicia Hill.\u00a0\u00a0Ms. Hill was hired by the Company in 2006 as an accounting assistant, and was eventually promoted to chief accountant responsible for the recording of transactions for three companies.\u00a0\u00a0In 2011, she was appointed Company Controller, Secretary, and Treasurer.\u00a0\u00a0Ms. Hill has guided the Company through the listing on the NYSE-MKT, in the addition of a new division in Mexico, and has been the liaison with the Company\u2019s auditors through a progressively complicated reporting process.\nDaniel L. Parks. Mr. Parks graduated from the University of Idaho in 1974 with a B.S. in Accounting, and was licensed as a certified public accountant in 1976.\u00a0\u00a0He worked as an auditor for Coopers & Lybrand for three years, as controller for a lumber manufacturing company for one year, and owned his own accounting practice for thirty years.\u00a0\u00a0Mr. Parks was extensively involved in auditing and financial statement preparation during this time.John C. Gustaven.\u00a0\u00a0Mr. Gustaven graduated from Rutgers University in 1970 with a BS in chemistry and started work for Harshaw Chemical (purchased by Amspec Chemical Corporation), a major producer of antimony trioxide.\u00a0\u00a0Mr. Gustaven took engineering courses from 1976 through 1980, and became president and treasurer of the company in 1983.\u00a0\u00a0He was promoted CEO in 1990.\u00a0\u00a0Mr. Gustaven designed a new type of production furnace for antimony trioxide that eventually produced 20 million pounds of antimony trioxide per year.\u00a0\u00a0Mr. Gustaven is conversant in Spanish, Chinese, and other languages, and travelled to many countries as part of his duties as president of Amspec Chemical Corporation.\u00a0\u00a0Mr. Gustaven came to work at United States Antimony Corporation in November of 2011.Matt Keane.\u00a0\u00a0Mr. Keane graduated from Mankato State University in 1978 with degrees in geography and environmental studies.\u00a0\u00a0Mr. Keane was owner of a construction business and a retail building supply business before becoming the director of sales for United States Antimony Corporation in 2000.\u00a0\u00a0Mr. Keane has developed the Company\u2019s growing zeolite sales through Bear River Zeolite and the increase in the Company\u2019s share of the domestic market for antimony products.We are not aware of any involvement by our directors or executive officers during the past five years in legal proceedings that are material to an evaluation of the ability or integrity of any director or executive officer.Board Meetings and Committees\u00a0\u00a0\u00a0Our Board of Directors held four (4) regular meetings during the 2015 calendar year.\u00a0\u00a0Each incumbent director attended all of the meetings held during the 2015 calendar year, in the aggregate, by the Board and each committee of the Board of which he was a member.Our Board of Directors established an Audit Committee on December 10, 2011. It consists of four members, Gary Babbitt (Chairman), Whitney Ferer, Jeffrey Wright, and Hart Baitis.\u00a0\u00a0None of the Audit Committee members are involved in our day-to-day financial management.\u00a0\u00a0Jeffrey Wright is considered a financial expert.During 2011, the Board also established a Compensation Committee and a Nominating Committee.Board Member Compensation\u00a0\u00a0\u00a0Following is a summary of fees, cash payments, stock awards, and other reimbursements to Directors during the year ended December 31, 2015:Directors Compensation","markdown_table":"\n\n\n\n| Name | | Age | | Affiliation | | Expiration of Term |\n| --- | --- | --- | --- | --- | --- | --- |\n| | | | | | | |\n| John C. Lawrence | | 77 | | Chairman, President, Director | | Annual meeting |\n| | | | | | | |\n| John C. Gustavsen | | 67 | | First Vice-President | | Annual meeting |\n| | | | | | | |\n| Russell C. Lawrence | | 47 | | Second Vice-President and Director | | Annual meeting |\n| | | | | | | |\n| Matthew Keane | | 60 | | Third Vice-President | | Annual meeting |\n| | | | | | | |\n| Daniel L. Parks | | 67 | | Chief Financial Officer | | Annual meeting |\n| | | | | | | |\n| Alicia Hill | | 34 | | Secretary, Controller and Treasurer | | Annual meeting |\n| | | | | | | |\n| Gary D. Babbitt | | 70 | | Director | | Annual meeting |\n| | | | | | | |\n| Whitney Ferer | | 57 | | Director | | Annual meeting |\n| | | | | | | |\n| Hart W. Baitis | | 66 | | Director | | Annual meeting |\n| | | | | | | |\n| Jeffrey D. Wright | | | | Director | | Annual meeting |\n\n\n\n","source":"UAMY\/10-K\/0001354488-16-006768"} {"title":"PART III","text":"Section 16(a) Beneficial Ownership Reporting Compliance\u00a0\u00a0\u00a0Section 16(a) of the Securities Exchange Act of 1934 requires our directors and executive officers and the holders of 10% or more of our common stock to file reports of ownership and changes in ownership with the Securities and Exchange Commission. Officers, directors and stockholders holding more than 10% of our common stock are required by the regulation to furnish us with copies of all Section 16(a) forms they have filed. Based solely on our review of copies of Forms 3, 4 and 5 furnished to us, Mr. Baitis, Mr. Babbitt, Mr. Ferer, and Mr. Russell Lawrence did not file timely Forms 3, 4 or Form 5 reports during 2015 and 2014.Code of EthicsThe Company has adopted a Code of Ethics that applies to the Company's executive officers and its directors.\u00a0\u00a0The Company will provide, without charge, a copy of the Code of Ethics on the written request of any person addressed to the Company at: United States Antimony Corporation, P.O. Box 643, Thompson Falls, MT 59873.","markdown_table":"\n\n\n\n| Name and Principal Position | | Fees Earned or paid in Cash | | | | Stock Awards | | | | Total Fees, Awards, and Other Compensation | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| John C. Lawrence, Chairman | | | | | | $ | 25,000 | | | $ | 25,000 | |\n| Gary D. Babbitt, Director | | $ | 36,000 | | | $ | 25,000 | | | $ | 61,000 | |\n| Russell Lawrence,\u00a0Director | | | | | | $ | 25,000 | | | $ | 25,000 | |\n| Hartmut Baitis,\u00a0Director | | | | | | $ | 25,000 | | | $ | 25,000 | |\n| Whitney Ferer,\u00a0Director | | | | | | $ | 25,000 | | | $ | 25,000 | |\n| Jeffrey Wright,\u00a0Director | | | | | | $ | 12,500 | | | $ | 12,500 | |\n| Totals | | $ | 36,000 | | | $ | 137,500 | | | $ | 173,500 | |\n\n\n\n \n\n","source":"UAMY\/10-K\/0001354488-16-006768"} {"title":"PART III","text":"(2)\n\n\nThese figures represent the fair value, as of the date of issuance, the annual director's fees payable to John C.\u00a0\u00a0Lawrence and Russell Lawrence in shares of USAC's common stock.\n\n\n\n\n\n\n\u00a0 \n\n\nCompensation for all executive officers, except for the President\/CEO position, is recommended to the compensation committee of the Board of Directors by the President\/CEO.\u00a0\u00a0The compensation committee makes the recommendation for the compensation of the President\/CEO.\u00a0\u00a0The compensation committee has identified a peer group of mining companies to aid in reviewing the President\u2019s compensation recommendations for executives, and for reviewing the compensation of the President\/CEO.\u00a0\u00a0The full Board approves the compensation amounts recommended by the compensation committee. Currently, the executive managements\u2019 compensation only includes base salary and health insurance.\u00a0\u00a0The Company does not have annual performance based salary increases, long term performance based cash incentives, deferred compensation, retirement benefits, or disability benefits.\u00a0\u00a0For the year ended December 31, 2015, Russell Lawrence (VP) received an increase in base compensation of $15,000 annually.\u00a0\u00a0The Board of Directors determined that Mr. Lawrence\u2019s compensation for the prior years was not adequate for the duties assigned to Mr. Russell as the Vice President for Latin America, and that a raise was appropriate to compensate for management of the Latin American operations.\n\n\n\n\n\n\n\u00a0 \n\n\nTwo executive officers, the President\/CEO and the Vice-President for the Latin American operations, receive restricted stock awards for their services as Board members.\n\n\nThe following table sets forth information concerning the outstanding equity awards at December 31, 2015, held by our principal executive officer.\u00a0\u00a0There were not any other outstanding equity awards or plan based awards to officers or directors as of December 31, 2015.","markdown_table":" \n\n\n\n\n| Name and Principal Position | Year | | Salary | | | | Bonus | | | | Stock Awards (2) | | | | Total | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| John C. Lawrence, | 2015 | | $ | 141,000 | | | | N\/A | | | $ | 25,000 | | | $ | 166,000 | |\n| President and Chief\u00a0Executive Officer | 2014 | | $ | 141,000 | | | | | | | $ | 25,000 | | | $ | 166,000 | |\n| | | | | | | | | | | | | | | | | | |\n| John C. Gustaven, | 2015 | | $ | 100,000 | | | | N\/A | | | | | | | $ | 100,000 | |\n| Executive Vice President | 2014 | | $ | 100,000 | | | | | | | | | | | $ | 100,000 | |\n| | | | | | | | | | | | | | | | | | |\n| Russell Lawrence, | 2015 | | $ | 120,000 | | | | N\/A | | | $ | 25,000 | | | $ | 145,000 | |\n| Vice President for LatinAmerica | 2014 | | $ | 105,000 | | | | | | | $ | 25,000 | | | $ | 130,000 | |\n\n\n\n\n\u00a0","source":"UAMY\/10-K\/0001354488-16-006768"} {"title":"PART III","text":"Item 12\u00a0\u00a0\u00a0Security Ownership of Certain Beneficial Owners and Management","markdown_table":"\n\n\n\n| | | | | | | | | | Outstanding Equity Awards at Fiscal Year End | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | | | | | | | | | | | | | |\n| | | Number of Securities Underlying Unexercised Options | | | | | | | Number of Securities Underlying Unexercised Unearned Options | | | | Average Exercise Price | | | Option Exercise Dates |\n| | | | | | |\n| Name | | | | | |\n| | | Exercisable | | | | Unexercisable | | | | | | | | | | |\n| | | | # | | | | # | | | | | | | | | |\n| | | | | | | | | | | | | | | | | |\n| John C. Lawrence | | | 250,000 | | | | 0 | | | 0 | | | $ | 0.25 | | None |\n| (Chairman of the Board Of | | | | | | | | | | | | | | | | |\n| Directors and Chief Executive | | | | | | | | | | | | | | | | |\n| Officer) | | | | | | | | | | | | | | | | |\n\n\n\n","source":"UAMY\/10-K\/0001354488-16-006768"} {"title":"PART III","text":"(1)\n\n\nBeneficial Ownership is determined in accordance with the rules of the Securities and Exchange Commission and generally includes voting or investment power with respect to securities. Shares of common stock subject to options or warrants currently exercisable or convertible, or exercisable or convertible within 60 days of March 30, 2016, are deemed outstanding for computing the percentage of the person holding options or warrants but are not deemed outstanding for computing the percentage of any other person. Percentages are based on a total of 66,316,278shares of common stock, 750,000 shares of Series B Preferred Stock, 177,904 shares of Series C Preferred Stock, and 1,751,005 shares of Series D Preferred Stock outstanding on March 30, 2016.\u00a0\u00a0Total voting stock of 68,245,187 shares is a total of all the common stock issued, and all of the Series C and Series D Preferred Stock.\n\n\n\n\n\n\n(2)\n\n\nIncludes 4,031,107 shares of common stock and 250,000 stock purchase warrants.\u00a0\u00a0Excludes 183,324 shares owned by Mr. Lawrence's sister, as to which Mr. Lawrence disclaims beneficial ownership.\n\n\n\n\n\n\n(3)\n\n\nIncludes shares owned by the estate of Al W. Dugan and shares owned by companies owned and controlled by the estate of Al W. Dugan.\u00a0\u00a0Excludes 183,333 shares owned by Lydia Dugan as to which the estate of Mr. Dugan disclaims beneficial ownership.\n\n\n\n\n\n\n(4)\n\n\nThe outstanding Series C and Series D preferred shares carry voting rights equal to the same number of shares of common stock.\n\n\n\n\n\n\n(5)\n\n\n\u00a0The outstanding Series B preferred shares carry voting rights only if the Company is in default in the payment of declared dividends.\u00a0\u00a0The Board of Directors has not declared any dividends as due and payable for the Series B preferred stock.","markdown_table":"\n\n\n\n| Title of Class | | Name and Address of Beneficial Owner (1) | | Amount and Nature of Beneficial Ownership | | | | Percent of Class (1) | | | | Percent of all Voting Stock | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| Common Stock | | Cardinal capital Management LLC | | | | | | | | | | | | |\n| | | Four Greenwich Office Park\u00a0\u00a0Greenwich CT 06831 | | | 4,008,694 | | | | 6.07 | % | | | 5.87 | % |\n| | | | | | | | | | | | | | | |\n| Common Stock | | Reed Family Limited Partnership | | | 4,018,335 | | | | 6.09 | % | | | 5.88 | % |\n| | | 328 Adams Street | | | | | | | | | | | | |\n| | | Milton, MA 02186 | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | |\n| Common Stock | | The Dugan Family | | | 6,362,927 | (3) | | | 9.64 | % | | | 9.32 | % |\n| | | c\/o A.W.Dugan | | | | | | | | | | | | |\n| | | 1415 Louisana Street, Suite 3100 | | | | | | | | | | | | |\n| | | Houston, TX 77002 | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | |\n| Series B Preferred | | Excel Mineral Company | | | 750,000 | (5) | | | 100.00 | % | | | N\/A | |\n| | | P.O. Box 3800 | | | | | | | | | | | | |\n| | | Santa Barbara, CA 93130 | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | |\n| Series C Preferred | | Richard A. Woods | | | 48,305 | (4) | | | 27.10 | % | | | \\* | |\n| | | 59 Penn Circle West | | | | | | | | | | | | |\n| | | Penn Plaza Apts. | | | | | | | | | | | | |\n| | | Pittsburgh, PA 15206 | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | |\n| Series C Preferred | | Dr. Warren A. Evans | | | 32,203 | (4) | | | 18.10 | % | | | \\* | |\n| | | 69 Ponfret Landing Road | | | | | | | | | | | | |\n| | | Brooklyn, CT 06234 | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | |\n| Series C Preferred | | Edward Robinson | | | 32,203 | (4) | | | 18.10 | % | | | \\* | |\n| | | 1007 Spruce Street, 1st floor | | | | | | | | | | | | |\n| | | Philadelphia, PA 19107 | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | |\n| Series C Preferred | | All Series C Preferred Shareholders as a Group | | | 177,904 | (4) | | | 100.00 | % | | | \\* | |\n| | | | | | | | | | | | | | | |\n| Common Stock | | John C. Lawrence | | | 4,281,107 | (2) | | | 83.35 | % | | | 6.66 | % |\n| | | | | | | | | | | | | | | |\n| | | Russell Lawrence | | | 280,654 | | | | 5.46 | % | | | \\* | |\n| | | | | | | | | | | | | | | |\n| | | Hart Baitis | | | 171,180 | | | | 3.33 | % | | | \\* | |\n| | | | | | | | | | | | | | | |\n| | | Garry Babbitt | | | 169,254 | | | | 3.29 | % | | | \\* | |\n| | | | | | | | | | | | | | | |\n| | | Whitney Ferer | | | 119,704 | | | | 2.33 | % | | | \\* | |\n| | | | | | | | | | | | | | | |\n| | | Jeffrey Wright | | | 50,000 | | | | \\* | | | | \\* | |\n| | | | | | | | | | | | | | | |\n| | | Mathew Keane | | | 10,300 | | | | \\* | | | | \\* | |\n| | | | | | | | | | | | | | | |\n| | | Daniel Parks | | | 54,000 | | | | 1.05 | | | | \\* | |\n| | | | | | | | | | | | | | | |\n| Common Stock | | All Directors and Executive Officers as a Group | | | 5,136,199 | | | | 100.00 | % | | | 7.53 | % |\n| | | | | | | | | | | | | | | |\n| Series D Preferred | | John C. Lawrence | | | 1,590,672 | (4) | | | 90.80 | % | | | 2.40 | % |\n| | | | | | | | | | | | | | | |\n| | | Leo Jackson | | | 102,000 | | | | 5.80 | % | | | \\* | |\n| | | | | | | | | | | | | | | |\n| | | Garry Babbitt | | | 58,333 | | | | 3.40 | % | | | \\* | |\n| | | | | | | | | | | | | | | |\n| Series D Preferred | | All Series D Preferred Shareholders as a Group | | | 1,751,005 | (4) | | | 100.00 | % | | | 2.70 | % |\n| | | | | | | | | | | | | | | |\n| Common Stock\u00a0and Preferred Stock w\/voting rights | | All Directors and Executive Officers as a Group | | | 5,136,199 | (2) | | | 72.55 | % | | | 7.53 | % |\n| | | | | | | | | | | | | | | |\n| | | All preferred Shareholders that are officers or directors | | | 1,751,005 | (4) | | | 27.45 | % | | | 2.56 | % |\n| | | | | | | | | | | | | | | |\n| Common and Preferred Voting Stock | | All Directors and Executive Officers as a Group | | | 6,887,204 | | | | 100.00 | % | | | 10.09 | % |\n\n\n\n","source":"UAMY\/10-K\/0001354488-16-006768"} {"title":"PART III","text":"*\u00a0\u00a0\u00a0\u00a0Filed herewith.","markdown_table":"\n\n\n| 14.0 | | Code of Ethics\\* |\n| --- | --- | --- |\n| | | |\n| 31.1 | | Rule 13a-14(a)\/15d-14(a) Certifications, Certification of John C. Lawrence\\* |\n| | | |\n| 32.1 | | Section 1350 Certifications, Certification of John C. Lawrence\\* |\n| | | |\n| 44.1 | | CERCLA Letter from U.S. Forest Service filed as an exhibit to USAC form 10-QSB for the quarter ended June 30, 2000 (File No. 001-08675) are incorporated herein by this reference and filed as an exhibit to USAC's Form 10-KSB for the year ended December 31, 1995 (File No. 1-8675) is incorporated herein by this reference |\n\n\n","source":"UAMY\/10-K\/0001354488-16-006768"} {"title":"F-5","text":"The Company's revenues from antimony sales are strongly influenced by world prices for such commodities, which fluctuate and are affected by numerous factors beyond the Company's control, including inflation and worldwide forces of supply and demand. The aggregate effect of these factors is not possible to predict accurately.","markdown_table":"\n\n\n| Sales to Three | | For the\u00a0Year Ended | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| Largest Customers | | December 31, 2015 | | | | December 31, 2014 | | |\n| Alpha Gary Corporation | | $ | 3,142,586 | | | $ | 3,289,766 | |\n| East Penn Manufacturing Inc | | | 1,236,250 | | | | 720,966 | |\n| Kohler Corporation | | | 1,736,914 | | | | 2,091,565 | |\n| | | $ | 6,115,750 | | | $ | 6,102,297 | |\n| % of Total Revenues | | | 46.70 | % | | | 56.65 | % |\n| | | | | | | | | |\n| Three Largest | | | | | | | | |\n| Accounts Receivable | | December 31, 2015 | | | | December 31, 2014 | | |\n| Gopher Resources | | $ | 141,570 | | | | | |\n| Earth Innovations Inc | | | | | | | 62,019 | |\n| Teck American Inc | | | 80,946 | | | | 227,239 | |\n| Milestone AV Technologies Inc. | | | | | | | 42,075 | |\n| Wildfire Construction | | | 43,327 | | | | - | |\n| | | $ | 265,843 | | | $ | 331,333 | |\n| % of Total Receivables | | | 62.90 | % | | | 72.87 | % |\n\n\n","source":"UAMY\/10-K\/0001354488-16-006768"} {"title":"F-11","text":"Factoring fees paid by the Company during the years ended December 31, 2015 and 2014, were $41,117 and $49,364, respectively.\u00a0\u00a0For the years ended December 31, 2015 and 2014, net accounts receivable of approximately $2.10 million and $2.30 million, respectively, were sold under the agreement.Proceeds from the sales were used to fund inventory purchases and operating expenses.\u00a0\u00a0The agreement is for a term of one year with automatic renewal for additional one-year terms.5.InventoriesThe major components of the Company's inventories at December 31, 2015 and 2014 were as follows:","markdown_table":"\n\u00a0\n\n\n\n| Accounts Receivble | | December 31, 2015 | | | | December 31, 2014 | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| Accounts receivable - non factored | | $ | 412,922 | | | $ | 445,391 | |\n| Accounts receivable - factored with recourse | | | 13,782 | | | | 13,314 | |\n| less allowance for doubtful accounts | | | (4,031 | ) | | | (4,031 | ) |\n| Accounts receivable - net | | $ | 422,673 | | | $ | 454,674 | |\n\n\n\n","source":"UAMY\/10-K\/0001354488-16-006768"} {"title":"F-11","text":"At December 31, 2015 and 2014, antimony metal consisted principally of recast metal from antimony-based compounds, and metal purchased from foreign suppliers.\u00a0\u00a0Antimony oxide inventory consisted of finished product oxide held at the Company's plant. Antimony concentrates and ore was held primarily at sites in Mexico and is essentially raw material, carried at cost.\u00a0\u00a0\u00a0At December 31, 2015, antimony inventory is valued at net realizable value. The Company's zeolite inventory consists of salable zeolite material held at BRZ's Idaho mining and production facility, and is carried at cost.","markdown_table":"\n\n\n\n| | | 2015 | | | | 2014 | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| Antimony Metal | | $ | 102,207 | | | $ | 40,352 | |\n| Antimony Oxide | | | 332,068 | | | | 718,982 | |\n| Antimony Concentrates | | | 133,954 | | | | 33,545 | |\n| Antimony Ore | | | 319,631 | | | | 447,262 | |\n| Total antimony | | | 887,860 | | | | 1,240,141 | |\n| Zeolite | | | 206,378 | | | | 193,398 | |\n| | | $ | 1,094,238 | | | $ | 1,433,539 | |\n\n\n\n","source":"UAMY\/10-K\/0001354488-16-006768"} {"title":"F-12","text":"At December 31, 2015 and 2014, the Company had $891,576 and $1,113,847 of assets that were considered to be construction in progress and had not yet been depreciated.","markdown_table":"\n\n\n\n| 2015 | | USAC | | | | MEXICO | | | | BRZ | | | | TOTAL | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| Plant & Equipment | | $ | 872,548 | | | $ | 7,497,791 | | | $ | 3,347,629 | | | $ | 11,717,968 | |\n| Buildings | | | 247,210 | | | | 900,992 | | | | 349,946 | | | | 1,498,148 | |\n| Mineral Rights and Interests | | | - | | | | 3,743,352 | | | | - | | | | 3,743,352 | |\n| Land & Other | | | 3,274,572 | | | | 2,529,294 | | | | 15,310 | | | | 5,819,176 | |\n| | | | 4,394,330 | | | | 14,671,429 | | | | 3,712,885 | | | | 22,778,644 | |\n| Accumulated Depreciation | | | (2,456,928 | ) | | | (2,131,624 | ) | | | (2,159,759 | ) | | | (6,748,311 | ) |\n| | | $ | 1,937,402 | | | $ | 12,539,805 | | | $ | 1,553,126 | | | $ | 16,030,333 | |\n| | | | | | | | | | | | | | | | | |\n| 2014 | | USAC | | | | MEXICO | | | | BRZ | | | | TOTAL | | |\n| Plant & Equipment | | $ | 814,183 | | | $ | 6,159,064 | | | $ | 3,166,701 | | | $ | 10,139,948 | |\n| Buildings | | | 243,248 | | | | 834,269 | | | | 349,946 | | | | 1,427,463 | |\n| Mineral Rights | | | - | | | | 2,058,737 | | | | - | | | | 2,058,737 | |\n| Land & Other | | | 3,274,572 | | | | 2,426,607 | | | | - | | | | 5,701,179 | |\n| | | | 4,332,003 | | | | 11,478,677 | | | | 3,516,647 | | | | 19,327,327 | |\n| Accumulated Depreciation | | | (2,395,109 | ) | | | (1,482,098 | ) | | | (1,938,317 | ) | | | (5,815,524 | ) |\n| | | $ | 1,936,894 | | | $ | 9,996,579 | | | $ | 1,578,330 | | | $ | 13,511,803 | |\n\n\n\n","source":"UAMY\/10-K\/0001354488-16-006768"} {"title":"F-13","text":"The Company\u2019s total asset retirement obligation and accrued reclamation costs of $260,327 and $255,190 at December 31, 2015 and 2014, respectively, include reclamation obligations for Idaho and Montana operations of $107,500.8.Other AssetsGuadalupeOn March 7, 2012 and on April 4, 2012 the Company entered into a supply agreement and a loan agreement, respectively, (\u201cthe Agreements\u201d) with several individuals collectively referred to as \u2018Grupo Roga\u2019 or \u2018Guadalupe.\u2019\u00a0\u00a0During the term of the supply agreement the Company funded certain of Guadalupe\u2019s equipment purchases, tax payments, labor costs, milling and trucking costs, and other expenses incurred in the Guadalupe mining operations for approximately $112,000. In addition to the advances for mining costs, the Company purchased antimony ore from Guadalupe that failed to meet agreed upon antimony metal recoveries and resulted in approximately $475,000 of excess advances paid to Guadalupe.The Agreements with Guadalupe granted the Company an option to purchase the concessions outright for $2,000,000.\u00a0\u00a0On September 29, 2015, the Company notified the owners of Guadalupe that it was exercising the option to purchase the Guadalupe property. The option exercise agreement allowed the Company to apply all amounts previously due the Company by Guadalupe of $586,893 to the purchase price consideration, resulting in a net obligation for the purchase of the Guadalupe mine of $1,413,107. The Company is obligated to make annual payments that vary from $60,000 to $149,077 annually through 2026.\u00a0\u00a0The debt payments are non-interest bearing. The Company determined the net present value of the future contractual stream of payments to be $972,722 using a 6% discount rate.\u00a0\u00a0The Company recorded $972,722 as the cost of the concessions and the debt payable equal to total payments due of $1,413,107 less a discount of $440,385.\u00a0\u00a0The discount is being amortized to interest expense using the effective interest method over the life of the debt.\u00a0\u00a0As of December 31, 2015, the Company had made $15,000 in payments toward this debt and amortized $14,591 of discount as interest expense.\u00a0\u00a0\u00a0The net balance of the debt at December 31, 2015 was $972,312.","markdown_table":"\n\n\n\n| Asset Retirement Obligation | | | | |\n| --- | --- | --- | --- | --- |\n| Balance December 31, 2013 | | $ | 150,080 | |\n| Accretion adjustment during 2014 | | | (2,390 | ) |\n| Balance December 31, 2014 | | | 147,690 | |\n| Accretion during 2015 | | | 5,137 | |\n| Balance December 31, 2015 | | $ | 152,827 | |\n\n\n\n \n\n","source":"UAMY\/10-K\/0001354488-16-006768"} {"title":"F-15","text":"10.\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0Notes Payable to BankAt December 31, 2015, the Company had the following notes payable to the bank:","markdown_table":"\n\n\n\n| Year Ending December 31, | | | | |\n| --- | --- | --- | --- | --- |\n| 2016 | | $ | 181,287 | |\n| 2017 | | | 121,266 | |\n| 2018 | | | 220,584 | |\n| 2019 | | | 305,303 | |\n| 2020 | | | 303,413 | |\n| Thereafter | | | 767,179 | |\n| | | $ | 1,899,032 | |\n\n\n\n\u00a0\n","source":"UAMY\/10-K\/0001354488-16-006768"} {"title":"F-15","text":"These notes are personally guaranteed by John C. Lawrence the Company\u2019s President and Chairman of the Board of Directors.\u00a0\u00a0\u00a0\u00a0The maximum amount available for borrowing under each note is $99,998.\u00a0\u00a0\u00a0There were no notes payable to bank at December 31, 2014.\n\n\n11.\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0Hillgrove Advances Payable\n\n\n\n\u00a0 \n\n\nOn November 7, 2014, the Company entered into a loan and processing agreement with Hillgrove Mines Pty Ltd of Australia (Hillgrove) by which Hillgrove will advance the Company funds to be used to expand their smelter in Madero, Mexico, and in Thompson Falls, Montana, so that they may process antimony and gold concentrates produced by Hillgrove\u2019s mine in Australia.\u00a0\u00a0The agreement requires that the Company construct equipment so that it can process approximately 200 metric tons of concentrate initially shipped by Hillgrove, with a provision so that the Company may expand to process more than that.\u00a0\u00a0The parties agreed that the equipment will be owned by USAC and USAMSA. The final terms of when the repayment takes place have not yet been agreed on.\u00a0\u00a0The agreement called for the Company to sell the final product for Hillgrove, and Hillgrove to have approval rights of the customers for their products.\u00a0\u00a0The agreement allows the Company to recover its operating costs as approved by Hillgrove, and to charge a 7.5% processing fee and a 2.0% sales commission.\u00a0\u00a0The initial term of the agreement is five years; however, Hillgrove may suspend or terminate the agreement at its discretion.\u00a0\u00a0The Company may terminate the agreement and begin using the furnaces for their own production if Hillgrove fails to recommence shipments within 365 days of a suspension notice. If a stop notice is issued between one year and two years, there is a formula to prorate the repayment amount from 50% to 81.25%.\u00a0\u00a0If a stop order is issued after two years, the repayment obligation is 81.25% of the funds advanced at that point.\u00a0\u00a0At December 31, 2015, management has determined that it is likely that the Company\u2019s\u00a0\u00a0repayment obligation will be 81.25% of the total amounts advanced. As of December 31, 2015, Hillgrove has advanced the Company a total of $1,397,016.\u00a0\u00a0Of this amount, approximately 18.75% or $262,408 has been recorded as deferred earned credit and is being recognized ratably through the period ending November 7, 2016 which is when the 81.25% repayment terms of the agreement is applicable.\u00a0\u00a0During the year ended December 31, 2015, $125,191 of the deferred earned credit was recognized with the remaining balance of $120,238 to be recognized in 2016.\u00a0\u00a0\u00a0At December 31, 2015, the amount due to Hillgrove for the advances is $1,134,608 which is approximately 81.25% of the total amount advanced.","markdown_table":"\n\n\n\n| Promissory note payable to First Security Bank of Missoula, bearing interest at 3.150%, maturing February 27, 2016, payable on demand, collateralized by a lien on Certificate of Deposit number 48614 | | $ | 36,881 | |\n| --- | --- | --- | --- | --- |\n| Promissory note payable to First Security Bank of Missoula, bearing interest at 3.150%, maturing February 27, 2016, payable on demand, collateralized by a lien on Certificate of Deposit number 48615 | | | 93,791 | |\n| | | | | |\n| Total notes payable to bank | | $ | 130,672 | |\n\n\n\n","source":"UAMY\/10-K\/0001354488-16-006768"} {"title":"F-17","text":"At December 31, 2015, warrants for purchase of 250,000 shares of the Company\u2019s common stock for $0.25 per share are outstanding and have no expiration date.\u00a0\u00a0\u00a0These warrants are owned by the Company\u2019s president.Preferred StockThe Company's Articles of Incorporation authorize 10,000,000 shares of $0.01 par value preferred stock available for issuance with such rights and preferences, including liquidation, dividend, conversion, and voting rights, as the Board of Directors may determine.Series BDuring 1993, the Board established a Series B preferred stock, consisting of 750,000 shares.\u00a0\u00a0The Series B preferred stock has preference over the Company's common stock and Series A preferred stock; has no voting rights (absent default in payment of declared dividends); and is entitled to cumulative dividends of $0.01 per share per year, payable if and when declared by the Board of Directors.\u00a0\u00a0During the years ended December 31, 2015 and 2014 the Company recognized $7,500 in Series B preferred stock dividend.\u00a0\u00a0In the event of dissolution or liquidation of the Company, the preferential amount payable to Series B preferred stockholders is $1.00 per share plus dividends in arrears. No dividends have been declared or paid with respect to the Series B preferred stock. The Series B Preferred stock is no longer convertible to shares of the Company\u2019s common stock.\u00a0\u00a0At December 31, 2015 and 2014, cumulative dividends in arrears on the outstanding Series B shares were $157,500 and $150,000, respectively.Series CDuring 2000, the Board established a Series C preferred stock, consisting of 205,996 shares.\u00a0\u00a0In 2002, 28,092 shares were converted to common stock and cancelled, leaving 177,904 Series C preferred shares authorized and outstanding.\u00a0\u00a0The Series C preferred stock has preference over the Company\u2019s common stock and has voting rights equal to that number of shares outstanding, but no conversion or dividend rights.\u00a0\u00a0In the event of dissolution or liquidation of the Company, the preferential amount payable to Series C preferred stockholders is $0.55 per share.","markdown_table":"\n\n\n\n| | | Number of Warrants | | | | Exercise Prices | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| Balance, December 31, 2013 | | | 2,489,407 | | | $ | 0.25 - $4.50 | |\n| Warrants exercised | | | (310,625 | ) | | $ | 1.20-$1.60 | |\n| Warrants expired | | | (1,451,865 | ) | | | | |\n| Balance, December 31, 2014 | | | 726,917 | | | $ | 0.25 - $4.50 | |\n| Warrants expired | | | (476,917 | ) | | | | |\n| Balance, December 31, 2015 | | | 250,000 | | | $ | 0.25 | |\n\n\n\n\u00a0\n","source":"UAMY\/10-K\/0001354488-16-006768"} {"title":"F-19","text":"At December 31, 2015, the Company has United States net operating loss carry forwards of approximately $186,000 that expire at various dates between 2030 and 2035.\u00a0\u00a0In addition, the Company has Montana state net operating loss carry forwards of approximately $2,313,000 which expire between 2017 and 2022, and Idaho state net operating loss carry forwards of approximately $940,000, which expire between 2033 and 2035.\u00a0\u00a0The Company has approximately $8.4 million of Mexican net operating loss carry forwards which expire between 2022 and 2025.At December 31 2015 and 2014, the Company had deferred tax assets arising principally from net operating loss carry forwards for income tax purposes.\u00a0\u00a0As management cannot determine that it is more likely than not the benefit of the net deferred tax asset will be realized, a valuation allowance equal to 100% of the net deferred tax asset has been recorded at December 31, 2015 and 2014.The income tax provision differs from the amount of income tax determined by applying the U.S. federal income tax rate to pretax loss for the years ended December 31, 2015 and 2014, due to the following:","markdown_table":"\n\n\n\n| | | 2015 | | | | 2014 | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| Deferred tax asset: | | | | | | | | |\n| Foreign exploration costs | | $ | 87,494 | | | | 127,936 | |\n| Foreign net operating loss carry forward | | | 2,515,954 | | | | 1,926,341 | |\n| loss carry forward | | | 185,472 | | | | 337,890 | |\n| Deferred tax asset | | | 2,788,920 | | | | 2,392,167 | |\n| | | | | | | | | |\n| Valuation allowance (foreign) | | | (2,515,954 | ) | | | (1,926,341 | ) |\n| Valuation allowance (federal) | | | (90,220 | ) | | | (266,711 | ) |\n| Total deferred tax asset | | | 182,746 | | | | 199,115 | |\n| | | | | | | | | |\n| Deferred tax liability: | | | | | | | | |\n| Property, plant, and equipment | | | (181,224 | ) | | | (197,593 | ) |\n| Other | | | (1,522 | ) | | | (1,522 | ) |\n| Total deferred tax liability | | | (182,746 | ) | | | (199,115 | ) |\n| | | | | | | | | |\n| Net Deferred Tax Asset | | $ | - | | | $ | - | |\n\n\n\n \n\n","source":"UAMY\/10-K\/0001354488-16-006768"} {"title":"F-20","text":"In addition, during 2014, Mr. Lawrence loaned the Company $65,300 for short-term operating capital and was paid back without interest during 2014.16.Commitments and ContingenciesIn 2005, Antimonio de Mexico, S. A. (\u201cAM\u201d) signed an option agreement that gives AM the exclusive right to explore and develop the San Miguel I and San Miguel II concessions for annual payments.\u00a0\u00a0Total payments will not exceed $1,430,344, reduced by taxes paid.\u00a0\u00a0During the years ended December 31, 2015 and 2014, $127,500 and $200,000, respectively, was paid and capitalized as mineral rights in accordance with the Company\u2019s accounting policies.\u00a0\u00a0At December 31, 2015, the following payments are scheduled: $65,000 by March 31, 2016.In June of 2013, the Company entered into a lease to mine antimony ore from concessions located in the Wadley Mining district in Mexico.\u00a0\u00a0The lease calls for a mandatory term of one year and requires payments of $29,000 per month.\u00a0\u00a0The lease is renewable each year with a 15 day notice to the lessor, and agreement of terms.\u00a0\u00a0\u00a0The lease was renewed in June of 2015.From time to time, the Company is assessed fines and penalties by the Mine Safety and Health Administration (\u201cMSHA\u201d).\u00a0\u00a0Using appropriate regulatory channels, management may contest these proposed assessments.\u00a0\u00a0\u00a0At December 31, 2015 and 2014, the Company has no accruals relating to such assessments.","markdown_table":"\n\n\n\n| | | 2015 | | | | 2014 | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| Balance, beginning of year | | $ | 8,357 | | | $ | 15,549 | |\n| Aircraft rental charges | | | 30,867 | | | | 30,561 | |\n| Payments and advances, net | | | (6,828 | ) | | | (37,753 | ) |\n| Balance, end of year | | $ | 32,396 | | | $ | 8,357 | |\n\n\n\n \n\n","source":"UAMY\/10-K\/0001354488-16-006768"} {"title":"Results of Operations by Division","text":"During the two year period ended December 31,\n2016, the most significant event affecting our financial\nperformance was the decrease in the price of antimony (see table\npage 6). During the first half of 2016, the price for antimony hit\na seven year low. By the ended of 2016, we stopped the processing\nof antimony concentrate for Hillgrove Mines, Ltd., of Australia and\nstarted production from our own mines in Mexico. The Mexican\nproduction from our own mines was very low in 2015 and 2016 due to\nthe processing of concentrates from Hillgrove. Antimony (metal\ncontained) produced and sold from Hillgrove concentrates was\n1,105,350 pounds during 2015 compared to 1,513,923 pounds for 2016,\nan increase of 37%. The Puerto Blanco mill circuits were utilized\nless than 10% of their capacity. Going forward, the increased\nsupply of raw material from Mexico and the metal prices for both\nantimony and precious metals will be the most significant factors\ninfluencing our operations.\nDuring\nthe two year period ending December 31, 2016, we incurred excess\nproduction costs at our Mexico operations. At the end of each year,\nmanagement determined an estimated portion of each operating unit\nthat was operating at less than expected capacity and assigned a\nportion of that years cost to excess operating costs. The\nproduction costs above the expected costs were reported in the\nabove schedule of results of operations by division as\n\u201cexcess Mexico production costs\u201d, which were $357,706\nin 2016 and $1,086,440 in 2015. The excess Mexico production costs\nare primarily due to holding costs from inactivity at the Wadley\nand Los Juarez mines, the Puerto Blanco mill, and the loss of\nproduction at the Madero smelter from metalurgical testing and\nexperimenting with various production methods and\nformulas.\nThe\nfollowing are highlights of the significant changes during 2016 and\nthe two year period then ended:","markdown_table":"\n\n\n| | 2016 | 2015 |\n| --- | --- | --- |\n| Antimony Division - United States: | | |\n| Revenues - Antimony (net of discount) | $8,744,170 | $9,863,933 |\n| Revenues - Precious metals | 672,871 | 491,426 |\n| | 9,417,041 | 10,355,359 |\n| Domestic cost of sales: | | |\n| Production costs | 3,274,100 | 4,265,840 |\n| Depreciation | 81,328 | 61,819 |\n| Freight and delivery | 419,256 | 311,027 |\n| General and administrative | 272,161 | 192,298 |\n| Direct sales expense | 65,652 | 65,000 |\n| Total domestic antimony cost of sales | 4,112,497 | 4,895,984 |\n| | | |\n| Cost of sales - Mexico | | |\n| Production costs | 3,480,252 | 3,765,902 |\n| Depreciation and amortization | 704,541 | 649,525 |\n| Freight and delivery | 113,412 | 62,555 |\n| Reclamation accrual | 5,454 | 5,137 |\n| Land lease expense | 261,154 | 435,103 |\n| Mexico non-production costs | 357,706 | 1,086,440 |\n| General and administrative | 178,048 | 363,025 |\n| Total Mexico antimony cost of sales | 5,100,567 | 6,367,687 |\n| | | |\n| Total revenues - antimony | 9,417,041 | 10,355,359 |\n| Total cost of sales - antimony | 9,213,064 | 11,263,671 |\n| Total gross profit (loss) - antimony | 203,977 | (908,312) |\n| | | |\n| Zeolite Division: | | |\n| Revenues | 2,473,094 | 2,753,644 |\n| Cost of sales: | | |\n| Production costs | 1,210,832 | 1,266,687 |\n| Depreciation | 213,868 | 221,441 |\n| Freight and delivery | 226,258 | 289,927 |\n| General and administrative | 178,881 | 114,102 |\n| Royalties | 258,206 | 279,435 |\n| Direct sales expense | 52,375 | 86,100 |\n| Total cost of sales | 2,140,420 | 2,257,692 |\n| Gross profit - zeolite | 332,674 | 495,952 |\n| | | |\n| Total revenues - combined | 11,890,135 | 13,109,003 |\n| Total cost of sales - combined | 11,353,484 | 13,521,363 |\n| Total gross profit (loss) - combined | $536,651 | $(412,360) |\n\n\n","source":"UAMY\/10-K\/0001654954-17-002854"} {"title":"Subsidiaries","text":"Our net\nworking capital decreased for the year ended December 31, 2016,\nfrom a negative amount of $293,504 at the beginning of\nthe year to a negative amount of $1,689,568 at the end of 2016. Our\ncurrent assets decreased primarily due to a decrease in our\ninventories and accounts receivable, in Montana and in Mexico. The\ncapital improvements were paid for with cash and debt. Our current\nliabilities increased primarily in the amount of accrued income\ntaxes payable and the current portion of long term debt due during\n2016.\nDuring\nthe year ending December 31, 2017, we are planning to finance our\nimprovements with operating cash flow. Our 2017 improvements are\nexpected to include improvements at both the Madero smelter and the\nThompson Falls smelter, and completing the installation of a leach\ncircuit at Puerto Blanco.\nIn\n2016, cash provided by operations was primarily due to a reduction\nof our inventories of approximately $239,000. We negotiated\ndecreases in our current liabilities for raw material of\napproximately $915,000 during 2015.\nThe\ncurrent portion of our long term debt is serviceable from the cash\ngenerated by operations.\nAt\nDecember 31, 2016, our financial statements show that we have\nnegative working capital of approximately $1.7 million and\naccumulated deficit of approximately $25.4 million.\u00a0 In\naddition, we have incurred losses for the prior three years.\u00a0\nThese factors indicate that there may be doubt regarding our\nability to continue as a going concern for the next twelve\nmonths.\u00a0\nDuring\nthe year ended December 31, 2016, we endured some of the lowest\nprices for antimony in the past seven years, with an average sales\nprice for our products of only $2.98 per pound of metal\ncontained.\u00a0 As of late March 2017, the price for antimony\nmetal contained is approximately $4.00 per pound.\u00a0 While we\nexperience increase in our raw material cost in the United States\nas a result, most of the $1.02 market increase will result in\nincreased cash flow.\nIn\naddition, we have cut costs for our labor at our Mexico locations\nwhich will result in a lower cost of raw material from Mexico.\nThese cuts have resulted from not processing concentrates from\nHillgrove Mines of Australia LTD in 2017. This has resulted in a\nlarge reduction in our work force at our Madero smelter, along with\na significant decrease in our operating costs for fuel, natural\ngas, electricity, and reagents. Although our total production in\nMexico will decrease due to the lack of Hillgrove concentrates, we\nare ramping up production from our own mining properties. We are\ncurrently on schedule to have seventeen small rotating furnaces in\noperation by the second quarter of 2017.\nIn\naddition, we have implemented wage and other cost reductions across\nat the corporate level that will decrease our administrative costs\nin 2017. We expect to continue paying a low cost for propane in\nMontana, which in years past has been a major operating\ncost.\nIn\n2017, we have negotiated a reduced monthly lease cost for the\nWadley mine approximately $11,600 a decrease from $23,200 per\nmonth.\u00a0 In addition, we paid the final installment to purchase\nmining concessions in the Los Juarez mining area.\u00a0 In 2015 and\n2016, we paid $100,000 and $68,600, respectively, for these\nconcession rights.\nWe\nbelieve that our current circumstances and actions taken by\nmanagement will enable us to be actively operating for the next\ntwelve months.\nOur\nstockholders\u2019 equity section makes note that we have a\nliquidation preference of $5,884,376 for our preferred stock. This\nconsists of a liquidation payment of $5,281,519 due if we liquidate\nour company or sell substantially all our assets, and $651,506 of\nundeclared dividends. The Board of Directors\u2019 does not intend\nto declare dividends on preferred stock as due and payable at any\ntime in the near future. We do not feel that the liquidation\npreference and undeclared dividends related to our preferred stock\nwill be an impediment to raising capital in the future by issuing\nadditional shares of common stock, and are not going to affect our\nliquidity.","markdown_table":"\n\n\n| Financial Condition and Liquidity | | |\n| --- | --- | --- |\n| | 2016 | 2015 |\n| Current Assets | $1,692,555 | $2,136,326 |\n| Current liabilities | (3,382,123) | (2,429,830) |\n| Net Working Capital | $(1,689,568) | $(293,504) |\n| | | |\n| Cash provided (used) by operations | $425,837 | $358,453 |\n| Cash used for capital outlay | (583,029) | (1,704,037) |\n| Cash provided (used) by financing: | | |\n| Net payments from factor | 136,617 | 468 |\n| Proceeds from notes payable to bank | 36,645 | 130,672 |\n| Proceeds from (paymrnts to) Hillgrove advances | - | 1,198,445 |\n| Principal paid on long-term debt | (175,238) | (94,141) |\n| Checks issued and payable | 35,682 | - |\n| Received on notes receivable for stock | - | 120,000 |\n| Net change in cash | $(123,486) | $9,860 |\n\n\n","source":"UAMY\/10-K\/0001654954-17-002854"} {"title":"Item 6","text":"Excess Mexico production costsDuring the three year period ending December 31, 2014, we incurred excess production costs at our Mexico operations.\u00a0\u00a0At the beginning of each year, management determined a standard, or expected, cost to produce antimony products for shipment to Montana for further processing. For 2014, 2013, and 2012, the standard costs per pound was $4.45, $4.04, and $4.51, respectively.\u00a0\u00a0The production costs above the standard costs were calculated and reported in the above schedule of results of operations by division as \u201cexcess Mexico production costs\u201d, which were $688,619, $1,095,839, and 678,053 in 2014, 2013, and 2012, respectively. The excess Mexico production costs are primarily due to holding costs from inactivity at the Los Juarez mine and the Puerto Blanco mill, and the loss of production at the Madero smelter from metalurgical testing and experimenting with various production methods and formulas.OverviewOur cost of production was elevated for the years ended December 31, 2013 and 2014, because we were starting a major mining and production facility in Mexico.\u00a0\u00a0The same workers responsible for production were also a significant part of building and testing the manufacturing plants and equipment at Puerto Blanco and Madero, Mexico, which resulted in costs that won\u2019t be incurred when construction and testing is complete.\u00a0\u00a0To a lesser degree, we incurred similar costs at our plant in Thompson Falls, Montana.\u00a0\u00a0In Mexico, there will still be some overlapping costs in the first six months of 2015 because the smelter is in the process of a major expansion in its physical plant.\u00a0\u00a0The production from Mexico should be significantly greater for 2015 than 2014 once the plant expansion is complete.The non-cash expense items totaled $908,172 for 2014 and included $780,782 for depreciation and amortization, $(2,390) for accretion, and $125,000 for director compensation.The non-cash expense items totaled $1,076,229 for 2013 and included $688,738 for depreciation and amortization, $8,040 for accretion, $150,000 for director compensation, and $229,451 for an increase in the valuation allowance for deferred income taxes.We are producing and buying raw materials, which will allow us to ensure a steady flow of products for sale.\u00a0\u00a0Our smelter at Madero, Mexico, was producing a significant portion of our raw materials in 2014.\u00a0\u00a0We will still purchase raw materials from suppliers for our smelter in Montana.","markdown_table":"\n\n\n\n| Results of Operations by Division | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| Antimony - Combined USA | | | | | | | | | | | | |\n| and Mexico | | 2014 | | | | 2013 | | | | 2012 | | |\n| Lbs of Antimony Metal USA | | | 1,141,436 | | | | 931,789 | | | | 1,031,164 | |\n| Lbs of Antimony Metal Mexico: | | | 586,368 | | | | 647,393 | | | | 372,046 | |\n| Total Lbs of Antimony Metal Sold | | | 1,727,804 | | | | 1,579,182 | | | | 1,403,210 | |\n| Average Sales Price\/Lb Metal | | $ | 4.71 | | | $ | 5.30 | | | $ | 6.24 | |\n| Net income (loss)\/Lb Metal | | $ | (1.11 | ) | | $ | (1.30 | ) | | $ | (0.62 | ) |\n| | | | | | | | | | | | | |\n| Gross antimony revenue - net of discount | | $ | 8,132,410 | | | $ | 8,375,158 | | | $ | 8,753,449 | |\n| Precious metals revenue | | | 461,083 | | | | 369,706 | | | | 647,554 | |\n| Production costs - USA | | | (4,864,603 | ) | | | (4,592,019 | ) | | | (5,665,806 | ) |\n| Product cost - Mexico | | | (2,609,338 | ) | | | (2,614,860 | ) | | | (1,677,927 | ) |\n| Direct sales and freight | | | (295,334 | ) | | | (285,274 | ) | | | (279,694 | ) |\n| General and administrative - operating | | | (288,602 | ) | | | (275,312 | ) | | | (353,656 | ) |\n| Excess Mexico production costs | | | (688,619 | ) | | | (1,095,839 | ) | | | (678,053 | ) |\n| General and administrative - non-operating | | | (1,234,597 | ) | | | (1,325,902 | ) | | | (1,193,583 | ) |\n| Non-operating gains | | | 14,530 | | | | 73,551 | | | | | |\n| Net interest | | | 6,496 | | | | (346 | ) | | | 6,059 | |\n| EBITDA | | | (1,366,574 | ) | | | (1,371,137 | ) | | | (441,657 | ) |\n| Income taxes | | | | | | | (229,451 | ) | | | (167,107 | ) |\n| Depreciation & amortization | | | (559,552 | ) | | | (448,036 | ) | | | (263,214 | ) |\n| Net income (Loss) - antimony | | $ | (1,926,126 | ) | | $ | (2,048,624 | ) | | $ | (871,978 | ) |\n| | | | | | | | | | | | | |\n| Zeolite | | | 2014 | | | | 2013 | | | | 2012 | |\n| Tons sold | | | 11,079 | | | | 11,182 | | | | 12,189 | |\n| Average Sales Price\/Ton | | $ | 195.83 | | | $ | 196.96 | | | $ | 216.73 | |\n| Net income (Loss)\/Ton | | $ | 29.85 | | | $ | 36.44 | | | $ | 25.72 | |\n| | | | | | | | | | | | | |\n| Gross zeolite revenue | | $ | 2,169,619 | | | $ | 2,202,414 | | | $ | 2,641,699 | |\n| Production costs | | | (1,109,386 | ) | | | (1,096,731 | ) | | | (1,618,816 | ) |\n| Direct sales and freight | | | (170,964 | ) | | | (162,143 | ) | | | (169,346 | ) |\n| Royalties | | | (222,054 | ) | | | (211,095 | ) | | | (234,343 | ) |\n| General and administrative - operating | | | (81,852 | ) | | | (62,133 | ) | | | (47,456 | ) |\n| General and administrative - non-operating | | | (63,765 | ) | | | (44,242 | ) | | | (47,819 | ) |\n| Gain on sale of equipment | | | 30,000 | | | | | | | | | |\n| Net interest | | | 303 | | | | (260 | ) | | | (701 | ) |\n| EBITDA | | | 551,901 | | | | 625,810 | | | | 523,218 | |\n| Depreciation | | | (221,230 | ) | | | (218,356 | ) | | | (209,776 | ) |\n| Net income\u00a0\u00a0- Zeolite | | $ | 330,671 | | | $ | 407,454 | | | $ | 313,442 | |\n| | | | | | | | | | | | | |\n| Company-wide | | | 2014 | | | | 2013 | | | | 2012 | |\n| Gross revenue | | $ | 10,763,112 | | | $ | 10,947,278 | | | $ | 12,042,702 | |\n| Production costs | | | (8,583,327 | ) | | | (8,303,610 | ) | | | (8,962,549 | ) |\n| Other operating costs | | | (1,747,425 | ) | | | (2,091,796 | ) | | | (1,762,548 | ) |\n| General and administrative - non-operating | | | (1,298,362 | ) | | | (1,370,144 | ) | | | (1,241,402 | ) |\n| Non-operating gains | | | 44,530 | | | | 73,551 | | | | | |\n| Net interest | | | 6,799 | | | | (606 | ) | | | 5,358 | |\n| EBITDA | | | (814,673 | ) | | | (745,327 | ) | | | 81,561 | |\n| Income tax benefit (expense) | | | | | | | (229,451 | ) | | | (167,107 | ) |\n| Depreciation & amortization | | | (780,782 | ) | | | (666,392 | ) | | | (472,990 | ) |\n| Net income\u00a0\u00a0(Loss) | | $ | (1,595,455 | ) | | $ | (1,641,170 | ) | | $ | (558,536 | ) |\n\n\n\n","source":"UAMY\/10-K\/0001354488-15-001160"} {"title":"Item 6","text":"We have completed installation of a natural gas pipeline to replace propane as the fuel used in our Mexico smelter.\u00a0\u00a0The pipeline was finished in the fourth quarter of 2014.\u00a0\u00a0We expect the pipeline will reduce our smelter fuel cost by approximately 75%.\u00a0\u00a0Our smelter fuel cost (propane) in Mexico was approximately $700,000 for 2013 and $690,000 using 8 furnaces for the first nine months of 2014.\u00a0\u00a0Our natural gas cost was approximately $125,000 using 12 furnaces for the fourth quarter of 2014.We are proceeding with the installation of a 400 - 500 ton per day flotation mill that we expect to cost between $400,000 and $500,000 to install.\u00a0\u00a0The concrete work for the mill has been completed, and work will be ongoing as we generate cash from operations. This mill will be dedicated to processing ore from the Los Juarez mining property.\u00a0\u00a0We are in a waiting period for approval of permits necessary to process the Los Juarez ore.\u00a0\u00a0We have adequate crushing capacity in place to feed the 500 ton per day mill and the existing mill.When approved, the restart of production from Los Juarez will create a significant increase in our precious metals revenue for 2015 and years forward.Our principal smelter, precious metals recovery operation, and our Company headquarters remain in Montana.\u00a0\u00a0With increased production, we expect to widen our base of customers.Results of OperationsComparison of Years ended December 31, 2014, 2013, and 2012","markdown_table":"\u00a0\n\n\n\n\n| | | Lbs of Antimony | | |\n| --- | --- | --- | --- | --- |\n| Mexico Prodution Activity: | | Metal Contained | | |\n| Direct Shipping Ore (DSO) | | | | |\n| Wadley property | | | 425,200 | |\n| Guadalupana area | | | 101,261 | |\n| Miscellaneous mines | | | 122,944 | |\n| Concentrate from Mill | | | | |\n| Guadalupe | | | 48,158 | |\n| Soyatal | | | 30,450 | |\n| Total Lbs delivered to Madero | | | 728,013 | |\n| | | | | |\n\n\n\n","source":"UAMY\/10-K\/0001354488-15-001160"} {"title":"Item 6","text":"\u25cf\n\n\n\u00a0During the three year period ended December 31, 2014, the most significant event affecting our financial performance was the decrease in the price of antimony (see table page 6).\u00a0\u00a0During the year ended December 31, 2014, the most significant event was an agreement to process antimony concentrate for Hillgrove LTD of Australia.\u00a0\u00a0The expansion of production at our Mexico operations caused our reported operating costs to be elevated when compared to years when we were not initiating the start-up of new production facilities. The Mexican production of antimony (metal contained) and sold was 586,368 pounds during 2014 compared to 647,393 pounds for 2013, a decrease of 9.4%.\u00a0\u00a02013 and 2014 are regarded as \u201cstart- up years\u201d during which the holding costs, permitting, and metallurgical research was categorized as a \u201cnon-production\u201d operating expense. During both years, Los Juarez concentrate was not produced and Soyatal oxide ore was in a research phase at the Puerto Blanco oxide circuit. Guadalupe shipped dump material while they obtained an explosives license and prepared the underground for mining higher grade rock.\u00a0\u00a0The Puerto Blanco mill circuits were utilized less than 10% of their capacity.\u00a0\u00a0Going forward, the increased supply of raw material from Mexico and the metal prices for both antimony and precious metals will be the most significant factors influencing our operations.\u00a0\u00a0The following are highlights of the significant changes during 2014 and the three year period then ended:\n\n\n\n\n\n\na.\u00a0\u00a0\n\n\nOur sales of antimony for 2014 increased by approximately 149,000 lbs from 2013. Our revenues from antimony decreased in 2013 by approximately $378,000 (4%) from 2012 primarily due to a decrease in the price of antimony metal. Revenues from antimony sales in 2014 were approximately $243,000 (3%) smaller than 2013 due to a decrease in the price of antimony.\u00a0\u00a0The average sale price for antimony contained in all products declined from $6.24 in 2012 to $5.30 in 2013, a decrease of $0.94 (17.7%), and from $5.30 to $4.71 in 2014, a decrease of $0.59 (11.1%).\n\n\n\n\n\n\nb.\u00a0\u00a0\n\n\nThe metallurgical problem with the Los Juarez feed has been solved, and mining, milling, and smelting will resume when the necessary permits are obtained. This will put the Puerto Blanco mill in operation. During 2013 and 2014, the Puerto Blanco mill was operating at less than 10% of capacity.\n\n\n\n\n\n\nc.\u00a0\u00a0\n\n\nThe Soyatal oxide ore recovery problem has been solved, and high grade oxide concentrates are being produced. Oxide mineralized rock from dumps will be mined and underground development will be started.\n\n\n\n\n\n\nd.\u00a0\u00a0\n\n\nExplosives were permitted at Guadalupe in 2014, and underground development has started. A lack of capital by the operator has hampered production.\n\n\n\n\n\n\n\u25cf\n\n\nAssuming that Guadalupe and Los Juarez feed are going to the Puerto Blanco mill, the 500 ton per day mill that is estimated at 40% of completion will need to be completed.\n\n\n\n\n\n\n\u25cf\n\n\nIf the Mexican \u201cnon-production\u201d holding expenses for properties that are being developed are excluded, the cost of production of 1,780,134 pounds of contained metal was $4.10 per pound for 2013 and $4.45 for 2014. The average sale price during 2013 and 2014 was $5.30 and $4.71 per pound, respectively.\n\n\n\n\n\n\n\u25cf\n\n\nOur cost of goods sold for antimony decreased by approximately $5,000 for 2014 even though our production increased, and our cost of goods sold for 2013 increased by approximately $583,000 from 2012 primarily due to an increase in raw material costs and start-up costs in Mexico. For the three years ending December 31, 2014, costs of goods sold include operating and non-operating production costs from Mexico operations.\u00a0\u00a0As production increased in Mexico, we saw an increase in our smelter costs through the third quarter of 2014 due to the high cost of propane in Mexico. Our switch to natural gas as a fuel for our smelter at Madero in the fourth quarter of 2014 has provided a significant improvement in our Mexico operating costs. In addition to the cost of propane, the cost of goods sold during all years has been impacted by an increase in the cost of operating supplies, such as fuel, trucking, insurance, refractory costs, and steel.\n\n\n\n\n\n\n\u25cf\n\n\nOur volume of zeolite sold was down less than 1% in 2014, from 11,182 tons in 2013 to 11,079 tons in 2014, and by approximately 8% in 2013, from 12,189 tons in 2012 to 11,182 tons in 2013. Total revenue decreased by approximately $33,000 in 2014 and approximately $439,000 in 2013.\u00a0\u00a0In 2012, we sold more products with additives, which are higher priced, than we did in 2013.\u00a0\u00a0Our cost of goods sold increased by approximately $44,500 for 2014, and decreased by approximately $522,000 for 2013 from 2012, primarily because we had a decrease in the volume of product sold in 2013, and because we did not pre-purchase as many supplies.\u00a0\u00a0We inventoried the cost of additives, drying, blending, and overall operating costs for a special product mix prepared in advance for winter sales in 2013 and 2014.\n\n\n\n\n\n\n\u25cf\n\n\nGeneral and administrative costs, as reported in our statement of operations, include fees paid to directors through stock based compensation. In 2014, 2013 and 2012, we incurred $40,000, $40,000 and $88,000, respectively, in fees to the NYSE MKT that were included in general and administrative expenses.\u00a0\u00a0General and administrative costs for 2014, 2013 and 2012 include general and administrative costs related to commencement of production at our facilities in Mexico.\u00a0\u00a0The combined general and administrative costs were 5.8%, 6.7%, and 6.7% of sales for 2014, 2013 and 2012, respectively.\n\n\n\n\n\n\n\u25cf\n\n\nThe decrease in professional fees for 2014 and 2013 (approximately $17,000 and $34,000, respectively) was primarily due to decreased costs related to our audits and financial statement preparation. The increase in professional fees for 2012 from 2011, (approximately $52,500) was primarily due to increased costs related to our audits and financial statement preparation during the year we became listed on the NYSE MKT.\n\n\nFactoring costs decreased in 2014, and were similar in 2013 to 2012. Factoring costs decreased in 2014 by approximately $22,000 as we were able to reduce our collection time for accounts receivable.\u00a0\u00a0The discounts we gave for early payments increased by approximately $42,100 in 2013 from 2012.\n\n\n\n\u25cf\n\n\nFor the year ended December 31, 2010, we determined that it was likely that we would be profitable in the future, and that it was appropriate to record a tax benefit of $493,000 for the value of tax losses from prior years that could be used to reduce income tax in future periods.\u00a0\u00a0For the years ended December 31, 2013, 2012, and 2011, this benefit was reduced by $229,451, $167,107, and $96,442, respectively, for increases in the valuation allowance due to changed expectations about when we would have taxable income, and changes in the components that made up the base for calculating the future tax benefit.\n\n\nSubsidiariesThe Company has a 100% investment in two subsidiaries in Mexico, USAMSA and AM, whose carrying value was assessed at December 31, 2014, 2013, and 2012, for impairment.\u00a0\u00a0Management\u2019s assessment of the subsidiaries\u2019 fair value was based on their future benefit to us.","markdown_table":"\n\n\n\n| | | 2014 | | | | 2013 | | | | 2012 | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| Antimony Division - United States: | | | | | | | | | | | | |\n| Revenues - Antimony (net of discount) | | $ | 8,132,410 | | | $ | 8,375,158 | | | $ | 8,745,321 | |\n| Revenues - Other | | | 9,080 | | | | 73,551 | | | $ | 8,128 | |\n| Revenues - Precious metals | | | 461,083 | | | | 369,706 | | | | 647,554 | |\n| | | | 8,602,573 | | | | 8,818,415 | | | | 9,401,003 | |\n| Domestic cost of sales: | | | | | | | | | | | | |\n| Production costs | | | 4,864,603 | | | | 4,592,019 | | | | 5,665,806 | |\n| Depreciation | | | 63,787 | | | | 61,574 | | | | 40,979 | |\n| Freight and delivery | | | 243,606 | | | | 227,179 | | | | 218,563 | |\n| General and administrative | | | 288,602 | | | | 275,313 | | | | 370,838 | |\n| Direct sales expense | | | 51,726 | | | | 58,095 | | | | 61,131 | |\n| Total domestic antimony cost of sales | | | 5,512,324 | | | | 5,214,180 | | | | 6,357,317 | |\n| | | | | | | | | | | | | |\n| Cost of sales - Mexico | | | | | | | | | | | | |\n| Production costs | | | 2,609,338 | | | | 2,614,860 | | | | 1,677,927 | |\n| Depreciation and amortization | | | 495,765 | | | | 386,462 | | | | 222,235 | |\n| Freight and delivery | | | 122,035 | | | | 52,628 | | | | 111,652 | |\n| Reclamation accrual | | | 4,839 | | | | 8,040 | | | | 8,040 | |\n| Land lease expense | | | 407,493 | | | | 202,364 | | | | 27,720 | |\n| Mexico non-production costs | | | 22,553 | | | | 644,993 | | | | 174,852 | |\n| General and administrative | | | 131,700 | | | | 187,814 | | | | 148,321 | |\n| Total Mexico antimony cost of sales | | | 3,793,723 | | | | 4,097,161 | | | | 2,370,747 | |\n| | | | | | | | | | | | | |\n| Total revenues - antimony | | | 8,602,573 | | | | 8,818,415 | | | | 9,401,003 | |\n| Total cost of sales - antimony | | | 9,306,047 | | | | 9,311,341 | | | | 8,728,064 | |\n| Total gross profit (loss) - antimony | | | (703,474 | ) | | | (492,926 | ) | | | 672,939 | |\n| | | | | | | | | | | | | |\n| Zeolite Division: | | | | | | | | | | | | |\n| Revenues | | | 2,169,619 | | | | 2,202,414 | | | | 2,641,699 | |\n| Cost of sales: | | | | | | | | | | | | |\n| Production costs | | | 1,109,386 | | | | 1,096,731 | | | | 1,618,816 | |\n| Depreciation | | | 221,230 | | | | 218,356 | | | | 209,776 | |\n| Freight and delivery | | | 87,355 | | | | 83,618 | | | | 93,260 | |\n| General and administrative | | | 81,852 | | | | 62,133 | | | | 47,457 | |\n| Royalties | | | 222,054 | | | | 211,095 | | | | 234,343 | |\n| Direct sales expense | | | 83,609 | | | | 78,525 | | | | 76,086 | |\n| Total cost of sales | | | 1,805,486 | | | | 1,750,458 | | | | 2,279,738 | |\n| Gross profit - zeolite | | | 364,133 | | | | 451,956 | | | | 361,961 | |\n| | | | | | | | | | | | | |\n| Total revenues - combined | | | 10,772,192 | | | | 11,020,829 | | | | 12,042,702 | |\n| Total cost of sales - combined | | | 11,111,533 | | | | 11,061,799 | | | | 11,007,802 | |\n| Total gross profit (loss) - combined | | $ | (339,341 | ) | | $ | (40,970 | ) | | $ | 1,034,900 | |\n| | | | | | | | | | | | | |\n\n\n\n \n\n","source":"UAMY\/10-K\/0001354488-15-001160"} {"title":"Item 6","text":"Our net working capital increased for the year ended December 31, 2014, from a negative amount of $568,777 at the beginning of the year to a positive amount of $11,029 at the end of 2014.\u00a0\u00a0Our current assets increased primarily due to an increase in our inventories in Montana and in Mexico.\u00a0\u00a0The capital improvements were mainly financed by the sale of stock.\n\u00a0\nOur net working capital decreased for the year ended December 31, 2013, from a positive amount of $1,480,487 at the beginning of the year to a negative amount of $568,777 at the end of 2013.\u00a0\u00a0During 2013, our current assets decreased and our current liabilities increased primarily due to expenditures for capital improvements in Mexico.\u00a0\u00a0The capital improvements in 2013 were mainly financed by the sale of stock and an increase in current liabilities. Our financial condition and liquidity improved for the year ended December 31, 2012.\u00a0\u00a0This was due to an increase in our cash provided by operations and the sale of stock each year.\u00a0\u00a0We used most of our resources from operating cash flows and the sale of stock to expand and improve our mine, mill, and smelter production facilities in Mexico.\u00a0\u00a0Over the three year period, we raised approximately $8,842,000 from issuing stock, and we used approximately $9,162,000, including $1,779,000 of assets purchased with debt, for capital improvements in Mexico ($8,072,000), Montana ($466,000), and at the Bear River Zeolite plant ($629,000).\u00a0\u00a0In Mexico, we completed the final installation of the crusher, ball mill and flotation circuit, four additional furnaces at Madero, started the installation of a 500 ton per day ball mill, and paid for\u00a0final construction of a natural gas pipeline.During the year ending December 31, 2015, we are planning to finance our improvements with operating cash flow. Our 2015 improvements are expected to include installation of more furnaces at both the Madero smelter and the Thompson Falls smelter, building an expanded smelter and warehouse building at Thompson Falls, and completing the installation of a 400 - 500 ton per day flotation mill at Puerto Blanco.In 2014, cash used by operations was primarily due to our net loss of approximately $1.595 million and an increase of approximately $534,000 in our inventories and other assets.\u00a0\u00a0We had cash provided of approximately $1.226 million from non-cash expenses (depreciation and amortization), stock issued for expenses, decrease in accounts receivable, an increase in accounts payable, and cash advanced from Hillgrove mines.In 2013, cash provided by operations was primarily due to an increase in accounts payable and other accrued liabilities.In 2012, cash provided by operations was primarily due to the collection of approximately $978,000 of accounts receivable, which were approximately $1,438,000 at the beginning of the year, and approximately $460,000 as of December 31, 2012.The current portion of our long term debt is serviceable from the cash generated by operations.Our stockholders\u2019 equity section makes note that we have a liquidation preference of $5,835,727 for our preferred stock.\u00a0\u00a0This consists of a liquidation payment of $5,281,519 due if we liquidate our company or sell substantially all our assets, and $554,208 of undeclared dividends.\u00a0\u00a0The Board of Directors\u2019 does not intend to declare dividends on preferred stock as due and payable at any time in the near future.\u00a0\u00a0We do not feel that the liquidation preference and undeclared dividends related to our preferred stock will be an impediment to raising capital in the future by issuing additional shares of common stock, and are not going to affect our liquidity.","markdown_table":"\n\n\n\n| Financial Condition and Liquidity | | | |\n| --- | --- | --- | --- |\n| | | 2014 | | | | 2013 | | | | 2012 | | |\n| Current Assets | | $ | 2,303,669 | | | $ | 1,910,564 | | | $ | 3,103,128 | |\n| Current liabilities | | | (2,292,640 | ) | | | (2,479,341 | ) | | | (1,622,641 | ) |\n| Net Working Capital | | $ | 11,029 | | | $ | (568,777 | ) | | $ | 1,480,487 | |\n| | | | | | | | | | | | | |\n| Cash provided (used) by operations | | $ | (1,036,375 | ) | | $ | 234,820 | | | $ | 526,419 | |\n| Cash used for capital outlay | | | (1,826,553 | ) | | | (2,733,762 | ) | | | (3,513,901 | ) |\n| Cash provided (used) by financing: | | | | | | | | | | | | |\n| Net proceeds from Hillgrove advances | | | 198,571 | | | | - | | | | - | |\n| Proceeds from notes payable to bank | | | - | | | | 138,520 | | | | - | |\n| Payments on notes to bank | | | (138,520 | ) | | | | | | | | |\n| Payments on long-term debt | | | (129,530 | ) | | | (273,405 | ) | | | (464,936 | ) |\n| Proceeds from long-term debt | | | 130,000 | | | | 352,000 | | | | - | |\n| Sale of Stock | | | 3,070,134 | | | | 1,147,194 | | | | 4,624,763 | |\n| Other | | | (164,387 | ) | | | 154,165 | | | | (176,961 | ) |\n| Net change in cash | | $ | 103,340 | | | $ | (980,468 | ) | | $ | 995,384 | |\n\n\n\n\u00a0\n","source":"UAMY\/10-K\/0001354488-15-001160"} {"title":"PART III","text":"Business Experience of Directors and Executive OfficersJohn C. Lawrence.\u00a0\u00a0Mr. Lawrence has been the president and a director since our inception.\u00a0\u00a0Mr. Lawrence was the president and a director of AGAU Mines, Inc., our corporate predecessor, since the inception of AGAU Mines, Inc. in 1968.\u00a0\u00a0He is a member of the Society of Mining Engineers and a recipient of the Uuno Sahinen Silver Medallion Award presented by Butte Tech, University of Montana.\u00a0\u00a0He has a vast background in mining, milling, smelting, chemical processing and oil and gas.Gary D. Babbitt.\u00a0\u00a0Mr. Babbitt has experience in mining industry with approximately 30 years dealing with joint ventures, purchases, royalty leases and contracts. He has a working knowledge of Spanish and has negotiated supply and mining agreements in Mexico.\u00a0\u00a0Mr. Babbitt has a B.A. from the Albertson College of Idaho, and earned his J.D. from the University of Chicago.Russell C. Lawrence.\u00a0\u00a0Mr. Lawrence has experience in the lines of applied physics, mining, refining, excavation, electricity, electronics, and building contracting.\u00a0\u00a0He graduated from the University of Idaho in 1994 with a degree in physics, and worked for the Physics Department at the University of Idaho for a period of 10 years. He has also worked as a building contractor and for USAC at the smelter and laboratory at Thompson Falls, for USAMSA in the construction and operation of the USAMSA smelter in Mexico, and for Antimonio de Mexico, S. A. de C. V. at the San Miguel Mine and the Cadereyta mill site in Mexico.Hart W. Baitis.\u00a0\u00a0Mr. Baitis graduated from the University of Oregon in 1971 with a B.S. in Geology, and was awarded a Ph. D. in Geology in 1976. He has 35 years of experience as an exploration geologist in the United States, Canada, Central America, and Mexico.\u00a0\u00a0Mr. Baitis is experienced in numerous geologic environments and terrains, and has been involved in all phases of exploration, ranging from field geologist, consultant, management, and acquisition team director.Whitney Ferer.\u00a0\u00a0Mr. Ferer, who was nominated to the board in February 2012, has worked for 34 years for Aaron Ferer & Sons, or AF&S, headquartered in Omaha, Nebraska, where he is currently the Vice President of Trading and Operations and Vice Chairman of the Board of AF&S.\u00a0\u00a0He has been involved in the patenting of various processes for the breakdown of plastics and metal recovery, and was Vice President of the Lead & Zinc Division of AF&S.\u00a0\u00a0In addition, Mr. Ferer has been active in the trading of all metals, and facilitated the opening of eight offices in the Far East and China.\u00a0\u00a0He is one of the largest traders of antimony metal and oxide in the United States.Daniel L. Parks. Mr. Parks graduated from the University of Idaho in 1974 with a B.S. in Accounting, and was licensed as a certified public accountant in 1976.\u00a0\u00a0He worked as an auditor for Coopers & Lybrand for three years, as controller for a lumber manufacturing company for one year, and owned his own accounting practice for thirty years.\u00a0\u00a0Mr. Parks was extensively involved in auditing and financial statement preparation during this time.We are not aware of any involvement by our directors or executive officers during the past five years in legal proceedings that are material to an evaluation of the ability or integrity of any director or executive officer.Board Meetings and Committees\u00a0\u00a0\u00a0Our Board of Directors held four (4) regular meetings during the 2014 calendar year.\u00a0\u00a0Each incumbent director attended all of the meetings held during the 2014 calendar year, in the aggregate, by the Board and each committee of the Board of which he was a member.Our Board of Directors established an Audit Committee on December 10, 2011. It consists of three members, Gary Babbitt (Chairman), Whitney Ferer, and Hart Baitis.\u00a0\u00a0None of the Audit Committee members are involved in our day-to-day financial management.\u00a0\u00a0Hart Baitis is considered a financial expert.During 2011, the Board also established a Compensation Committee and a Nominating Committee.Board Member Compensation\u00a0\u00a0\u00a0Following is a summary of fees, cash payments, stock awards, and other reimbursements to Directors during the year ended December 31, 2014:Directors Compensation","markdown_table":"\n\n\n| Name | Age | Affiliation | Expiration of Term |\n| --- | --- | --- | --- |\n| | | | |\n| John C. Lawrence | 76 | Chairman, President, Director | Annual meeting |\n| | | | |\n| John C. Gustavsen | 66 | First Vice-President | Annual meeting |\n| | | | |\n| Russell C. Lawrence | 46 | Second\u00a0Vice-President | Annual meeting |\n| | | | |\n| Matthew Keane | 59 | Third Vice-President | Annual meeting |\n| | | | |\n| Daniel L. Parks | 66 | Chief Financial Officer | Annual meeting |\n| | | | |\n| Alicia Hill | 33 | Secretary, Controller and Treasurer | Annual meeting |\n| | | | |\n| Gary D. Babbitt | 69 | Director | Annual meeting |\n| | | | |\n| Whitney Ferer | 56 | Director | Annual meeting |\n| | | | |\n| Hart W. Baitis | 65 | Director | Annual meeting |\n\n\n","source":"UAMY\/10-K\/0001354488-15-001160"} {"title":"PART III","text":"Section 16(a) Beneficial Ownership Reporting Compliance\u00a0\u00a0\u00a0Section 16(a) of the Securities Exchange Act of 1934 requires our directors and executive officers and the holders of 10% or more of our common stock to file reports of ownership and changes in ownership with the Securities and Exchange Commission. Officers, directors and stockholders holding more than 10% of our common stock are required by the regulation to furnish us with copies of all Section 16(a) forms they have filed. Based solely on our review of copies of Forms 3, 4 and 5 furnished to us, Mr. John Lawrence, Mr. Baitis, Mr. Babbitt, Mr. Ferer, and Mr. Russell Lawrence did not file timely Forms 3, 4 or Form 5 reports during 2014, 2013, or 2012.Code of EthicsThe Company has adopted a Code of Ethics that applies to the Company's executive officers and its directors.\u00a0\u00a0The Company will provide, without charge, a copy of the Code of Ethics on the written request of any person addressed to the Company at: United States Antimony Corporation, P.O. Box 643, Thompson Falls, MT 59873.","markdown_table":"\n\n\n| Name and Principal Position | | Fees Earned or paid in Cash | | | | Stock Awards | | | | Total Fees, Awards, and Other Compensation | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| John C. Lawrence, Chairman | | | | | | $ | 25,000 | | | $ | 25,000 | |\n| Gary D. Babbitt, Director | | $ | 36,000 | | | $ | 25,000 | | | $ | 61,000 | |\n| Russell Lawrence,\u00a0Director | | | | | | $ | 25,000 | | | $ | 25,000 | |\n| Hartmut Baitis,\u00a0Director | | | | | | $ | 25,000 | | | $ | 25,000 | |\n| Whitney Ferer,\u00a0Director | | | | | | $ | 25,000 | | | $ | 25,000 | |\n| Totals | | $ | 36,000 | | | $ | 125,000 | | | $ | 161,000 | |\n\n\n","source":"UAMY\/10-K\/0001354488-15-001160"} {"title":"PART III","text":"(2)\n\n\nThese figures represent the fair values, as of the date of issuance, of the annual director's fee payable to Mr. Lawrence in the form of shares of USAC's common stock.\n\n\n\n\n\n\n\u00a0 \n\n\nCompensation for all executive officers, except for the President\/CEO position, is recommended to the compensation committee of the Board of Directors by the President\/CEO.\u00a0\u00a0The compensation committee makes the recommendation for the compensation of the President\/CEO.\u00a0\u00a0The compensation committee has identified a peer group of mining companies to aid in reviewing the President\u2019s compensation recommendations for executives, and for reviewing the compensation of the President\/CEO.\u00a0\u00a0The full Board approves the compensation amounts recommended by the compensation committee. Currently, the executive managements\u2019 compensation only includes base salary and health insurance.\u00a0\u00a0The Company does not have annual performance based salary increases, long term performance based cash incentives, deferred compensation, retirement benefits, or disability benefits.\u00a0\u00a0For the year ended December 31,2014, The Chief Executive Officer (CEO) received an increase in base compensation of $15,000 annually.\u00a0\u00a0The Board of Directors determined that the CEO\u2019s compensation for the prior years was substantially less than that of Chief Executive Officers for similar companies, and that a raise was appropriate to compensate the CEO for management of a Company with the complexities of United States Antimony Corporation.\n\n\n\n\n\n\n\u00a0 \n\n\nTwo executive officers, the President\/CEO and the Vice-President for the Latin American operations, receive restricted stock awards for their services as Board members.\n\n\nThe following table sets forth information concerning the outstanding equity awards at December 31, 2014, held by our principal executive officer.\u00a0\u00a0There were not any other outstanding equity awards or plan based awards to officers or directors as of December 31, 2014.","markdown_table":"\n\n\n\n| Name and Principal Position | | Year | | | | Salary | | | | Bonus | | | | Stock Awards (2) | | | | Total | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| John C. Lawrence, President and Chief Executive Officer | | | 2014 | | | $ | 141,000 | | | | N\/A | | | $ | 25,000 | | | $ | 171,538 | |\n| | | | 2013 | | | | 126,000 | | | | | | | | 25,000 | | | | 156,538 | |\n| | | | 2012 | | | | 126,000 | | | | | | | | 25,000 | | | | 156,538 | |\n| | | | | | | | | | | | | | | | | | | | | |\n| John C. Gustaven, Executive Vice President | | | 2014 | | | $ | 100,000 | | | | N\/A | | | | | | | $ | 100,000 | |\n| | | | 2013 | | | | 100,000 | | | | | | | | | | | | 100,000 | |\n| | | | 2012 | | | | 100,000 | | | | | | | | | | | | 100,000 | |\n| | | | | | | | | | | | | | | | | | | | | |\n| Russell Lawrence, Vice President for Latin America | | | 2014 | | | $ | 105,000 | | | | N\/A | | | $ | 25,000 | | | $ | 130,000 | |\n| | | | 2013 | | | | 100,000 | | | | | | | | 25,000 | | | | 125,000 | |\n| | | | 2012 | | | | 100,000 | | | | | | | | 25,000 | | | | 125,000 | |\n\n\n\n","source":"UAMY\/10-K\/0001354488-15-001160"} {"title":"PART III","text":"Item 12\u00a0\u00a0\u00a0Security Ownership of Certain Beneficial Owners and Management","markdown_table":"\n\n\n\n| | | | | | | | | | | Outstanding Equity Awards at | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | | | | | | | | | Fiscal Year End | | | | | | | |\n| | | Number of Securities Underlying Unexercised Options | | | | | | | | Number of Securities | | | | Average | | | Option |\n| | | Exercisable | | | | Unexercisable | | | | Underlying Unexercised | | | | Exercise | | | Exercise |\n| Name | | | # | | | | # | | | Unearned Options | | | | Price | | | Dates |\n| John C. Lawrence | | | 250,000 | | | | 0 | | | | 0 | | | $ | 0.25 | | None |\n| (Chairman of the Board Of | | | | | | | | | | | | | | | | | |\n| Directors and Chief Executive | | | | | | | | | | | | | | | | | |\n| Officer) | | | | | | | | | | | | | | | | | |\n\n\n\n \n\n","source":"UAMY\/10-K\/0001354488-15-001160"} {"title":"PART III","text":"(1)Beneficial Ownership is determined in accordance with the rules of the Securities and Exchange Commission and generally includes voting or investment power with respect to securities. Shares of common stock subject to options or warrants currently exercisable or convertible, or exercisable or convertible within 60 days of March 16, 2015, are deemed outstanding for computing the percentage of the person holding options or warrants but are not deemed outstanding for computing the percentage of any other person. Percentages are based on a total of 66,027,453\u00a0shares of common stock, 750,000 shares of Series B Preferred Stock, 177,904 shares of Series C Preferred Stock, and 1,751,005 shares of Series D Preferred Stock outstanding on March 16, 2015.\u00a0\u00a0Total voting stock of 67,956,632 shares is a total of all the common stock issued, and all of the Series C and Series D Preferred Stock.\n\n\n\n(2)\n\n\nIncludes 3,892,235 shares of common stock and 250,000 stock purchase warrants.\u00a0\u00a0Excludes 183,324 shares owned by Mr. Lawrence's sister, as to which Mr. Lawrence disclaims beneficial ownership.\n\n\n\n\n\n\n(3)\n\n\nIncludes shares owned by the estate of Al W. Dugan and shares owned by companies owned and controlled by the estate of Al W. Dugan.\u00a0\u00a0Excludes 183,333 shares owned by Lydia Dugan as to which the estate of Mr. Dugan disclaims beneficial ownership.\n\n\n\n\n\n\n(4)\n\n\nThe outstanding Series C and Series D preferred shares carry voting rights equal to the same number of shares of common stock.\n\n\n\n\n\n\n(5)\n\n\n\u00a0The outstanding Series B preferred shares carry voting rights only if the Company is in default in the payment of declared dividends.\u00a0\u00a0The Board of Directors has not declared any dividends as due and payable for the Series B preferred stock.","markdown_table":"\n\n\n\n\n| Title of Class | | Name and Address of Beneficial Owner (1) | | Amount and Nature of Beneficial Ownership | | Percent of Class (1) | | Percent of all Voting Stock |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| Common Stock | | Cardinal capital Management LLC\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 Four Greenwich Office Park\u00a0\u00a0 Greenwich CT 06831 | | 4,008,694 | | 6.07% | | 5.91% |\n| Common Stock | | Reed Family Limited Partnership\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 328 Adams Street\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 Milton, MA 02186 | | 4,018,335 | | 6.09% | | 5.92% |\n| Common Stock | | The Dugan Family\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 c\/o A.W.Dugan\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 1415 Louisana Street, Suite 3100\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 Houston, TX 77002 | | 6,362,927(3) | | 9.64% | | 9.38% |\n| Series B Preferred | | Excel Mineral Company\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 P.O. Box 3800\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 Santa Barbara, CA 93130 | | 750,000(5) | | 100.00% | | N\/A |\n| Series C Preferred | | Richard A. Woods\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 59 Penn Circle West\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 Penn Plaza Apts.\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 Pittsburgh, PA 15206 | | 48,305(4) | | 27.10% | | \\* |\n| Series C Preferred | | Dr. Warren A. Evans\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 69 Ponfret Landing Road\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 Brooklyn, CT\u00a0\u00a006234 | | 32,203(4) | | 18.10% | | \\* |\n| Series C Preferred | | Edward Robinson\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 1007 Spruce Street, 1st floor\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 Philadelphia, PA 19107 | | 32,203(4) | | 18.10% | | \\* |\n| Series C Preferred | | All Series C Preferred Shareholders as a Group | | 177,904(4) | | 100.00% | | \\* |\n| Common Stock | | John C. Lawrence\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 Russell Lawrence\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 Hart Baitis\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 Garry Babbitt\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 Whitney Ferer\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 Mathew Keane\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 Daniel Parks | | 4,142,235(2) 179,582 34,415 148,056 71,915 10,300 40,000 | | 89.53% 3.88% \\* 3.20% 1.60% \\* \\* \\* | | 6.11% \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\\* \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\\* \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\\* \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\\* \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\\* \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\\* |\n| Common Stock | | All Directors and Executive Officers as a Group | | 4,626,503 | | 100.00% | | 6.82% |\n| Series D Preferred | | John C. Lawrence\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 Leo Jackson\u00a0\u00a0 Garry Babbitt | | 1,590,672(4) 102,000 58,333 | | 90.80% 5.80% 3.40% | | 2.40% \\* \\* |\n| Series D Preferred | | All Series D Preferred Shareholders as a Group | | 1,751,005(4) | | 100.00% | | 2.70% |\n| Common Stock and Preferred Stock w\/voting rights | | All Directors and Executive Officers as a Group All preferred Shareholders that are officers or directors | | 4,626,503(2) - 1,751,005(4) | | 72.55% - 27.45% | | 6.82% - 2.70% |\n| Common and Preferred Voting Stock | | All Directors and Executive Officers as a Group | | 6,377,508 | | 100.00% | | 9.40% |\n\n\n\n\n","source":"UAMY\/10-K\/0001354488-15-001160"} {"title":"PART III","text":"*\u00a0\u00a0\u00a0\u00a0Filed herewith.Reports on Form 8-K","markdown_table":"\n\n\n\n| 10.38 | Memorandum of Understanding with Geosearch Inc. |\n| --- | --- |\n| | |\n| 10.39 | Factoring Agreement-Systran Financial Services Company |\n| | |\n| 10.40 | Mortgage to John C. Lawrence |\n| | |\n| 10.41 | Warrant Issue-Al W. Dugan filed as an exhibit to USAC's Quarterly Report on Form 10-QSB for the quarter ended March 31, 2000 (File No. 001-08675) is incorporated herein by this reference |\n| | |\n| 10.42 | Agreement between United States Antimony Corporation and Thomson Kernaghan & Co., Ltd. filed as an exhibit to USAC form 10-QSB for the quarter ended June 30, 2000 (File No. 001-08675) are incorporated herein by this reference |\n| | |\n| 10.43 | Settlement agreement and release of all claims between the Estate of Bobby C. Hamilton and United States Antimony Corporation filed as an exhibit to USAC form 10-QSB for the quarter ended June 30, 2000 (File No. 001-08675) are incorporated herein by this reference. |\n| | |\n| 10.44 | Supply Contracts with Fortune America Trading Ltd. filed as an exhibit to USAC form 10-QSB for the quarter ended June 30, 2000 (File No. 001-08675) are incorporated herein by this reference |\n| | |\n| 10.45 | Amended and Restated Agreements with Thomson Kernaghan & Co., Ltd, filed as an exhibit to amendment No. 3 to USAC's Form SB-2 Registration Statement (Reg. No. 333-45508), are incorporated herein by this reference |\n| | |\n| 10.46 | Purchase Order from Kohler Company, filed as an exhibit to amendment No. 4 to USAC's Form SB-2 Registration Statement (Reg. No. 333-45508) are incorporated herein by this reference |\n| | |\n| Documents filed as an exhibit to USAC's Form 10-QSB for the quarter ended June 30, 2002 (File No. 001-08675) are incorporated herein by this reference: | |\n| | |\n| 10.47 | Bear River Zeolite Company Royalty Agreement, dated May 29, 2002 |\n| | |\n| 10.48 | Grant of Production Royalty, dated June 1, 2002 |\n| | |\n| 10.49 | Assignment of Common Stock of Bear River Zeolite Company, dated May 29, 2002 |\n| | |\n| 10.50 | Agreement to Issue Warrants of USA, dated May 29, 2002 |\n| | |\n| 10.51 | Secured convertible note payable - Delaware Royalty Company dated December 22, 2003\\* |\n| | |\n| 10.52 | Convertible note payable - John C. Lawrence dated December 22, 2003\\* |\n| | |\n| 10.53 | Pledge, Assignment and Security Agreement dated December 22, 2003\\* |\n| | |\n| 10.54 | Note Purchase Agreement dated December 22, 2003\\* |\n| | |\n| 14.0 | Code of Ethics\\* |\n| | |\n| 31.1 | Rule 13a-14(a)\/15d-14(a) Certifications |\n| | Certification of John C. Lawrence\\* |\n| | |\n| 32.1 | Section 1350 Certifications |\n| | Certification of John C. Lawrence\\* |\n| | |\n| 44.1 | CERCLA Letter from U.S. Forest Service filed as an exhibit to USAC form 10-QSB for the quarter ended June 30, 2000 (File No. 001-08675) are incorporated herein by this reference and filed as an exhibit to USAC's Form 10-KSB for the year ended December 31, 1995 (File No. 1-8675) is incorporated herein by this reference |\n\n\n\n\u00a0\n","source":"UAMY\/10-K\/0001354488-15-001160"} {"title":"F-2","text":"The accompanying notes are an integral part of these consolidated financial statements.\n\u00a0\n\u00a0\n\n\n\u00a0 \n\n\nF-3","markdown_table":"\n\n\n| United States Antimony Corporation and Subsidiaries | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| Consolidated Statements of Operations | | | | | | | | | | | | |\n| For the years ended December 31, 2014, 2013 and 2012 | | | | | | | | | | | | |\n| | | | | | | | | | | | | |\n| | | 2014 | | | | 2013 | | | | 2012 | | |\n| | | | | | | | | | | | | |\n| REVENUES | | $ | 10,772,192 | | | $ | 11,020,829 | | | $ | 12,042,702 | |\n| | | | | | | | | | | | | |\n| COST OF REVENUES | | | 11,111,533 | | | | 11,061,799 | | | | 11,007,802 | |\n| | | | | | | | | | | | | |\n| GROSS PROFIT (LOSS) | | | (339,341 | ) | | | (40,970 | ) | | | 1,034,900 | |\n| | | | | | | | | | | | | |\n| OPERATING EXPENSES: | | | | | | | | | | | | |\n| General and administrative | | | 623,569 | | | | 736,312 | | | | 810,369 | |\n| Salaries and benefits | | | 418,083 | | | | 336,000 | | | | 284,483 | |\n| Gain on sale of asset | | | (35,450 | ) | | | - | | | | - | |\n| Professional fees | | | 207,346 | | | | 224,889 | | | | 258,735 | |\n| TOTAL OPERATING EXPENSES | | | 1,213,548 | | | | 1,297,201 | | | | 1,353,587 | |\n| | | | | | | | | | | | | |\n| LOSS FROM OPERATIONS | | | (1,552,889 | ) | | | (1,338,171 | ) | | | (318,687 | ) |\n| | | | | | | | | | | | | |\n| OTHER INCOME (EXPENSE): | | | | | | | | | | | | |\n| Interest income | | | 7,916 | | | | 3,923 | | | | 8,049 | |\n| Interest expense | | | (1,118 | ) | | | (4,529 | ) | | | (2,691 | ) |\n| Bad debts | | | - | | | | (1,170 | ) | | | - | |\n| Factoring expense | | | (49,364 | ) | | | (71,772 | ) | | | (78,100 | ) |\n| TOTAL OTHER INCOME (EXPENSE) | | | (42,566 | ) | | | (73,548 | ) | | | (72,742 | ) |\n| | | | | | | | | | | | | |\n| LOSS BEFORE INCOME TAXES | | | (1,595,455 | ) | | | (1,411,719 | ) | | | (391,429 | ) |\n| | | | | | | | | | | | | |\n| INCOME TAXES: | | | | | | | | | | | | |\n| Income tax (expense) | | | - | | | | (229,451 | ) | | | (167,107 | ) |\n| TOTAL INCOME TAXES | | | - | | | | (229,451 | ) | | | (167,107 | ) |\n| | | | | | | | | | | | | |\n| NET LOSS | | | (1,595,455 | ) | | | (1,641,170 | ) | | | (558,536 | ) |\n| Preferred dividends | | | (48,649 | ) | | | (48,649 | ) | | | (48,649 | ) |\n| Net loss available to | | | | | | | | | | | | |\n| common stockholders | | $ | (1,644,104 | ) | | $ | (1,689,819 | ) | | $ | (607,185 | ) |\n| | | | | | | | | | | | | |\n| Net loss per share of | | | | | | | | | | | | |\n| common stock basic and diluted: | | $ | (0.03 | ) | | $ | (0.03 | ) | | $ | (0.01 | ) |\n| | | | | | | | | | | | | |\n| Weighted average shares outstanding | | | | | | | | | | | | |\n| basic and diluted: | | | 64,605,253 | | | | 62,281,449 | | | | 61,235,365 | |\n| | | | | | | | | | | | | |\n\n\n","source":"UAMY\/10-K\/0001354488-15-001160"} {"title":"F-2","text":"For the years ended December 31, 2014, 2013, and 2012","markdown_table":"\n\n| United States Antimony Corporation and Subsidiaries |\n| --- |\n| Consolidated Statements of Changes in Stockholders' Equity |\n\n","source":"UAMY\/10-K\/0001354488-15-001160"} {"title":"F-2","text":"The accompanying notes are an integral part of these consolidated financial statements.\n\u00a0\n\n\n\u00a0 \n\n\nF-4","markdown_table":"\n\n\n\n\n\n\n| | | | | | | | | | | | | | | | | | | Additional | | | Notes | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | Total Preferred Stock | | | | | | | | Common Stock | | | | | | | | Paid-In | | | Receivable | | Accumulated | | | | | | |\n| | | Shares | | | | Amount | | | | Shares | | | | Amount | | | | Capital | | | for Stock Sales | | Deficit | | | | Total | | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Balances, December 31, 2011 | | | 2,678,909 | | | $ | 26,788 | | | | 59,349,300 | | | $ | 593,492 | | | $ | 25,635,129 | | | | $ | (19,487,038 | ) | | $ | 6,768,371 | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Issuance of common stock and warrants for cash, | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| net of offering costs | | | | | | | | | | | 2,156,334 | | | | 21,563 | | | | 4,603,200 | | | | | | | | | 4,624,763 | |\n| Issuance of common stock to directors for services: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Accrued in prior year | | | | | | | | | | | 95,835 | | | | 958 | | | | 229,046 | | | | | | | | | 230,004 | |\n| For current year | | | | | | | | | | | 69,992 | | | | 700 | | | | 220,528 | | | | | | | | | 221,228 | |\n| Issuance of common stock for cash through exercise of warrants | | | | | | | | | | | 225,265 | | | | 2,253 | | | | 57,747 | | | | | | | | | 60,000 | |\n| Net loss | | | | | | | | | | | | | | | | | | | | | | | | (558,536 | ) | | | (558,536 | ) |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Balances, December 31, 2012 | | | 2,678,909 | | | | 26,788 | | | | 61,896,726 | | | | 618,966 | | | | 30,745,650 | | | | | (20,045,574 | ) | | | 11,345,830 | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Issuance of common stock and warrants for cash, | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| net of offering costs | | | | | | | | | | | 1,139,480 | | | | 11,396 | | | | 1,135,799 | | | | | | | | | 1,147,195 | |\n| Issuance of common stock and warrants for notes payable | | | | | | | | | | | 120,000 | | | | 1,200 | | | | 148,800 | | | | | | | | | 150,000 | |\n| Net loss | | | | | | | | | | | | | | | | | | | | | | | | (1,641,170 | ) | | | (1,641,170 | ) |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Balances, December 31, 2013 | | | 2,678,909 | | | | 26,788 | | | | 63,156,206 | | | | 631,562 | | | | 32,030,249 | | | | | (21,686,744 | ) | | | 11,001,855 | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Issuance of common stock and exercise of warrants for cash, | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| net of offering costs | | | | | | | | | | | 2,400,071 | | | | 24,001 | | | | 3,046,133 | | | | | | | | | 3,070,134 | |\n| Issuance of common stock for notes payable | | | | | | | | | | | 235,717 | | | | 2,357 | | | | 327,643 | | | | | | | | | 330,000 | |\n| Issuance of common stock to directors for services | | | | | | | | | | | 83,334 | | | | 833 | | | | 149,167 | | | | | | | | | 150,000 | |\n| Issuance of common stock to consultant for services | | | | | | | | | | | 24,000 | | | | 240 | | | | 38,760 | | | | | | | | | 39,000 | |\n| Issuance of common stock for cashless exercise of warrants | | | | | | | | | | | 3,125 | | | | 31 | | | | (31 | ) | | | | | | | | - | |\n| Stock issued for notes receivable | | | | | | | | | | | 125,000 | | | | 1,250 | | | | 148,750 | | (150,000) | | | | | | | - | |\n| Net loss | | | | | | | | | | | | | | | | | | | | | | | | (1,595,455 | ) | | | (1,595,455 | ) |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Balances, December 31, 2014 | | | 2,678,909 | | | $ | 26,788 | | | | 66,027,453 | | | $ | 660,274 | | | $ | 35,740,671 | | $\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0(150,000) | | $ | (23,282,199 | ) | | $ | 12,995,534 | |\n\n\n\n\n\n\n","source":"UAMY\/10-K\/0001354488-15-001160"} {"title":"F-2","text":"The accompanying notes are an integral part of these consolidated financial statements.\n\u00a0\n\n\n\u00a0 \n\n\nF-5\n\n\n\n\n\n\u00a0 \n\n\n\nUnited States Antimony Corporation and Subsidiaries\nNotes to Consolidated Financial Statements\nDecember 31, 2014, 2013 and 2012\n1.Background of Company and Basis of PresentationAGAU Mines, Inc., predecessor of United States Antimony Corporation (\"USAC\" or \"the Company\"), was incorporated in June 1968 as a Delaware corporation to mine gold and silver. USAC was incorporated in Montana in January 1970 to mine and produce antimony products. In June 1973, AGAU Mines, Inc. was merged into USAC. In December 1983, the Company suspended its antimony mining operations when it became possible to purchase antimony raw materials more economically from foreign sources.\u00a0\u00a0The principal business of the Company has been the production and sale of antimony products.During 2000, the Company formed a 75% owned subsidiary, Bear River Zeolite Company (\"BRZ\"), to mine and market zeolite and zeolite products from a mineral deposit in southeastern Idaho.\u00a0\u00a0In 2001, an operating plant was constructed at the zeolite site and zeolite production and sales commenced.\u00a0\u00a0During 2002, the Company acquired the remaining 25% of BRZ and continued to produce and sell zeolite products.During 2005, the Company formed a 100% owned subsidiary, Antimonio de Mexico S.A. de C.V. (\u201cAM\u201d), to explore and develop potential antimony properties in Mexico.During 2006, the Company acquired 100% ownership in United States Antimony, Mexico S.A. de C.V. (\u201cUSAMSA\u201d), which became a wholly-owned subsidiary of the Company.2.Concentrations of Risk","markdown_table":"\n\n\n\n| United States Antimony Corporation and Subsidiaries | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| Consolidated Statements of Cash Flows | | | | | | | | | | | | |\n| For the years ended December 31, 2014, 2013, and 2012 | | | | | | | | | | | | |\n| | | | | | | | | | | | | |\n| | | | | | | | | | | | | |\n| Cash Flows From Operating Activities: | | 2014 | | | | 2013 | | | | 2012 | | |\n| Net loss | | $ | (1,595,455 | ) | | $ | (1,641,170 | ) | | $ | (558,536 | ) |\n| Adjustments to reconcile net loss to net cash | | | | | | | | | | | | |\n| provided (used) by operating activities: | | | | | | | | | | | | |\n| Depreciation and amortization | | | 780,782 | | | | 688,738 | | | | 472,990 | |\n| Gain on sale of asset | | | (35,450 | ) | | | - | | | | - | |\n| Accretion of asset retirement obligation | | | (2,390 | ) | | | 8,040 | | | | 8,040 | |\n| Common stock issued for services | | | 39,000 | | | | - | | | | 221,228 | |\n| Deferred income taxes | | | - | | | | 229,451 | | | | 167,107 | |\n| Change in: | | | | | | | | | | | | |\n| Accounts receivable, net | | | 121,347 | | | | (119,862 | ) | | | 982,405 | |\n| Inventories | | | (398,769 | ) | | | 157,419 | | | | (125,376 | ) |\n| Other current assets | | | (12,596 | ) | | | 137,664 | | | | (114,321 | ) |\n| Other assets | | | (104,524 | ) | | | (13,984 | ) | | | (443,730 | ) |\n| Accounts payable | | | 86,906 | | | | 474,438 | | | | 186,283 | |\n| Accrued payroll, taxes and interest | | | 10,308 | | | | 35,396 | | | | (52,387 | ) |\n| Other accrued liabilities | | | (11,934 | ) | | | 20,525 | | | | (89,072 | ) |\n| Stock payable to directors for services | | | 125,000 | | | | 150,000 | | | | - | |\n| Deferred revenue | | | (31,408 | ) | | | 110,138 | | | | (43,760 | ) |\n| Payables to related parties | | | (7,192 | ) | | | (1,973 | ) | | | (84,452 | ) |\n| Net cash provided (used) by operating activities | | | (1,036,375 | ) | | | 234,820 | | | | 526,419 | |\n| | | | | | | | | | | | | |\n| Cash Flows From Investing Activities: | | | | | | | | | | | | |\n| Purchase of certificates of deposit | | | - | | | | - | | | | (244,090 | ) |\n| Purchase of properties, plants and equipment | | | (1,826,553 | ) | | | (2,733,762 | ) | | | (3,269,811 | ) |\n| Net cash used by investing activities | | | (1,826,553 | ) | | | (2,733,762 | ) | | | (3,513,901 | ) |\n| | | | | | | | | | | | | |\n| Cash Flows From Financing Activities: | | | | | | | | | | | | |\n| Net proceeds from (payments to) factor | | | (164,387 | ) | | | 154,164 | | | | (123,053 | ) |\n| Proceeds from Hillgrove advances | | | 198,571 | | | | - | | | | - | |\n| Proceeds from sale of common stock | | | | | | | | | | | | |\n| and exercise of warrants, net of offering costs | | | 3,070,134 | | | | 1,147,195 | | | | 4,624,763 | |\n| Issuance of common stock pursuant to exercise of warrants | | | - | | | | - | | | | 60,000 | |\n| Proceeds from notes payable to bank | | | - | | | | 138,520 | | | | - | |\n| Payments on notes to bank | | | (138,520 | ) | | | - | | | | - | |\n| Payments on long-term debt | | | (129,530 | ) | | | (273,405 | ) | | | (464,936 | ) |\n| Proceeds from long term debt | | | 130,000 | | | | 352,000 | | | | - | |\n| Proceeds from related party loans | | | 65,300 | | | | - | | | | - | |\n| Payments on related party loans | | | (65,300 | ) | | | - | | | | - | |\n| Change in checks issued and payable | | | - | | | | - | | | | (113,908 | ) |\n| Net cash provided by financing activities | | | 2,966,268 | | | | 1,518,474 | | | | 3,982,866 | |\n| NET INCREASE (DECREASE) IN CASH | | | | | | | | | | | | |\n| AND CASH EQUIVALENTS | | | 103,340 | | | | (980,468 | ) | | | 995,384 | |\n| Cash and cash equivalents at beginning of year | | | 20,343 | | | | 1,000,811 | | | | 5,427 | |\n| Cash and cash equivalents at end of year | | $ | 123,683 | | | $ | 20,343 | | | $ | 1,000,811 | |\n| | | | | | | | | | | | | |\n| SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: | | | | | | | | | | | | |\n| Interest paid in cash (net of amount capitalized) | | $ | 1,118 | | | $ | 2,529 | | | $ | 2,691 | |\n| Noncash investing and financing activities: | | | | | | | | | | | | |\n| Properties, plants & equipment acquired with long-term debt | | $ | 29,185 | | | $ | 762,541 | | | $ | 665,150 | |\n| Properties, plants & equipment acquired with accounts payable | | $ | - | | | $ | 79,105 | | | $ | - | |\n| Imputed interest included in property, plant and equipment | | $ | 45,752 | | | $ | - | | | $ | - | |\n| Common stock issued to directors | | $ | 150,000 | | | $ | - | | | $ | - | |\n| Common stock issued for debt payment | | $ | 330,000 | | | $ | 150,000 | | | $ | - | |\n| Common stock issued for note receivable | | $ | 150,000 | | | $ | - | | | $ | - | |\n| Equipment sold for other asset advances | | $ | 40,000 | | | $ | - | | | $ | - | |\n| | | | | | | | | | | | | |\n\n\n\n","source":"UAMY\/10-K\/0001354488-15-001160"} {"title":"F-2","text":"The Company's revenues from antimony sales are strongly influenced by world prices for such commodities, which fluctuate and are affected by numerous factors beyond the Company's control, including inflation and worldwide forces of supply and demand. The aggregate effect of these factors is not possible to predict accurately.","markdown_table":"\n\n\n| Sales to Three | | | | | | For the Year Ended | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| Largest Customers | | December 31, 2014 | | | | December 31, 2013 | | | | December 31, 2012 | | |\n| Alpha Gary Corporation | | $ | 3,289,766 | | | $ | 3,700,945 | | | $ | 3,245,612 | |\n| East Penn Manufacturing Inc | | | 720,966 | | | $ | - | | | $ | - | |\n| General Electric | | | - | | | | 781,200 | | | | - | |\n| Kohler Corporation | | | 2,091,565 | | | | 2,654,215 | | | | 2,286,938 | |\n| Polymer Products Inc. | | | - | | | | - | | | | 1,119,055 | |\n| | | $ | 6,102,297 | | | $ | 7,136,360 | | | $ | 6,651,605 | |\n| % of Total Revenues | | | 56.65 | % | | | 64.75 | % | | | 55.23 | % |\n| | | | | | | | | | | | | |\n| Three Largest | | | | | | For the Year Ended | | | | | | |\n| Accounts Receivable | | December 31, 2014 | | | | December 31, 2013 | | | | December 31, 2012 | | |\n| Kohler Corporation | | | | | | $ | 202,019 | | | | | |\n| Alpha Gary Corporation | | | | | | | 42,778 | | | $ | 194,005 | |\n| Earth Innovations Inc | | $ | 62,019 | | | | - | | | | - | |\n| Teck American Inc | | | 227,239 | | | | 88,329 | | | | - | |\n| Milestone AV Technologies Inc. | | | 42,075 | | | | - | | | | - | |\n| Quantum Remediation | | | - | | | | - | | | | 101,149 | |\n| Scutter Enterprises | | | - | | | | - | | | | 41,512 | |\n| | | $ | 331,333 | | | $ | 333,126 | | | $ | 336,666 | |\n| % of Total Receivables | | | 72.87 | % | | | 57.83 | % | | | 73.80 | % |\n| | | | | | | | | | | | | |\n\n\n","source":"UAMY\/10-K\/0001354488-15-001160"} {"title":"F-9","text":"The Company\u2019s financial instruments include cash and cash equivalents, certificates of deposits, restricted cash, due to factor, and long-term debt.\u00a0\u00a0The carrying value of certificates of deposit, restricted cash, due to factor, and long-term debt approximates fair value based on the contractual terms of those instruments.Fair Value MeasurementsAccounting Standards\u00a0\u00a0Codification (\u201cASC\u201d) 820, \u201cFair Value Measurements and Disclosures\u201d, requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. ASC 820 establishes a fair value hierarchy based on the level of independent, objective evidence surrounding the inputs used to measure fair value. A financial instrument\u2019s categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. ASC 820 prioritizes the inputs into three levels that may be used to measure fair value.The Company discloses the following information for each class of assets and liabilities that are measured at fair value:\n\n\n\n1.\u00a0\u00a0\n\n\nthe fair value measurement;\n\n\n\n\n\n\n2.\u00a0\u00a0\n\n\nthe level within the fair value hierarchy in which the fair value measurements in their entirety fall, segregating fair value measurements using quoted prices in active markets for identical assets or liabilities (Level 1), significant other observable inputs (Level 2), and significant unobservable inputs (Level 3);\n\n\n\n\n\n\n3.\u00a0\u00a0\n\n\nfor fair value measurements using significant unobservable inputs (Level 3), a reconciliation of the beginning and ending balances, separately presenting changes during the period attributable to the following:\n\n\n\n\n\n\na.\u00a0\u00a0\n\n\ntotal gains or losses for the period (realized and unrealized), segregating those gains or losses included in earnings, and a description of where those gains or losses included in earnings\u00a0\u00a0are reported in the statement of operations;\n\n\n\n\n\n\nb.\u00a0\u00a0\n\n\nthe amount of these gains or losses attributable to the change in unrealized gains or losses relating to those assets or liabilities still held at the reporting period date and a description of where those unrealized gains or losses are reported;\n\n\n\n\n\n\nc.\u00a0\u00a0\n\n\npurchases, sales, issuances, and settlements (net); and\n\n\n\n\n\n\nd.\u00a0\u00a0\n\n\ntransfers into and\/or out of Level 3.\n\n\n\n\n\n\n4.\u00a0\u00a0\n\n\nthe amount of the total gains or losses for the period included in earnings\u00a0\u00a0that are attributable to the change in unrealized gains or losses relating to those assets and liabilities still held at the reporting date and a description of where those unrealized gains or losses are reported in the statement of operations; and\n\n\n\n\n\n\n5.\u00a0\u00a0\n\n\nin annual periods only, the valuation technique(s) used to measure fair value and a discussion of changes in valuation techniques, if any, during the period.","markdown_table":"\n\n\n\n| | | December 31,\u00a02014 | | | | December 31,\u00a02013 | | | | December 31,\u00a02012 | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| Warrants | | | 726,917 | | | | 2,489,407 | | | | 1,934,667 | |\n| Convertible preferred stock | | | 1,751,005 | | | | 1,751,005 | | | | 1,751,005 | |\n| Total possible dilution | | | 2,477,922 | | | | 4,240,412 | | | | 3,685,672 | |\n| | | | | | | | | | | | | |\n\n\n\n","source":"UAMY\/10-K\/0001354488-15-001160"} {"title":"F-10","text":"Recent Accounting PronouncementsIn July\u00a02013, the FASB issued ASU 2013-11, \u201cPresentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists\u201d (\u201cASU 2013-11\u201d). ASU 2013-11 provides guidance on the presentation of unrecognized tax benefits related to any disallowed portion of net operating loss carryforwards, similar tax losses, or tax credit carryforwards, if they exist. ASU 2013-11 is effective for fiscal years beginning after December\u00a015, 2013. The adoption of ASU 2013-11 is not expected to have a material impact on the Company\u2019s consolidated financial statements.In August 2014, the FASB issued ASU No. 2014-15, \u201cPresentation of Financial Statements\u2014Going Concern.\u201d The provisions of ASU No. 2014-15 require management to assess an entity\u2019s ability to continue as a going concern by incorporating and expanding upon certain principles that are currently in U.S. auditing standards. Specifically, the amendments (1) provide a definition of the term substantial doubt, (2) require an evaluation every reporting period including interim periods, (3) provide principles for considering the mitigating effect of management\u2019s plans, (4) require certain disclosures when substantial doubt is alleviated as a result of consideration of management\u2019s plans, (5) require an express statement and other disclosures when substantial doubt is not alleviated, and (6) require an assessment for a period of one year after the date that the financial statements are issued (or available to be issued). The amendments in this ASU are effective for the annual period ending after December 15, 2016, and for annual periods and interim periods thereafter. The Company is currently assessing the impact of ASU No. 2014-15 on the Company\u2019s consolidated financial statements once adopted.Other accounting standards that have been issued or proposed by FASB that do not require adoption until a future date are not expected to have a material impact on the consolidated financial statements upon adoption. The Company does not discuss recent pronouncements that are not anticipated to have an impact on or are unrelated to its financial condition, results of operations, cash flows or disclosures.4.\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0Accounts Receivable and Due to FactorThe Company factors designated trade receivables pursuant to a factoring agreement with LSC Funding Group L.C., an unrelated factor (the \u201cFactor\u201d).\u00a0\u00a0The agreement specifies that eligible trade receivables are factored with recourse.\u00a0\u00a0\u00a0The performance of all obligations and payments to the factoring company is personally guaranteed by John C. Lawrence, the Company\u2019s President and Chairman of the Board of Directors.\u00a0\u00a0Selected trade receivables are submitted to the factor, and the Company receives 85% of the face value of the receivable by wire transfer. Upon payment by the customer, the remainder of the amount due is received from the Factor, less a one-time servicing fee of 2% for the receivables factored.\u00a0\u00a0This servicing fee is recorded on the consolidated statement of operations in the period of sale to the factor.","markdown_table":"\n\n\n\n| | | | | | | | | Input |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | | | | | | | Hierarchy |\n| Assets: | | 2014 | | | 2013 | | | Level |\n| Cash and cash equivalents | | $ | 123,683 | | $ | 20,343 | | Level 1 |\n| Certificates of deposit | | | 249,147 | | | 246,565 | | Level 1 |\n| Restricted cash | | | 75,754 | | | 75,501 | | Level 1 |\n| Total | | $ | 448,584 | | $ | 342,409 | | |\n| | | | | | | | | |\n\n\n\n","source":"UAMY\/10-K\/0001354488-15-001160"} {"title":"F-11","text":"Factoring fees paid by the Company during the years ended December 31, 2014, 2013 and 2012 were $49,364, $71,772, and $78,100, respectively.\u00a0\u00a0For the years ended December 31, 2014, 2013, and 2012, net accounts receivable of approximately $2.30 million, $3.28 million, and $3.80 million, respectively, were sold under the agreement.Proceeds from the sales were used to fund inventory purchases and operating expenses.\u00a0\u00a0The agreement is for a term of one year with automatic renewal for additional one-year terms.5.InventoriesThe major components of the Company's inventories at December 31, 2014 and 2013 were as follows:","markdown_table":"\n\n\n\n| Accounts Receivble | | December 31, 2014 | | | | December 31, 2013 | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| Accounts receivable - non factored | | $ | 445,391 | | | $ | 402,351 | |\n| Accounts receivable - factored with recourse | | | 13,314 | | | | 177,701 | |\n| less allowance for doubtful accounts | | | (4,031 | ) | | | (4,031 | ) |\n| Accounts receivable - net | | $ | 454,674 | | | $ | 576,021 | |\n\n\n\n","source":"UAMY\/10-K\/0001354488-15-001160"} {"title":"F-11","text":"At December 31, 2014 and 2013, antimony metal consisted principally of recast metal from antimony-based compounds, and metal purchased from foreign suppliers.\u00a0\u00a0Antimony oxide inventory consisted of finished product oxide held at the Company's plant. Antimony concentrates and ore was held primarily at sites in Mexico and is essentially raw material, carried at cost.\u00a0\u00a0\u00a0The Company's zeolite inventory consists of salable zeolite material held at BRZ's Idaho mining and production facility, and is carried at cost.","markdown_table":"\n\n\n| | | 2014 | | | | 2013 | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| Antimony Metal | | $ | 40,352 | | | $ | 33,850 | |\n| Antimony Oxide | | | 718,982 | | | | 535,251 | |\n| Antimony Concentrates | | | 33,545 | | | | 93,190 | |\n| Antimony Ore | | | 447,262 | | | | 106,519 | |\n| Total antimony | | | 1,240,141 | | | | 768,810 | |\n| Zeolite | | | 193,398 | | | | 265,960 | |\n| | | $ | 1,433,539 | | | $ | 1,034,770 | |\n| | | | | | | | | |\n\n\n","source":"UAMY\/10-K\/0001354488-15-001160"} {"title":"F-12","text":"7.\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0Asset Retirement Obligation and Accrued Reclamation CostsDuring 2011, the Company assessed the obligation for removal and remediation costs relating to its plants and mine in Mexico.\u00a0\u00a0Management assigned a cost to the expected work involved in complying with the requirements of the Mexico operating permits.\u00a0\u00a0Management applied, based on a 20 year life, a cost inflation factor, and then discounted that cost to a current net present value based on a discount rate of 6% (management\u2019s estimate of its credit-adjusted interest rate). During 2011, management determined a future cost in 2031 of approximately $430,000 with a net present value of $134,000.","markdown_table":"\n\n\n\n| 2014 | | USAC | | | | MEXICO | | | | BRZ | | | | TOTAL | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| Plant & Equipment | | $ | 814,183 | | | $ | 6,159,064 | | | $ | 3,166,701 | | | $ | 10,139,948 | |\n| Buildings | | | 243,248 | | | | 834,269 | | | | 349,946 | | | | 1,427,463 | |\n| Mineral Rights | | | - | | | | 1,117,636 | | | | | | | | 1,117,636 | |\n| Land & Other | | | 3,274,572 | | | | 3,367,708 | | | | | | | | 6,642,280 | |\n| | | | 4,332,003 | | | | 11,478,677 | | | | 3,516,647 | | | | 19,327,327 | |\n| Accumulated Depreciation | | | (2,395,109 | ) | | | (1,482,098 | ) | | | (1,938,317 | ) | | | (5,815,524 | ) |\n| | | $ | 1,936,894 | | | $ | 9,996,579 | | | $ | 1,578,330 | | | $ | 13,511,803 | |\n| | | | | | | | | | | | | | | | | |\n| 2013 | | USAC | | | | MEXICO | | | | BRZ | | | | TOTAL | | |\n| Plant & Equipment | | $ | 749,493 | | | $ | 4,952,524 | | | $ | 3,041,934 | | | $ | 8,743,951 | |\n| Buildings | | | 242,186 | | | | 787,917 | | | | 349,946 | | | | 1,380,049 | |\n| Mineral Rights | | | - | | | | 916,522 | | | | - | | | | 916,522 | |\n| Land & Other | | | 3,270,248 | | | | 3,123,067 | | | | - | | | | 6,393,315 | |\n| | | | 4,261,927 | | | | 9,780,030 | | | | 3,391,880 | | | | 17,433,837 | |\n| Accumulated Depreciation | | | (2,333,484 | ) | | | (987,621 | ) | | | (1,717,087 | ) | | | (5,038,192 | ) |\n| | | $ | 1,928,443 | | | $ | 8,792,409 | | | $ | 1,674,793 | | | $ | 12,395,645 | |\n\n\n\n","source":"UAMY\/10-K\/0001354488-15-001160"} {"title":"F-12","text":"The Company\u2019s total asset retirement obligation and accrued reclamation costs of $255,190 and $257,580 at December 31, 2014 and 2013, respectively include reclamation obligations for Idaho and Montana operations of $107,500.(1) During 2014, an adjustment was made to correct immaterial excess accretion expense recognized in 2013 and 2012.","markdown_table":"\n\n\n\n| Asset Retirement Obligation | | | | |\n| --- | --- | --- | --- | --- |\n| | | | | |\n| Balance December 31, 2011 | | $ | 134,000 | |\n| Accretion | | | 8,040 | |\n| Balance December 31, 2012 | | | 142,040 | |\n| Accretion | | | 8,040 | |\n| Balance December 31, 2013 | | | 150,080 | |\n| Accretion | | | (2,390) | (1) |\n| Balance December 31, 2014 | | $ | 147,690 | |\n\n\n\n","source":"UAMY\/10-K\/0001354488-15-001160"} {"title":"F-15","text":"10.\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0Notes Payable to BankAt December 31, 2013, the Company had the following notes payable to the bank:","markdown_table":"\n\n\n\n| Year Ending December 31, | | | | |\n| --- | --- | --- | --- | --- |\n| 2015 | | | 159,278 | |\n| 2016 | | | 107,035 | |\n| 2017 | | | 100,000 | |\n| 2018 | | | 174,589 | |\n| 2019 | | | 200,000 | |\n| 2020 | | | 200,000 | |\n| 2021 | | | 100,000 | |\n| Less remaining discount (see Note 8) | | | (166,296 | ) |\n| | | $ | 874,606 | |\n\n\n\n","source":"UAMY\/10-K\/0001354488-15-001160"} {"title":"F-15","text":"These notes are personally guaranteed by John C. Lawrence the Company\u2019s President and Chairman of the Board of Directors.\u00a0\u00a0The Company paid the notes in full during 2014.\n\n\n11.\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0Hillgrove Advances Payable\n\n\n\n\u00a0 \n\n\nOn November 7, 2014, the Company entered into a loan and processing agreement with Hillgrove Mines Pty Ltd of Australia (Hillgrove) by which Hillgrove will advance the Company funds to be used to expand their smelter in Madero, Mexico, and in Thompson Falls, Montana, so that they may process antimony and gold concentrates produced by Hillgrove\u2019s mine in New South Wales, Australia.\u00a0\u00a0The agreement requires that the Company will construct equipment so that it can process approximately 200 metric tons of concentrate initially shipped by Hillgrove, with a provision so that the Company may expand to process more than that.\u00a0\u00a0The parties contemplate that the equipment will be owned by USAC and USAMSA. The final terms of when the repayment takes place have not yet been agreed on.\u00a0\u00a0The Company will also sell the final product for Hillgrove, and Hillgrove will have approval rights of the customers for their products.\u00a0\u00a0The agreement allows the Company to recover its operating costs as approved by Hillgrove, and to charge a 7.5% processing fee and a 2.0% sales commission.\u00a0\u00a0The initial term of the agreement is five years; however, Hillgrove may suspend or terminate the agreement at its discretion.\u00a0\u00a0The Company may terminate the agreement and begin using the furnaces for their own production if Hillgrove fails to recommence shipments within 365 days of a suspension notice. If a stop notice is issued by Hillgrove within one year of the date of the agreement, the Company is only obligated to repay 50% of the funds advanced at that point.\u00a0\u00a0If a stop notice is issued between one year and two years, there is a formula to prorate the repayment amount from 50% to 81.25%.\u00a0\u00a0If a stop order is issued after two years, the repayment obligation is 81.25% of the funds advanced at that point. The Company has recorded the Hillgrove advances payable net of the 18.75% discount on the obligation due if Hillgrove issues a stop order after two years.\u00a0\u00a0The discount of $37,232 is classified as deferred revenue and will be recognized ratably over a two year period. During the last quarter of 2014 Hillgrove advanced the Company $198,571, of which $161,339 has been recorded as a long-term liability at December 31, 2014.","markdown_table":"\n\n\n| Promissory note payable to First Security Bank of Missoula, bearing interest at 3.150%, maturing February 27, 2014, payable on demand, collateralized by a lien on Certificate of Deposit number 48614 | $ | 70,952 |\n| --- | --- | --- |\n| Promissory note payable to First Security Bank of Missoula, bearing interest at 3.150%, maturing February 27, 2014, payable on demand, collateralized by a lien on Certificate of Deposit number 48615 | | 67,568 |\n| Total notes payable to bank | $ | 138,520 |\n\n\n","source":"UAMY\/10-K\/0001354488-15-001160"} {"title":"F-17","text":"Preferred StockThe Company's Articles of Incorporation authorize 10,000,000 shares of $0.01 par value preferred stock available for issuance with such rights and preferences, including liquidation, dividend, conversion, and voting rights, as the Board of Directors may determine.Series BDuring 1993, the Board established a Series B preferred stock, consisting of 750,000 shares.\u00a0\u00a0The Series B preferred stock has preference over the Company's common stock and Series A preferred stock; has no voting rights (absent default in payment of declared dividends); and is entitled to cumulative dividends of $0.01 per share per year, payable if and when declared by the Board of Directors.\u00a0\u00a0During the years ended December 31, 2014 and 2013 the Company recognized $7,500 in Series B preferred stock dividend.\u00a0\u00a0In the event of dissolution or liquidation of the Company, the preferential amount payable to Series B preferred stockholders is $1.00 per share plus dividends in arrears. No dividends have been declared or paid with respect to the Series B preferred stock. The Series B Preferred stock is no longer convertible to shares of the Company\u2019s common stock.\u00a0\u00a0At December 31, 2014 and 2013, cumulative dividends in arrears on the outstanding Series B shares were $142,500 and $135,000, respectively. Series CDuring 2000, the Board established a Series C preferred stock, consisting of 205,996 shares.\u00a0\u00a0In 2002, 28,092 shares were converted to common stock and cancelled, leaving 177,904 Series C preferred shares authorized and outstanding.\u00a0\u00a0The Series C preferred stock has preference over the Company\u2019s common stock and has voting rights equal to that number of shares outstanding, but no conversion or dividend rights.\u00a0\u00a0In the event of dissolution or liquidation of the Company, the preferential amount payable to Series C preferred stockholders is $0.55 per share.","markdown_table":"\n\n\n\n| Year ending December 31: | | | | |\n| --- | --- | --- | --- | --- |\n| 2015 | | | 476,917 | |\n| Thereafter | | | 250,000 | |\n| | | | 726,917 | |\n\n\n\n","source":"UAMY\/10-K\/0001354488-15-001160"} {"title":"F-19","text":"At December 31, 2014, 2013 and 2012, the Company had net deferred tax assets as follows:","markdown_table":"\n\n\n\n| | | 2014 | | | | 2013 | | | | 2012 | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| Domestic | | $ | (345,293 | ) | | $ | 163,632 | | | $ | 301,391 | |\n| Foreign | | | (1,250,162 | ) | | | (1,575,351 | ) | | | (692,820 | ) |\n| Total | | | (1,595,455 | ) | | | (1,411,719 | ) | | | (391,429 | ) |\n\n\n\n","source":"UAMY\/10-K\/0001354488-15-001160"} {"title":"F-19","text":"At December 31, 2014, the Company has United States net operating loss carry forwards of approximately $600,000 that expire at various dates between 2029 and 2034.\u00a0\u00a0In addition, the company has unexpired Montana state net operating loss carry forwards of approximately $2,016,000 which expire between 2016 and 2021, and unexpired Idaho state net operating loss carry forwards of approximately $1,140,000, which expire in 2032 and 2034.\u00a0\u00a0The company has approximately $6.4 million of Mexican net operating loss carry forwards which expire between 2021 and 2024.At December 31 2014 and 2013, the Company had deferred tax assets arising principally from net operating loss carry forwards for income tax purposes.\u00a0\u00a0As management cannot determine that it is more likely than not that we will realize the benefit of the net deferred tax asset, a valuation allowance equal to 100% of the net deferred tax asset has been recorded at December 31, 2014 and 2013.","markdown_table":"\n\n\n\n| | | 2014 | | | | 2013 | | | | 2012 | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| Deferred tax asset: | | | | | | | | | | | | |\n| Other | | $ | - | | | $ | - | | | $ | 11,151 | |\n| Foreign exploration costs | | | 127,936 | | | | 168,401 | | | | 208,855 | |\n| Foreign net operating loss carry forward | | | 1,926,341 | | | | 232,723 | | | | 374,110 | |\n| Foreign other | | | - | | | | 42,612 | | | | 217,887 | |\n| Federal and state net\u00a0\u00a0operating | | | | | | | | | | | | |\n| loss carry forward | | | 337,890 | | | | 35,424 | | | | 39,824 | |\n| Deferred tax asset | | | 2,392,167 | | | | 479,160 | | | | 851,827 | |\n| | | | | | | | | | | | | |\n| Valuation allowance (foreign) | | | (1,926,341 | ) | | | (279,235 | ) | | | (605,496 | ) |\n| Valuation allowance (federal) | | | (266,711 | ) | | | (71,786 | ) | | | - | |\n| Total deferred tax asset | | | 199,115 | | | | 128,139 | | | | 246,331 | |\n| | | | | | | | | | | | | |\n| Deferred tax liability: | | | | | | | | | | | | |\n| Property, plant, and equipment | | | (197,593 | ) | | | (128,139 | ) | | | (16,880 | ) |\n| Other | | | (1,522 | ) | | | | | | | | |\n| Total deferred tax liability | | | (199,115 | ) | | | (128,139 | ) | | | (16,880 | ) |\n| | | | | | | | | | | | | |\n| Net Deferred Tax Asset | | $ | - | | | $ | - | | | $ | 229,451 | |\n\n\n\n","source":"UAMY\/10-K\/0001354488-15-001160"} {"title":"F-20","text":"During the years ended December 31, 2014, 2013, and 2012, there were no material uncertain tax positions taken by the Company.\u00a0\u00a0The Company United States income tax filings are subject to examination for the years 2012 through 2014, and 2010 and 2014 in Mexico. In the event that the Company is assessed penalties and or interest, penalties will be charged to other operating expense and interest will be charged to interest expense.15.Related-Party TransactionsThe Company\u2019s President and Chairman, John Lawrence, rents equipment and an aircraft to the Company and charges the Company for lodging and meals provided to consultants, customers and other parties by an entity that Mr. Lawrence owns.Transactions due to (due from) Mr. Lawrence during 2014, 2013, and 2012 were as follows:","markdown_table":"\n\n\n\n| Computed expected tax provision (benefit) | | $ | (558,409 | ) | | | -35.0 | % | | $ | (494,102 | ) | | | -35.0 | % | | $ | (137,000 | ) | | | -35.0 | % |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| Foreign taxes | | | 62,508 | | | | 3.9 | % | | | 78,768 | | | | 5.6 | % | | | 34,641 | | | | 8.9 | % |\n| Other (1) | | | (1,346,130 | ) | | | -84.4 | % | | | 899,260 | | | | 63.7 | % | | | 61,770 | | | | 15.8 | % |\n| Change in valuation allowance U.S. | | | 194,925 | | | | 12.2 | % | | | 71,786 | | | | 5.1 | % | | | 207,696 | | | | 53.1 | % |\n| Change in valuation allowance Foreign | | | 1,647,106 | | | | 103.2 | % | | | | | | | | | | | | | | | | |\n| Release of valuation allowance Foreign | | | | | | | | | | | (326,261 | ) | | | -23.1 | % | | | - | | | | 0.0 | % |\n| Total | | $ | - | | | | - | | | $ | 229,451 | | | | 16 | % | | $ | 167,107 | | | | 42.7 | % |\n| | | | | | | | | | | | | | | | | | | | | | | | | |\n| (1)\u00a0In 2014 and 2013 there were revisions to estimates of foreign net operating loss carry forwards. | | | | | | | | | | | | | | | | | | | | | | | | |\n\n\n\n","source":"UAMY\/10-K\/0001354488-15-001160"} {"title":"F-20","text":"In addition, during 2014, Mr. Lawrence loaned the Company $65,300 for short-term operating capital and was paid back without interest during 2014.The Chairman of the audit committee and compensation committee received $36,000 in cash during 2014 and 2013 for services performed. The Chairman of the audit committee and compensation committee and one other audit committee member received a total of $56,000 in cash during 2012 for services performed.In addition to the transactions described above,\u00a0during 2014, 2013, and 2012, the Company had the following transactions with related parties:\n\n\n\n\u25cf\u00a0\u00a0\n\n\nDuring 2014, 2013, and 2012, the Company paid $82,505, $81,642, and $89,204, respectively, to a former director for development of Mexican mill sites and consulting fees.","markdown_table":"\n\n\n\n| | | 2014 | | | | 2013 | | | | 2012 | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| Balance, beginning of year | | $ | 15,549 | | | $ | 17,522 | | | $ | 47,843 | |\n| Aircraft and equipment rental charges, and other | | | 30,561 | | | | 65,502 | | | | 74,490 | |\n| Payments, net | | | (37,753 | ) | | | (67,475 | ) | | | (104,811 | ) |\n| Balance, end of year | | $ | 8,357 | | | $ | 15,549 | | | $ | 17,522 | |\n\n\n\n","source":"UAMY\/10-K\/0001354488-15-001160"} {"title":"ITEM 7.\u00a0MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS","text":"Overview\n\n\n\n\u25cf\n\n\nOur cost of production was elevated for the year ending December 31, 2012, because we were starting a major mining and production facility in Mexico.\u00a0The same workers responsible for production were also a significant part of building and testing the manufacturing plants and equipment at Puerto Blanco, and Madero, Mexico, which resulted in costs that won\u2019t be incurred when construction and testing is complete.\u00a0\u00a0To a lesser degree, we incurred similar costs at our plant in Thompson Falls, Montana.\u00a0\u00a0There will still be some overlapping costs in the first quarter of 2013 because the plants are still in a shakedown mode, but it should be less for 2013 than 2012.\n\n\n\n\n\n\n\u25cf\u00a0\u00a0\n\n\nAlthough we are expanding our operations in Mexico, we still purchase significant raw materials from our suppliers.\u00a0We will remain an antimony producer, although we anticipate greater revenue from precious metals and zeolite.\n\n\n\n\n\n\n\u25cf\u00a0\u00a0\n\n\nWe are producing our own raw materials from our mine, mill, and smelter in Mexico, which will allow us to ensure a steady flow of products for sale.\u00a0\u00a0Our mine at Los Juarez, our Puerto Blanco mill, and our smelter at Madero, Mexico, will be producing a significant portion of our raw materials commencing in 2013.\u00a0\u00a0Our company-wide production for 2013 is expected to double that of 2012.\u00a0We completed the installation of more crusher capacity, the flotation and ball mill, and more smelter furnaces in Mexico during 2012, and we therefore expect more sales in 2013 due to the availability of more raw materials.\n\n\n\n\n\n\n\u25cf\u00a0\u00a0\n\n\nWe have also commenced installation of a natural gas pipeline to replace propane as the fuel used in our Mexico smelter, which we expect to be finished by May of 2013.\u00a0\u00a0We expect the pipeline to cost approximately $1.2 million dollars when completed, and that it will reduce our smelter fuel cost by approximately 75%.\u00a0We have spent $584,000 on construction as of December 31, 2012.\n\n\n\n\n\n\n\u25cf\u00a0\u00a0\n\n\n\u00a0We are initiating the installation of a 400 - 500 ton per day flotation mill to be completed by the end of 2013 that we expect to cost between $400,000 and $500,000 to install.\u00a0This mill will be dedicated to processing ore from the Los Juarez mining property, and, in addition to the increase in antimony production, it will increase our precious metals revenue significantly.\u00a0We have adequate crushing capacity in place to feed the 500 ton per day mill and the existing mill.\n\n\n\n\n\n\n\u25cf\u00a0\u00a0\n\n\n\u00a0The increased production from Los Juarez will also create a significant increase in our precious metals revenue for 2013 and 2014.\n\n\n\n\n\n\n\u25cf\u00a0\u00a0\n\n\n\u00a0If the world economy improves, we expect to benefit from an increase in antimony prices.\u00a0If the world economy does not improve, or if it worsens, we expect to see stagnant or decreasing commodity prices for antimony.\u00a0\n\n\nOur principal smelter, precious metals recovery operation, and our Company headquarters remain in Montana.\u00a0With increased production, we expect to widen our base of customers.","markdown_table":"\n\n\n| Results of Operations by Division | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| Antimony - Combined USA and Mexico | | | | | | | | | | | | |\n| | | 2012 | | | | 2011 | | | | 2010 | | |\n| Lbs of Antimony Metal USA | | | 1,031,164 | | | | 1,179,973 | | | | 1,334,452 | |\n| Lbs of Antimony Metal Mexico: | | | 372,046 | | | | 221,450 | | | | 59,152 | |\n| Total Lbs of Antimony Metal Sold | | | 1,403,210 | | | | 1,401,423 | | | | 1,393,604 | |\n| Sales Price\/Lb Metal | | $ | 6.24 | | | $ | 7.43 | | | $ | 4.43 | |\n| Net income (loss)\/Lb Metal | | $ | (0.50 | ) | | $ | 0.45 | | | $ | (0.11 | ) |\n| | | | | | | | | | | | | |\n| Gross antimony revenue - net of discount | | $ | 8,753,449 | | | $ | 10,406,636 | | | $ | 6,174,062 | |\n| Precious metals revenue | | | 647,554 | | | | 667,813 | | | | 483,307 | |\n| Production costs - USA | | | (5,665,806 | ) | | | (7,294,421 | ) | | | (4,786,197 | ) |\n| Product cost - Mexico | | | (1,677,927 | ) | | | (1,031,957 | ) | | | (275,648 | ) |\n| Direct sales and freight | | | (279,694 | ) | | | (281,089 | ) | | | (282,070 | ) |\n| General and administrative - operating | | | (353,656 | ) | | | (280,853 | ) | | | (80,267 | ) |\n| Mexico non-production costs | | | (678,053 | ) | | | (430,601 | ) | | | (160,819 | ) |\n| General and administrative - non-operating | | | (1,193,583 | ) | | | (936,873 | ) | | | (1,069,270 | ) |\n| Net interest | | | 6,059 | | | | 5,205 | | | | 7,751 | |\n| EBITDA | | | (441,657 | ) | | | 823,860 | | | | 10,849 | |\n| Depreciation & amortization | | | (263,214 | ) | | | (199,515 | ) | | | (168,808 | ) |\n| Net income (Loss) - antimony | | $ | (704,871 | ) | | $ | 624,345 | | | $ | (157,959 | ) |\n| | | | | | | | | | | | | |\n| Zeolite | | | | | | | | | | | | |\n| Tons sold | | | 12,189 | | | | 12,105 | | | | 15,319 | |\n| Sales Price\/Ton | | $ | 216.73 | | | $ | 168.83 | | | $ | 157.71 | |\n| Net income (Loss)\/Ton | | $ | 25.72 | | | $ | 9.76 | | | $ | 30.69 | |\n| | | | | | | | | | | | | |\n| Gross zeolite revenue | | $ | 2,641,699 | | | $ | 2,043,641 | | | $ | 2,415,955 | |\n| Production costs | | | (1,618,816 | ) | | | (1,221,101 | ) | | | (1,254,375 | ) |\n| Direct sales and freight | | | (169,346 | ) | | | (183,333 | ) | | | (86,737 | ) |\n| Royalties | | | (234,343 | ) | | | (197,371 | ) | | | (229,352 | ) |\n| General and administrative - operating | | | (95,275 | ) | | | (117,420 | ) | | | (188,251 | ) |\n| Net interest | | | (701 | ) | | | | | | | | |\n| EBITDA | | | 523,218 | | | | 324,416 | | | | 657,240 | |\n| Depreciation | | | (209,776 | ) | | | (206,231 | ) | | | (187,068 | ) |\n| Net income\u00a0\u00a0(Loss) - zeolite | | $ | 313,442 | | | $ | 118,185 | | | $ | 470,172 | |\n| | | | | | | | | | | | | |\n| Company-wide | | | | | | | | | | | | |\n| Gross revenue | | $ | 12,042,702 | | | $ | 13,118,090 | | | $ | 9,073,324 | |\n| Production costs | | | (8,962,549 | ) | | | (9,547,479 | ) | | | (6,316,220 | ) |\n| Other operating costs | | | (1,810,367 | ) | | | (1,490,667 | ) | | | (1,027,496 | ) |\n| General and administrative - non-operating | | | (1,193,583 | ) | | | (936,873 | ) | | | (1,069,270 | ) |\n| Net interest | | | 5,358 | | | | 5,205 | | | | 7,751 | |\n| EBITDA | | | 81,561 | | | | 1,148,276 | | | | 668,089 | |\n| Income tax benefit (expense) | | | (167,107 | ) | | | (105,610 | ) | | | 493,000 | |\n| Depreciation & amortization | | | (472,990 | ) | | | (405,746 | ) | | | (355,876 | ) |\n| Net income\u00a0\u00a0(Loss) | | $ | (558,536 | ) | | $ | 636,920 | | | $ | 805,213 | |\n\n\n","source":"UAMY\/10-K\/0001354488-13-001259"} {"title":"ITEM 7.\u00a0MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS","text":"During the three year period ending December 31, 2012, the most significant event affecting our financial performance was the fluctuation in the price of antimony (see table page 6).\u00a0\u00a0During the year ending December 31, 2012, the most significant event was the commencement of production at our Mexico operations which caused our reported operating costs to be elevated when compared to years when we were not initiating the operation of a new production facility.\u00a0\u00a0During the year ending December 31, 2010, we recorded an impairment loss of $199,302.\u00a0\u00a0Going forward, the increased supply of raw material from Mexico and the metal prices for both antimony and precious metals, will be the most significant factors influencing our operations.\u00a0\u00a0The following are highlights of the significant changes during the three year period:\n\n\n\n\u25cf\u00a0\u00a0\n\n\nRevenues from antimony sales in 2012 were approximately $1,653,000 (16%) smaller than 2011 primarily due to a decrease in the price of antimony.\u00a0\u00a0Our revenues from antimony increased in 2011 by approximately $4,233,000 (68%) from 2010 primarily due to an increase in the price of antimony metal (approximately $4,135,000).\n\n\n\n\n\n\n\u25cf\u00a0\u00a0 \n\n\nOur cost of goods sold for antimony for 2012 decreased by approximately $790,000 for 2012 due to a decrease in our raw materials cost, but was a greater per cent of sales than in prior years primarily due to costs associated with starting a major production facility in Mexico. Our cost of goods sold for antimony during 2011 and 2010 increased by approximately $3,765,000 (65%) and $3,539,000 (159%), respectively.\u00a0\u00a0The increase in cost of goods sold in 2011 was primarily due to the increase in the cost of our raw materials, and the increase in 2010 was due to the increase in the price of metal and increased production.\u00a0\u00a0For all three years, costs of goods sold include production costs from Mexico operations.\u00a0\u00a0The cost of goods sold during all years has been impacted by an increase in the cost of operating supplies, such as fuel, trucking, insurance, refractor costs, steel, and propane.\n\n\n\n\n\n\n\u25cf\u00a0\u00a0 \n\n\nOur volume of zeolite sold was nearly the same in 2012 as 2011, but total revenue increased by approximately $598,000.\u00a0\u00a0In 2012, we sold more products with additives, which are higher priced, than we did in 2011, and we raised prices for most products due to our increased operating costs.\u00a0\u00a0Our cost of goods sold for 2012 increased by approximately $354,000 from 2011, primarily due to the cost of additives, drying, blending, and overall operating cost increases.\u00a0\u00a0Our revenues from zeolite were up both in price and tons sold (approximately $880,000) in 2010 from 2009.\u00a0\u00a0This was primarily due to a contract for nuclear remediation with the Department of Energy.\u00a0\u00a0That contract was not ongoing in 2011, which was the primary cause for a decrease of\u00a0\u00a0approximately 3,200 tons sold (approximately $500,000).\u00a0\u00a0Although tons sold for 2011 was less than 2010, there was an increase in the sales price per ton which accounted for an increase in revenue of approximately $130,000.\u00a0\u00a0The increase in the price for 2011 was mainly due to an additive, drying, and blending for a customer, which also caused a similar increase in our cost of production for 2011.\n\n\n\n\n\n\n\u25cf\u00a0\u00a0 \n\n\nGeneral and administrative costs, as reported in our statement of operations, include fees paid to directors through stock based compensation. In 2012, we incurred $88,000 in fees to the NYSE MKT that were included in general and administrative expenses.\u00a0\u00a0General and administrative costs for both 2012 and 2011 include general and administrative costs related to commencement of production at our facilities in Mexico.\u00a0\u00a0The combined general and administrative costs were 5.5% and 4.0% of sales for 2012 and 2011, respectively.\n\n\n\n\n\n\n\u25cf\u00a0\u00a0 \n\n\nThe increase in professional fees for 2012, 2011, and 2010 (approximately $39,600, $52,500 and $ 30,700, respectively) was primarily due to increased costs related to our audits and financial statement preparation.\n\n\n\n\n\n\n\u25cf\u00a0\u00a0 \n\n\nFactoring costs decreased in 2012 by approximately $76,100 as we were able to reduce our collection time for accounts receivable.\u00a0\u00a0Our discount to customers for early payment increased by approximately $42,100 in 2012 from 2011.\u00a0\u00a0Factoring expense increased for each year in 2011and 2010 by approximately $35,100 and $30,700, respectively, because of increased revenue and greater amounts of accounts receivable available for factoring.\n\n\n\n\n\n\n\u25cf\u00a0\u00a0 \n\n\nFor the year ending December 31, 2010, we determined that it was likely that we would be profitable in the future, and that it was appropriate to record a tax benefit of $493,000 for the value of tax losses from prior years that could be used to reduce income tax in future periods.\u00a0\u00a0For the year ending December 31, 2011, this benefit was reduced by approximately $105,600 for tax expenses due to taxable income in that year.\u00a0\u00a0For the year ended December 31, 2012, certain assets recorded for tax purposes that are not recorded on our books were reduced, causing a further reduction in this benefit of approximately $167,100.\n\n\nSubsidiariesThe Company has a 100% investment in two subsidiaries in Mexico, USAMSA and AM, whose carrying value was assessed at December 31, 2012, 2011, and 2010, for impairment.\u00a0\u00a0Management\u2019s assessment of the subsidiaries\u2019 fair value was based on their future benefit to us.\u00a0\u00a0During fiscal year 2010 USAMSA was forced to relocate to a new mill site, resulting in an impairment of approximately $200,000.","markdown_table":"\n\n\n| | | 2012 | | | | 2011 | | | | 2010 | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| Antimony Division - United States: | | | | | | | | | | | | |\n| Revenues - Antimony (net of discount) | | $ | 8,753,449 | | | $ | 10,406,636 | | | $ | 6,174,062 | |\n| Revenues - Precious metals | | | 647,554 | | | | 667,813 | | | | 483,307 | |\n| | | | 9,401,003 | | | | 11,074,449 | | | | 6,657,369 | |\n| Domestic cost of sales: | | | | | | | | | | | | |\n| Production costs | | | 5,665,806 | | | | 7,294,421 | | | | 4,786,197 | |\n| Depreciation | | | 40,979 | | | | 29,963 | | | | 27,387 | |\n| Freight and delivery | | | 218,563 | | | | 216,668 | | | | 236,623 | |\n| General and administrative | | | 370,838 | | | | 280,853 | | | | 80,267 | |\n| Direct sales expense | | | 61,131 | | | | 64,421 | | | | 45,447 | |\n| Total domestic antimony cost of sales | | | 6,357,317 | | | | 7,886,326 | | | | 5,175,921 | |\n| | | | | | | | | | | | | |\n| Cost of sales - Mexico | | | | | | | | | | | | |\n| Production costs | | | 1,677,927 | | | | 1,031,957 | | | | 294,391 | |\n| Depreciation and amortization | | | 222,235 | | | | 169,552 | | | | 141,421 | |\n| Freight and delivery | | | 111,652 | | | | 121,432 | | | | 5,578 | |\n| Reclamation accrual | | | 8,040 | | | | | | | | - | |\n| Other non-production costs | | | 202,572 | | | | 150,773 | | | | | |\n| General and administrative | | | 148,321 | | | | 158,396 | | | | 136,498 | |\n| Total Mexico antimony cost of sales | | | 2,370,747 | | | | 1,632,110 | | | | 577,888 | |\n| | | | | | | | | | | | | |\n| Total revenues - antimony | | | 9,401,003 | | | | 11,074,449 | | | | 6,657,369 | |\n| Total cost of sales - antimony | | | 8,728,064 | | | | 9,518,436 | | | | 5,753,809 | |\n| Total gross profit - antimony | | | 672,939 | | | | 1,556,013 | | | | 903,560 | |\n| | | | | | | | | | | | | |\n| Zeolite Division: | | | | | | | | | | | | |\n| Revenues | | | 2,641,699 | | | | 2,043,641 | | | | 2,415,955 | |\n| Cost of sales: | | | | | | | | | | | | |\n| Production costs | | | 1,618,816 | | | | 1,221,101 | | | | 1,254,375 | |\n| Depreciation | | | 209,776 | | | | 206,231 | | | | 187,068 | |\n| Freight and delivery | | | 93,260 | | | | 103,630 | | | | 16,637 | |\n| General and administrative | | | 47,457 | | | | 117,420 | | | | 188,251 | |\n| Royalties | | | 234,343 | | | | 197,371 | | | | 229,352 | |\n| Direct sales expense | | | 76,086 | | | | 79,703 | | | | 70,100 | |\n| Total cost of sales | | | 2,279,738 | | | | 1,925,456 | | | | 1,945,783 | |\n| Gross profit - zeolite | | | 361,961 | | | | 118,185 | | | | 470,172 | |\n| | | | | | | | | | | | | |\n| Total revenues - combined | | | 12,042,702 | | | | 13,118,090 | | | | 9,073,324 | |\n| Total cost of sales - combined | | | 11,007,802 | | | | 11,443,892 | | | | 7,699,592 | |\n| Total gross profit - combined | | $ | 1,034,900 | | | $ | 1,674,198 | | | $ | 1,373,732 | |\n\n\n","source":"UAMY\/10-K\/0001354488-13-001259"} {"title":"ITEM 7.\u00a0MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS","text":"Our financial condition and liquidity, i.e., our net working capital, has improved each year for the three years ended December 31, 2012.\u00a0\u00a0This was due to an increase in our cash provided by operations and the sale of stock each year.\u00a0\u00a0We used most of our resources from operating cash flows and the sale of stock to complete our mine, mill, and smelter production facility in Mexico.\u00a0\u00a0Over the three year period, we raised approximately $6,870,000 from issuing restricted stock, and we used approximately $9,183,000, including $1,998,000 of assets purchased with debt, for capital improvements in Mexico ($7,881,000), Montana ($482,000), and at the Bear River Zeolite plant ($820,000).\u00a0\u00a0In Mexico, we completed the final installation of the crusher, ball mill and flotation circuit, four additional furnaces at Madero, and paid for partial construction of a natural gas pipeline.During the next year ending December 31, 2013, we are planning on financing our improvements through operating cash flow, including final installation of a natural gas pipeline to the Madero smelter, and installation of a 400 - 500 ton per day flotation mill that will increase our production from the Los Juarez ore.In 2012, cash provided by operations was primarily due to the collection of approximately $978,000 of accounts receivable, which were approximately $1,438,000 at the beginning of the year, and approximately $460,000 as of December 31, 2012.\u00a0\u00a0During the year ended December 31, 2010, the cash provided by operations was increased by the addition of a deferred tax asset for $493,000.\u00a0\u00a0In 2011, an increase in inventories due to raw materials purchased per supply agreements reduced cash flows from operations by approximately $923,000, and in 2011 and 2010, increases in accounts receivable due to December sales reduced cash flows from operations by approximately $693,000 and $583,000, respectively.\u00a0\u00a0An increase in accounts payable, not paid because of the increase in the amount of accounts receivable due at year end, increased our cash flow from operations by approximately $585,000 for 2011.\u00a0\u00a0The current portion of our long term debt is serviceable from the cash generated by operations.Our stockholders\u2019 equity section makes note that we have a liquidation preference of $5,689,780 as concerns our preferred stock.\u00a0\u00a0This consists of a liquidation payment of $5,225,360 due if we liquidate our company or sell substantially all our assets, and $464,420 of undeclared dividends.\u00a0\u00a0The Board of Directors\u2019 does not intend to declare dividends on preferred stock as due and payable at any time in the near future.\u00a0\u00a0We do not feel that the liquidation preference and undeclared dividends related to our preferred stock will be an impediment to raising capital in the future by issuing additional shares of common stock, and are not going to affect our liquidity.","markdown_table":"\n\n\n\n| Financial Condition and Liquidity | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | 2012 | | | | 2011 | | | | 2010 | | |\n| | | | | | | | | | | | | |\n| Current Assets | | $ | 3,103,128 | | | $ | 2,963,570 | | | $ | 1,848,825 | |\n| Current liabilities | | | (1,803,396 | ) | | | (1,742,022 | ) | | | (784,322 | ) |\n| Net Working Capital | | $ | 1,299,732 | | | $ | 1,221,548 | | | $ | 1,064,503 | |\n| | | | | | | | | | | | | |\n| Cash provided (used) by operations | | $ | 526,419 | | | $ | 564,041 | | | $ | 307,350 | |\n| Cash (used) by investing | | | (3,513,901 | ) | | | (2,239,441 | ) | | | (965,919 | ) |\n| Cash provided (used) by financing: | | | | | | | | | | | | |\n| Principal paid on long-term debt | | | (464,936 | ) | | | (124,722 | ) | | | (59,270 | ) |\n| Sale of Stock | | | 4,624,763 | | | | 1,242,780 | | | | 1,003,229 | |\n| Other | | | (176,961 | ) | | | 113,908 | | | | (17,142 | ) |\n| Net change in cash | | $ | 995,384 | | | $ | (443,434 | ) | | $ | 268,248 | |\n\n\n\n\u00a0\n","source":"UAMY\/10-K\/0001354488-13-001259"} {"title":"SECTION 16(A) OF THE EXCHANGE ACT","text":"Business Experience of Directors and Executive OfficersJohn C. Lawrence.\u00a0\u00a0Mr. Lawrence has been the president and a director since our inception.\u00a0\u00a0Mr. Lawrence was the president and a director of AGAU Mines, Inc., our corporate predecessor, since the inception of AGAU Mines, Inc. in 1968.\u00a0\u00a0He is a member of the Society of Mining Engineers and a recipient of the Uuno Sahinen Silver Medallion Award presented by Butte Tech, University of Montana.\u00a0\u00a0He has a vast background in mining, milling, smelting, chemical processing and oil and gas.Gary D. Babbitt.\u00a0\u00a0Mr. Babbitt has experience in mining industry with approximately 30 years dealing with joint ventures, purchases, royalty leases and contracts. He has a working knowledge of Spanish and has negotiated supply and mining agreements in Mexico.\u00a0\u00a0Mr. Babbitt has a B.A. from the Albertson College of Idaho, and earned his J.D. from the University of Chicago.Bernard J. Guarnera.\u00a0\u00a0Mr. Guarnera, who was nominated to the Board in May 2012, has more than 40 years of experience in the global mining industry.\u00a0\u00a0Most recently he served as Chairman and CEO of Behre Dolbear & Company, an internationally recognized mining consulting firm which was founded in 1991.\u00a0\u00a0He previously served with Texaco\u2019s Minerals Group, Daymes & Moore, and Boise Cascade, firms where he worked in the coal and uranium, precious and base metals and industrial minerals sectors.\u00a0\u00a0Mr. Guarnera has degrees from the Michigan College of Mining & Technology (B.Sc. Geological Engineering (mining emphasis) and M.Sc. Economic Geology).Russell C. Lawrence.\u00a0\u00a0Mr. Lawrence has experience in the lines of applied physics, mining, refining, excavation, electricity, electronics, and building contracting.\u00a0\u00a0He graduated from the University of Idaho in 1994 with a degree in physics, and worked for the Physics Department at the University of Idaho for a period of 10 years. He has also worked as a building contractor and for USAC at the smelter and laboratory at Thompson Falls, for USAMSA in the construction and operation of the USAMSA smelter in Mexico, and for Antimonio de Mexico, S. A. de C. V. at the San Miguel Mine and the Cadereyta mill site in Mexico.Hart W. Baitis.\u00a0\u00a0Mr. Baitis graduated from the University of Oregon in 1971 with a B.S. in Geology, and was awarded a Ph. D. in Geology in 1976. He has 35 years of experience as an exploration geologist in the United States, Canada, Central America, and Mexico.\u00a0\u00a0Mr. Baitis is experienced in numerous geologic environments and terrains, and has been involved in all phases of exploration, ranging from field geologist, consultant, management, and acquisition team director.Whitney Ferer.\u00a0\u00a0Mr. Ferer, who was nominated to the board in February 2012, has worked for 34 years for Aaron Ferer & Sons, or AF&S, headquartered in Omaha, Nebraska, where he is currently the Vice President of Trading and Operations and Vice Chairman of the Board of AF&S.\u00a0\u00a0He has been involved in the patenting of various processes for the breakdown of plastics and metal recovery, and was Vice President of the Lead & Zinc Division of AF&S.\u00a0\u00a0In addition, Mr. Ferer has been active in the trading of all metals, and facilitated the opening of eight offices in the Far East and China.\u00a0\u00a0He is one of the largest traders of antimony metal and oxide in the United States.Daniel L. Parks. Mr. Parks graduated from the University of Idaho in 1974 with a B.S. in Accounting, and was licensed as a certified public accountant in 1976.\u00a0\u00a0He worked as an auditor for Coopers & Lybrand for three years, as controller for a lumber manufacturing company for one year, and owned his own accounting practice for thirty years.\u00a0\u00a0Mr. Parks was extensively involved in auditing and financial statement preparation during this time.We are not aware of any involvement by our directors or executive officers during the past five years in legal proceedings that are material to an evaluation of the ability or integrity of any director or executive officer.Board Meetings and Committees.\u00a0\u00a0Our Board of Directors held four (4) regular meetings during the 2012 calendar year.\u00a0\u00a0Each incumbent director attended all of the meetings held during the 2012 calendar year, in the aggregate, by the Board and each committee of the Board of which he was a member.Our Board of Directors established an Audit Committee on December 10, 2011. It consists of three members, Gary Babbitt (Chairman), Whitney Ferer, and Hart Baitis.\u00a0\u00a0None of the Audit Committee members are involved in our day-to-day financial management.\u00a0\u00a0Hart Baitis is considered a financial expert.During 2011, the Board also established a Compensation Committee and a Nominating Committee.Board Member Compensation.\u00a0\u00a0We paid directors' fees in the form of 26,000 shares of our common stock per director during 2010.\u00a0\u00a0In January of 2012, we issued the directors 149,500 shares, of which 95,835 shares were for services during 2011.\u00a0\u00a0The remaining shares will be part of the directors\u2019 compensation for 2012.\u00a0\u00a0Following is a summary of fees, cash payments, stock awards, and other reimbursements to Directors during the year ended December 31, 2012:","markdown_table":"\n\n\n\n| Name | | Age | | Affiliation | | Expiration of Term |\n| --- | --- | --- | --- | --- | --- | --- |\n| | | | | | | |\n| John C. Lawrence | | 74 | | Chairman, President, | | Annual meeting |\n| | | | | Treasurer; Director | | |\n| | | | | | | |\n| John C. Gustavsen | | 64 | | First Vice-President | | Annual meeting |\n| | | | | | | |\n| Russell C. Lawrence | | 44 | | Second Vice-President | | Annual meeting |\n| | | | | And Director | | |\n| | | | | | | |\n| Matthew Keane | | 58 | | Third Vice-President | | Annual meeting |\n| | | | | | | |\n| Daniel L. Parks | | 64 | | Chief Financial Officer | | Annual meeting |\n| | | | | | | |\n| Alicia Hill | | 31 | | Secretary and Controller | | Annual meeting |\n| | | | | | | |\n| Bernard Guarnera | | 69 | | Director | | Annual meeting |\n| | | | | | | |\n| Gary D. Babbitt | | 67 | | Director | | Annual meeting |\n| | | | | | | |\n| Whitney Ferer | | 54 | | Director | | Annual meeting |\n| | | | | | | |\n| Hart W. Baitis | | 63 | | Director | | Annual meeting |\n\n\n\n\u00a0\n","source":"UAMY\/10-K\/0001354488-13-001259"} {"title":"SECTION 16(A) OF THE EXCHANGE ACT","text":"Section 16(a) Beneficial Ownership Reporting Compliance.\u00a0\u00a0Section 16(a) of the Securities Exchange Act of 1934 requires our directors and executive officers and the holders of 10% or more of our common stock to file reports of ownership and changes in ownership with the Securities and Exchange Commission. Officers, directors and stockholders holding more than 10% of our common stock are required by the regulation to furnish us with copies of all Section 16(a) forms they have filed. Based solely on our review of copies of Forms 3, 4 and 5 furnished to us, Mr.John Lawrence, Mr. Baitis, Mr. Babbitt, Mr. Ferer, Mr. Guarnera, and Mr.Russell Lawrence did not file timely Forms 3, 4 or Form 5 reports during 2012, 2011, or 2010.Code of EthicsThe Company has adopted a Code of Ethics that applies to the Company's executive officers and its directors.\u00a0\u00a0The Company will provide, without charge, a copy of the Code of Ethics on the written request of any person addressed to the Company at: United States Antimony Corporation, P.O. Box 643, Thompson Falls, MT 59873.","markdown_table":"\n\n\n\n| Directors Compensation | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| Name and Principal Position | | Fees Earned or paid in Cash | | | | Stock Awards | | | | Total Fees, Awards, and Other Compensation | | |\n| | | | | | | | | | | | | |\n| John C. Lawrence, Chairman | | | | | | $ | 25,000 | | | $ | 25,000 | |\n| Bernard Guarnera, Director | | | | | | $ | 15,625 | | | $ | 15,625 | |\n| Gary D. Babbitt, Director | | $ | 36,000 | | | $ | 25,000 | | | $ | 61,000 | |\n| Leo Jackson,\u00a0Director | | $ | 60,000 | | | $ | 36,755 | | | $ | 96,755 | |\n| Russell Lawrence,\u00a0Director | | | | | | $ | 25,000 | | | $ | 25,000 | |\n| Hartmut Baitis, Director | | | | | | $ | 25,000 | | | $ | 25,000 | |\n| Whitney Ferer,\u00a0Director | | | | | | $ | 25,000 | | | $ | 25,000 | |\n| Patrick Dugan,\u00a0Director | | | | | | $ | 34,438 | | | $ | 34,438 | |\n\n\n\n\u00a0\n","source":"UAMY\/10-K\/0001354488-13-001259"} {"title":"ITEM 11. EXECUTIVE COMPENSATION","text":"(1)\n\n\nRepresents earned but unused vacation.\n\n\n\n\n\n\n(2)\n\n\nThese figures represent the fair values, as of the date of issuance, of the annual director's fee payable to Mr. Lawrence in the form of shares of USAC's common stock.\n\n\n\n\n\n\n\u00a0 \n\n\nCompensation for all executive officers, except for the President\/CEO position, is recommended to the compensation committee of the Board of Directors by the President\/CEO.\u00a0\u00a0The compensation committee makes the recommendation for the compensation of the President\/CEO.\u00a0\u00a0The compensation committee has identified a peer group of mining companies to aid in reviewing the President\u2019s compensation recommendations for executives, and for reviewing the compensation of the President\/CEO.\u00a0\u00a0The full Board approves the compensation amounts recommended by the compensation committee. Currently, the executive managements\u2019 compensation only includes base salary and health insurance.\u00a0\u00a0The Company does not have annual performance based salary increases, long term performance based cash incentives, deferred compensation, retirement benefits, or disability benefits.\u00a0\u00a0For the year ended December 31, 2011, The Chief Executive Officer (CEO) received an increase in base compensation of $24,000 annually.\u00a0\u00a0The Board of Directors determined that the CEO\u2019s compensation for the prior year ended December 31, 2010, was substantially less than that of Chief Executive Officers for similar companies, and that a raise was appropriate to compensate the CEO for management of a Company with the complexities of United States Antimony Corporation.\n\n\n\n\n\n\n\u00a0 \n\n\nTwo executive officers, the President\/CEO and the Vice-President for the Latin American operations, receive restricted stock awards for their services as Board members.\n\n\n\n\u00a0\u00a0\nThe following table sets forth information concerning the outstanding equity awards at December 31, 2012, held by our principal executive officer.\u00a0\u00a0There were not any other outstanding equity awards or plan based awards to officers or directors as of December 31, 2012.","markdown_table":" \n\n\n\n\n| Name and Principal Position | | Year | | Salary | | | | Bonus | | | | Other Annual Compensation (1) | | | | Restricted Options\/Awards (2) | | | All Other Compensation | | Total | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | | | | | | | | | | | | | | | | | | | | | | |\n| John C. Lawrence, | | 2012 | | $ | 126,000 | | | | N\/A | | | $ | 5,538 | | | $ | 25,000 | | None | | $ | 156,538 | |\n| President and Chief | | 2011 | | $ | 126,000 | | | | | | | $ | 5,538 | | | $ | 40,001 | | | | $ | 171,539 | |\n| Executive Officer | | 2010 | | $ | 102,500 | | | | | | | $ | 5,538 | | | $ | 13,520 | | | | $ | 121,558 | |\n| John C. Gustaven, | | 2012 | | $ | 100,000 | | | | N\/A | | | | | | | | | | None | | $ | 100,000 | |\n| Executive Vice President | | 2011 | | $ | 85,000 | | | | | | | | | | | | | | | | $ | 85,000 | |\n| | | 2010 | | | | | | | | | | | | | | | | | | | | | |\n| Russell Lawrence, | | 2012 | | $ | 100,000 | | | | N\/A | | | | | | | $ | 25,000 | | None | | $ | 125,000 | |\n| Vice President for Latin | | 2011 | | $ | 85,000 | | | | | | | | | | | $ | 40,001 | | | | $ | 125,001 | |\n| America | | 2010 | | $ | 85,000 | | | | | | | | | | | $ | 13,520 | | | | $ | 98,520 | |\n\n\n\n\u00a0\n","source":"UAMY\/10-K\/0001354488-13-001259"} {"title":"ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT","text":"(1)\n\n\nBeneficial Ownership is determined in accordance with the rules of the Securities and Exchange Commission and generally includes voting or investment power with respect to securities. Shares of common stock subject to options or warrants currently exercisable or convertible, or exercisable or convertible within 60 days of March 18, 2013, are deemed outstanding for computing the percentage of the person holding options or warrants but are not deemed outstanding for computing the percentage of any other person. Percentages are based on a total of 61,896,726\u00a0shares of common stock, 750,000 shares of Series B Preferred Stock, 177,904 shares of Series C Preferred Stock, and 1,751,005 shares of Series D Preferred Stock outstanding on March 18, 2013.\u00a0\u00a0Total voting stock of 63,825,635 shares is a total of all the common stock issued, and all of the Series C and Series D Preferred Stock.\n\n\n\n\n\n\n(2)\n\n\nIncludes 3,801,653 shares of common stock and 250,000 stock purchase warrants.\u00a0\u00a0Excludes 183,324 shares owned by Mr. Lawrence's sister, as to which Mr. Lawrence disclaims beneficial ownership.\n\n\n\n\n\n\n(3)\n\n\nIncludes shares owned by the estate of Al W. Dugan and shares owned by companies owned and controlled by the estate of Al W. Dugan.\u00a0\u00a0Excludes 183,333 shares owned by Lydia Dugan as to which the estate of Mr. Dugan disclaims beneficial ownership.\n\n\n\n\n\n\n(4)\n\n\nThe outstanding Series C and Series D preferred shares carry voting rights equal to the same number of shares of common stock.\n\n\n\n\n\n\n(5)\n\n\nThe outstanding Series B preferred shares carry voting rights only if the Company is in default in the payment of declared dividends.\u00a0\u00a0The Board of Directors has not declared any dividends as due and payable for the Series B preferred stock.","markdown_table":"\n\n\n\n| | | Name and Address of | | Amount and Nature of | | Percent of | | Percent of |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| Title of Class | | Beneficial Owner(1) | | Beneficial Ownership | | Class(1) | | all Voting Stock |\n| | | | | | | | | |\n| Common stock | | Reed Family Limited Partnership | | 3,918,335 | | 7 | | 7 |\n| | | 328 Adams Street | | | | | | |\n| | | Milton, MA 02186 | | | | | | |\n| | | | | | | | | |\n| Common stock | | The Dugan Family | | 6,362,927(3) | | 10 | | 10 |\n| | | c\/o A. W. Dugan | | | | | | |\n| | | 1415 Louisiana Street, Suite 3100 | | | | | | |\n| | | Houston, TX 77002 | | | | | | |\n| | | | | | | | | |\n| Series B Preferred | | Excel Mineral Company | | 750,000(5) | | 100 | | N\/A |\n| | | PO Box 3800 | | | | | | |\n| | | Santa Barbara, CA 93130 | | | | | | |\n| | | | | | | | | |\n| Series C Preferred | | Richard A. Woods | | 48,305(4) | | 27 | | Nil |\n| | | 59 Penn Circle West | | | | | | |\n| | | Penn Plaza Apts. | | | | | | |\n| | | Pittsburgh, PA 15206 | | | | | | |\n| | | | | | | | | |\n| Series C Preferred | | Dr. Warren A. Evans | | 48,305(4) | | 27 | | Nil |\n| | | 69 Ponfret Landing Road | | | | | | |\n| | | Brooklyn, CT 06234 | | | | | | |\n| | | | | | | | | |\n| Series C Preferred | | Edward Robinson | | 32,203(4) | | 18 | | Nil |\n| | | 1007 Spruce Street 1st Floor | | | | | | |\n| | | Philadelphia, PA 19107 | | | | | | |\n| | | | | | | | | |\n| Series C Preferred | | All Series C Preferred Shareholders | | | | | | |\n| | | as a group | | 177,904(4) | | 100 | | Nil |\n| | | | | | | | | |\n| Common stock | | John C. Lawrence | | 4,128,346(2) | | 7 | | 7 |\n| Common stock | | Hart Baitis | | 20,526 | | Nil | | Nil |\n| Common stock | | Russ Lawrence | | 165,693 | | Nil | | Nil |\n| Common stock | | Bernard Guarnera | | 12,275 | | Nil | | Nil |\n| Common stock | | Gary Babbitt | | 134,167 | | Nil | | Nil |\n| Common stock | | Whitney Ferer | | 58,026 | | Nil | | Nil |\n| Common stock | | Matthew Keane | | 10,300 | | Nil | | Nil |\n| Common stock | | Daniel Parks | | 35,400 | | Nil | | Nil |\n| Common Stock | | All directors and executive | | | | | | |\n| | | officers as a group | | 4,564,733 | | 7 | | 7 |\n| | | | | | | | | |\n| Series D Preferred | | John C. Lawrence | | 1,590,672(4) | | 91 | | 3 |\n| Series D Preferred | | Leo Jackson | | 102,000 | | 5 | | Nil |\n| Series D Preferred | | Gary Babbit | | 58,333 | | Nil | | Nil |\n| Series D Preferred | | All Series D Preferred Shareholders | | | | | | |\n| | | as a group | | 1,751,005(4) | | 100 | | 3 |\n\n\n\n","source":"UAMY\/10-K\/0001354488-13-001259"} {"title":"ITEM 15.\u00a0\u00a0EXHIBITS AND REPORTS ON FORM 8-K","text":"*\u00a0\u00a0\u00a0\u00a0Filed herewith.Reports on Form 8-K","markdown_table":"\n\n\n| 10.43 | | Settlement agreement and release of all claims between the Estate of Bobby C. Hamilton and United States Antimony Corporation filed as an exhibit to USAC form 10-QSB for the quarter ended June 30, 2000 (File No. 001-08675) are incorporated herein by this reference. |\n| --- | --- | --- |\n| | | |\n| 10.44 | | Supply Contracts with Fortune America Trading Ltd. filed as an exhibit to USAC form 10-QSB for the quarter ended June 30, 2000 (File No. 001-08675) are incorporated herein by this reference |\n| | | |\n| 10.45 | | Amended and Restated Agreements with Thomson Kernaghan & Co., Ltd, filed as an exhibit to amendment No. 3 to USAC's Form SB-2 Registration Statement (Reg. No. 333-45508), are incorporated herein by this reference |\n| | | |\n| 10.46 | | Purchase Order from Kohler Company, filed as an exhibit to amendment No. 4 to USAC's Form SB-2 Registration Statement (Reg. No. 333-45508) are incorporated herein by this reference |\n| | | |\n| Documents filed as an exhibit to USAC's Form 10-QSB for the quarter ended June 30, 2002 (File No. 001-08675) are incorporated herein by this reference: | | |\n| | | |\n| 10.47 | | Bear River Zeolite Company Royalty Agreement, dated May 29, 2002 |\n| | | |\n| 10.48 | | Grant of Production Royalty, dated June 1, 2002 |\n| | | |\n| 10.49 | | Assignment of Common Stock of Bear River Zeolite Company, dated May 29, 2002 |\n| | | |\n| 10.50 | | Agreement to Issue Warrants of USA, dated May 29, 2002 |\n| | | |\n| 10.51 | | Secured convertible note payable - Delaware Royalty Company dated December 22, 2003\\* |\n| | | |\n| 10.52 | | Convertible note payable - John C. Lawrence dated December 22, 2003\\* |\n| | | |\n| 10.53 | | Pledge, Assignment and Security Agreement dated December 22, 2003\\* |\n| | | |\n| 10.54 | | Note Purchase Agreement dated December 22, 2003\\* |\n| | | |\n| 14.0 | | Code of Ethics\\* |\n| | | |\n| 31.1 | | Rule 13a-14(a)\/15d-14(a) Certifications |\n| | | Certification of John C. Lawrence\\* |\n| | | |\n| 32.1 | | Section 1350 Certifications |\n| | | Certification of John C. Lawrence\\* |\n| | | |\n| 44.1 | | CERCLA Letter from U.S. Forest Service filed as an exhibit to USAC form 10-QSB for the quarter ended June 30, 2000 (File No. 001-08675) are incorporated herein by this reference and filed as an exhibit to USAC's Form 10-KSB for the year ended December 31, 1995 (File No. 1-8675) is incorporated herein by this reference |\n\n\n","source":"UAMY\/10-K\/0001354488-13-001259"} {"title":"SIGNATURES","text":"Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.","markdown_table":"\n\n\n\n| | UNITED STATES ANTIMONY CORPORATION | | |\n| --- | --- | --- | --- |\n| | (Registrant) | | |\n| | | | |\n| Date:\u00a0March 18, 2013 | By: | | |\n| | | John C. Lawrence, President, Director, | |\n| | | and Principal Executive Officer | |\n| | | | |\n| Date: March 18, 2013 | By: | | |\n| | | Daniel L. Parks, Chief Financial Officer | |\n| | | | |\n| Date: March 18, 2013 | By: | | |\n| | | Alicia Hill, Controller | |\n\n\n\n \n\n","source":"UAMY\/10-K\/0001354488-13-001259"} {"title":"REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM","text":"The accompanying notes are an integral part of these consolidated financial statements.\n\u00a0\n\n\n\u00a0 \n\n\nF-3\n\n\n\n\n\nTable of Contents","markdown_table":"\n\n\u00a0\n\n\n\n| | | 2012 | | | | 2011 | | | | 2010 | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | | | | | | | | | | | |\n| REVENUES | | $ | 12,042,702 | | | $ | 13,118,090 | | | $ | 9,073,324 | |\n| | | | | | | | | | | | | |\n| COST OF REVENUES | | | 11,007,802 | | | | 11,443,892 | | | | 7,699,592 | |\n| | | | | | | | | | | | | |\n| GROSS PROFIT | | | 1,034,900 | | | | 1,674,198 | | | | 1,373,732 | |\n| | | | | | | | | | | | | |\n| OPERATING EXPENSES: | | | | | | | | | | | | |\n| General and administrative | | | 810,369 | | | | 428,092 | | | | 438,889 | |\n| Salaries and benefits | | | 284,483 | | | | 149,671 | | | | 153,819 | |\n| Professional fees | | | 258,735 | | | | 204,904 | | | | 152,357 | |\n| Impairment of properties, plants and equipment | | | - | | | | - | | | | 199,302 | |\n| TOTAL OPERATING EXPENSES | | | 1,353,587 | | | | 782,667 | | | | 944,367 | |\n| | | | | | | | | | | | | |\n| INCOME (LOSS) FROM OPERATIONS | | | (318,687 | ) | | | 891,531 | | | | 429,365 | |\n| | | | | | | | | | | | | |\n| OTHER INCOME (EXPENSE): | | | | | | | | | | | | |\n| Interest income | | | 8,049 | | | | 5,205 | | | | 7,751 | |\n| Interest expense | | | (2,691 | ) | | | - | | | | (5,796 | ) |\n| Factoring expense | | | (78,100 | ) | | | (154,206 | ) | | | (119,107 | ) |\n| TOTAL OTHER INCOME (EXPENSE) | | | (72,742 | ) | | | (149,001 | ) | | | (117,152 | ) |\n| | | | | | | | | | | | | |\n| INCOME (LOSS) BEFORE INCOME TAXES | | | (391,429 | ) | | | 742,530 | | | | 312,213 | |\n| | | | | | | | | | | | | |\n| INCOME TAXES: | | | | | | | | | | | | |\n| Income tax (expense) - current | | | - | | | | (9,168 | ) | | | - | |\n| Income tax (expense) benefit - deferred | | | (167,107 | ) | | | (96,442 | ) | | | 493,000 | |\n| TOTAL INCOME TAXES | | | (167,107 | ) | | | (105,610 | ) | | | 493,000 | |\n| | | | | | | | | | | | | |\n| NET INCOME (LOSS) | | | (558,536 | ) | | | 636,920 | | | | 805,213 | |\n| Preferred dividends | | | (48,649 | ) | | | (48,649 | ) | | | (48,648 | ) |\n| Net income (loss) available to | | | | | | | | | | | | |\n| common shareholders | | $ | (607,185 | ) | | $ | 588,271 | | | $ | 756,565 | |\n| | | | | | | | | | | | | |\n| Net income (loss) per share of | | | | | | | | | | | | |\n| common stock: | | | | | | | | | | | | |\n| Basic | | $ | (0.01 | ) | | $ | 0.01 | | | $ | 0.01 | |\n| Diluted | | $ | (0.01 | ) | | $ | 0.01 | | | $ | 0.01 | |\n| | | | | | | | | | | | | |\n| Weighted average shares outstanding: | | | | | | | | | | | | |\n| Basic | | | 61,896,726 | | | | 58,855,348 | | | | 54,356,693 | |\n| Diluted | | | 61,896,726 | | | | 59,381,175 | | | | 54,578,054 | |\n\n\n\n\n \n\n","source":"UAMY\/10-K\/0001354488-13-001259"} {"title":"REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM","text":"The Company's revenues from antimony sales are strongly influenced by world prices for such commodities, which fluctuate and are affected by numerous factors beyond the Company's control, including inflation and worldwide forces of supply and demand. The aggregate effect of these factors is not possible to predict accurately.\n\n\u00a0 \n\n\nF-6\n\n\n\n\n\nTable of Contents\n\n\n\u00a0\nUnited States Antimony Corporation and Subsidiaries\nNotes to Consolidated Financial Statements\nDecember 31, 2012, 2011 and 2010\n\n3.\u00a0\u00a0\u00a0\u00a0Summary of Significant Accounting PoliciesPrinciples of ConsolidationThe Company's consolidated financial statements include the accounts of BRZ, USAMSA and AM, all wholly-owned subsidiaries.\u00a0\u00a0Intercompany balances and transactions are eliminated in consolidation.Use of EstimatesThe 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 at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Significant and critical estimates include property, plant and equipment impairment, accounts receivable allowance, deferred income taxes, environmental remediation liabilities and asset retirement obligations. Actual results could differ from those estimates.ReclassificationsCertain reclassifications have been made to the 2011 and 2010 financial statements in order to conform to the 2012 presentation.\u00a0\u00a0These reclassifications have no effect on net income (loss), total assets or stockholders' equity as previously reported.Cash and Cash EquivalentsThe Company considers cash in banks and investments with original maturities of three months or less when purchased to be cash equivalents.Restricted CashRestricted cash at December 31, 2012 and 2011 consists of cash held for reclamation performance bonds, and is held as certificates of deposit with financial institutions.Accounts ReceivableAccounts receivable are stated at the amount that management expects to collect from outstanding balances.\u00a0\u00a0Management provides for probable uncollectible amounts through an allowance for doubtful accounts.\u00a0\u00a0Changes to the allowance for doubtful accounts are based on management\u2019s judgment, considering historical write-offs, collections and current credit conditions.\u00a0\u00a0Balances which remain outstanding after management has used reasonable collection efforts are written off through a charge to the allowance for doubtful accounts and a credit to the applicable accounts receivable.\u00a0\u00a0Payments received on receivables subsequent to being written off are considered a bad debt recovery.InventoriesInventories at December 31, 2012 and 2011, consisted primarily of finished antimony products, antimony metal, antimony ore, and finished zeolite products that are stated at the lower of first-in, first-out cost or estimated net realizable value. Finished antimony products, antimony metal and finished zeolite products costs include raw materials, direct labor and processing facility overhead costs and freight allocated based on production quantity. Since the Company's antimony inventory is a commodity with a sales value that is subject to world prices for antimony that are beyond the Company's control, a significant change in the world market price of antimony could have a significant effect on the net realizable value of inventories. The Company periodically reviews its inventories to identify excess and obsolete inventories and to estimate reserves for obsolete inventories as necessary to reflect inventories at net realizable value.\n\n\u00a0 \n\n\nF-7\n\n\n\n\n\nTable of Contents\n\n\n\u00a0\nUnited States Antimony Corporation and Subsidiaries\nNotes to Consolidated Financial Statements\nDecember 31, 2012, 2011 and 2010\n\u00a0\n3.\u00a0\u00a0\u00a0\u00a0Summary of Significant Accounting Policies, continued\nProperties, Plants and EquipmentProperties, plants and equipment are stated at historical cost and are depreciated using the straight-line method over estimated useful lives of five to fifteen years. Vehicles and office equipment are stated at cost and are depreciated using the straight-line method over estimated useful lives of three to seven years.\u00a0\u00a0Maintenance and repairs are charged to operations as incurred. Betterments of a major nature are capitalized.\u00a0\u00a0Expenditures for new propertyplant, equipment, and improvements that extend the useful life or functionality of the asset are capitalized.\u00a0\u00a0The Company capitalized $5,002,392 and $2,473,750 in plant construction and other capital costs for the years ended December 31, 2012 and 2011, respectively.\u00a0\u00a0These amounts include capitalized interest of $14,313 and $10,888, respectively. When assets are retired or sold, the costs and related accumulated depreciation are eliminated from the accounts and any resulting gain or loss is reflected in operations.Management of the Company periodically reviews the net carrying value of all of its long-lived assets. These reviews consider the net realizable value of each asset or group to determine whether a permanent impairment in value has occurred and the need for any asset write-down. An impairment loss is recognized when the estimated future cash flows (undiscounted and without interest) expected to result from the use of an asset are less than the carrying amount of the asset.\u00a0\u00a0Measurement of an impairment loss is based on the estimated fair value of the asset if the asset is expected to be held and used.Translations of Foreign CurrenciesAll amounts are presented in United States (US) Dollars, and the US Dollar is the functional currency of the Company and its foreign subsidiaries.\u00a0\u00a0All transactions are carried out in US Dollars, or translated at the time of the transaction.\u00a0\u00a0There are no accounts carried in foreign currencies that would require translation at year end.Mineral RightsThe cost to obtain the legal right to explore, extract and retain at least a portion of the benefits from mineral deposits are capitalized as mineral rights in the year of acquisition.\u00a0\u00a0These capitalized costs will be amortized to the statement of operations using the unit of production method when placed into production.\u00a0\u00a0Mineral rights are assessed for impairment when facts and circumstances indicate that the potential for impairment exists.\u00a0\u00a0No impairment has been indicated for the years ended December 31, 2012 or 2011 as a result of this assessment.\u00a0\u00a0Mineral rights are subject to write down in the period the property is abandoned.Exploration and DevelopmentThe Company records exploration costs as operating expenses in the period they occur, and capitalizes development costs on discrete mineralized bodies that have proven reserves in compliance with SEC Industry Guide 7, and are in development or production.Reclamation and RemediationAll of the Company's mining operations are subject to reclamation and remediation requirements. Minimum standards for mine reclamation have been established by various governmental agencies. Costs are estimated based primarily upon environmental and regulatory requirements and are accrued. The liability for reclamation is classified as current or noncurrent based on the expected timing of expenditures.\u00a0\u00a0Reclamation differs from an asset retirement obligation in that no associated asset is recorded in the case of reclamation liabilities.\n\n\u00a0 \n\n\nF-8\n\n\n\n\n\nTable of Contents\n\n\n\u00a0\nUnited States Antimony Corporation and Subsidiaries\nNotes to Consolidated Financial Statements\nDecember 31, 2012, 2011 and 2010\n3.\u00a0\u00a0\u00a0\u00a0Summary of Significant Accounting Policies, continuedIt is reasonably possible that because of uncertainties associated with defining the nature and extent of environmental contamination, application of laws and regulations by regulatory authorities, and changes in remediation technology, the ultimate cost of remediation and reclamation could change in the future. The Company continually reviews its accrued liabilities for such remediation and reclamation costs as evidence becomes available indicating that its remediation and reclamation liability has changed.The Company records the fair value of an asset retirement obligation as a liability in the period in which the Company incurs a legal obligation for the retirement of long-lived assets, it is probable that such costs will be incurred and they are reasonably estimable.\u00a0\u00a0A corresponding asset is also recorded and depreciated over the life of the assets on a units-of-production basis.\u00a0\u00a0After the initial measurement of the asset retirement obligation, the liability will be adjusted at the end of each reporting period to reflect changes in the estimated future cash flows underlying the obligation.\u00a0\u00a0Determination of any amounts recognized upon adoption is based upon numerous estimates and assumptions, including future retirement costs, future inflation rates, and the credit-adjusted risk-free interest rates.Revenue RecognitionSales of antimony and zeolite products are recorded upon shipment and when title passes to the customer.\u00a0\u00a0Prepayments received from customers prior to the time that products are shipped are recorded as deferred revenue.\u00a0\u00a0When the related products are shipped, the amount recorded as deferred revenue is recognized as revenue.\u00a0\u00a0The Company's sales agreements provide for no product returns or allowances.Sales of precious metals are recognized when pervasive evidence of an arrangement exists, the price is fixed and determinable, the product has been delivered, title has transferred, and collection is reasonably assured.Common Stock Issued for Consideration Other than CashAll transactions in which goods or services are received for the issuance of shares of the Company\u2019s common stock are accounted for based on the fair value of the consideration received or the fair value of the common stock issued, whichever is more readily determinable.Income TaxesIncome taxes are accounted for under the liability method.\u00a0\u00a0Under this method, deferred income tax liabilities or assets are determined at the end of each period using the tax rate expected to be in effect when the taxes are actually paid or recovered.\u00a0\u00a0A valuation allowance is recognized on deferred tax assets when it is more likely than not that some or all of these deferred tax assets will not be realized.The Company applies generally accepted accounting principles for recognition of uncertainty in income taxes and prescribing a recognition threshold and measurement attribute for the recognition and measurement of a tax position taken or expected to be taken in a tax return.Allowance for Doubtful AccountsThe allowance for doubtful accounts is based on management\u2019s regular evaluation of individual customer\u2019s receivables and consideration of a customer\u2019s financial condition and credit history.\u00a0\u00a0Trade receivables are written off when deemed uncollectible.\u00a0\u00a0Recoveries of trade receivables previously written off are recorded when received.\u00a0\u00a0Interest is not charged on past due accounts.\n\n\u00a0 \n\n\nF-9\n\n\n\n\n\nTable of Contents\n\n\n\u00a0\nUnited States Antimony Corporation and Subsidiaries\nNotes to Consolidated Financial Statements\nDecember 31, 2012, 2011 and 2010\n\u00a0\n3.\u00a0\u00a0\u00a0\u00a0Summary of Significant Accounting Policies, continuedIncome (Loss) Per Common ShareBasic earnings per share is calculated by dividing net income (loss) available to common stockholders by the weighted average number of common shares outstanding during the period.\u00a0\u00a0Diluted earnings per share is calculated based on the weighted average number of common shares outstanding during the period plus the effect of potentially dilutive common stock equivalents, including warrants to purchase the Company's common stock and convertible preferred stock.\u00a0\u00a0Management has determined that the calculation of diluted earnings per share for the years ended December 31, 2012, 2011 and 2010, adds none, 525,827 and 221,361 shares, respectively, to basic weighted average shares, related to common stock purchase warrants.\u00a0\u00a0Shares related to warrants and convertible preferred stock was not added to the weighted average of common stock for 2012 because the results would have been anti-dilutive.\u00a0As of December 31, 2012, 2011 and 2010, the remaining potentially dilutive common stock equivalents not included in the calculation of diluted earnings per share are as follows:","markdown_table":"\n\n\n| Sales to Three | | For the\u00a0Year Ended | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| Largest Customers | | December\u00a031, 2012 | | | | December\u00a031, 2011 | | | | December\u00a031, 2010 | | |\n| Alpha Gary Corporation | | $ | 3,245,612 | | | $ | 1,771,173 | | | | | |\n| Ampacet Corporation | | | | | | | | | | $ | 602,980 | |\n| Kohler Corporation | | | 2,286,938 | | | | 2,941,143 | | | | 2,435,978 | |\n| Polymer Products Inc. | | | 1,119,055 | | | | 2,887,862 | | | | 666,600 | |\n| | | $ | 6,651,605 | | | $ | 7,600,178 | | | $ | 3,705,558 | |\n| % of Total Revenues | | | 58.14 | % | | | 57.90 | % | | | 40.80 | % |\n| | | | | | | | | | | | | |\n| Three Largest | | | Year End | | | | | | | | | |\n| Accounts Receivable | | December\u00a031, 2012 | | | | December\u00a031, 2011 | | | | December\u00a031, 2010 | | |\n| Kohler Corporation | | | | | | $ | 299,273 | | | $ | 62,454 | |\n| Alpha Gary Corporation | | $ | 194,005 | | | | 254,940 | | | | | |\n| GE Lighting (LPC) | | | | | | | 252,000 | | | | | |\n| H.B. Chemical Co. | | | | | | | | | | | 226,600 | |\n| BASF Catalysts LLC | | | | | | | | | | | 196,810 | |\n| Quantum Remediation | | | 101,149 | | | | | | | | | |\n| Scutter Enterprises | | | 41,512 | | | | | | | | | |\n| | | $ | 336,666 | | | $ | 806,213 | | | $ | 485,864 | |\n| % of Total Receivables | | | 73.80 | % | | | 64.20 | % | | | 61.20 | % |\n\n\n","source":"UAMY\/10-K\/0001354488-13-001259"} {"title":"REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM","text":"Fair Value of Financial InstrumentsThe Company\u2019s financial instruments include cash and cash equivalents, restricted cash and long-term debt.\u00a0\u00a0The carrying value of certificates of deposit, restricted cash, and long-term debt approximates fair value based on the contractual terms of those instruments.Fair Value MeasuresASC 820, \u201cFair Value Measurements and Disclosures\u201d, requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. ASC 820 establishes a fair value hierarchy based on the level of independent, objective evidence surrounding the inputs used to measure fair value. A financial instrument\u2019s categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. ASC 820 prioritizes the inputs into three levels that may be used to measure fair value:\n\n\n\n\u25cf\u00a0\u00a0\n\n\nLevel 1: Applies to assets or liabilities for which there are quoted prices in active markets for identical assets or liabilities.\n\n\n\n\n\n\n\n\u25cf\u00a0\u00a0\n\n\n\nLevel 2: Applies to assets or liabilities for which there are inputs other than quoted prices that are observable for the asset or liability such as quoted prices for similar assets or liabilities in active markets; quoted prices for identical assets or liabilities in markets with insufficient volume or infrequent transactions (less active markets); or model-derived valuations in which significant inputs are observable or can be derived principally from, or corroborated by, observable market data.\n\n\n\n\n\n\n\n\u25cf\u00a0\u00a0\n\n\n\nLevel 3: Applies to assets or liabilities for which there are unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of the assets or liabilities.\n\n\n\n\n\u00a0 \n\n\nF-10\n\n\n\n\n\nTable of Contents\n\n\n\u00a0\nUnited States Antimony Corporation and Subsidiaries\nNotes to Consolidated Financial Statements\nDecember 31, 2012, 2011 and 2010\n\u00a0\n3.\u00a0\u00a0\u00a0\u00a0Summary of Significant Accounting Policies, continuedThe table below sets forth our financial assets and liabilities that were accounted for at fair value on a recurring basis as of December 31, 2012 and 2011, respectively, and the fair value calculation input hierarchy level that we have determined applies to each asset and liability category.","markdown_table":"\n\n\n\n| | | December 31,\u00a0 2012 | | | | December 31,\u00a0 2011 | | | | December 31,\u00a0 2010 | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| Warrants | | | 1,934,667 | | | | 74,173 | | | | 503,639 | |\n| Convertible preferred stock | | | 1,751,005 | | | | 1,751,005 | | | | 1,751,005 | |\n| Total possible dilution | | | 3,685,672 | | | | 1,825,178 | | | | 2,254,644 | |\n\n\n\n\u00a0\n","source":"UAMY\/10-K\/0001354488-13-001259"} {"title":"REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM","text":"4.\u00a0\u00a0\u00a0\u00a0\u00a0Accounts Receivable and Due to Factor","markdown_table":"\n\n\n| | | | | | | | | | | Input | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | | | | | | | | | Hierarchy | |\n| Assets: | | 2012 | | | | 2011 | | | | Level | |\n| Cash and cash equivalents | | $ | 1,000,811 | | | $ | 5,247 | | | Level I | |\n| Certificates of deposit | | $ | 243,616 | | | $ | - | | | Level I | |\n| Restricted cash | | $ | 75,251 | | | $ | 74,777 | | | Level I | |\n\n\n","source":"UAMY\/10-K\/0001354488-13-001259"} {"title":"REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM","text":"The factoring agreement requires the Company to pay a financing fee equal to 2% of the face amount of receivables sold.\u00a0\u00a0Factoring fees paid by the Company during the years ended December 31, 2012, 2011 and 2010 were $78,100, $154,206, and $119,107, respectively.\u00a0\u00a0For the years ended December 31, 2012, 2011, and 2010, net accounts receivable of approximately $ 3.80 million, $7.39 million, and $5.96 million, respectively, were sold under the agreement.Proceeds from the sales were used to fund inventory purchases and operating expenses.\u00a0\u00a0The agreement is for a term of one year with automatic renewal for additional one-year terms.\n\n\u00a0 \n\n\nF-11\n\n\n\n\n\nTable of Contents\n\n\n\u00a0\nUnited States Antimony Corporation and Subsidiaries\nNotes to Consolidated Financial Statements\nDecember 31, 2012, 2011 and 2010\n\u00a0\n5.\u00a0\u00a0\u00a0\u00a0InventoriesThe major components of the Company's inventories at December 31, 2012 and 2011 were as follows:","markdown_table":"\n\n\n\n| Accounts Receivble | | December 31, 2012 | | | | December 31, 2011 | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| Accounts receivable - non factored | | $ | 432,500 | | | $ | 1,299,575 | |\n| Accounts receivable - factored with recourse | | | 27,690 | | | | 146,589 | |\n| less allowance for doubtful accounts | | | (4,031 | ) | | | (7,600 | ) |\n| Accounts receivable - net | | $ | 456,159 | | | $ | 1,438,564 | |\n\n\n\n\u00a0\n","source":"UAMY\/10-K\/0001354488-13-001259"} {"title":"REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM","text":"At December 31, 2012 and 2011, antimony metal consisted principally of recast metal from antimony-based compounds, and metal purchased from foreign suppliers.\u00a0\u00a0Antimony oxide inventory consisted of finished product oxide held at the Company's plant. Antimony concentrates and ore was held primarily at sites in Mexico and is essentially raw material, carried at cost.\u00a0\u00a0\u00a0The Company's zeolite inventory consists of salable zeolite material held at BRZ's Idaho mining and production facility, and is carried at cost.As we processed purchased ore from our inventory n Mexico, we became aware that, due to analytical problems,\u00a0we were over paying for direct shipping ore.\u00a0\u00a0We received credits from some of our Mexican ore suppliers for previously purchased ore.\u00a0\u00a0As part of the negotiations, we exercised our option to purchase the Soyatal mine properties for approximately $1.3MM.\u00a0\u00a0We are obligated to make payments of $200,000 annually through 2018, and a final payment of $100,000 is due in 2019.\u00a0\u00a0This obligation is recorded in long-term debt as Soyatal Mine. We have credits of approximately $342,000 recorded in other assets for advances to the previous Soyatal operator which can be used as a payment on our debt at a rate of $100,000 per year, or offset from future ore purchase payments which may become due to the suppliers.6.\u00a0\u00a0\u00a0 Properties, Plants and EquipmentThe major components of the Company's properties, plants and equipment at December 31, 2012 and 2011 are shown below.\u00a0\u00a0Approximately $1.4 million and $1.6 million of capitalized costs at December 31, 2012 and 2011, respectively, related primarily to the construction of an antimony mill in Mexico, have not yet been placed in service and, therefore, have not been subject to depreciation for those years.During 2010 the Company incurred an impairment charge of $199,302 on certain constructed assets at its Cal Los Arcos Mexican mill site because it was determined that the mill site was no longer viable.\u00a0\u00a0Assets such as installation costs and concrete work that were unable to be transported to the new mill site at Corral Blanco were deemed to be impaired and therefore written off.\n\n\u00a0 \n\n\nF-12\n\n\n\n\n\nTable of Contents\n\n\n\u00a0\nUnited States Antimony Corporation and Subsidiaries\nNotes to Consolidated Financial Statements\nDecember 31, 2012, 2011 and 2010\n\n6.\u00a0\u00a0\u00a0\u00a0Properties, Plants and Equipment, continued","markdown_table":"\n\n\n\n| | | 2012 | | | | 2011 | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| Antimony Metal | | $ | 152,821 | | | $ | 152,026 | |\n| Antimony Oxide | | | 295,613 | | | | 180,404 | |\n| Antimony Concentrates | | | 46,008 | | | | | |\n| Antimony Ore | | | 500,192 | | | | 644,113 | |\n| Total antimony | | | 994,634 | | | | 976,543 | |\n| Zeolite | | | 197,555 | | | | 90,270 | |\n| | | $ | 1,192,189 | | | $ | 1,066,813 | |\n\n\n\n\u00a0\n","source":"UAMY\/10-K\/0001354488-13-001259"} {"title":"REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM","text":"During 2011, the Company assessed the obligation for removal and remediation costs relating to its plants and mine in Mexico.\u00a0\u00a0Management assigned a cost to the expected work involved in complying with the requirements of the Mexico operating permits.\u00a0\u00a0Management applied, based on a 20 year life, a cost inflation factor, and then discounted that cost to a current net present value based on a discount rate of 6% (management\u2019s estimate of its credit-adjusted interest rate). Management determined a future cost in 2031 of approximately $430,000 with a net present value of $142,040.","markdown_table":"\n\n\n\n| | | 2012 | | | | 2011 | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| Antimony | | | | | | | | |\n| Equipment | | $ | 3,762,238 | | | $ | 1,936,038 | |\n| Buildings | | | 1,219,025 | | | | 1,054,311 | |\n| Mineral rights | | | 786,087 | | | | 635,011 | |\n| Land and Other | | | 5,942,853 | | | | 3,394,174 | |\n| | | | 11,710,203 | | | | 7,019,534 | |\n| Accumulated depreciation | | | (2,850,722 | ) | | | (2,597,878 | ) |\n| Total Antimony, net | | | 8,859,481 | | | | 4,421,656 | |\n| | | | | | | | | |\n| Zeolite | | | | | | | | |\n| Equipment | | | 2,397,119 | | | | 2,125,748 | |\n| Buildings | | | 818,538 | | | | 788,913 | |\n| | | | 3,215,657 | | | | 2,914,661 | |\n| Accumulated depreciation | | | (1,498,732 | ) | | | (1,289,313 | ) |\n| Total Zeolite, net | | | 1,716,925 | | | | 1,625,348 | |\n| | | | | | | | | |\n| Properties, plants and equipment, net | | $ | 10,576,406 | | | $ | 6,047,004 | |\n\n\n\n\u00a0\n","source":"UAMY\/10-K\/0001354488-13-001259"} {"title":"REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM","text":"The asset retirement obligation liability is combined with reclamation obligations for Idaho and Montana operations of $107,500 at December 31, 2012.\n\n\u00a0 \n\n\nF-13\n\n\n\n\n\nTable of Contents\n\n\n\u00a0\nUnited States Antimony Corporation and Subsidiaries\nNotes to Consolidated Financial Statements\nDecember 31, 2012, 2011 and 2010\n\u00a0\n7.\u00a0\u00a0\u00a0\u00a0Long-Term Debt:","markdown_table":"\n\n\n| Asset Retirement Obligation | | | | |\n| --- | --- | --- | --- | --- |\n| Balance December 31, 2010 | | $ | - | |\n| Incurred during 2011 | | | 134,000 | |\n| Balance December 31, 2011 | | | 134,000 | |\n| Accretion during 2012 | | | 8,040 | |\n| Balance December 31, 2012 | | $ | 142,040 | |\n\n\n","source":"UAMY\/10-K\/0001354488-13-001259"} {"title":"REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM","text":"F-14\n\n\n\n\n\nTable of Contents\n\n\nUnited States Antimony Corporation and Subsidiaries\nNotes to Consolidated Financial Statements\nDecember 31, 2012, 2011 and 2010\n\u00a0\n7.\u00a0\u00a0\u00a0\u00a0Long-Term Debt, continued\nAt December 31, 2102, principal payments on debt are due as follows:","markdown_table":"\n\n\n| Long-Term debt at December 31, 2012 and 2011, is as follows: | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | 2012 | | | | 2011 | | |\n| Note payable to Thermo Fisher Financial Co., bearing interest | | | | | | | | |\n| at 5.67%; payable in monthly installments of $3,522; maturing | | | | | | | | |\n| September 2013; collateralized by equipment. | | $ | 34,310 | | | $ | - | |\n| Note payable to Thermo Fisher Financial Co., bearing interest | | | | | | | | |\n| at 8.54%; payable in monthly installments of $2,792; maturing | | | | | | | | |\n| December 2013; collateralized by equipment. | | | 30,708 | | | | - | |\n| Note payable to Stearns Bank, bearing interest | | | | | | | | |\n| at 6.9%; payable in monthly installments of $3,555; maturing | | | | | | | | |\n| December 2014; collateralized by equipment. | | | 79,500 | | | | - | |\n| Note payable to Western States Equipment Co., bearing interest | | | | | | | | |\n| at 6.15%; payable in monthly installments of $2,032; maturing | | | | | | | | |\n| June 2015; collateralized by equipment. | | | 56,390 | | | | 77,040 | |\n| Note payable to CNH Capital America, LLC, bearing interest | | | | | | | | |\n| at 4.5%; payable in monthly installments of $505; maturing | | | | | | | | |\n| June 2013; collateralized by equipment. | | | 3,478 | | | | 8,648 | |\n| Note payable to Catepillar Financial, bearing interest at 5.95%; | | | | | | | | |\n| payable in monthly installments of $827; maturing September 2015; | | | | | | | | |\n| collateralized by equipment. | | | 25,823 | | | | - | |\n| Note payable to GE Capital, bearing interest at 2.25%; payable in | | | | | | | | |\n| monthly installments of $359; maturing July 2013; collateralized by | | | | | | | | |\n| equipment. | | | 2,847 | | | | 6,531 | |\n| Note payable toDe Lage Landen Financial Services | | | | | | | | |\n| bearing interest at 5.30%; payable in monthly installments of $549; | | | | | | | | |\n| maturing\u00a0\u00a0March 2016; collateralized by equipment. | | | 19,629 | | | | - | |\n| Note payable to Phyllis Rice, bearing interest | | | | | | | | |\n| at 1%; payable in monthly installments of $2,000; maturing | | | | | | | | |\n| March 2015; collateralized by equipment. | | | 55,365 | | | | 80,882 | |\n| Note payable to De Lage Landen Financial Services, | | | | | | | | |\n| bearing interest at 5.12%; payable in monthly installments of $697; | | | | | | | | |\n| maturing December 2014; collateralized by equipment. | | | 16,496 | | | | 19,229 | |\n| Note payable to Catepillar Financial, bearing interest | | | | | | | | |\n| at 6.15%; payable in monthly installments of $766; maturing | | | | | | | | |\n| August 2014; collateralized by equipment. | | | 14,535 | | | | 21,990 | |\n| Note payable to De Lage Landen Financial Services, | | | | | | | | |\n| bearing interest at 5.28%; payable in monthly installments of $709; | | | | | | | | |\n| maturing June 2014; collateralized by equipment. | | | 12,235 | | | | 23,529 | |\n| Note payable for Corral Blanco Land, bearing interest at 6.0%, | | | | | | | | |\n| due May 1, 2013; collateralized by land | | | 86,747 | | | | - | |\n| Note payable for Soyatal Mine, 7.0 % interest, | | | | | | | - | |\n| annual payments of $200,000\u00a0\u00a0through 2019; | | | 1,067,431 | | | | | |\n| | | | 1,505,494 | | | | 237,849 | |\n| Less Current portion | | | (461,354 | ) | | | (79,631 | ) |\n| Non-Current portion | | $ | 1,044,140 | | | $ | 158,218 | |\n\n\n","source":"UAMY\/10-K\/0001354488-13-001259"} {"title":"REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM","text":"8.\u00a0\u00a0\u00a0 Stockholders' Equity","markdown_table":"\n\n\n| Year Ending December 31, | | | | |\n| --- | --- | --- | --- | --- |\n| 2013 | | $ | 461,354 | |\n| 2014 | | | 259,360 | |\n| 2015 | | | 181,995 | |\n| 2016 | | | 159,551 | |\n| 2017 | | | 168,974 | |\n| 2018 | | | 180,802 | |\n| 2019 | | | 93,458 | |\n| | | $ | 1,505,494 | |\n\n\n","source":"UAMY\/10-K\/0001354488-13-001259"} {"title":"REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM","text":"Preferred StockThe Company's Articles of Incorporation authorize 10,000,000 shares of $0.01 par value preferred stock available for issuance with such rights and preferences, including liquidation, dividend, conversion, and voting rights, as the Board of Directors may determine.Series BDuring 1993, the Board established a Series B preferred stock, consisting of 750,000 shares.\u00a0\u00a0The Series B preferred stock has preference over the Company's common stock and Series A preferred stock; has no voting rights (absent default in payment of declared dividends); and is entitled to cumulative dividends of $0.01 per share per year, payable if and when declared by the Board of Directors.\u00a0\u00a0In the event of dissolution or liquidation of the Company, the preferential amount payable to Series B preferred stockholders is $1.00 per share plus dividends in arrears. No dividends have been declared or paid with respect to the Series B preferred stock. The Series B Preferred stock is no longer convertible to shares of the Company\u2019s common stock.\u00a0\u00a0At December 31, 2012 and 2011, cumulative dividends in arrears on the outstanding Series B shares were $135,000 and $127,500, respectively.Series CDuring 2000, the Board established a Series C preferred stock, consisting of 205,996 shares.\u00a0\u00a0In 2002, 28,092 shares were converted to common stock and cancelled, leaving 177,904 Series C preferred shares authorized and outstanding.\u00a0\u00a0The Series C preferred stock has preference over the Company\u2019s common stock and has voting rights equal to that number of shares outstanding, but no conversion or dividend rights.\u00a0\u00a0In the event of dissolution or liquidation of the Company, the preferential amount payable to Series C preferred stockholders is $0.55 per share.\n\n\u00a0 \n\n\nF-16\n\n\n\n\n\nTable of Contents\n\nUnited States Antimony Corporation and SubsidiariesNotes to Consolidated Financial StatementsDecember 31, 2012, 2011 and 20108.\u00a0\u00a0\u00a0 Stockholders' Equity, continuedSeries DDuring 2002, the Board established a Series D preferred stock, authorizing the issuance of up to 2,500,000 shares.\u00a0\u00a0The Series D preferred stock has preference over the Company\u2019s common stock but is subordinate to the liquidation preferences of the holders of the Company\u2019s outstanding Series A, Series B and Series C preferred stock.\u00a0\u00a0Series D preferred stock carries voting rights and is entitled to annual dividends of $0.0235 per share.\u00a0\u00a0The dividends are cumulative and payable after payment and satisfaction of the Series A, B and C preferred stock dividends.\u00a0\u00a0No dividends have been declared or paid with respect to the Series D preferred stock.\u00a0\u00a0At December 31, 2012 and 2011, cumulative dividends in arrears on the 1,751,005 outstanding Series D shares were $ 378,069 and $336,920, respectively, payable if and when declared by the Board of Directors.\u00a0\u00a0In the event of dissolution or liquidation of the Company, the preferential amount payable to Series D preferred stockholders is $2.50 per share.\u00a0\u00a0At December 31, 2012 and 2011, the liquidation preference for Series D preferred stock was $4,755,069 and $4,377,513, respectively.\u00a0\u00a0Holders of the Series D preferred stock have the right, subject to the availability of authorized but unissued common stock, to convert their shares into shares of the Company's common stock on a one-to-one basis without payment of additional consideration and are not redeemable unless by mutual consent.\u00a0\u00a0\u00a0The majority of Series D preferred shares are held by John Lawrence, president of the Company.9.\u00a0\u00a0\u00a0 2000 Stock PlanIn January 2000, the Company's Board of Directors resolved to create the United States Antimony Corporation 2000 Stock Plan (\"the Plan\").\u00a0\u00a0The purpose of the Plan is to attract and retain the best available personnel for positions of substantial responsibility and to provide additional incentive to employees, directors and consultants of the Company to promote the success of the Company's business. The maximum number of shares of common stock or options to purchase common stock that may be issued pursuant to the Plan is 500,000.\u00a0\u00a0At December 31, 2012 and 2011, 300,000 shares of the Company's common stock had been issued under the Plan.\u00a0\u00a0There were no issuances under the Plan during 2012 and 2011.10.\u00a0 Income TaxesThe Company\u2019s income tax provision (benefit) for the years ending December 31, 2012, 2011, and 2010, are as follows:","markdown_table":"\n\n\n\n| | | Number of Warrants | | | | Exercise Prices | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| Balance, December 31, 2010 | | | 725,000 | | | $ | .20 - $.75 | |\n| Warrants exercised | | | (125,000 | ) | | $ | .30 - $.40 | |\n| Balance, December 31, 2011 | | | 600,000 | | | $ | .30 - $.60 | |\n| Warrants issued | | | 1,734,667 | | | $ | 2.50 - $4.50 | |\n| Warrants exercised | | | (250,000 | ) | | $ | .30 - $2.50 | |\n| Warrants expired | | | (150,000 | ) | | $ | .30 - $.40 | |\n| Balance, December 31, 2012 | | | 1,934,667 | | | $ | .25 - $4.50 | |\n| | | | | | | | | |\n| The above common stock warrants | | | | | | | | |\n| expire as follows: | | | | | | | | |\n| | | | | | | | | |\n| Year ended December 31: | | | | | | | | |\n| 2013 | | | 50,000 | | | | | |\n| 2014 | | | 1,157,750 | | | | | |\n| 2015 | | | 476,917 | | | | | |\n| Thereafter | | | 250,000 | | | | | |\n| | | | 1,934,667 | | | | | |\n\n\n\n\u00a0\n","source":"UAMY\/10-K\/0001354488-13-001259"} {"title":"REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM","text":"F-17\n\n\n\n\n\nTable of Contents\n\n\n\u00a0\nUnited States Antimony Corporation and Subsidiaries\nNotes to Consolidated Financial Statements\nDecember 31, 2012, 2011 and 2010","markdown_table":"\n\n\n| | | 2012 | | | | 2011 | | | | 2010 | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| Federal | | | | | | | | | | | | |\n| Current | | $ | - | | | $ | - | | | $ | - | |\n| Deferred | | | 151,915 | | | | 87,675 | | | | (448,182 | ) |\n| Total | | $ | 151,915 | | | $ | 87,675 | | | $ | (448,182 | ) |\n| | | | | | | | | | | | | |\n| State | | | | | | | | | | | | |\n| Current | | $ | - | | | $ | 9,168 | | | $ | - | |\n| Deferred | | | 15,192 | | | | 8,767 | | | | (44,818 | ) |\n| Total | | $ | 15,192 | | | $ | 17,935 | | | $ | (44,818 | ) |\n| | | | | | | | | | | | | |\n| Foreign | | $ | - | | | $ | - | | | $ | - | |\n| | | | | | | | | | | | | |\n| Total provision (benefit) | | $ | 167,107 | | | $ | 105,610 | | | $ | (493,000 | ) |\n\n\n","source":"UAMY\/10-K\/0001354488-13-001259"} {"title":"REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM","text":"At December 31, 2012 and 2011, the Company had net deferred tax assets as follows:","markdown_table":"\n\n\n| | | 2012 | | | | 2011 | | | | 2010 | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| Domestic | | $ | 301,391 | | | $ | 1,342,530 | | | $ | 890,101 | |\n| Foreign | | | (692,820 | ) | | | (600,000 | ) | | | (577,888 | ) |\n| Total | | $ | (391,429 | ) | | $ | 742,530 | | | $ | 312,213 | |\n\n\n","source":"UAMY\/10-K\/0001354488-13-001259"} {"title":"REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM","text":"Existing and forecasted pretax earnings for financial reporting purposes are sufficient to generate the estimated required future taxable income required to realize the recognized federal net deferred tax asset as of December 31, 2012.","markdown_table":"\n\n\n| | | 2012 | | | | 2011 | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| Deferred tax asset: | | | | | | | | |\n| Property, plant, and equipment | | $ | - | | | $ | 79,164 | |\n| Other | | | 11,151 | | | | 2,926 | |\n| Foreign exploration costs | | | 208,855 | | | | 249,309 | |\n| Foreign net operating loss carryforward | | | 374,110 | | | | 390,000 | |\n| Foreign property, plant, and equipment | | | 217,887 | | | | | |\n| Federal and state net net operating | | | | | | | | |\n| loss carry forward | | | 39,824 | | | | 65,159 | |\n| Deferred tax asset | | | 851,827 | | | | 786,558 | |\n| | | | | | | | | |\n| Valuation allowance (foreign) | | | (605,496 | ) | | | (390,000 | ) |\n| Valuation allowance (federal) | | | - | | | | - | |\n| Total deferred tax asset | | | 246,331 | | | | 396,558 | |\n| | | | | | | | | |\n| Deferred tax liability: | | | | | | | | |\n| Property, plant, and equipment | | | (16,880 | ) | | | - | |\n| Total deferred tax liability | | | (16,880 | ) | | | - | |\n| | | | | | | | | |\n| Net Deferred Tax Asset | | $ | 229,451 | | | $ | 396,558 | |\n\n\n","source":"UAMY\/10-K\/0001354488-13-001259"} {"title":"REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM","text":"(1)\u00a0\u00a0Meals and entertainment, effect of state taxes, change of prior year estimate, and rate differential, as management has refined their estimate to 38.5% in 2011.\nDuring the years ended December 31, 2012, 2011, and 2010, there were no material uncertain tax positions taken by the Company.\u00a0\u00a0The Company United States income tax filings are subject to examination for the years 2010 through 2012, and 2011 and 2012 in Mexico. In the event that the Company is assessed penalties and or interest, penalties will be charged to other operating expense and interest will be charged to interest expense.11.\u00a0 Related-Party TransactionsAmounts due to (due from) related parties at December 31, 2012 and 2011 were as follows:","markdown_table":"\n\u00a0\n\n\n\n| | | 2012 | | | | | | | | 2011 | | | | | | | | 2010 | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | | | | | | | | | | | | | | | | | | | | | | | |\n| Computed expected tax provision (benefit) | | $ | (137,000 | ) | | | -35.0 | % | | $ | 259,886 | | | | 35.0 | % | | $ | 106,000 | | | | 34.0 | % |\n| Effect of permanent differences | | | - | | | | 0.0 | % | | | 4,662 | | | | 0.6 | % | | | 30,000 | | | | 9.6 | % |\n| Foreign taxes | | | 34,641 | | | | 8.9 | % | | | 24,000 | | | | 3.2 | % | | | - | | | | - | |\n| Other(1) | | | 61,770 | | | | 15.8 | % | | | 126,062 | | | | 17.0 | % | | | - | | | | - | |\n| Increase in valuation allowance | | | 207,696 | | | | 53.1 | % | | | - | | | | - | | | | - | | | | - | |\n| Release of valuation allowance | | | - | | | | 0.0 | % | | | (309,000 | ) | | | -41.6 | % | | | (629,000 | ) | | | -202.0 | % |\n| Total | | $ | 167,107 | | | | 42.7 | % | | $ | 105,610 | | | | 14.2 | % | | $ | (493,000 | ) | | | -158.4 | % |\n\n\n\n\u00a0\n","source":"UAMY\/10-K\/0001354488-13-001259"} {"title":"REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM","text":"(1)Transactions affecting the payable to Mr. Lawrence during 2012, 2011 and 2010 were as follows:","markdown_table":"\n\n\n| | | 2012 | | | | 2011 | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| Payable to officer for antimony ore | | $ | - | | | $ | 54,131 | |\n| | | | | | | | | |\n| John C. Lawrence, president and director(1) | | | 17,522 | | | | 47,843 | |\n| Net related party liabilities | | $ | 17,522 | | | $ | 101,974 | |\n\n\n","source":"UAMY\/10-K\/0001354488-13-001259"} {"title":"REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM","text":"In addition to transactions described above,\u00a0during 2012, 2011, and 2010, the Company had the following transactions with related parties:Members of the audit committee received $24,000 in cash for 2011.During 2012, 2011, and 2010, the Company paid $89,204, $107,359, and $55,469, respectively, to a director for development of Mexican mill sites and consulting fees.A director of the Company acted on behalf of the Company as laison to Mexican officials through the year ended 2011. During the years ended December 31, 2011 and 2010, fees and expenses to this director were $37,083 and $32,000, respectively.\n\n\u00a0 \n\n\nF-19\n\n\n\n\n\nTable of Contents","markdown_table":"\n\n\n| | | 2012 | | | | 2011 | | | | 2010 | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| Balance, beginning of year | | $ | 47,843 | | | $ | 18,060 | | | $ | 8,394 | |\n| Aircraft rental charges | | | 74,490 | | | | 86,058 | | | | 129,177 | |\n| Payments and advances, net | | | (104,811 | ) | | | (56,275 | ) | | | (119,511 | ) |\n| Balance, end of year | | $ | 17,522 | | | $ | 47,843 | | | $ | 18,060 | |\n\n\n","source":"UAMY\/10-K\/0001354488-13-001259"} {"title":"REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM","text":"F-20\n\n\n\n\n\nTable of Contents\n\nUnited States Antimony Corporation and SubsidiariesNotes to Consolidated Financial StatementsDecember 31, 2012, 2011 and 201013.\u00a0\u00a0Business Segments, continued","markdown_table":"\n\n\n| | | For the year ended | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | December\u00a031, 2012 | | | | December\u00a031, 2011 | | | | December\u00a031, 2010 | | |\n| Capital expenditures: | | | | | | | | | | | | |\n| Antimony | | | | | | | | | | | | |\n| United States | | $ | 288,364 | | | $ | 160,536 | | | $ | 31,300 | |\n| Mexico | | | 4,385,983 | | | | 1,988,345 | | | | 927,131 | |\n| Subtotal Antimony | | | 4,674,347 | | | | 2,148,881 | | | | 958,431 | |\n| Zeolite | | | 328,045 | | | | 324,869 | | | | 36,300 | |\n| Total | | $ | 5,002,392 | | | $ | 2,473,750 | | | $ | 994,731 | |\n| | | | | | | | | | | | | |\n| | | For the year ended | | | | | | | | | | |\n| | | December\u00a031, 2012 | | | | December\u00a031, 2011 | | | | December\u00a031, 2010 | | |\n| Revenues: | | | | | | | | | | | | |\n| Antimony | | $ | 9,401,003 | | | $ | 11,074,449 | | | $ | 6,657,369 | |\n| Zeolite | | | 2,641,699 | | | | 2,043,641 | | | | 2,415,955 | |\n| Total | | $ | 12,042,702 | | | $ | 13,118,090 | | | $ | 9,073,324 | |\n\n\n","source":"UAMY\/10-K\/0001354488-13-001259"} {"title":"ITEM\u00a07. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND\nRESULTS OF OPERATIONS","text":"The following tables show changes in interest income, interest expense and net interest resulting from changes in\nvolume and rate variances for major categories of earnings assets and interest bearing liabilities.","markdown_table":"\n\n| | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | **2013** | | | | | | | | | | |\n| | | (In Thousands) | | | | | | | | | | |\n| | | AverageBalance | | | | Interest\/Dividends | | | | Yield\/Rate | | |\n| **ASSETS** | | | | | | | | | | | | |\n| **Interest Earning Assets:** | | | | | | | | | | | | |\n| Loans | | $ | 507,126 | | | $ | 24,978 | | | | 4.93 | % |\n| Taxable investment securities | | | 287,736 | | | | 4,597 | | | | 1.60 | % |\n| Tax-exempt investment securities | | | 64,355 | | | | 1,819 | | | | 4.28 | % |\n| Federal funds sold\u00a0& interest bearing deposits | | | 22,243 | | | | 34 | | | | 0.15 | % |\n| | | | | | | | | | | | | |\n| **Total Interest Earning Assets** | | | 881,460 | | | $ | 31,428 | | | | 3.68 | % |\n| | | | | | | | | | | | | |\n| **Non-Interest Earning Assets:** | | | | | | | | | | | | |\n| Cash and cash equivalents | | | 17,691 | | | | | | | | | |\n| Other assets | | | 39,107 | | | | | | | | | |\n| | | | | | | | | | | | | |\n| **Total Assets** | | $ | 938,258 | | | | | | | | | |\n| | | | | | | | | | | | | |\n| **LIABILITIES AND SHAREHOLDERS\u0092 EQUITY** | | | | | | | | | | | | |\n| **Interest Bearing Liabilities:** | | | | | | | | | | | | |\n| Savings deposits | | $ | 400,071 | | | $ | 1,475 | | | | 0.37 | % |\n| Other time deposits | | | 250,737 | | | | 2,718 | | | | 1.08 | % |\n| Other borrowed money | | | 6,690 | | | | 163 | | | | 2.44 | % |\n| Federal funds purchased and securties sold under agreement to repurchase | | | 54,312 | | | | 248 | | | | 0.46 | % |\n| | | | | | | | | | | | | |\n| **Total Interest Bearing Liabilities** | | | 711,810 | | | $ | 4,604 | | | | 0.65 | % |\n| | | | | | | | | | | | | |\n| **Non-Interest Bearing Liabilities:** | | | | | | | | | | | | |\n| Non-interest bearing demand deposits | | | 109,804 | | | | | | | | | |\n| Other | | | 7,895 | | | | | | | | | |\n| | | | | | | | | | | | | |\n| **Total Liabilities** | | | 829,509 | | | | | | | | | |\n| | | | | | | | | | | | | |\n| **Shareholders\u0092 Equity** | | | 108,749 | | | | | | | | | |\n| | | | | | | | | | | | | |\n| **Total Liabilities and** | | | | | | | | | | | | |\n| **Shareholders\u0092 Equity** | | $ | 938,258 | | | | | | | | | |\n| | | | | | | | | | | | | |\n| Interest\/Dividend income\/yield | | | | | | $ | 31,428 | | | | 3.68 | % |\n| Interest Expense \/ yield | | | | | | | 4,604 | | | | 0.65 | % |\n| | | | | | | | | | | | | |\n| Net Interest Spread | | | | | | $ | 26,824 | | | | 3.03 | % |\n| | | | | | | | | | | | | |\n| Net Interest Margin | | | | | | | | | | | 3.15 | % |\n| | | | | | | | | | | | | |\n\n","source":"FMAO\/10-K\/0001193125-16-474789"} {"title":"ITEM\u00a07. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND\nRESULTS OF OPERATIONS","text":"As mentioned in the discussion earlier, in reviewing years 2014 to 2013, the change in volume is the main driver for the\nimproved ratio which is opposite of the change between 2013 to 2012 the largest impact was due to rate. The strategy since 2010 has been to extend the maturities of time deposit \u0093specials\u0094 to over 24 months to prepare for a rising rate\nenvironment. The other strategy employed since 2011 was to increase core deposits by offering innovative products focused on customer needs, such as higher interest rates and fraud notification. In exchange for these accounts, customers were asked to utilize services that benefited both the Bank and themselves. Smaller time\ndeposit rate shoppers had an option to perhaps change their behavior of banking or allow those deposits to run off. The new core deposit products were indeed embraced by our customers and have helped to attain the deposit portfolio mix sought by the\nBank. Non-Interest Income The discussion now turns\nto the noninterest activity of 2015 operations, beginning with the revenue portion. In comparing line items of the consolidated statements of income for years ended 2013 through 2015, it can be seen where the Company has been spending its time and\nthe impact of the recession and slow recovery. This section will focus on the significant noninterest items that impacted the operations of the Company. The Company has concerns with the increased costs associated with regulatory compliance such as the possible loss of revenue from new regulations stemming\nfrom the Dodd-Frank Act. History has proven the concern is justified. One area of revenue impacted was overdraft fees. Updated Regulation E guidelines were implemented on August\u00a015, 2010 and the Bank has ended each year since with a lower\nrevenue stream from overdraft fees. This has occurred in spite of the addition of the new offices since 2010. Each year, the number of checking accounts increased along with the balances; however average collected overdraft fees per account\ndecreased. Overdraft fees in 2015 accounted for $2.4 million in noninterest income, compared to $2.5 million in 2014 and $2.7 million for 2013. The Bank had made this an area of focus for 2015 as this revenue stream remains under intense regulator\nreview. In 2015, the Bank adjusted its overdraft program and renamed it \u0093Courtesy Pay\u0094. Courtesy Pay establishes dynamic limits based on a customer\u0092s behavior and likelihood of repayment. The Bank has sought to better service the\ncustomer\u0092s needs while decreasing the need for collections and improving profitability. At the current time, profitability has not been impacted. Service charges on checking accounts, excluding Health Savings Accounts, were up $120 thousand for\n2015 and $208.7 thousand for 2014. This improvement is credited to the new checking accounts mentioned previously. The Bank has long promoted the use of\ndebit cards by its customers and continued that philosophy with the introduction of additional new products. 2015 revenue improved $142.9 thousand and 2014 revenue improved $250.5 from ATM\/debit card usage as compared to 2014 and 2013, respectively.\nThe Bank receives interchange revenue from each use by a customer of the card. In 2011, this revenue stream was at risk of being reduced by the Federal Reserve regulation of the interchange fee. The establishment by the Federal Reserve of a tiered\npricing for banks under $10 billion has helped to protect the profitability from such fees, although the concern remains as to how long this tiered pricing will remain in effect. While this revenue stream continues to improve with more depositors\nusing electronic methods for purchasing, the expense of fraud has offset a portion of the revenue gain. Further discussion can be found in the non-interest expense section regarding the net effect of debit card activity. Noninterest income from net gain on sales of loans decreased for both 2015 and 2014 as compared to 2013. Unfortunately, this has become a trend mainly due to\nthe duration of the flat rate interest environment. The net gain on sale of loans is derived from sales of real estate loans into the secondary market. Of these loan types, the Bank sells 100% of the residential loans and 90% of the agricultural\nloans into the secondary market. 2014 or 2015 activity did not reach the same high levels as 2013. Gains of $559.6 and $140.8 thousand were recorded for residential and agricultural real estate respectively for 2015 along with gains of $452.7 and\n$194.3 thousand were recorded for residential and agricultural real estate respectively for 2014. In conjunction with these sales, the Bank maintains servicing rights and those income amounts during all three years are included in the customer\nservice fees line item and account for over $300 thousand in revenue each year. The last line item in the noninterest income section as was discussed\npreviously is the net gain on sale of investments. The Bank has taken advantage of this opportunity the last three years and expects to continue as long as the rates remain low and the yield curve is favorable to the transaction. The Bank will not\nincrease short-term gains at the sacrifice of long-term profitability. All of the sales of securities in 2015 and 2014 of $47.0 and $57.9 million respectively were used to fund loan growth while only some of the $91 million in proceeds realized on\nthe sale of securities in 2013 were used to fund loan growth. This is a source of funds that will continue to be analyzed for use in the coming year. Gains of $451 thousand were recorded for 2015, $494 thousand for 2014 as compared to $775 thousand\nfor 2013. Customer service fees show a nice improvement of $623 thousand collected in 2015 as compared to 2014. Almost $200 thousand can be attributed to\nclassifying foreign ATM fees out of service charges into miscellaneous fees in 2015. An additional $104.7 thousand comes from servicing those sold secondary loans mentioned in gain on sale of loans, as the volume increased in 2015 as compared to\n2014. Total loan service fees collected in 2015 was $1.2 million compared to $1.1 million in 2014. Overall, noninterest income increased $604 thousand in 2015 following a year where it had decreased $654\nthousand. Some of the revenue may not be easily duplicated as it is dependent on economic and market conditions to provide the opportunity. However, the increased revenue amounts from deposit and loan services should continue to provide improved\nprofitability in the future. Gains on sales should also continue in the near term though when it will change is unknown at this time. Non-Interest\nExpense Noninterest expense increased 3.4% in 2015 as compared to 2014 and was preceded by a 4.2% increase in 2014 as compared to 2013. Represented in\ndollars, 2015 was $854 thousand higher than 2014 and 2014 was $1 million higher than 2013. The largest factor behind both years increase was the expense of employee salaries and wages. During 2015, an additional $721 thousand was spent over 2014\nwhich correlates to a 7.1% increase. When making the same analysis for 2014 as compared to 2013, 2014\u0092s costs increased $633 thousand or 6.6%. Three main components flow into salaries and wages: base salary, deferred costs, and incentives\ncomposed of the expense of restricted stock awards and performance incentives. Base pay has increased with the addition of the three offices of Waterville, Custar and Sylvania, the Captive and through normal yearly increases to the remainder of the\nemployees. Base pay was up $559.3 thousand for 2015 over the previous year and 2014 was up $474.1 thousand over 2013. The full time equivalent number of employees at each yearend increased to 265 for 2015, to 260 for 2014 compared to 2013\u0092s\n251. Incentive pay as it related to performance was up $209.5 thousand in 2014 over 2013. Both measurements used to award incentive pay had improved in\n2015 and 2014 and employees benefited accordingly. These followed 2013, a year in which the incentive performance pay was down $110.1 thousand from 2012. The expense for the restricted stock awards has also increased each of the last three years as\nmore shares have been granted to a larger number of employees. 2015\u0092s cost for this program was $82 thousand higher than 2014 and 2014 was $20.9 thousand higher than 2013. The awards incorporate a three year vesting period so the increase of\nany one year carries forward through the next two years. This expense should continue to increase as the Company continues its expansion strategy. (For further discussion in incentive pay and restricted stock awards, see note 11 of the consolidated\nfinancial statements.) Employee benefits increased by similar percentages as the salaries and wages for 2015 increased by 6.9% over 2014 and 2014\nincreased by 3.3% over 2013. The cost of the 401-K retirement plan increased each year as the profit share component increased along with the number of employees participating. The Company has been able to hold steady the expense of the\nemployee\u0092s group insurance while paying higher premiums. Being partially self-insured has helped with lower claim experience though it is an unknown each year what that experience will be. For 2014 and 2015, a switch in the medical provider and\ncomparison pricing also assisted to control the cost. Employees do participate in any premium increases. Net occupancy expense typically increases as the\nCompany expands, with 2014 being an exception due to an increase in building rent. Building rent is netted out to offset occupancy expense. The greatest contributor to building rent comes from the division of FM Investments within the Bank. This\ndivision experienced a strong 2014; however the department was short staffed most of 2015. This has been remedied in 2016 and performance is expected to improve. While net loss on sale of other assets owned, mainly ORE property, does not represent income for the years presented, the decrease in the amount of the loss\nfor 2015 as compared to 2014, does contribute to improved profitability. Loss on sale of assets included any write downs in the carrying values of ORE property on the Bank\u0092s balance sheet. In 2015 and 2014, the number of properties and the\ncorresponding carrying values decreased as compared to 2013. The Bank also sold its St. Joe, Indiana property during 2015. While taking a loss for the sale, the Bank eliminated the continued maintenance expense of an unoccupied building. An easement\nwas agreed upon to enable the ATM located on the property to remain operational. The mortgage refinancing activity has been lower over the last three\nyears. A correlating expense to that activity is the amortization of mortgage servicing rights. The amortization is the expense that offsets the income recognized when the loan is first made. Income is recorded when the mortgage loan is first sold\nwith servicing retained and is therefore recognized within one year. The amortization, however, is calculated over the life of the loan and accelerated as loans are paid off early. An increase in this expense can be driven by two activities: an\nincrease in the number of sold loans and\/or by the acceleration of the expense from payoff and refinance activity. The best picture of the bottom line impact is achieved by netting the income with the expense each year. 2015 had net income of $33\nthousand, a switch from 2014 which had net expense of $42.7 thousand and 2013 had a net income of $2 thousand. Of course, the value (or\nincome) of the mortgage servicing right when sold also impacts the net position. 2015 had higher additions and lower amortization expense from refinanced loans. 2013 had new loan activity and lower refinance activity making the additions and\namortization almost equal. The number of loans and balances also indicates this as the levels have remained fairly constant. 2014 was a year with limited sales and the amortization expense was therefore higher than the capitalized additions. As of\nDecember 2015, 3,598 loans are being serviced with balances of $275.7 million. As of December\u00a031, 2014, there were 3,638 loans serviced with balances of $275.4 million and as of December 2013, there were 3,684 loans serviced with balances of\n$282.1 million. The impact of mortgage servicing rights to both noninterest income and expense is shown in the following table:","markdown_table":"\n\n| | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | 2015 vs 2014 | | | | | | | | | | |\n| | | (In Thousands) | | | | | | | | | | |\n| | | NetChange | | | | Due\u00a0to\u00a0change\u00a0inVolume | | | | Rate | | |\n| **Interest Earning Assets:** | | | | | | | | | | | | |\n| Loans | | $ | 1,223 | | | $ | 2,210 | | | $ | (987 | ) |\n| Taxable investment securities | | | (762 | ) | | | (211 | ) | | | (551 | ) |\n| Tax-exempt investment securities | | | (281 | ) | | | 26 | | | | (307 | ) |\n| Federal funds sold\u00a0& interest bearing deposits | | | 17 | | | | 11 | | | | 6 | |\n| | | | | | | | | | | | | |\n| **Total Interest Earning Assets** | | $ | 197 | | | $ | 2,036 | | | $ | (1,839 | ) |\n| | | | | | | | | | | | | |\n| **Interest Bearing Liabilities:** | | | | | | | | | | | | |\n| Savings deposits | | $ | 108 | | | $ | 65 | | | $ | 43 | |\n| Other time deposits | | | (297 | ) | | | (233 | ) | | | (64 | ) |\n| Other borrowed money | | | (3 | ) | | | (1 | ) | | | (2 | ) |\n| Federal funds purchased and securities sold under agreement to repurchase | | | 63 | | | | (13 | ) | | | 76 | |\n| | | | | | | | | | | | | |\n| **Total Interest Bearing Liabilities** | | $ | (129 | ) | | $ | (182 | ) | | $ | 53 | |\n| | | | | | | | | | | | | |\n| | | | | | | | | | | | | |\n| | | 2014 vs 2013 | | | | | | | | | | |\n| | | (In Thousands) | | | | | | | | | | |\n| | | NetChange | | | | Due\u00a0to\u00a0change\u00a0inVolume | | | | Rate | | |\n| **Interest Earning Assets:** | | | | | | | | | | | | |\n| Loans | | $ | 3,092 | | | $ | 3,667 | | | $ | (575 | ) |\n| Taxable investment securities | | | (1,027 | ) | | | (1,577 | ) | | | 550 | |\n| Tax-exempt investment securities | | | (25 | ) | | | 50 | | | | (75 | ) |\n| Federal funds sold\u00a0& interest bearing deposits | | | (15 | ) | | | (20 | ) | | | 5 | |\n| | | | | | | | | | | | | |\n| **Total Interest Earning Assets** | | $ | 2,025 | | | $ | 2,120 | | | $ | (95 | ) |\n| | | | | | | | | | | | | |\n| **Interest Bearing Liabilities:** | | | | | | | | | | | | |\n| Savings deposits | | $ | (26 | ) | | $ | (20 | ) | | $ | (6 | ) |\n| Other time deposits | | | (709 | ) | | | (391 | ) | | | (318 | ) |\n| Other borrowed money | | | (159 | ) | | | (159 | ) | | | \u0097 | |\n| Federal funds purchased and securities sold under agreement to repurchase | | | 6 | | | | 30 | | | | (24 | ) |\n| | | | | | | | | | | | | |\n| **Total Interest Bearing Liabilities** | | $ | (888 | ) | | $ | (540 | ) | | $ | (348 | ) |\n| | | | | | | | | | | | | |\n\n","source":"FMAO\/10-K\/0001193125-16-474789"} {"title":"ITEM\u00a07. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND\nRESULTS OF OPERATIONS","text":"Furniture and equipment steadily increases as we continue to add facilities and invest in technology. Annual maintenance costs\ncontinue to grow and become a greater piece of the overall cost. As new services are provided to our customers, the backroom cost to supply them continues to rise. The Company accepts it is an expected cost of doing business and keeping our services\nrelevant to the industry. Data processing expense increased $50 thousand during 2015 and by $38 thousand in 2014. The Company continues to investigate\nways to reduce this expense. The pricing on many services, however, is based on number of accounts and the Bank fully expects those to increase with the growth from the newer offices and overall Bank growth. The last line item with significant variation in noninterest expense to discuss is \u0093other general and administrative\u0094. The decrease of $348 thousand\nfor 2015 as compared to 2014 can be mainly attributed to a $195.7 thousand reduction in marketing and consulting costs. A renegotiation of one service provider contract along with the maturity of another during 2015 lead to the decrease. Another\ncontributor to the reduction was lower losses due to NSF and fraud. The Bank applauds the work of our front-line staff to recognize possible fraud and scams attempted on our customers and stopping them before they can occur. An investment in\nadditional fraud detection software has also helped our back office personnel to detect possible digital fraud. This was down $60.2 thousand in 2015 compared to an increase in 2014 of $40.9 thousand. Other general and administrative was higher by $461 thousand in 2014. The fluctuation was not isolated to a single source. The primary factors impacting this\nfluctuation in 2014 are increases in both ATM expense and core deposit intangible expenses. The increased expense of $52.7 thousand relating to ATM and debit cards in 2015 and 2014 over the previous year is caused by many factors. Increased usage\nduring both years corresponds to increases in both revenue and cost. Finally, fraud increases cost as new cards have to be issued to limit the risk exposure. The fraud losses themselves are not recognized in this breakout, however the cost of\nreplacement cards is. The Bank is currently deploying chip technology within its cards; the Bank is aware the adoption of embedded chips will increase this expense in the coming years. 2014 experienced additional expense over 2013 in consulting\n($161.7 thousand), audit and accounting fees ($166.5 thousand) and advertising ($101.3 thousand). Allowance for Credit Losses Provision expense decreased by $566 thousand for 2015, following an increase of $333 thousand for 2014. The decrease for 2015 was due to the consistent strong\nasset quality of the Bank\u0092s loan portfolio as evidenced by low levels of both net charge-offs and delinquencies. The increase for 2014 was needed to account for the loan growth and the net charge-off activity of 2014. Sustained strong asset\nquality kept the provision expense lower than the growth alone would have warranted. Net charge-offs were $473, $480 and $888 thousand for 2015, 2014 and 2013, respectively. Commercial and Industrial loans had the largest charge-off activity in 2015\nand 2013, while 2014 was impacted with higher levels in the consumer portfolios. The Company segregates its Allowance for Credit Losses (ACL) into two reserves: The ACL and the Allowance for\nUnfunded Loan Commitments and Letters of Credit (AULC). When combined, these reserves constitute the total ACL. The AUCL is included in other liabilities on the consolidated balance sheets. The Bank\u0092s ALLL methodology captures trends in leading, current, and lagging indicators which will directly affect the Bank\u0092s allocation amount. The\nBank monitors trends in such leading indicators as delinquency, unemployment changes in the Bank\u0092s service area, experience and ability of staff, regulatory trends, and credit concentrations. A current indicator such as the total watch list\nloan amount to Capital, and a lagging indicator such as the charge off amount are referenced as well. A matrix formed by loan type from these indicators is used in making ALLL adjustments. Watch list loan balances are comprised of loans graded 5-8. These loan balances decreased 53.6% or $7.2 million from December\u00a031, 2014 to\nDecember\u00a031, 2015. The balances decreased mainly due to successful results from collection efforts. Given the size of the decrease, it is no surprise it is attributed mainly to the commercial real estate portfolio decreasing by $5.9 million.\nThree customers made up the bulk of the balances with one of three finding funding elsewhere. Commercial loans (non-real estate) on the Bank\u0092s watch list also had a nice decrease during 2015, though just not as high at $1.9 million. Of the aggregate watch list loan balances, as of December\u00a031, 2015, special mention accounted for 36.6% with substandard comprising 49.1% and doubtful\naccounting for the final 14.3%. In comparison to 2014, special mention was down $7.2 million, substandard up slightly by $161 thousand and doubtful down almost exactly the same amount at $162 thousand. Special mention loan balances increased 21.2% or $1.7 million overall as of yearend 2014 compared to same date 2013. The increase was in the commercial and\ncommercial real estate portfolios. The largest increase of $2.1 million was in the commercial real estate, which was caused mainly by one large relationship being downgraded. Agricultural real estate decreased $618 thousand, thereby offsetting the\nabove-referenced increase. For 2014, the increase in special mention is offset by significant decreases in the substandard classifications of those same\ncommercial related portfolios. Overall, substandard and doubtful loans decreased 42.5% or $2.9 million as compared to yearend 2013. In response to these fluctuations and loan growth during 2014 and 2015, the Bank changed ALLL to outstanding loan\ncoverage percentage changed to 0.88% as of December\u00a031, 2015, 0.95% as of December\u00a031, 2014 from and 0.90% as of December\u00a031, 2013. The\nabove indicators are reviewed quarterly. Some of the indicators are quantifiable and, as such, will automatically adjust the ALLL once calculated. These indicators include the ratio of past due loans to total loans, loans past due greater than 30\ndays, and the ration of watch list loans to capital, with the watch list made up of loans graded 5, 6 or 7 on a scale of 1 (best) to 7 (worst). Other indicators use more subjective data to the extent possible to evaluate the potential for inherent\nlosses in the Bank\u0092s loan portfolio. For example, the economic indicator uses the unemployment statistics from the communities in our market area to help determine whether the ALLL should be adjusted. At the end of each of 2013, 2014 and 2015,\na slight improvement was noted in unemployment figures. All aggregate commercial and agricultural credits including real estate loans of $250,000 and\nover are reviewed annually by both credit committees and internal loan review to look for early signs of deterioration. To establish the specific reserve\nallocation for real estate, a discount to the market value is established to account for liquidation expenses. The discounting percentage used for real estate mirrors the discounting of real estate as provided for in the Bank\u0092s Loan Policy.\nHowever, unique or unusual circumstances may be present which will affect the real estate value and, when appropriately identified, can adjust the discounting percentage at the discretion of management. The ACL increased $153 and $755 thousand during 2015 and 2014 respectively, which was preceded by a $29 thousand decrease during 2013. The large increase in\n2014 directly correlates to the large increase in loan balances. With the improved asset quality, the metrics upon which the ACL is calculated did not support a larger increase in 2015 even though loan growth occurred. The percentage of ACL to the\ntotal loan portfolio was 0.93% as of December\u00a031, 2013, 0.98% as of December\u00a031, 2014 and 0.91% as of December\u00a031, 2015. December\u00a031, 2013 had the lowest loans past due 30+ day percentage at 0.25% in the Bank\u0092s known\nhistory, December\u00a031, 2014 and 2015 were still at respectable lows of 0.37% and 0.32%. Please see Note 4 in the consolidated financial statement for additional tables regarding the composition of the\nACL. Federal Income Taxes Effective tax rates were\n26.97%, 28.64% and 28.53% for 2015, 2014 and 2013 respectively. The effect of tax-exempt interest from holding tax-exempt securities and Industrial Development Bonds (IDBs) was $554, $634, and $640 thousand for 2015, 2014, and 2013, respectively.\nAll years included an increase into a higher tax bracket for income over $10 million. Behind the decrease in 2015 is one of the benefits from the establishment of the Captive subsidiary. Material Changes in Financial Condition The shifts in\nthe balance sheet during 2015 and 2014 have positioned the Company for continued improvement in profitability. On the asset side, the Company experiences an increase in interest income due to loan growth with funding provided by a decrease in the\ninvestment portfolio, core deposit growth and 2015 also utilized other borrowings. The cost of funds was impacted by the shift of interest bearing liabilities to noninterest and the decrease in time deposits and other borrowed money as borrowings\ndidn\u0092t increase until December 2015. Both contributed to improved profitability in 2015 and 2014 and leads to expected liabilities improvement in future years. Average earning assets increased throughout 2015 and 2014. Loan growth in both years was the main factor. 2014 was also aided by the Custar acquisition which\ntook place in December 2013 and brought in $29 million in deposits. 2015 also had the addition of the Sylvania office for a full year along with the growth in the other newer offices. Securities The investment portfolio is primarily used to\nprovide overall liquidity for the Bank. It is also used to provide required collateral for pledging to the Bank\u0092s Ohio public depositors for amounts on deposit in excess of the FDIC coverage limits. It may also be used to pledge for additional\nborrowings from third parties. Investments are made with the above criteria in mind while still seeking a fair market rate of return, and looking for maturities that fall within the projected overall strategy of the Bank. The possible need to fund\ngrowth is also a consideration. All of the Bank\u0092s security portfolio is categorized as available for sale and as such is recorded at market value.\nSecurity balances as of December\u00a031 are summarized below:","markdown_table":"\n\n| | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | (In Thousands) | | | | | | | | | | |\n| | | 2015 | | | | 2014 | | | | 2013 | | |\n| Beginning Year | | $ | 2,023 | | | $ | 2,066 | | | $ | 2,063 | |\n| Capitalized Additions | | | 407 | | | | 301 | | | | 429 | |\n| Amortization | | | (374 | ) | | | (344 | ) | | | (426 | ) |\n| Valuation Allowance | | | \u0097 | | | | \u0097 | | | | \u0097 | |\n| | | | | | | | | | | | | |\n| End of Year | | $ | 2,056 | | | $ | 2,023 | | | $ | 2,066 | |\n| | | | | | | | | | | | | |\n\n","source":"FMAO\/10-K\/0001193125-16-474789"} {"title":"ITEM\u00a07. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND\nRESULTS OF OPERATIONS","text":"The following table sets forth the maturities of investment securities as of December\u00a031, 2015 and the weighted average\nyields of such securities calculated on the basis of cost and effective yields weighted for the scheduled maturity of each security. Tax-equivalent adjustments, using a thirty-four percent rate, have been made in yields on obligations of state and\npolitical subdivisions. Stocks of domestic corporations have not been included.","markdown_table":"\n\n| | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | (In Thousands) | | | | | | | | | | |\n| | | 2015 | | | | 2014 | | | | 2013 | | |\n| U.S. Treasury | | $ | 38,505 | | | $ | 25,393 | | | $ | 25,272 | |\n| U.S. Government agencies | | | 98,220 | | | | 119,234 | | | | 172,972 | |\n| Mortgage-backed securities | | | 26,324 | | | | 29,562 | | | | 44,792 | |\n| State and local governments | | | 72,066 | | | | 74,303 | | | | 81,473 | |\n| | | | | | | | | | | | | |\n| | | $ | 235,115 | | | $ | 248,492 | | | $ | 324,509 | |\n| | | | | | | | | | | | | |\n\n","source":"FMAO\/10-K\/0001193125-16-474789"} {"title":"ITEM\u00a07. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND\nRESULTS OF OPERATIONS","text":"As of December\u00a031, 2015 the Bank did not hold a large block of any one investment security in excess of 10% of\nstockholders\u0092 equity. The largest segment of holdings is in US Governments. The Bank also holds stock in the Federal Home Loan Bank of Cincinnati at a cost of $3.7 million. This is required in order to obtain Federal Home Loan Bank loans. The\nBank also owns stock of Farmer Mac with a carrying value of $37.4 thousand which is required to participate loans in the program. Loan Portfolio\nThe Bank\u0092s various loan portfolios are subject to varying levels of credit risk. Management mitigates these risks through portfolio\ndiversification and through standardization of lending policies and procedures. Risks are mitigated through an adherence to the Bank\u0092s loan\npolicies, with any exception being recorded and approved by senior management or committees comprised of senior management. The Bank\u0092s loan policies define parameters to essential underwriting guidelines such as loan-to-value ratio, cash flow\nand debt-to-income ratio, loan requirements and covenants, financial information tracking, collection practice and others. The maximum loan amount to any one borrower is limited by the Bank\u0092s legal lending limits and is stated in policy. On a\nbroader basis, the Bank restricts total aggregate funding in comparison to Bank capital to any one business or agricultural sector by an approved sector percentage to capital limitation. The following table shows the Bank\u0092s loan portfolio by category of loan as of December\u00a031st of each year, including loans held for sale:","markdown_table":"\n\n| | | | | | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | Maturities(Amounts in Thousands) | | | | | | | | | | | | | | |\n| | | Within One Year | | | | | | | | After One YearWithin Five Years | | | | | | |\n| | | Amount | | | | Yield | | | | Amount | | | | Yield | | |\n| U.S. Treasury | | $ | 5,091 | | | | 0.56 | % | | $ | 28,345 | | | | 1.09 | % |\n| U.S. Government agencies | | | \u0097 | | | | 0.00 | % | | | 87,994 | | | | 1.31 | % |\n| Mortgage-backed securities | | | \u0097 | | | | 0.00 | % | | | 254 | | | | 4.39 | % |\n| State and local governments | | | 7,630 | | | | 1.91 | % | | | 29,479 | | | | 2.10 | % |\n| Taxable state and local governments | | | 1,141 | | | | 2.21 | % | | | 6,076 | | | | 1.79 | % |\n| | | | | | | | | | | | | | | | | |\n| | | After Five YearsWithin Ten Years | | | | | | | | After Ten Years | | | | | | |\n| | | Amount | | | | Yield | | | | Amount | | | | Yield | | |\n| U.S. Treasury | | $ | 5,069 | | | | 2.00 | % | | $ | \u0097 | | | | 0.00 | % |\n| U.S. Government agencies | | | 10,226 | | | | 2.02 | % | | | \u0097 | | | | 0.00 | % |\n| Mortgage-backed securities | | | 8,394 | | | | 2.94 | % | | | 17,676 | | | | 2.20 | % |\n| State and local governments | | | 19,659 | | | | 2.55 | % | | | 5,634 | | | | 2.27 | % |\n| Taxable state and local governments | | | 999 | | | | 2.60 | % | | | 1,448 | | | | 5.57 | % |\n\n","source":"FMAO\/10-K\/0001193125-16-474789"} {"title":"ITEM\u00a07. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND\nRESULTS OF OPERATIONS","text":"The following table shows the maturity of loans as of December\u00a031, 2015:","markdown_table":"\n\n| | | | | | | | | | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | (In Thousands) | | | | | | | | | | | | | | | | | | |\n| Loans: | | 2015 | | | | 2014 | | | | 2013 | | | | 2012 | | | | 2011 | | |\n| Consumer Real Estate | | $ | 88,189 | | | $ | 97,550 | | | $ | 92,438 | | | $ | 80,287 | | | $ | 84,477 | |\n| Agricultural Real estate | | | 58,525 | | | | 50,895 | | | | 44,301 | | | | 40,143 | | | | 31,993 | |\n| Agricultural | | | 82,654 | | | | 74,611 | | | | 65,449 | | | | 57,770 | | | | 52,598 | |\n| Commercial Real Estate | | | 322,762 | | | | 270,188 | | | | 248,893 | | | | 199,999 | | | | 198,266 | |\n| Commercial and Industrial | | | 100,125 | | | | 100,126 | | | | 99,498 | | | | 101,624 | | | | 114,497 | |\n| Consumer | | | 27,770 | | | | 24,277 | | | | 21,406 | | | | 20,413 | | | | 23,375 | |\n| Industrial Development Bonds | | | 6,491 | | | | 4,698 | | | | 4,358 | | | | 1,299 | | | | 1,196 | |\n| | | | | | | | | | | | | | | | | | | | | |\n| | | $ | 686,516 | | | $ | 622,345 | | | $ | 576,343 | | | $ | 501,535 | | | $ | 506,402 | |\n| | | | | | | | | | | | | | | | | | | | | |\n\n","source":"FMAO\/10-K\/0001193125-16-474789"} {"title":"ITEM\u00a07. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND\nRESULTS OF OPERATIONS","text":"The following table presents the total of loans due after one year which has either 1) predetermined interest rates (fixed) or\n2) floating or adjustable interest rates (variable):","markdown_table":"\n\n| | | | | | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | (In Thousands) | | | | | | | | | | | | | | |\n| | | WithinOne Year | | | | After OneYear\u00a0WithinFive Years | | | | AfterFive Years | | | | Total | | |\n| Consumer Real Estate | | $ | 1,270 | | | $ | 11,486 | | | $ | 75,433 | | | $ | 88,189 | |\n| Agricultural Real Estate | | | 1,073 | | | | 3,300 | | | | 54,152 | | | | 58,525 | |\n| Agricultrual | | | 52,939 | | | | 24,239 | | | | 5,476 | | | | 82,654 | |\n| Commercial Real Estate | | | 13,030 | | | | 70,699 | | | | 239,033 | | | | 322,762 | |\n| Commercial and Industrial | | | 45,971 | | | | 34,791 | | | | 19,363 | | | | 100,125 | |\n| Consumer | | | 5,480 | | | | 17,228 | | | | 5,062 | | | | 27,770 | |\n| Industrial Development Bonds | | | 1,300 | | | | 185 | | | | 5,006 | | | | 6,491 | |\n| | | | | | | | | | | | | | | | | |\n| | | $ | 121,063 | | | $ | 161,928 | | | $ | 403,525 | | | $ | 686,516 | |\n| | | | | | | | | | | | | | | | | |\n\n","source":"FMAO\/10-K\/0001193125-16-474789"} {"title":"ITEM\u00a07. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND\nRESULTS OF OPERATIONS","text":"The following table summarizes the Company\u0092s nonaccrual, past due 90 days or more and still accruing loans,\nand accruing troubled debt restructurings as of December\u00a031 for each of the last five years:","markdown_table":"\n\n| | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | (In Thousands) | | | | | | | | | | |\n| | | FixedRate | | | | VariableRate | | | | Total | | |\n| Consumer Real Estate | | $ | 81,987 | | | $ | 4,932 | | | $ | 86,919 | |\n| Agricultural Real Estate | | | 47,252 | | | | 10,200 | | | | 57,452 | |\n| Agricultural | | | 29,108 | | | | 607 | | | | 29,715 | |\n| Commercial Real Estate | | | 236,384 | | | | 73,348 | | | | 309,732 | |\n| Commercial and Industrial | | | 53,292 | | | | 862 | | | | 54,154 | |\n| Consumer | | | 22,290 | | | | \u0097 | | | | 22,290 | |\n| Industrial Development Bonds | | | 5,050 | | | | 141 | | | | 5,191 | |\n\n","source":"FMAO\/10-K\/0001193125-16-474789"} {"title":"ITEM\u00a07. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND\nRESULTS OF OPERATIONS","text":"Although loans may be classified as non-performing, some pay on a regular basis, and many continue to pay interest irregularly\nor at less than original contractual rates. Interest income that would have been recorded under the original terms of these loans would have aggregated $117.1 thousand for 2015, $52.3 thousand for 2014 and $139.1 thousand for 2013. Any collections\nof interest on nonaccrual loans are included in interest income when collected unless it is on an impaired loan with a specific allocation. A collection of interest on an impaired loan with a specific allocation is applied to the loan balance to\ndecrease the allocation. Total interest collections, whether on an accrued or cash basis, amounted to $76 thousand for 2015, $87 thousand for 2014 and $60 thousand for 2013. $20.6 thousand of interest collected in 2015 was applied to reduce the\nspecific allocation and was applied for the same reason in 2014. Loans are placed on nonaccrual status in the event that the loan is in past due status\nfor more than 90 days or payment in full of principal and interest is not expected. The Bank had nonaccrual loan balances of $2.1 million at December\u00a031, 2015 compared to balances of $3.3 and $1.7 million as of year-end 2013 and 2014,\nrespectively. All of the balances of nonaccrual loans for the past three years were collaterally secured. As of December\u00a031, 2015 the Bank had $7.0\nmillion of loans which it considers to be \u0093potential problem loans\u0094 in that the borrowers are experiencing financial difficulties. At December\u00a031, 2014, the Bank had $13.5 million of these loans. These loans are subject to constant\nmanagement attention and are reviewed at least monthly. The amount of the potential problem loans was considered in management\u0092s review of the loan loss reserve at December\u00a031, 2015 and 2014. In extending credit to families, businesses and governments, banks accept a measure of risk against which an allowance for possible loan loss is established\nby way of expense charges to earnings. This expense is determined by management based on a detailed monthly review of the risk factors affecting the loan portfolio, including general economic conditions, changes in the portfolio mix, past due\nloan-loss experience and the financial condition of the bank\u0092s borrowers. As of December\u00a031, 2015, the Bank had loans outstanding to\nindividuals and firms engaged in the various fields of agriculture in the amount of $82.8 million with an additional $58.5 million in agricultural real estate loans these compared to $74.6 and $50.9 million respectively as of December\u00a031, 2014.\nThe ratio of this segment of loans to the total loan portfolio is not considered unusual for a bank engaged in and servicing rural communities. Interest\nrate modification to reflect a decrease in market interest rates or maintain a relationship with the debtor, where the debtor is not experiencing financial difficulty and can obtain funding from other sources, is not considered a troubled debt\nrestructuring. As of December\u00a031, 2015, the Bank had $1.1 million of its loans that were classified as troubled debt restructurings, of which $182.4 thousand are included in non-accrual loans. This compares to $797.2 thousand as of same date\n2014 and the Bank had almost $911.2 thousand classified as such as of December\u00a031, 2013. Updated appraisals are required on all collateral dependent\nloans once they are deemed impaired. The Bank may also require an updated appraisal of a watch list loan which the Bank monitors under their loan policy. On a quarterly basis, Bank management reviews properties supporting asset dependent loans to\nconsider market events that may indicate a change in value has occurred. To determine observable market price, collateral asset values securing an\nimpaired loan are periodically evaluated. Maximum time of re-evaluation is every 12 months for chattels and titled vehicles and every two years for real estate. In this process, third party evaluations are obtained and heavily relied upon. Until\nsuch time that updated appraisals are received, the Bank may discount the existing collateral value used. Performing \u0093non-watch list\u0094 loans secured in whole or in part by real estate, do not require an updated\nappraisal unless the loan is rewritten and additional funds advanced. Watch List loans secured in whole or in part by real estate require updated appraisals every two years. All loans are subject to loan to values as found in the Bank\u0092s loan\npolicies irrespective of their grade. The Bank\u0092s watch list is reviewed on a quarterly basis by management and any questions to value are addressed at that time. The majority of the Bank\u0092s loans are made in the market by lenders who live and work in the market. Thus, their evaluation of the independent valuation\nis also valuable and serves as a double check. On extremely rare occasions, the Bank will make adjustments to the recorded values of collateral securing\ncommercial real estate loans without acquiring an updated appraisal for the subject property. The Bank has no formalized policy for determining when collateral value adjustments between regularly scheduled appraisals are necessary, nor does it use\nany specific methodology for applying such adjustments. However, on a quarterly basis as part of its normal operations, the Bank\u0092s senior management and the Loan Review Committee will meet to review all commercial credits either deemed to be\nimpaired or on the Bank\u0092s watch list. In addition to analyzing the recent performance of these loans, management and the Enterprise Risk Management Committee will also consider any general market conditions that might warrant adjustments to the\nvalue of particular real estate collateralizing commercial loans. In addition, management conducts annual reviews of all commercial loans exceeding certain outstanding balance thresholds. In each of these situations, any information available to\nmanagement regarding market conditions impacting a specific property or other relevant factors are considered, and lenders familiar with a particular commercial real estate loan and the underlying collateral may be present to provide their opinion\non such factors. If the available information leads management to conclude a valuation adjustment is warranted, such an adjustment may be applied on the basis of the information available. If management concludes that an adjustment is warranted but\nlacks the specific information needed to reasonably quantify the adjustment, management will order a new appraisal on the subject property even though one may not be required under the Bank\u0092s general policies for updating appraisal. Note 4 of the Consolidated Financial Statements may also be reviewed for additional tables dealing with the Bank\u0092s loans and ALLL. ALLL is evaluated based on an assessment of the losses inherent in the loan portfolio. This assessment results in an allowance consisting of two components,\nallocated and unallocated. Management considers several different risk assessments in determining ALLL. The allocated component of ALLL reflects expected\nlosses resulting from an analysis of individual loans, developed through specific credit allocations for individual loans and historical loss experience for each loan category. For those loans where the internal credit rating is at or below a\npredetermined classification and management can reasonably estimate the loss that will be sustained based upon collateral, the borrowers operating activity and economic conditions in which the borrower operates, a specific allocation is made. For\nthose borrowers that are not currently behind in their payment, but for which management believes, based on economic conditions and operating activities of the borrower, the possibility exists for future collection problems, a reserve is\nestablished. The amount of reserve allocated to each loan portfolio is based on past loss experiences and the different levels of risk within each loan portfolio. The historical loan loss portion is determined using a historical loss analysis by\nloan category. The unallocated portion of the reserve for loan losses is determined based on management\u0092s assessment of general economic conditions\nas well as specific economic factors in the Bank\u0092s marketing area. This assessment inherently involves a higher degree of uncertainty. It represents estimated inherent but undetected losses within the portfolio that are probable due to\nuncertainties in economic conditions, delays in obtaining information, including unfavorable information about a borrower\u0092s financial condition and other current risk factors that may not have yet manifested themselves in the Bank\u0092s\nhistorical loss factors used to determine the allocated component of the allowance. Actual charge-off of loan balances is based upon periodic evaluations\nof the loan portfolio by management. These evaluations consider several factors, including, but not limited to, general economic conditions, financial condition of the borrower, and collateral. As presented below, charge-offs increased to $1.0 million for 2015, preceded by a decrease to $778 thousand for\n2014, an increase to $1.3 million for 2013, decreased to $891 thousand for 2012 and 2011 recorded $2.7 million. The provision expense also decreased in 2012 and 2011 and increased for 2013 and 2014. 2015 had the lowest provision expense of all years\npresented at $625 thousand. 2014 and 2013 had provision expense of $1.2 million and $858 thousand respectively. 2012 had provision expense of $738 thousand with 2011 having provision expense of $1.7 million. The Commercial and Industrial portfolio\nhad the largest net charge-off position in 2011 through 2015. The improvement in asset quality during the periods shown is reflected in the increased percentage of the allowance for loan loss to nonperforming loans. In reviewing the bigger picture of the allowance for credit loss, the years with the higher percentage of ACL to total nonperforming loans ratio account for\nthe lower level of nonaccrual and watch list loans. This demonstrates the extended time period with which it has taken to achieve resolution and\/or collection of these loans. In 2012, the provision expense was to offset the higher year-end watch\nlist values. A smaller portion of the allowance was needed to fund the impaired loans as collateral remained sufficient to cover the outstanding amounts in most cases. 2014\u0092s significant and continued loan growth since fourth quarter 2013 was\nthe reason behind 2014\u0092s higher balances as asset quality remained strong. The ratio of ACL to nonperforming loans increased significantly in 2014 which is why provision loan expense was lower in 2015 in comparison. The ACL to nonperforming\nloans for 2015 remained more than adequate and emphasizes the existing strong level of credit quality. The following table presents a reconciliation of the allowance for credit losses for the years ended\nDecember\u00a031, 2015, 2014, 2013, 2012 and 2011:","markdown_table":"\n\n| | | | | | | | | | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | (In Thousands) | | | | | | | | | | | | | | | | | | |\n| | | 2015 | | | | 2014 | | | | 2013 | | | | 2012 | | | | 2011 | | |\n| Non-accrual loans | | $ | 2,041 | | | $ | 1,705 | | | $ | 3,329 | | | $ | 4,828 | | | $ | 2,131 | |\n| Accruing loans past due 90 days or more | | | \u0097 | | | | \u0097 | | | | \u0097 | | | | 1 | | | | \u0097 | |\n| Troubled debt restructurings, not included above | | | 878 | | | | 471 | | | | 485 | | | | \u0097 | | | | \u0097 | |\n| | | | | | | | | | | | | | | | | | | | | |\n| Total | | $ | 2,919 | | | $ | 2,176 | | | $ | 3,814 | | | $ | 4,829 | | | $ | 2,131 | |\n| | | | | | | | | | | | | | | | | | | | | |\n\n","source":"FMAO\/10-K\/0001193125-16-474789"} {"title":"ITEM\u00a07. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND\nRESULTS OF OPERATIONS","text":"*\nNonperforming loans are defined as all loans on nonaccrual, plus any loans past due 90 days not on nonaccrual. Allocation of ALLL per Loan Category in terms of dollars and percentage of loans in each category to total loans\nis as follows:","markdown_table":"\n\n| | | | | | | | | | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | (In Thousands) | | | | | | | | | | | | | | | | | | |\n| | | 2015 | | | | 2014 | | | | 2013 | | | | 2012 | | | | 2011 | | |\n| Loans | | $ | 685,878 | | | $ | 621,926 | | | $ | 576,113 | | | $ | 501,402 | | | $ | 506,215 | |\n| | | | | | | | | | | | | | | | | | | | | |\n| Daily average of outstanding loans | | $ | 627,194 | | | $ | 581,483 | | | $ | 507,126 | | | $ | 492,697 | | | $ | 504,058 | |\n| | | | | | | | | | | | | | | | | | | | | |\n| Allowance for Loan Losses-Jan 1 | | $ | 5,905 | | | $ | 5,194 | | | $ | 5,224 | | | $ | 5,091 | | | $ | 5,706 | |\n| Loans Charged off: | | | | | | | | | | | | | | | | | | | | |\n| Consumer Real Estate | | | 38 | | | | 168 | | | | 147 | | | | 246 | | | | 423 | |\n| Agricultural Real Estate | | | \u0097 | | | | \u0097 | | | | \u0097 | | | | \u0097 | | | | \u0097 | |\n| Agricultural | | | \u0097 | | | | \u0097 | | | | \u0097 | | | | 6 | | | | 24 | |\n| Commercial Real Estate | | | 143 | | | | 229 | | | | 164 | | | | 98 | | | | 360 | |\n| Commercial and Industrial | | | 536 | | | | \u0097 | | | | 513 | | | | 47 | | | | 1,500 | |\n| Consumer | | | 313 | | | | 381 | | | | 438 | | | | 494 | | | | 374 | |\n| | | | | | | | | | | | | | | | | | | | | |\n| | | $ | 1,030 | | | $ | 778 | | | $ | 1,262 | | | $ | 891 | | | $ | 2,681 | |\n| | | | | | | | | | | | | | | | | | | | | |\n| Loan Recoveries: | | | | | | | | | | | | | | | | | | | | |\n| Consumer Real Estate | | $ | 41 | | | $ | 34 | | | $ | 20 | | | $ | 60 | | | $ | 61 | |\n| Agricultural Real Estate | | | \u0097 | | | | \u0097 | | | | \u0097 | | | | \u0097 | | | | \u0097 | |\n| Agricultural | | | 64 | | | | 44 | | | | 5 | | | | 12 | | | | 67 | |\n| Commercial Real Estate | | | 204 | | | | 4 | | | | 23 | | | | 7 | | | | 32 | |\n| Commercial and Industrial | | | 91 | | | | 20 | | | | 141 | | | | 30 | | | | 19 | |\n| Consumer | | | 157 | | | | 196 | | | | 185 | | | | 177 | | | | 172 | |\n| | | | | | | | | | | | | | | | | | | | | |\n| | | $ | 557 | | | $ | 298 | | | $ | 374 | | | $ | 286 | | | $ | 351 | |\n| | | | | | | | | | | | | | | | | | | | | |\n| Net Charge Offs | | $ | 473 | | | $ | 480 | | | $ | 888 | | | $ | 605 | | | $ | 2,330 | |\n| Provision for loan loss | | | 625 | | | | 1,191 | | | | 858 | | | | 738 | | | | 1,715 | |\n| Acquisition provision for loan loss | | | \u0097 | | | | \u0097 | | | | \u0097 | | | | \u0097 | | | | \u0097 | |\n| Allowance for Loan\u00a0& Lease Losses - Dec 31 | | $ | 6,057 | | | $ | 5,905 | | | $ | 5,194 | | | $ | 5,224 | | | $ | 5,090 | |\n| Allowance for Unfunded Loan Commitments & Letters of Credit Dec\u00a031 | | | 208 | | | | 207 | | | | 163 | | | | 162 | | | | 130 | |\n| | | | | | | | | | | | | | | | | | | | | |\n| Total Allowance for Credit Losses - Dec 31 | | $ | 6,265 | | | $ | 6,112 | | | $ | 5,357 | | | $ | 5,386 | | | $ | 5,221 | |\n| | | | | | | | | | | | | | | | | | | | | |\n| Ratio of net charge-offs to average | | | | | | | | | | | | | | | | | | | | |\n| Loans outstanding | | | 0.08 | % | | | 0.08 | % | | | 0.18 | % | | | 0.12 | % | | | 0.46 | % |\n| | | | | | | | | | | | | | | | | | | | | |\n| Ratio of the Allowance for Loan Loss to | | | | | | | | | | | | | | | | | | | | |\n| Nonperforming Loans | | | 293.75 | % | | | 346.30 | % | | | 156.03 | % | | | 108.20 | % | | | 238.89 | % |\n| | | | | | | | | | | | | | | | | | | | | |\n\n","source":"FMAO\/10-K\/0001193125-16-474789"} {"title":"ITEM\u00a07. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND\nRESULTS OF OPERATIONS","text":"Deposits The amount of\noutstanding time certificates of deposits and other time deposits in amounts of $100,000 or more by maturity as of December\u00a031, 2015 are as follows: \n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\u00a0\n\u00a0\u00a0\n(In Thousands)\n\u00a0\n\n\u00a0\n\u00a0\u00a0\nUnderThree\u00a0Months\n\u00a0\n\u00a0\u00a0\nOver\u00a0ThreeMonthsLess thanSix\u00a0Months\n\u00a0\n\u00a0\u00a0\nOver SixMonths\u00a0LessThan OneYear\n\u00a0\n\u00a0\u00a0\nOverOneYear\n\u00a0\n\n Time Deposits\n\u00a0\u00a0\n$\n8,904\n\u00a0\u00a0\n\u00a0\u00a0\n$\n13,404\n\u00a0\u00a0\n\u00a0\u00a0\n$\n20,513\n\u00a0\u00a0\n\u00a0\u00a0\n$\n38,040\n\u00a0\u00a0\n\n\n\u00a0\u00a0\n \u00a0\n \u00a0\n\u00a0\n\u00a0\u00a0\n \u00a0\n \u00a0\n\u00a0\n\u00a0\u00a0\n \u00a0\n \u00a0\n\u00a0\n\u00a0\u00a0\n \u00a0\n \u00a0\n\u00a0\nThe following table presents the average amount of and average rate paid on each deposit category:","markdown_table":"\n\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | 2015 | | | | | | | | 2014 | | | | | | | | 2013 | | | | | | | | 2012 | | | | | | | | 2011 | | | | | | |\n| | | Amount(000\u0092s) | | | | % | | | | Amount(000\u0092s) | | | | % | | | | Amount(000\u0092s) | | | | % | | | | Amount(000\u0092s) | | | | % | | | | Amount(000\u0092s) | | | | % | | |\n| Balance at End of Period Applicable To: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Consumer Real Estate | | $ | 338 | | | | 12.82 | | | $ | 537 | | | | 15.69 | | | $ | 257 | | | | 16.05 | | | $ | 368 | | | | 16.01 | | | $ | 260 | | | | 16.12 | |\n| Agricultural Real Estate | | | 211 | | | | 8.52 | | | | 184 | | | | 8.18 | | | | 131 | | | | 7.69 | | | | 113 | | | | 8.01 | | | | 140 | | | | 6.32 | |\n| Agricultural | | | 582 | | | | 12.07 | | | | 547 | | | | 12.00 | | | | 326 | | | | 11.36 | | | | 290 | | | | 11.52 | | | | 267 | | | | 10.39 | |\n| Commercial Real Estate | | | 2,516 | | | | 46.98 | | | | 2,367 | | | | 43.43 | | | | 2,107 | | | | 43.19 | | | | 1,749 | | | | 39.89 | | | | 2,087 | | | | 39.74 | |\n| Commercial and Industrial | | | 1,229 | | | | 15.56 | | | | 1,421 | | | | 16.86 | | | | 1,359 | | | | 18.03 | | | | 2,183 | | | | 20.53 | | | | 1,948 | | | | 22.85 | |\n| Consumer | | | 337 | | | | 4.05 | | | | 323 | | | | 3.84 | | | | 292 | | | | 3.68 | | | | 268 | | | | 4.04 | | | | 315 | | | | 4.58 | |\n| Unallocated | | | 844 | | | | 0.00 | | | | 526 | | | | 0.00 | | | | 722 | | | | 0.00 | | | | 253 | | | | 0.00 | | | | 74 | | | | 0.00 | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Allowance for Loan\u00a0& Lease Losses | | $ | 6,057 | | | | 100.00 | | | $ | 5,905 | | | | 100.00 | | | $ | 5,194 | | | | 100.00 | | | $ | 5,224 | | | | 100.00 | | | $ | 5,091 | | | | 100.00 | |\n| Off Balance Sheet Commitments | | | 208 | | | | | | | | 207 | | | | | | | | 163 | | | | | | | | 162 | | | | | | | $ | 130 | | | | | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Total Allowance for Credit Losses | | $ | 6,265 | | | | | | | $ | 6,112 | | | | | | | $ | 5,357 | | | | | | | $ | 5,386 | | | | | | | $ | 5,221 | | | | | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n\n","source":"FMAO\/10-K\/0001193125-16-474789"} {"title":"ITEM\u00a07. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND\nRESULTS OF OPERATIONS","text":"Liquidity Liquidity remains adequate though down from prior years as the Bank has decreased the investment portfolio to fund loans. The Bank has access to $58 million of\nunsecured borrowings through correspondent banks and $29.4 million of unpledged securities which may be sold or used as collateral. An additional $4.1 million is also available from the Federal Home Loan Bank based on current collateral pledging\nwith up to $118.5 million available provided adequate collateral is pledged. Maintaining sufficient funds to meet depositor and borrower needs on a daily\nbasis continues to be among management\u0092s top priorities. This is accomplished not only by immediate liquid resources of cash, due from banks and federal funds sold, but also by the Bank\u0092s available for sale securities portfolio. The\naverage aggregate balance of these assets was $262.1 for 2015 and $296.5 million for 2014, and $387.7 million for 2013. This represented 28.0%, 31.8% and 42.5% of total average assets, respectively. Of the almost $218.7 million of debt securities in\nthe bank\u0092s portfolio as of December\u00a031, 2015, $12.7 million, or 5.8% of the portfolio, is expected to receive payments or mature in 2016. The availability of the funds may be reduced by the need to utilize securities for pledging purposes\non public deposits. This liquidity provides the opportunity to fund loan growth by analysis of the lowest cost and source of funds whether by increasing deposits, sales or runoff of investments or utilizing debt. In addition to the Bank\u0092s investment portfolio, the Company has $16.4 million held in the holding company\u0092s investment portfolio. $1.5 million of\nthose investments will mature or receive payments in the next twelve months. These funds provide liquidity to the Company. The Bank has been declaring additional dividends each quarter to provide this liquidity to the Company. In future years, the\nCaptive will also upstream dividends to the Company once reserve levels are adequately provided for. This will also provide additional liquidity for Company activities. Historically, the primary source of liquidity has been core deposits that include noninterest bearing and interest bearing demand deposits, savings, money\nmarket accounts and time deposits of individuals. Core deposit balances as of year-end 2015 increased in all categories with the exception of time deposits. Overall deposits increased an average of $2.6 million in 2015, $913 thousand in 2014 and\n$4.7 million during 2013. The Bank also utilized Federal Funds purchased at times during 2013 through 2015. The average balance for 2015 and 2014 was $1.2 million and $1.4 million respectively. The Bank began using this temporary funding source\nheavier in December 2015 while it secured more permanent funding. Historically, the primary use of new funds is placing the funds back into the community\nthrough loans for the acquisition of new homes, consumer products and for business development. The use of new funds for loans is measured by the loan to deposit ratio. The Bank\u0092s average loan to deposit ratio was 80.7% for 2015, 76.4% for 2014\nand 66.2% for 2013. The lower ratio in 2013 was due to the success of the deposit gathering function, the residential mortgage loans being sold in the secondary market and the lack of loan demand. The Bank\u0092s goal is for this ratio to be higher\nin the 80-90 percent range with loan growth being the driver. The Bank ended the year 2015 at an 88.1% loan to deposit ratio. Short-term debt such as\nfederal funds purchased and securities sold under agreement to repurchase also provides the Company with liquidity. Short-term debt for both federal funds purchased and securities sold under agreement to repurchase amounted to $78.8 million at the\nend of 2015 compared to $56.0 million at the end of 2014 and $69.8 million at the end of 2013. These accounts are used to provide a sweep product to the Bank\u0092s commercial customers. \u0093Other borrowings\u0094 are also a source of funds. Other borrowings consist of loans from the Federal Home Loan Bank of Cincinnati. These funds are then\nused to provide loans in our community. The Bank utilized this funding source in December 2015 by borrowing $10 million. Prior borrowings from this source had decreased by $4.5 million to none at December\u00a031, 2014. This compares to decreased\nborrowings during 2013 of $7.1 million. The decreased borrowings were payoffs of matured notes in 2013 and 2014. Asset\/Liability Management The primary functions of asset\/liability management are to assure adequate liquidity and maintain an appropriate balance between interest earning assets and\ninterest bearing liabilities. It involves the management of the balance sheet mix, maturities, re-pricing characteristics and pricing components to provide an adequate and stable net interest margin with an acceptable level of risk. Interest rate\nsensitivity management seeks to avoid fluctuating net interest margins and to enhance consistent growth of net interest income through periods of changing interest rates. Changes in net income, other than those related to volume arise when interest rates on assets re-price in a time\nframe or interest rate environment that is different from that of the re-pricing period for liabilities. Changes in net interest income also arise from changes in the mix of interest-earning assets and interest-bearing liabilities. Historically, the Bank has maintained liquidity through cash flows generated in the normal course of business, loan repayments, maturing earning assets, the\nacquisition of new deposits, and borrowings. The Bank\u0092s asset and liability management program is designed to maximize net interest income over the long term while taking into consideration both credit and interest rate risk. Interest rate\nsensitivity varies with different types of interest-earning assets and interest-bearing liabilities. Overnight federal funds on which rates change daily and loans that are tied to the market rate differ considerably from long-term investment\nsecurities and fixed rate loans. Similarly, time deposits over $100,000 and money market certificates are much more interest rate sensitive than passbook savings accounts. The Bank utilizes shock analysis to examine the amount of exposure an instant\nrate change of 100, 200, 300 and 400 basis points in both increasing and decreasing directions would have on the financials. Acceptable ranges of earnings and equity at risk are established and decisions are made to maintain those levels based on\nthe shock results. Impact of Inflation and Changing Prices The consolidated financial statements and notes thereto presented herein have been prepared in accordance with generally accepted accounting principles, which\nrequire the measurement of financial position and operating results in terms of historical dollars without considering the changes in the relative purchasing power of money over time due to inflation. The impact of inflation is reflected in the\nincreased cost of the Company\u0092s operations. Unlike most industrial companies, nearly all the assets and liabilities of the Company are monetary in nature. As a result, interest rates have a greater impact on the Company\u0092s performance than\ndo the effects of general levels of inflation. Interest rates do not necessarily move in the same direction or to the same extent as the prices of goods and service. Contractual Obligations Contractual Obligations of the\nCompany totaled $252.1 million as of December\u00a031, 2015. Time deposits represent contractual agreements for certificates of deposits held by its customers. Long term debt represents the borrowings with the Federal Home Loan Bank and is further\ndefined in Note 4 and 9 of the Consolidated Financial Statements.","markdown_table":"\n\n| | | | | | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | (In Thousands) | | | | | | | | | | | | | | |\n| | | Non-InterestDDAs | | | | InterestDDAs | | | | SavingsAccounts | | | | TimeAccounts | | |\n| December\u00a031, 2015: | | | | | | | | | | | | | | | | |\n| Average balance | | $ | 162,028 | | | $ | 184,941 | | | $ | 227,328 | | | $ | 189,822 | |\n| Average rate | | | 0.00 | % | | | 0.62 | % | | | 0.18 | % | | | 0.90 | % |\n| | | | | | | | | | | | | | | | | |\n| December\u00a031, 2014: | | | | | | | | | | | | | | | | |\n| Average balance | | $ | 152,155 | | | $ | 178,285 | | | $ | 216,405 | | | $ | 214.680 | |\n| Average rate | | | 0.00 | % | | | 0.51 | % | | | | | | | 0.92 | % |\n| | | | | | | | | | | | | | | | | |\n| December\u00a031, 2013: | | | | | | | | | | | | | | | | |\n| Average balance | | $ | 109,804 | | | $ | 202,914 | | | $ | 197,157 | | | $ | 250,737 | |\n| Average rate | | | | | | | 0.53 | % | | | 0.19 | % | | | 1.06 | % |\n\n","source":"FMAO\/10-K\/0001193125-16-474789"} {"title":"ITEM\u00a07. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND\nRESULTS OF OPERATIONS","text":"Capital Resources Stockholders\u0092 equity was $120.1 million as of December\u00a031, 2015 compared to $114.5 million at December\u00a031, 2014. Dividends declared during 2015\nwere $0.87 per share totaling $3.99 million and during 2014 were $0.84 per share totaling $3.86 million. During 2015, the Company purchased 30,685 shares and awarded 16,000 shares of restricted stock to 67 employees. During 2014, the Company\npurchased 23,570 shares and awarded 13,250 restricted shared to 61 employees. For a summary of activity as it relates to the Company\u0092s restricted stock awards, please refer to Note 11: Employee Benefit Plans in the consolidated financial\nstatements. At yearend 2015, the Company held 587,466 shares in Treasury stock and 38,995 unvested shares of restricted stock. At yearend 2014, the Company held 572,662 shares in Treasury stock and 33,390 unvested shares of restricted stock. On\nJanuary\u00a015, 2016 the Company announced the authorization by its Board of Directors for the Company\u0092s repurchase, either on the open market, or in privately negotiated transactions, of up to 200,000 shares of its outstanding common stock\ncommencing January\u00a015, 2016 and ending December\u00a031, 2016. The Company has a history of approving a similar resolution to be in effect each year for at least the last five years. The Company continues to have a strong capital base and maintains regulatory capital ratios that are above the\ndefined regulatory capital ratios. At December\u00a031, 2015, the Bank and the Company had total risk-based capital ratios of 12.64% and 14.95%, respectively. Core capital to risk-based asset ratios of 11.87% and 14.18% for the Bank and the Company,\nrespectively, are well in excess of regulatory guidelines. The Bank\u0092s leverage ratio of 10.12% is also substantially in excess of regulatory guidelines, as is the Company\u0092s at 11.91%. Under Basel III, the common equity Tier 1 Capital to\nrisk-weighted assets ratios are also well above the required 4.50% and the 6.50% well capitalized levels with the Company at 14.18% and the Bank at 11.87%. For further discussion and analysis of regulatory capital requirements, refer to Note 15 of\nthe Audited Financial Statements. The Company\u0092s subsidiaries are restricted by regulations from making dividend distributions in excess of certain\nprescribed amounts. Upon prior regulatory approval, the Bank may be allowed to pay above the prescribed amount.","markdown_table":"\n\n| | | | | | | | | | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | Payment Due by Period (In Thousands) | | | | | | | | | | | | | | | | | | |\n| Contractual Obligations | | Total | | | | Less than1 year | | | | 1-3Years | | | | 3-5Years | | | | More\u00a0than5 years | | |\n| Securities sold under agreement to repurchase | | $ | 56,815 | | | $ | 39,691 | | | $ | \u0097 | | | $ | 17,124 | | | $ | \u0097 | |\n| Time Deposits | | | 184,285 | | | | 89,862 | | | | 60,381 | | | | 33,198 | | | | 844 | |\n| Dividends Payable | | | 1,007 | | | | 1,007 | | | | \u0097 | | | | \u0097 | | | | \u0097 | |\n| Long Term Debt | | | 10,000 | | | | \u0097 | | | | 10,000 | | | | \u0097 | | | | \u0097 | |\n| | | | | | | | | | | | | | | | | | | | | |\n| Total | | $ | 252,107 | | | $ | 130,560 | | | $ | 70,381 | | | $ | 50,322 | | | $ | 844 | |\n| | | | | | | | | | | | | | | | | | | | | |\n\n","source":"FMAO\/10-K\/0001193125-16-474789"} {"title":"Net Interest Income","text":"The following tables show changes in interest income, interest expense and net interest resulting from changes in volume and rate variances for major categories of earnings assets and interest bearing liabilities.","markdown_table":"\n\n\n| | | 2017 | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | (In Thousands) | | | | | | | | | | |\n| | | Average | | | | Interest\/ | | | | | | |\n| | | Balance | | | | Dividends | | | | Yield\/Rate | | |\n| ASSETS | | | | | | | | | | | | |\n| Interest Earning Assets: | | | | | | | | | | | | |\n| Loans | | $ | 783,140 | | | $ | 37,195 | | | | 4.76 | % |\n| Taxable investment securities | | | 154,081 | | | | 2,815 | | | | 1.83 | % |\n| Tax-exempt investment securities | | | 52,192 | | | | 1,045 | | | | 3.03 | % |\n| Federal funds sold & interest bearing deposits | | | 16,597 | | | | 193 | | | | 1.16 | % |\n| Total Interest Earning Assets | | | 1,006,010 | | | $ | 41,248 | | | | 4.16 | % |\n| Non-Interest Earning Assets: | | | | | | | | | | | | |\n| Cash and cash equivalents | | | 33,411 | | | | | | | | | |\n| Other assets | | | 36,913 | | | | | | | | | |\n| Total Assets | | $ | 1,076,334 | | | | | | | | | |\n| LIABILITIES\u00a0AND\u00a0SHAREHOLDERS'\u00a0EQUITY | | | | | | | | | | | | |\n| Interest Bearing Liabilities: | | | | | | | | | | | | |\n| Savings deposits | | $ | 519,580 | | | $ | 2,302 | | | | 0.44 | % |\n| Other time deposits | | | 188,443 | | | | 2,181 | | | | 1.16 | % |\n| Other borrowed money | | | 9,960 | | | | 147 | | | | 1.48 | % |\n| Federal funds purchased and securities sold under \u00a0\u00a0 agreement to repurchase | | | 32,173 | | | | 497 | | | | 1.54 | % |\n| Total Interest Bearing Liabilities | | | 750,156 | | | $ | 5,127 | | | | 0.68 | % |\n| Non-Interest Bearing Liabilities: | | | | | | | | | | | | |\n| Non-interest bearing demand deposits | | | 180,129 | | | | | | | | | |\n| Other | | | 15,624 | | | | | | | | | |\n| Total Liabilities | | | 945,909 | | | | | | | | | |\n| Shareholders' Equity | | | 130,425 | | | | | | | | | |\n| Total Liabilities and Shareholders' Equity | | $ | 1,076,334 | | | | | | | | | |\n| Interest\/Dividend income\/yield | | | | | | $ | 41,248 | | | | 4.16 | % |\n| Interest Expense\/cost | | | | | | | 5,127 | | | | 0.68 | % |\n| Net Interest Spread | | | | | | $ | 36,121 | | | | 3.48 | % |\n| Net Interest Margin | | | | | | | | | | | 3.65 | % |\n\n","source":"FMAO\/10-K\/0001564590-20-006695"} {"title":"Non-Interest Expense","text":"Furniture and equipment steadily increase as we continue to add facilities and invest in technology. Annual maintenance costs continue to grow and become a greater piece of the overall cost. As new services are provided to our customers, the backroom cost to supply them continues to rise. The Company accepts it is an expected cost of doing business and keeping our services relevant to the industry. Data processing costs were higher in 2019 as compared to 2018 by $1.3 million of which $867.6 thousand was acquisition related for termination fees.\u00a0\u00a0Overall, data processing expense for 2019 was expected to be higher with the addition of the six acquired Indiana offices. Data processing expense increased $104.4 thousand during 2018 as compared to 2017.\u00a0\u00a0As the pricing on many services is based on number of accounts and the Bank fully expects those to increase with the growth from the newer offices and overall Bank growth, this line item is expected to also increase.The FDIC assessment has a decreasing cost trend over the years shown. This line item speaks to the health of the Bank and the financial industry. The assessment for 2019 was down $143.5 thousand compared to 2018 as a result of the Small Bank Assessment Credits applied to 3rd and 4th quarter\u2019s invoices.\u00a0\u00a0The assessment for 2018 was down $4 thousand from 2017.The last line items with significant variation in noninterest expense to discuss is \u201cconsulting fees\u201d and \u201cother general and administrative.\u201d Two main events are behind the increase of $865 thousand in 2018 as compared to 2017 in this line item.\u00a0\u00a0Both events incurred one-time costs which required the use of outside consultants.\u00a0\u00a0 First related to the use of an executive recruiter firm to conduct a search for a CEO due to an upcoming retirement.\u00a0\u00a0The second related to the costs of researching, analyzing and negotiating possible mergers and acquisition opportunities.\u00a0\u00a0The consulting fees were beneficial in both instances as a new CEO was hired and a merger was closed on January 1, 2019.\u00a0\u00a0Consulting fees increased by $551.2 thousand in 2018 over 2017 while decreasing $259.9 thousand in 2019 compared to 2018.\u00a0\u00a0During 2019, consultants were used to complete a pay study review, assist with developing a three year strategic plan and to identify profit enhancement initiatives.\u00a0\u00a0Acquisition costs incurred in 2019 and 2018 total $1.28 million and $742.1 thousand respectively with expenses being recorded in multiple line items.\u00a0\u00a0Core deposit intangible expense which is included in the other general and administrative line decreased in 2018 as compared to 2017 by $77.7 thousand; however, increased in 2019 compared to 2018 by $560 thousand with the acquisition.\u00a0\u00a0Advertising and public relations increased also in 2019 by $682 thousand following an increase of $129.9 thousand in 2018. With the addition of new offices in both years behind the increases, 2019 was expected to increase due to additional offices being added.\u00a0\u00a0The Bank also celebrates the anniversary of office openings with a special event in each community.","markdown_table":"\n\n\n| | | (In Thousands) | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | 2019 | | | | 2018 | | | | 2017 | | |\n| Beginning Year | | $ | 2,385 | | | $ | 2,299 | | | $ | 2,192 | |\n| Capitalized Additions | | | 731 | | | | 450 | | | | 460 | |\n| Amortization | | | (487 | ) | | | (364 | ) | | | (353 | ) |\n| Valuation Allowance | | | - | | | | - | | | | - | |\n| End of Year | | $ | 2,629 | | | $ | 2,385 | | | $ | 2,299 | |\n\n","source":"FMAO\/10-K\/0001564590-20-006695"} {"title":"Securities","text":"The following table sets forth the maturities of investment securities as of December 31, 2019 and the weighted average yields of such securities calculated on the basis of cost and effective yields weighted for the scheduled maturity of each security.\u00a0\u00a0Tax-equivalent adjustments, using a twenty-one percent rate, have been made in yields on obligations of state and political subdivisions.\u00a0\u00a0Stocks of domestic corporations have not been included. Maturities of mortgage-backed securities are based on the stated maturity date of the security. Due to prepayments, actual maturities may be different.","markdown_table":"\n\n\n| | | (In Thousands) | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | 2019 | | | | 2018 | | | | 2017 | | |\n| U.S. Treasury | | $ | 10,021 | | | $ | 22,830 | | | $ | 20,978 | |\n| U.S. Government agencies | | | 62,445 | | | | 69,327 | | | | 80,466 | |\n| Mortgage-backed securities | | | 95,197 | | | | 36,262 | | | | 39,510 | |\n| State and local governments | | | 54,630 | | | | 40,028 | | | | 55,444 | |\n| | | $ | 222,293 | | | $ | 168,447 | | | $ | 196,398 | |\n\n","source":"FMAO\/10-K\/0001564590-20-006695"} {"title":"Securities","text":"As of December 31, 2019, the Bank did not hold a large block of any one investment security in excess of 10% of stockholders\u2019 equity. The largest segment of holdings is in U.S. Government agencies. The Bank also holds stock in the Federal Home Loan Bank of Cincinnati and Indianapolis at a cost of $5.8 million. This is required in order to obtain Federal Home Loan Bank loans.","markdown_table":"\n\n\n| | | After Five Years | | | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | Within Ten Years | | | | | | | | After Ten Years | | | | | | |\n| | | Amount | | | | Yield | | | | Amount | | | | Yield | | |\n| U.S. Treasury | | $ | - | | | | 0.00 | % | | $ | - | | | | 0.00 | % |\n| U.S. Government agencies | | | 27,057 | | | | 2.43 | % | | | - | | | | 0.00 | % |\n| Mortgage-backed securities | | | 10,648 | | | | 2.26 | % | | | 83,881 | | | | 2.37 | % |\n| State and local governments | | | 14,169 | | | | 1.83 | % | | | 969 | | | | 2.55 | % |\n| Taxable state and local governments | | | 16,923 | | | | 2.70 | % | | | 2,837 | | | | 1.79 | % |\n\n","source":"FMAO\/10-K\/0001564590-20-006695"} {"title":"Loan Portfolio","text":"The following table shows the maturity of loans excluding fair value adjustments as of December 31, 2019:","markdown_table":"\n\n\n| | | (In Thousands) | | | | | | | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| Loans: | | 2019 | | | | 2018 | | | | 2017 | | | | 2016 | | | | 2015 | | |\n| Consumer Real Estate | | $ | 165,349 | | | $ | 80,766 | | | $ | 83,620 | | | $ | 86,234 | | | $ | 88,189 | |\n| Agricultural Real Estate | | | 199,105 | | | | 68,609 | | | | 64,073 | | | | 62,375 | | | | 57,277 | |\n| Agricultural | | | 111,820 | | | | 108,495 | | | | 95,111 | | | | 84,563 | | | | 82,654 | |\n| Commercial Real Estate | | | 551,309 | | | | 419,784 | | | | 410,520 | | | | 377,481 | | | | 322,762 | |\n| Commercial and Industrial | | | 135,631 | | | | 121,793 | | | | 126,275 | | | | 109,256 | | | | 100,125 | |\n| Consumer | | | 49,237 | | | | 41,953 | | | | 37,757 | | | | 33,179 | | | | 27,770 | |\n| Other | | | 8,314 | | | | 5,889 | | | | 6,415 | | | | 5,732 | | | | 6,491 | |\n| | | $ | 1,220,765 | | | $ | 847,289 | | | $ | 823,771 | | | $ | 758,820 | | | $ | 685,268 | |\n\n","source":"FMAO\/10-K\/0001564590-20-006695"} {"title":"Loan Portfolio","text":"The following table presents the total of loans excluding fair value adjustments due after one year which has either 1) predetermined interest rates (fixed) or 2) floating or adjustable interest rates (variable):","markdown_table":"\n\n\n| | | (In Thousands) | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | | | | | After One | | | | | | |\n| | | Within | | | | Year Within | | | | After | | |\n| | | One Year | | | | Five Years | | | | Five Years | | |\n| Consumer Real Estate | | $ | 5,163 | | | $ | 19,025 | | | $ | 141,231 | |\n| Agricultural Real Estate | | | 272 | | | | 4,668 | | | | 195,162 | |\n| Agricultural | | | 66,851 | | | | 29,954 | | | | 15,006 | |\n| Commercial Real Estate | | | 49,976 | | | | 230,817 | | | | 270,698 | |\n| Commercial and Industrial | | | 68,257 | | | | 54,718 | | | | 12,708 | |\n| Consumer | | | 6,215 | | | | 32,711 | | | | 10,227 | |\n| Other | | | 340 | | | | 804 | | | | 7,163 | |\n| | | $ | 197,074 | | | $ | 372,697 | | | $ | 652,195 | |\n\n","source":"FMAO\/10-K\/0001564590-20-006695"} {"title":"Loan Portfolio","text":"The following table summarizes the Company\u2019s nonaccrual, past due 90 days or more and still accruing loans, and accruing troubled debt restructurings as of December 31 for each of the last five years:","markdown_table":"\n\n\n| | | (In Thousands) | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | Fixed | | | | Variable | | | | | | |\n| | | Rate | | | | Rate | | | | Total | | |\n| Consumer Real Estate | | | 147,925 | | | | 12,331 | | | | 160,256 | |\n| Agricultural Real Estate | | | 177,049 | | | | 22,781 | | | | 199,830 | |\n| Agricultural | | | 43,248 | | | | 1,712 | | | | 44,960 | |\n| Commercial Real Estate | | | 383,122 | | | | 118,393 | | | | 501,515 | |\n| Commercial and Industrial | | | 62,156 | | | | 5,270 | | | | 67,426 | |\n| Consumer | | | 42,924 | | | | 14 | | | | 42,938 | |\n| Other | | | 7,967 | | | | - | | | | 7,967 | |\n| | | | 864,391 | | | | 160,501 | | | | 1,024,892 | |\n\n","source":"FMAO\/10-K\/0001564590-20-006695"} {"title":"Loan Portfolio","text":"Although loans may be classified as non-performing, some pay on a regular basis, and many continue to pay interest irregularly or at less than original contractual rates.\u00a0\u00a0Interest income that would have been recorded under the original terms of these loans would have aggregated $193 thousand for 2019, $99 for 2018 and $205.4 thousand for 2017. Any collections of interest on nonaccrual loans are included in interest income when collected unless it is on an impaired loan with a specific allocation.\u00a0\u00a0A collection of interest on an impaired loan with a specific allocation is applied to the loan balance to decrease the allocation. Total interest collections, whether on an accrued or cash basis, amounted to $117 thousand for 2019, $69 thousand for 2018 and $57 thousand for 2017. Loans are placed on nonaccrual status in the event that the loan is in past due status for more than 90 days or payment in full of principal and interest is not expected.\u00a0\u00a0The Bank had nonaccrual loan balances of $3.4 million at December 31, 2019 compared to balances of $542 thousand and $1.0 million as of year-end 2018 and 2017. All of the balances of nonaccrual loans for the past three years were collaterally secured. As of December 31, 2019, the Bank had $60.2 million of loans which it considers to be \u201cpotential problem loans\u201d in that the borrowers are experiencing financial difficulties which are not reflected in the table above. At December 31, 2018, the Bank had $7.9 million of these loans. At December 31, 2017, the Bank had $21.2 million of these loans.\u00a0\u00a0These loans are subject to constant management attention and are reviewed at least monthly. The amount of the potential problem loans was considered in management\u2019s review of the loan loss reserve at December 31, 2019 and 2018.In extending credit to families, businesses and governments, banks accept a measure of risk against which an allowance for possible loan loss is established by way of expense charges to earnings. This expense is determined by management based on a detailed monthly review of the risk factors affecting the loan portfolio, including general economic conditions, changes in the portfolio mix, past due loan-loss experience and the financial condition of the bank\u2019s borrowers.As of December 31, 2019, the Bank had loans outstanding to individuals and firms engaged in the various fields of agriculture in the amount of $111.8 million with an additional $199.1 million in agricultural real estate loans these compared to $108.5 and $68.6 million respectively as of December 31, 2018.\u00a0\u00a0The ratio of this segment of loans to the total loan portfolio is not considered unusual for a bank engaged in and servicing rural communities.Interest rate modification to reflect a decrease in market interest rates or maintain a relationship with the debtor, where the debtor is not experiencing financial difficulty and can obtain funding from other sources, is not considered a troubled debt restructuring. As of December 31, 2019, the Bank had $1.03 million of its loans that were classified as troubled debt restructurings, of which $50.3 thousand are included in non-accrual loans.\u00a0\u00a0This compares to $178.1 thousand of troubled debt restructurings, of which $74.4 thousand are included in non-accrual loans for 2018 and $712.0 thousand of troubled debt restructuring, of which $124.8 thousand are included in non-accrual loans for 2017. Updated appraisals are required on all collateral dependent loans once they are deemed impaired.\u00a0\u00a0The Bank may also require an updated appraisal of a watch list loan which the Bank monitors under their loan policy. On a quarterly basis, Bank management reviews properties supporting asset dependent loans to consider market events that may indicate a change in value has occurred.To determine observable market value, collateral asset values securing an impaired loan are periodically evaluated. Maximum time of re-evaluation is every 12 months for chattels and titled vehicles and every two years for real estate.\u00a0\u00a0In this process, third party evaluations are obtained and heavily relied upon. Until such time that updated appraisals are received, the Bank may discount the existing collateral value used.Performing \u201cnon-watch list\u201d loans secured in whole or in part by real estate, do not require an updated appraisal unless the loan is rewritten and additional funds advanced.\u00a0\u00a0Watch List loans secured in whole or in part by real estate require updated appraisals every two years.\u00a0\u00a0All loans are subject to loan to values as found in the Bank\u2019s loan policies irrespective of their grade.\u00a0\u00a0The Bank\u2019s watch list is reviewed on a quarterly basis by management and any questions to value are addressed at that time. The majority of the Bank\u2019s loans are made in the market by lenders who live and work in the market.\u00a0\u00a0Thus, their evaluation of the independent valuation is also valuable and serves as a double check.\u00a0\u00a0On extremely rare occasions, the Bank will make adjustments to the recorded values of collateral securing commercial real estate loans without acquiring an updated appraisal for the subject property. The Bank has no formalized policy for determining when collateral value adjustments between regularly scheduled appraisals are necessary, nor does it use any specific methodology for applying such adjustments. However, on a quarterly basis as part of its normal operations, the Bank\u2019s senior management and the Loan Review Committee will meet to review all commercial credits either deemed to be impaired or on the Bank\u2019s watch list. In addition to analyzing the recent performance of these loans, management and the Enterprise Risk Management Committee will also consider any general market conditions that might warrant adjustments to the value of particular real estate collateralizing commercial loans. In addition, management conducts annual reviews of all commercial loans exceeding certain outstanding balance thresholds. In each of these situations, any information available to management regarding market conditions impacting a specific property or other relevant factors are considered, and lenders familiar with a particular commercial real estate loan and the underlying collateral may be present to provide their opinion on such factors. If the available information leads management to conclude a valuation adjustment is warranted, such an adjustment may be applied on the basis of the information available. If management concludes that an adjustment is warranted but lacks the specific information needed to reasonably quantify the adjustment, management will order a new appraisal on the subject property even though one may not be required under the Bank\u2019s general policies for updating appraisal. Note 4 of the Consolidated Financial Statements may also be reviewed for additional tables dealing with the Bank\u2019s loans and ALLL. ALLL is evaluated based on an assessment of the losses inherent in the loan portfolio.\u00a0\u00a0This assessment results in an allowance consisting of two components, allocated and unallocated. Management considers several different risk assessments in determining ALLL. The allocated component of ALLL reflects expected losses resulting from an analysis of individual loans, developed through specific credit allocations for individual loans and historical loss experience for each loan category.\u00a0\u00a0For those loans where the internal credit rating is at or below a predetermined classification and management can reasonably estimate the loss that will be sustained based upon collateral, the borrowers operating activity and economic conditions in which the borrower operates, a specific allocation is made.\u00a0\u00a0For those borrowers that are not currently behind in their payment, but for which management believes, based on economic conditions and operating activities of the borrower, the possibility exists for future collection problems, a reserve is established.\u00a0\u00a0The amount of reserve allocated to each loan portfolio is based on past loss experiences and the different levels of risk within each loan portfolio.\u00a0\u00a0The historical loan loss portion is determined using a historical loss analysis by loan category.The unallocated portion of the reserve for loan losses is determined based on management\u2019s assessment of general economic conditions as well as specific economic factors in the Bank\u2019s marketing area.\u00a0\u00a0This assessment inherently involves a higher degree of uncertainty.\u00a0\u00a0It represents estimated inherent but undetected losses within the portfolio that are probable due to uncertainties in economic conditions, delays in obtaining information, including unfavorable information about a borrower\u2019s financial condition and other current risk factors that may not have yet manifested themselves in the Bank\u2019s historical loss factors used to determine the allocated component of the allowance.Actual charge-off of loan balances is based upon periodic evaluations of the loan portfolio by management.\u00a0\u00a0These evaluations consider several factors, including, but not limited to, general economic conditions, financial condition of the borrower, and collateral.As presented in the table on the next page, charge-offs increased to $841 thousand for 2019.\u00a0\u00a070.1% of the charge-offs stemmed from the consumer related portfolios. Charge-offs were $580 thousand for 2018, $288 thousand for 2017, preceded by $550 thousand for 2016 and $1.0 million for 2015.\u00a0\u00a0Recoveries were $156 thousand in 2019 compared to $163, $150, $156, and $557 thousand for 2018, 2017, 2016 and 2015, respectively. The net charge-offs for the last five years were all under $1 million. 2017 was the lowest at $138 thousand. Higher provision expense was used to fund the ALLL for loan growth in 2016. For 2015 and 2017, the provision was used to replenish the balance decreased by the net charge-off activity. Overall, the ALLL increased from $6.3 million at yearend 2015 to $7.2 million at yearend 2019. After adding the allowance for unfunded loan commitments, the ACL ended 2019 $7.7 million. As the ratios on the bottom of the following table show, the trends for each have continually improved over the five years shown. Asset quality and the ACL are both strong and emphasize the level of credit quality. In reviewing the bigger picture of the allowance for credit loss, the years with the higher percentage of ACL to total nonperforming loans ratio account for the lower level of nonaccrual and watch list loans. This demonstrates the extended time period with which it has taken to achieve resolution and\/or collection of these loans.\u00a0\u00a0The ratio of ACL to nonperforming loans increased beginning in 2015 with a significant drop in 2019. 2019\u2019s provision expense was the highest of the five years shown largely due to an increase in watch list loans.\u00a0\u00a0Loan growth occurred in 2019 reaching a double-digit percentage increase like 2016.\u00a0\u00a0The ACL to nonperforming loans for all years remained more than adequate and emphasizes the existing strong level of credit quality.\u00a0\u00a0The following table presents a reconciliation of the allowance for credit losses for the years ended December 31, 2019, 2018, 2017, 2016 and 2015:","markdown_table":"\n\n\n| | | (In Thousands) | | | | | | | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | 2019 | | | | 2018 | | | | 2017 | | | | 2016 | | | | 2015 | | |\n| Non-accrual loans | | $ | 3,400 | | | $ | 542 | | | $ | 1,003 | | | $ | 1,384 | | | $ | 2,041 | |\n| Accruing loans past due 90 days or more | | | - | | | | - | | | | - | | | | - | | | | - | |\n| Troubled Debt Restructurings, not included above | | | 980 | | | | 104 | | | | 587 | | | | 559 | | | | 878 | |\n| Total | | $ | 4,380 | | | $ | 646 | | | $ | 1,590 | | | $ | 1,943 | | | $ | 2,919 | |\n\n","source":"FMAO\/10-K\/0001564590-20-006695"} {"title":"Loan Portfolio","text":"*Nonperforming loans are defined as all loans on nonaccrual, plus any loans past due 90 days not on nonaccrual.Allocation of ALLL per Loan Category in terms of dollars and percentage of loans in each category to total loans is as follows:","markdown_table":"\n\n\n| | | (In Thousands) | | | | | | | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | 2019 | | | | 2018 | | | | 2017 | | | | 2016 | | | | 2015 | | |\n| Loans | | $ | 1,218,999 | | | $ | 846,374 | | | $ | 823,024 | | | $ | 758,094 | | | $ | 684,630 | |\n| Daily average of outstanding loans | | $ | 1,129,231 | | | $ | 831,614 | | | $ | 783,140 | | | $ | 724,076 | | | $ | 627,194 | |\n| Allowance for Loan Losses - Jan 1 | | $ | 6,775 | | | $ | 6,868 | | | $ | 6,784 | | | $ | 6,057 | | | $ | 5,905 | |\n| Loans Charged off: | | | | | | | | | | | | | | | | | | | | |\n| Consumer Real Estate | | | 98 | | | | 63 | | | | 4 | | | | 106 | | | | 38 | |\n| Agricultural\u00a0\u00a0Real Estate | | | - | | | | - | | | | - | | | | - | | | | - | |\n| Agricultural | | | 37 | | | | - | | | | - | | | | 21 | | | | - | |\n| Commercial Real Estate | | | - | | | | 16 | | | | 21 | | | | 93 | | | | 143 | |\n| Commercial and Industrial | | | 215 | | | | 142 | | | | - | | | | 20 | | | | 536 | |\n| Consumer | | | 491 | | | | 359 | | | | 263 | | | | 310 | | | | 313 | |\n| | | | 841 | | | | 580 | | | | 288 | | | | 550 | | | | 1,030 | |\n| Loan Recoveries: | | | | | | | | | | | | | | | | | | | | |\n| Consumer Real Estate | | | - | | | | 18 | | | | 13 | | | | 28 | | | | 41 | |\n| Agricultural\u00a0\u00a0Real Estate | | | - | | | | - | | | | - | | | | - | | | | - | |\n| Agricultural | | | 3 | | | | 8 | | | | 8 | | | | 10 | | | | 64 | |\n| Commercial Real Estate | | | 11 | | | | 10 | | | | 15 | | | | 20 | | | | 204 | |\n| Commercial and Industrial | | | 22 | | | | 13 | | | | 12 | | | | 11 | | | | 91 | |\n| Consumer | | | 120 | | | | 114 | | | | 102 | | | | 87 | | | | 157 | |\n| | | | 156 | | | | 163 | | | | 150 | | | | 156 | | | | 557 | |\n| Net Charge Offs | | | 685 | | | | 417 | | | | 138 | | | | 394 | | | | 473 | |\n| Provision for loan loss | | | 1,138 | | | | 324 | | | | 222 | | | | 1,121 | | | | 625 | |\n| Acquisition provision for loan loss | | | - | | | | - | | | | - | | | | - | | | | - | |\n| Allowance for Loan & Lease Losses - Dec 31 | | | 7,228 | | | | 6,775 | | | | 6,868 | | | | 6,784 | | | | 6,057 | |\n| Allowance for Unfunded Loan \u00a0\u00a0 Commitments & Letters of Credit - Dec 31 | | | 479 | | | | 274 | | | | 227 | | | | 217 | | | | 208 | |\n| Total Allowance for Credit Losses - Dec 31 | | $ | 7,707 | | | $ | 7,049 | | | $ | 7,095 | | | $ | 7,001 | | | $ | 6,265 | |\n| Ratio of net charge-offs to average Loans outstanding | | | 0.06 | % | | | 0.05 | % | | | 0.02 | % | | | 0.05 | % | | | 0.08 | % |\n| Ratio of the Allowance for Loan Loss to \u00a0\u00a0 Nonperforming Loans | | | 209.70 | % | | | 1249.57 | % | | | 684.83 | % | | | 490.39 | % | | | 293.75 | % |\n\n","source":"FMAO\/10-K\/0001564590-20-006695"} {"title":"Net Interest Income","text":"The following tables show changes in interest income, interest expense and net interest resulting from changes in volume and rate variances for major categories of earnings assets and interest bearing liabilities.","markdown_table":"\n\n\n| | | 2016 | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | (In Thousands) | | | | | | | | | | |\n| | | Average | | | | Interest\/ | | | | | | |\n| | | Balance | | | | Dividends | | | | Yield\/Rate | | |\n| ASSETS | | | | | | | | | | | | |\n| Interest Earning Assets: | | | | | | | | | | | | |\n| Loans | | $ | 724,076 | | | $ | 33,703 | | | | 4.67 | % |\n| Taxable investment securities | | | 172,647 | | | | 2,730 | | | | 1.58 | % |\n| Tax-exempt investment securities | | | 55,395 | | | | 1,229 | | | | 3.36 | % |\n| Federal funds sold & interest bearing deposits | | | 13,004 | | | | 65 | | | | 0.50 | % |\n| Total Interest Earning Assets | | | 965,122 | | | $ | 37,727 | | | | 3.98 | % |\n| Non-Interest Earning Assets: | | | | | | | | | | | | |\n| Cash and cash equivalents | | | 27,348 | | | | | | | | | |\n| Other assets | | | 31,848 | | | | | | | | | |\n| Total Assets | | $ | 1,024,318 | | | | | | | | | |\n| LIABILITIES\u00a0AND\u00a0SHAREHOLDERS'\u00a0EQUITY | | | | | | | | | | | | |\n| Interest Bearing Liabilities: | | | | | | | | | | | | |\n| Savings deposits | | $ | 446,996 | | | $ | 1,690 | | | | 0.38 | % |\n| Other time deposits | | | 194,753 | | | | 1,927 | | | | 0.99 | % |\n| Other borrowed money | | | 10,000 | | | | 148 | | | | 1.48 | % |\n| Federal funds purchased\u00a0\u00a0and securities sold under \u00a0\u00a0 agreement to repurchase | | | 64,825 | | | | 458 | | | | 0.71 | % |\n| Total Interest Bearing Liabilities | | | 716,574 | | | $ | 4,223 | | | | 0.59 | % |\n| Non-Interest Bearing Liabilities: | | | | | | | | | | | | |\n| Non-interest bearing demand deposits | | | 169,510 | | | | | | | | | |\n| Other | | | 13,896 | | | | | | | | | |\n| Total Liabilities | | | 899,980 | | | | | | | | | |\n| Shareholders' Equity | | | 124,338 | | | | | | | | | |\n| Total Liabilities and Shareholders' Equity | | $ | 1,024,318 | | | | | | | | | |\n| Interest\/Dividend income\/yield | | | | | | $ | 37,727 | | | | 3.98 | % |\n| Interest Expense\/cost | | | | | | | 4,223 | | | | 0.59 | % |\n| Net Interest Spread | | | | | | $ | 33,504 | | | | 3.39 | % |\n| Net Interest Margin | | | | | | | | | | | 3.55 | % |\n\n","source":"FMAO\/10-K\/0001564590-19-004731"} {"title":"Non-Interest Expense","text":"Furniture and equipment steadily increases as we continue to add facilities and invest in technology. Annual maintenance costs continue to grow and become a greater piece of the overall cost. As new services are provided to our customers, the backroom cost to supply them continues to rise. The Company accepts it is an expected cost of doing business and keeping our services relevant to the industry. Data processing costs were actually lower in 2017 as compared to 2016 by $196 thousand. Two reasons for the improvement was the negotiation of an extended contract with our core processor and 2016 had the additional cost of upgrading Bank customer debit cards to incorporate EMV chip card technology.\u00a0\u00a0Both already better align with our future strategies while controlling costs.\u00a0\u00a0Data processing expense increased $105 thousand during 2018 as compared to 2017.\u00a0\u00a0As we continue to expand this line item is expected to also increase.As the pricing on many services, however, is based on number of accounts and the Bank fully expects those to increase with the growth from the newer offices and overall Bank growth. Overall, data processing expense for 2019 will be higher than 2018 with the addition of the six Indiana offices. The FDIC assessment has a decreasing cost trend over the years shown. This line item speaks to the health of the Bank and the financial industry. The assessment for 2018 was down only $4 thousand from 2017 and the assessment for 2017 was down $77 thousand from 2016.The last line items with significant variation in noninterest expense to discuss is \u201cconsulting fees\u201d and \u201cother general and administrative.\u201d Two main events are behind the increase of $865 thousand in 2018 as compared to 2017 in this line item.\u00a0\u00a0Both events incurred one-time costs which required the use of outside consultants.\u00a0\u00a0 First related to the use of an executive recruiter firm to conduct a search for a CEO due to an upcoming retirement.\u00a0\u00a0The second related to the costs of researching, analyzing and negotiating possible mergers and acquisition opportunities.\u00a0\u00a0The consulting fees were beneficial in both instances as a new CEO was hired and a merger was closed on January 1, 2019.\u00a0\u00a0Consulting fees increased by $551.2 thousand in 2018 over 2017.\u00a0\u00a0Acquisition costs incurred in 2018 total $742.1 thousand with expenses being recorded in multiple line items.\u00a0\u00a0Though 2017 did not increase by as large an amount as 2016 had when compared to 2015, it was still an increase of $207 thousand. The two main reasons behind the increase in 2017 were the costs associated with listing on the NASDAQ stock market and the cost of offering the Insured Cash Sweep product.\u00a0\u00a0Both of these costs have been previously explained along with the benefits that have been provided by incurring said costs.\u00a0\u00a0 Advertising and public relations increased also in 2018 by $129.9 thousand following an increase of $113 thousand in 2017. With the addition of new offices in both years behind the increases, 2019 is also expected to increase due to additional offices being added.\u00a0\u00a0The Bank also celebrates the anniversary of office openings with a special event in each community.","markdown_table":"\n\n\n| | | (In Thousands) | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | 2018 | | | | 2017 | | | | 2016 | | |\n| Beginning Year | | $ | 2,299 | | | $ | 2,192 | | | $ | 2,056 | |\n| Capitalized Additions | | | 450 | | | | 460 | | | | 555 | |\n| Amortization | | | (364 | ) | | | (353 | ) | | | (419 | ) |\n| Valuation Allowance | | | - | | | | - | | | | - | |\n| End of Year | | $ | 2,385 | | | $ | 2,299 | | | $ | 2,192 | |\n\n","source":"FMAO\/10-K\/0001564590-19-004731"} {"title":"Securities","text":"The following table sets forth the maturities of investment securities as of December 31, 2018 and the weighted average yields of such securities calculated on the basis of cost and effective yields weighted for the scheduled maturity of each security.\u00a0\u00a0Tax-equivalent adjustments, using a twenty-one percent rate, have been made in yields on obligations of state and political subdivisions.\u00a0\u00a0Stocks of domestic corporations have not been included. Maturities of mortgage-backed securities are based on the stated maturity date of the security. Due to prepayments, actual maturities may be different.","markdown_table":"\n\n\n| | | (In Thousands) | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | 2018 | | | | 2017 | | | | 2016 | | |\n| U.S. Treasury | | $ | 22,830 | | | $ | 20,978 | | | $ | 24,775 | |\n| U.S. Government agencies | | | 69,327 | | | | 80,466 | | | | 82,474 | |\n| Mortgage-backed securities | | | 36,262 | | | | 39,510 | | | | 48,461 | |\n| State and local governments | | | 40,028 | | | | 55,444 | | | | 62,817 | |\n| | | $ | 168,447 | | | $ | 196,398 | | | $ | 218,527 | |\n\n","source":"FMAO\/10-K\/0001564590-19-004731"} {"title":"Securities","text":"As of December 31, 2018, the Bank did not hold a large block of any one investment security in excess of 10% of stockholders\u2019 equity. The largest segment of holdings is in U.S. Government agencies. The Bank also holds stock in the Federal Home Loan Bank of Cincinnati at a cost of $3.7 million. This is required in order to obtain Federal Home Loan Bank loans.","markdown_table":"\n\n\n| | | After Five Years | | | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | Within Ten Years | | | | | | | | After Ten Years | | | | | | |\n| | | Amount | | | | Yield | | | | Amount | | | | Yield | | |\n| U.S. Treasury | | $ | - | | | | 0.00 | % | | $ | - | | | | 0.00 | % |\n| U.S. Government agencies | | | 16,815 | | | | 2.12 | % | | | - | | | | 0.00 | % |\n| Mortgage-backed securities | | | 3,347 | | | | 2.12 | % | | | 31,533 | | | | 2.27 | % |\n| State and local governments | | | 16,612 | | | | 1.85 | % | | | 1,195 | | | | 1.65 | % |\n| Taxable state and local governments | | | 2,573 | | | | 4.05 | % | | | - | | | | 0.00 | % |\n\n","source":"FMAO\/10-K\/0001564590-19-004731"} {"title":"Loan Portfolio","text":"The following table shows the maturity of loans as of December 31, 2018:","markdown_table":"\n\n\n| | | (In Thousands) | | | | | | | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| Loans: | | 2018 | | | | 2017 | | | | 2016 | | | | 2015 | | | | 2014 | | |\n| Consumer Real Estate | | $ | 80,766 | | | $ | 83,620 | | | $ | 86,234 | | | $ | 88,189 | | | $ | 97,426 | |\n| Agricultural Real Estate | | | 68,609 | | | | 64,073 | | | | 62,375 | | | | 57,277 | | | | 50,560 | |\n| Agricultural | | | 108,495 | | | | 95,111 | | | | 84,563 | | | | 82,654 | | | | 74,611 | |\n| Commercial Real Estate | | | 419,784 | | | | 410,520 | | | | 377,481 | | | | 322,762 | | | | 270,188 | |\n| Commercial and Industrial | | | 121,793 | | | | 126,275 | | | | 109,256 | | | | 100,125 | | | | 100,126 | |\n| Consumer | | | 41,953 | | | | 37,757 | | | | 33,179 | | | | 27,770 | | | | 24,277 | |\n| Industrial Development Bonds | | | 5,889 | | | | 6,415 | | | | 5,732 | | | | 6,491 | | | | 4,698 | |\n| | | $ | 847,289 | | | $ | 823,771 | | | $ | 758,820 | | | $ | 685,268 | | | $ | 621,886 | |\n\n","source":"FMAO\/10-K\/0001564590-19-004731"} {"title":"Loan Portfolio","text":"The following table presents the total of loans due after one year which has either 1) predetermined interest rates (fixed) or 2) floating or adjustable interest rates (variable):","markdown_table":"\n\n\n| | | (In Thousands) | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | | | | | After One | | | | | | |\n| | | Within | | | | Year Within | | | | After | | |\n| | | One Year | | | | Five Years | | | | Five Years | | |\n| Consumer Real Estate | | $ | 4,226 | | | $ | 16,495 | | | $ | 60,045 | |\n| Agricultural Real Estate | | | 615 | | | | 4,818 | | | | 63,176 | |\n| Agricultural | | | 70,505 | | | | 28,073 | | | | 9,917 | |\n| Commercial Real Estate | | | 16,339 | | | | 160,783 | | | | 242,662 | |\n| Commercial and Industrial | | | 61,382 | | | | 52,678 | | | | 7,733 | |\n| Consumer | | | 5,211 | | | | 27,369 | | | | 9,373 | |\n| Industrial Development Bonds | | | 600 | | | | 270 | | | | 5,019 | |\n| | | $ | 158,878 | | | $ | 290,486 | | | $ | 397,925 | |\n\n","source":"FMAO\/10-K\/0001564590-19-004731"} {"title":"Loan Portfolio","text":"The following table summarizes the Company\u2019s nonaccrual, past due 90 days or more and still accruing loans, and accruing troubled debt restructurings as of December 31 for each of the last five years:","markdown_table":"\n\n\n| | | (In Thousands) | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | Fixed | | | | Variable | | | | | | |\n| | | Rate | | | | Rate | | | | Total | | |\n| Consumer Real Estate | | | 70,990 | | | | 5,550 | | | | 76,540 | |\n| Agricultural Real Estate | | | 55,357 | | | | 12,637 | | | | 67,994 | |\n| Agricultural | | | 37,164 | | | | 826 | | | | 37,990 | |\n| Commercial Real Estate | | | 283,622 | | | | 119,823 | | | | 403,445 | |\n| Commercial and Industrial | | | 54,218 | | | | 6,193 | | | | 60,411 | |\n| Consumer | | | 36,724 | | | | 18 | | | | 36,742 | |\n| Industrial Development Bonds | | | 5,289 | | | | - | | | | 5,289 | |\n| | | | 543,364 | | | | 145,047 | | | | 688,411 | |\n\n","source":"FMAO\/10-K\/0001564590-19-004731"} {"title":"Loan Portfolio","text":"Although loans may be classified as non-performing, some pay on a regular basis, and many continue to pay interest irregularly or at less than original contractual rates.\u00a0\u00a0Interest income that would have been recorded under the original terms of these loans would have aggregated $99 thousand for 2018, $205.4 for 2017 and $116.1 thousand for 2016. Any collections of interest on nonaccrual loans are included in interest income when collected unless it is on an impaired loan with a specific allocation.\u00a0\u00a0A collection of interest on an impaired loan with a specific allocation is applied to the loan balance to decrease the allocation. Total interest collections, whether on an accrued or cash basis, amounted to $69 thousand for 2018, $57 thousand for 2017 and $64 thousand for 2016. Loans are placed on nonaccrual status in the event that the loan is in past due status for more than 90 days or payment in full of principal and interest is not expected.\u00a0\u00a0The Bank had nonaccrual loan balances of $542 thousand at December 31, 2018 compared to balances of $1.0 and $1.4 million as of year-end 2017 and 2016. All of the balances of nonaccrual loans for the past three years were collaterally secured. As of December 31, 2018, the Bank had $7.9 million of loans which it considers to be \u201cpotential problem loans\u201d in that the borrowers are experiencing financial difficulties. At December 31, 2017, the Bank had $21.2 million of these loans. The decrease is largely attributed to the payoff of one relationship.\u00a0\u00a0At December 31, 2016, the Bank had $20.4 million of these loans.\u00a0\u00a0These loans are subject to constant management attention and are reviewed at least monthly. The amount of the potential problem loans was considered in management\u2019s review of the loan loss reserve at December 31, 2018 and 2017.In extending credit to families, businesses and governments, banks accept a measure of risk against which an allowance for possible loan loss is established by way of expense charges to earnings. This expense is determined by management based on a detailed monthly review of the risk factors affecting the loan portfolio, including general economic conditions, changes in the portfolio mix, past due loan-loss experience and the financial condition of the bank\u2019s borrowers.As of December 31, 2018, the Bank had loans outstanding to individuals and firms engaged in the various fields of agriculture in the amount of $108.5 million with an additional $68.6 million in agricultural real estate loans these compared to $95.1 and $64.1 million respectively as of December 31, 2017.\u00a0\u00a0The ratio of this segment of loans to the total loan portfolio is not considered unusual for a bank engaged in and servicing rural communities.Interest rate modification to reflect a decrease in market interest rates or maintain a relationship with the debtor, where the debtor is not experiencing financial difficulty and can obtain funding from other sources, is not considered a troubled debt restructuring. As of December 31, 2018, the Bank had $178.1 thousand of its loans that were classified as troubled debt restructurings, of which $74.4 thousand are included in non-accrual loans.\u00a0\u00a0This compares to $0.7 million as of same date 2017 and 2016. Updated appraisals are required on all collateral dependent loans once they are deemed impaired.\u00a0\u00a0The Bank may also require an updated appraisal of a watch list loan which the Bank monitors under their loan policy. On a quarterly basis, Bank management reviews properties supporting asset dependent loans to consider market events that may indicate a change in value has occurred.To determine observable market value, collateral asset values securing an impaired loan are periodically evaluated. Maximum time of re-evaluation is every 12 months for chattels and titled vehicles and every two years for real estate.\u00a0\u00a0In this process, third party evaluations are obtained and heavily relied upon. Until such time that updated appraisals are received, the Bank may discount the existing collateral value used.Performing \u201cnon-watch list\u201d loans secured in whole or in part by real estate, do not require an updated appraisal unless the loan is rewritten and additional funds advanced.\u00a0\u00a0Watch List loans secured in whole or in part by real estate require updated appraisals every two years.\u00a0\u00a0All loans are subject to loan to values as found in the Bank\u2019s loan policies irrespective of their grade.\u00a0\u00a0The Bank\u2019s watch list is reviewed on a quarterly basis by management and any questions to value are addressed at that time. The majority of the Bank\u2019s loans are made in the market by lenders who live and work in the market.\u00a0\u00a0Thus, their evaluation of the independent valuation is also valuable and serves as a double check.\u00a0\u00a0On extremely rare occasions, the Bank will make adjustments to the recorded values of collateral securing commercial real estate loans without acquiring an updated appraisal for the subject property. The Bank has no formalized policy for determining when collateral value adjustments between regularly scheduled appraisals are necessary, nor does it use any specific methodology for applying such adjustments. However, on a quarterly basis as part of its normal operations, the Bank\u2019s senior management and the Loan Review Committee will meet to review all commercial credits either deemed to be impaired or on the Bank\u2019s watch list. In addition to analyzing the recent performance of these loans, management and the Enterprise Risk Management Committee will also consider any general market conditions that might warrant adjustments to the value of particular real estate collateralizing commercial loans. In addition, management conducts annual reviews of all commercial loans exceeding certain outstanding balance thresholds. In each of these situations, any information available to management regarding market conditions impacting a specific property or other relevant factors are considered, and lenders familiar with a particular commercial real estate loan and the underlying collateral may be present to provide their opinion on such factors. If the available information leads management to conclude a valuation adjustment is warranted, such an adjustment may be applied on the basis of the information available. If management concludes that an adjustment is warranted but lacks the specific information needed to reasonably quantify the adjustment, management will order a new appraisal on the subject property even though one may not be required under the Bank\u2019s general policies for updating appraisal. Note 4 of the Consolidated Financial Statements may also be reviewed for additional tables dealing with the Bank\u2019s loans and ALLL. ALLL is evaluated based on an assessment of the losses inherent in the loan portfolio.\u00a0\u00a0This assessment results in an allowance consisting of two components, allocated and unallocated. Management considers several different risk assessments in determining ALLL. The allocated component of ALLL reflects expected losses resulting from an analysis of individual loans, developed through specific credit allocations for individual loans and historical loss experience for each loan category.\u00a0\u00a0For those loans where the internal credit rating is at or below a predetermined classification and management can reasonably estimate the loss that will be sustained based upon collateral, the borrowers operating activity and economic conditions in which the borrower operates, a specific allocation is made.\u00a0\u00a0For those borrowers that are not currently behind in their payment, but for which management believes, based on economic conditions and operating activities of the borrower, the possibility exists for future collection problems, a reserve is established.\u00a0\u00a0The amount of reserve allocated to each loan portfolio is based on past loss experiences and the different levels of risk within each loan portfolio.\u00a0\u00a0The historical loan loss portion is determined using a historical loss analysis by loan category.The unallocated portion of the reserve for loan losses is determined based on management\u2019s assessment of general economic conditions as well as specific economic factors in the Bank\u2019s marketing area.\u00a0\u00a0This assessment inherently involves a higher degree of uncertainty.\u00a0\u00a0It represents estimated inherent but undetected losses within the portfolio that are probable due to uncertainties in economic conditions, delays in obtaining information, including unfavorable information about a borrower\u2019s financial condition and other current risk factors that may not have yet manifested themselves in the Bank\u2019s historical loss factors used to determine the allocated component of the allowance.Actual charge-off of loan balances is based upon periodic evaluations of the loan portfolio by management.\u00a0\u00a0These evaluations consider several factors, including, but not limited to, general economic conditions, financial condition of the borrower, and collateral.As presented in the table on the next page, charge-offs increased to $580 thousand for 2018.\u00a0\u00a061.9% of the charge-offs stemmed from the consumer related portfolios. Charge-offs were $288 thousand for 2017, $550 thousand for 2016, preceded by $1.0 million for 2015 and $778 thousand for 2014.\u00a0\u00a0Recoveries were $163 thousand in 2018 compared to $150, $156, $557, and $298 thousand for 2017, 2016, 2015 and 2014, respectively. The net charge-offs for the last five years were all under $1 million. 2017 was the lowest at $138 thousand. Higher provision expense was used to fund the ALLL for loan growth in 2014 and 2016. For 2015 and 2017, the provision was used to replenish the balance decreased by the net charge-off activity. Overall, the ALLL increased from $5.9 million at yearend 2014 to $6.8 million at yearend 2018. After adding the allowance for unfunded loan commitments, the ACL ended 2018 just over $7.0 million. As the ratios on the bottom of the following table show, the trends for each have continually improved over the five years shown. Asset quality and the ACL are both strong and emphasize the level of credit quality. In reviewing the bigger picture of the allowance for credit loss, the years with the higher percentage of ACL to total nonperforming loans ratio account for the lower level of nonaccrual and watch list loans. This demonstrates the extended time period with which it has taken to achieve resolution and\/or collection of these loans. 2014\u2019s significant and continued loan growth since fourth quarter 2013 was the reason behind 2014\u2019s higher balances as asset quality remained strong. The ratio of ACL to nonperforming loans increased significantly in 2014 which is why provision loan expense was lower in 2015 in comparison. The ACL to nonperforming loans for 2015 remained more than adequate and emphasizes the existing strong level of credit quality.\u00a0\u00a02018 did not warrant a large provision as the asset quality continued to strengthen.\u00a0\u00a0Loan growth occurred, though not at the double-digit percentage increases of 2015 and 2016.The following table presents a reconciliation of the allowance for credit losses for the years ended December 31, 2018, 2017, 2016, 2015 and 2014:","markdown_table":"\n\n\n| | | (In Thousands) | | | | | | | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | 2018 | | | | 2017 | | | | 2016 | | | | 2015 | | | | 2014 | | |\n| Non-accrual loans | | $ | 542 | | | $ | 1,003 | | | $ | 1,384 | | | $ | 2,041 | | | $ | 1,705 | |\n| Accruing loans past due 90 days or more | | | - | | | | - | | | | - | | | | - | | | | - | |\n| Troubled Debt Restructurings, not included above | | | 104 | | | | 534 | | | | 559 | | | | 878 | | | | 471 | |\n| Total | | $ | 646 | | | $ | 1,537 | | | $ | 1,943 | | | $ | 2,919 | | | $ | 2,176 | |\n\n","source":"FMAO\/10-K\/0001564590-19-004731"} {"title":"Loan Portfolio","text":"*Nonperforming loans are defined as all loans on nonaccrual, plus any loans past due 90 days not on nonaccrual.Allocation of ALLL per Loan Category in terms of dollars and percentage of loans in each category to total loans is as follows:","markdown_table":"\n\n\n| | | (In Thousands) | | | | | | | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | 2018 | | | | 2017 | | | | 2016 | | | | 2015 | | | | 2014 | | |\n| Loans | | $ | 846,374 | | | $ | 823,024 | | | $ | 758,094 | | | $ | 684,630 | | | $ | 621,467 | |\n| Daily average of outstanding loans | | $ | 831,614 | | | $ | 783,140 | | | $ | 724,076 | | | $ | 627,194 | | | $ | 581,483 | |\n| Allowance for Loan Losses - Jan 1 | | $ | 6,868 | | | $ | 6,784 | | | $ | 6,057 | | | $ | 5,905 | | | $ | 5,194 | |\n| Loans Charged off: | | | | | | | | | | | | | | | | | | | | |\n| Consumer Real Estate | | | 63 | | | | 4 | | | | 106 | | | | 38 | | | | 168 | |\n| Agricultural\u00a0\u00a0Real Estate | | | - | | | | - | | | | - | | | | - | | | | - | |\n| Agricultural | | | - | | | | - | | | | 21 | | | | - | | | | - | |\n| Commercial Real Estate | | | 16 | | | | 21 | | | | 93 | | | | 143 | | | | 229 | |\n| Commercial and Industrial | | | 142 | | | | - | | | | 20 | | | | 536 | | | | - | |\n| Consumer | | | 359 | | | | 263 | | | | 310 | | | | 313 | | | | 381 | |\n| | | | 580 | | | | 288 | | | | 550 | | | | 1,030 | | | | 778 | |\n| Loan Recoveries: | | | | | | | | | | | | | | | | | | | | |\n| Consumer Real Estate | | | 18 | | | | 13 | | | | 28 | | | | 41 | | | | 34 | |\n| Agricultural\u00a0\u00a0Real Estate | | | - | | | | - | | | | - | | | | - | | | | - | |\n| Agricultural | | | 8 | | | | 8 | | | | 10 | | | | 64 | | | | 44 | |\n| Commercial Real Estate | | | 10 | | | | 15 | | | | 20 | | | | 204 | | | | 4 | |\n| Commercial and Industrial | | | 13 | | | | 12 | | | | 11 | | | | 91 | | | | 20 | |\n| Consumer | | | 114 | | | | 102 | | | | 87 | | | | 157 | | | | 196 | |\n| | | | 163 | | | | 150 | | | | 156 | | | | 557 | | | | 298 | |\n| Net Charge Offs | | | 417 | | | | 138 | | | | 394 | | | | 473 | | | | 480 | |\n| Provision for loan loss | | | 324 | | | | 222 | | | | 1,121 | | | | 625 | | | | 1,191 | |\n| Acquisition provision for loan loss | | | - | | | | - | | | | - | | | | - | | | | - | |\n| Allowance for Loan & Lease Losses - Dec 31 | | | 6,775 | | | | 6,868 | | | | 6,784 | | | | 6,057 | | | | 5,905 | |\n| Allowance for Unfunded Loan \u00a0\u00a0 Commitments & Letters of Credit - Dec 31 | | | 274 | | | | 227 | | | | 217 | | | | 208 | | | | 207 | |\n| Total Allowance for Credit Losses - Dec 31 | | $ | 7,049 | | | $ | 7,095 | | | $ | 7,001 | | | $ | 6,265 | | | $ | 6,112 | |\n| Ratio of net charge-offs to average Loans outstanding | | | 0.05 | % | | | 0.02 | % | | | 0.05 | % | | | 0.08 | % | | | 0.08 | % |\n| Ratio of the Allowance for Loan Loss to \u00a0\u00a0 Nonperforming Loans | | | 1249.57 | % | | | 684.83 | % | | | 490.39 | % | | | 293.75 | % | | | 346.30 | % |\n\n","source":"FMAO\/10-K\/0001564590-19-004731"} {"title":"ITEM\u00a07. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS","text":"The following tables show changes in interest income, interest expense and net interest resulting from changes in\nvolume and rate variances for major categories of earnings assets and interest bearing liabilities.","markdown_table":"\n\n| | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | **2014** | | | | | | | | | | |\n| | | (In Thousands) | | | | | | | | | | |\n| | | Average | | | | Interest\/ | | | | | | |\n| | | Balance | | | | Dividends | | | | Yield\/Rate | | |\n| **ASSETS** | | | | | | | | | | | | |\n| | | | | | | | | | | | | |\n| **Interest Earning Assets:** | | | | | | | | | | | | |\n| Loans | | $ | 581,483 | | | $ | 28,070 | | | | 4.83 | % |\n| Taxable investment securities | | | 189,003 | | | | 3,570 | | | | 1.89 | % |\n| Tax-exempt investment securities | | | 65,520 | | | | 1,794 | | | | 4.15 | % |\n| Federal funds sold\u00a0& interest bearing deposits | | | 8,992 | | | | 19 | | | | 0.21 | % |\n| | | | | | | | | | | | | |\n| **Total Interest Earning Assets** | | | 844,998 | | | $ | 33,453 | | | | 4.07 | % |\n| | | | | | | | | | | | | |\n| **Non-Interest Earning Assets:** | | | | | | | | | | | | |\n| Cash and cash equivalents | | | 23,634 | | | | | | | | | |\n| Other assets | | | 79,296 | | | | | | | | | |\n| | | | | | | | | | | | | |\n| **Total Assets** | | $ | 947,928 | | | | | | | | | |\n| | | | | | | | | | | | | |\n| **LIABILITIES AND SHAREHOLDERS\u0092 EQUITY** | | | | | | | | | | | | |\n| | | | | | | | | | | | | |\n| **Interest Bearing Liabilities:** | | | | | | | | | | | | |\n| Savings deposits | | $ | 394,690 | | | $ | 1,449 | | | | 0.37 | % |\n| Other time deposits | | | 214,680 | | | | 2,009 | | | | 0.94 | % |\n| Other borrowed money | | | 158 | | | | 4 | | | | 2.53 | % |\n| Federal funds purchased and securties sold under agreement to repurchase | | | 60,989 | | | | 254 | | | | 0.42 | % |\n| | | | | | | | | | | | | |\n| **Total Interest Bearing Liabilities** | | | 670,517 | | | $ | 3,716 | | | | 0.55 | % |\n| | | | | | | | | | | | | |\n| **Non-Interest Bearing Liabilities:** | | | | | | | | | | | | |\n| Non-interest bearing demand deposits | | | 152,155 | | | | | | | | | |\n| Other | | | 14,622 | | | | | | | | | |\n| | | | | | | | | | | | | |\n| **Total Liabilities** | | | 837,294 | | | | | | | | | |\n| | | | | | | | | | | | | |\n| **Shareholders\u0092 Equity** | | | 110,634 | | | | | | | | | |\n| | | | | | | | | | | | | |\n| **Total Liabilities and Shareholders\u0092 Equity** | | $ | 947,928 | | | | | | | | | |\n| | | | | | | | | | | | | |\n| Interest\/Dividend income\/yield | | | | | | $ | 33,453 | | | | 4.07 | % |\n| Interest Expense \/ yield | | | | | | | 3,716 | | | | 0.55 | % |\n| | | | | | | | | | | | | |\n| Net Interest Spread | | | | | | $ | 29,737 | | | | 3.52 | % |\n| | | | | | | | | | | | | |\n| Net Interest Margin | | | | | | | | | | | 3.63 | % |\n| | | | | | | | | | | | | |\n\n","source":"FMAO\/10-K\/0001193125-17-051316"} {"title":"ITEM\u00a07. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS","text":"Non-Interest Income The discussion now turns to the noninterest activity of 2016 operations, beginning with the revenue portion. In comparing line items of the consolidated\nstatements of income for years ended 2014 through 2016, it can be seen where the Company has been spending its time and the impact of the recession and slow recovery. This section will focus on the significant noninterest items that impacted the\noperations of the Company. The Company has concerns with the increased costs associated with regulatory compliance such as the possible loss\nof revenue from new regulations stemming from the Dodd-Frank Act. History has proven the concern is justified. One area of revenue impacted was overdraft fees. The Bank has ended each of the last 3 years with a lower revenue stream from overdraft\nfees. This has occurred in spite of the addition of the new offices. Each year, the number of checking accounts has increased along with the balances; however average collected overdraft fees per account decreased. Overdraft fees in 2016 and 2015\naccounted for $2.4\u00a0million in noninterest income, compared to $2.5\u00a0million in 2014 and $2.7\u00a0million for 2013. The Bank had made this an area of focus for 2015 as this revenue stream remains under intense regulator review. In 2015, the\nBank adjusted its overdraft program and renamed it \u0093Courtesy Pay.\u0094 Courtesy Pay establishes dynamic limits based on a customer\u0092s behavior and likelihood of repayment. The Bank has sought to better service the customer\u0092s needs\nwhile decreasing the need for collections and improving profitability. At the current time, profitability has not been impacted and in 2016 it only slowed the amount of decrease. Service charges on checking accounts also leveled off in 2016.\nExcluding Health Savings Accounts, service charges were up $120\u00a0thousand for 2015 and $208.7\u00a0thousand for 2014. This improvement is credited to the new checking accounts mentioned previously. The Bank has long promoted the use of debit cards by its customers and continued that philosophy with the introduction of additional new products. 2016\nrevenue improved $122.4\u00a0thousand, 2015 revenue improved $142.9\u00a0thousand and 2014 revenue improved $250.5 from ATM\/debit card usage as compared to each of the respective prior years. The Bank receives interchange revenue from each use by a\ncustomer of a Bank issued ATM\/debit the card. In 2011, this revenue stream was at risk of being reduced by the Federal Reserve regulation of the interchange fee. The establishment by the Federal Reserve of a tiered pricing for banks under\n$10\u00a0billion has helped to protect the profitability from such fees, although the concern remains as to how long this tiered pricing will remain in effect. While this revenue stream continues to improve with more depositors using electronic\nmethods for purchasing, the expense attributable to card fraud has offset a portion of the revenue gain. Further discussion can be found in the non-interest expense section regarding the net effect of debit\ncard activity. Noninterest income from net gain on sales of loans increased for 2016 after having decreased for both 2015 and 2014. The change may be\nrelated to the increase in rates after the long duration of the flat rate interest environment. The net gain on sale of loans is derived from sales of real estate loans into the secondary market. Of these loan types, the Bank sells 100% of the\nresidential loans and 90% of the agricultural loans into the secondary market. Gains of $683.7 and $204.0\u00a0thousand were recorded for residential an agricultural real estate respectively for 2016. Gains of $559.6 and $140.8\u00a0thousand were\nrecorded for residential and agricultural real estate respectively for 2015 compared to gains of $452.7 and $194.3\u00a0thousand respectively for 2014. In conjunction with these sales, the Bank maintains servicing rights and those income amounts\nduring all three years are included in the customer service fees line item and accounted for over $400\u00a0thousand in revenue for 2016 and 2015. The\nlast line item in the noninterest income section is the net gain on sale of investments. The Bank has taken advantage of this opportunity the last three years and expects to continue as long as the rates remain low and the yield curve is favorable\nto the transaction. The Bank will not increase short-term gains at the sacrifice of long-term profitability. All of the sales of securities in 2016, 2015 and 2014 of $85.7, $47.0 and $57.9\u00a0million respectively were used to fund loan growth.\nThis is a source of funds that will continue to be analyzed for use in the coming year. Gains of $588\u00a0thousand were recorded for 2016, $451\u00a0thousand for 2015 as compared to $494\u00a0thousand for 2014. Customer service fees show an improvement of $271\u00a0thousand collected in 2016 as compared to 2015. 2015 experienced an even higher increase in customer\nservice fees of $623\u00a0thousand over 2014. Almost $200\u00a0thousand can be attributed to classifying foreign ATM fees out of service charges into miscellaneous fees in 2015. Other fees included in this line item are the interchange fee mentioned\npreviously, fees for wire activity, safe deposit box rent and profit on sales of checks to name a few. Overall, noninterest income increased\n$580\u00a0thousand in 2016 preceded by a year where it had increased $604\u00a0thousand. Some of the revenue may not be easily duplicated as it is dependent on economic and market conditions to provide the opportunity. However, the increased revenue\namounts from deposit and loan services should continue to provide improved profitability in the future. Management expects gains on sales to continue in the near term. Non-Interest Expense Noninterest expense increased 5.2% in 2016 as compared to 2015 and was preceded by a 3.4% increase in 2015 as compared to 2014. Represented in dollars, 2016\nwas $1.4\u00a0million higher than 2015 and 2015 was $854\u00a0thousand higher \nthan 2014. The largest factor behind the increase both years was the expense of employee salaries and wages. During 2016, an additional $713\u00a0thousand was spent over 2015 which correlates to\na 6.5% increase. When making the same analysis for 2015 as compared to 2014, 2015\u0092s costs increased $721\u00a0thousand or 7.1%. Three main components flow into salaries and wages: base salary, deferred costs, and incentives composed of the\nexpense of restricted stock awards and performance incentives. Base pay has increased with the addition of the three offices of Huntertown, Bowling Green and Sylvania, as well as from the operations of the Captive and through normal yearly increases\nto the remainder of the employees. Base pay was up $669.7\u00a0thousand for 2016 over the previous year and 2015 was up $559.3\u00a0thousand over 2014. The full time equivalent number of employees at each yearend increased to 273 for 2016, to 265\nfor 2015 compared to 2014\u0092s 260. Incentive pay as it related to performance was up $177.4\u00a0thousand in 2016 over 2015. Measurements used for\naward incentive pay had improved in 2016 and 2015 and employees benefited accordingly. The expense for the restricted stock awards has also increased each of the last three years as more shares have been granted to a larger number of employees and\nthe market value of the shares has increased. 2016\u0092s cost for this program was $87.9\u00a0thousand higher than 2015 and 2015 was $82\u00a0thousand higher than 2014. The awards incorporate a three year vesting period so the increase of any one\nyear carries forward through the next two years. This expense should continue to increase as the Company continues its expansion strategy. For further discussion in incentive pay and restricted stock awards, see note 11 of the consolidated financial\nstatements. Employee benefits decreased in 2016 which correlated directly to a lower level of medical expense. As the Bank is partially self-insured,\nlower claims during 2016 decreased the expense. Employee group insurance was down $266.9\u00a0thousand for 2016. Overall, employee benefits were down $232\u00a0thousand or 6.5% from 2015. Employee benefits increased by a similar percentage as the salaries and wages for 2015 increased by 6.9% over 2014. The cost of the 401-K retirement plan increased each year as the profit share component increased along with the number of employees participating. Being partially self-insured has helped with lower claim experience though it is an\nunknown each year what that experience will be. For 2014 and 2015, a switch in the medical provider and comparison pricing also assisted to control the cost. Employees do participate in any premium increases. Net occupancy expense typically increases as the Company expands, which is what has occurred for 2016 and 2015. One factor that can offset occupancy expense\nis the receipt by the Company of building rent as it is netted out of occupancy expense. The greatest contributor to building rent comes from the division of FM Investments within the Bank. This division experienced a strong 2014; however the\ndepartment was short staffed most of 2015 and 2016. This has been remedied in 2017 and performance is expected to improve. While net loss on sale of\nother assets owned, mainly ORE property, does not represent income for the years presented, the decrease in the amount of the loss for 2015 as compared to 2014, did contribute to improved profitability. For 2016, the loss was higher at\n$81\u00a0thousand than 2015\u0092s $47\u00a0thousand. Loss on sale of assets included any write downs in the carrying values of ORE property on the Bank\u0092s balance sheet. In 2016 and 2015, the number of properties and the corresponding carrying\nvalues decreased as compared to 2014. The Bank also sold its St. Joe, Indiana property during 2015. While taking a loss for the sale, the Bank eliminated the continued maintenance expense of an unoccupied building. An easement was agreed upon to\nenable the ATM located on the property to remain operational. The 1-4 family mortgage refinancing activity has\nbeen slow over the last three years though increasing slightly each year. A correlating expense to that activity is the amortization of mortgage servicing rights. The amortization is the expense that offsets the income recognized when the loan is\nfirst made. Income is recorded when the mortgage loan is first sold with servicing retained and is therefore recognized within one year. The amortization, however, is calculated over the life of the loan and accelerated as loans are paid off early.\nAn increase in this expense can be driven by two activities: an increase in the number of sold loans and\/or by the acceleration of the expense from payoff and refinance activity. The best picture of the bottom line impact is achieved by netting the\nincome with the expense each year. 2015 had net income of $33\u00a0thousand, a switch from 2014 which had net expense of $42.7\u00a0thousand. Of course, the value (or income) of the mortgage servicing right when sold also impacts the net position.\n2016 has net income of $136\u00a0thousand and 2015 had higher additions and lower amortization expense from refinanced loans. The number of loans and balances also indicates this as the levels have remained fairly constant. 2014 was a year with\nlimited sales and the amortization expense was therefore higher than the capitalized additions. As of December\u00a031, 2016, 3,599 loans are being serviced with corresponding balances of $279.4\u00a0million. This is almost identical to the\nDecember\u00a031, 2015 number and balance of loans 1-4 family being serviced. As of December 2015, 3,598 loans are being serviced with balances of $275.7\u00a0million. As of December\u00a031, 2014, there were\n3,638 loans serviced with balances of $275.4\u00a0million. The impact of mortgage servicing rights to both noninterest income and expense is shown in the following table:","markdown_table":"\n\n| | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | 2016 vs 2015 | | | | | | | | | | |\n| | | (In Thousands) | | | | | | | | | | |\n| | | NetChange | | | | Due\u00a0to\u00a0change\u00a0inVolume | | | | Rate | | |\n| **Interest Earning Assets:** | | | | | | | | | | | | |\n| Loans | | $ | 4,410 | | | $ | 4,537 | | | $ | (127 | ) |\n| Taxable investment securities | | | (78 | ) | | | (82 | ) | | | 4 | |\n| Tax-exempt investment securities | | | (284 | ) | | | (373 | ) | | | 89 | |\n| Federal funds sold\u00a0& interest bearing deposits | | | 29 | | | | (11 | ) | | | 40 | |\n| | | | | | | | | | | | | |\n| **Total Interest Earning Assets** | | $ | 4,077 | | | $ | 4,071 | | | $ | 6 | |\n| | | | | | | | | | | | | |\n| **Interest Bearing Liabilities:** | | | | | | | | | | | | |\n| Savings deposits | | $ | 133 | | | $ | 131 | | | $ | 2 | |\n| Other time deposits | | | 215 | | | | 44 | | | | 171 | |\n| Other borrowed money | | | 147 | | | | 92 | | | | 55 | |\n| Federal funds purchased and securities sold under agreement to repurchase | | | 141 | | | | 38 | | | | 103 | |\n| | | | | | | | | | | | | |\n| **Total Interest Bearing Liabilities** | | $ | 636 | | | $ | 305 | | | $ | 331 | |\n| | | | | | | | | | | | | |\n| | | | | | | | | | | | | |\n| | | 2015 vs 2014 | | | | | | | | | | |\n| | | (In Thousands) | | | | | | | | | | |\n| | | NetChange | | | | Due\u00a0to\u00a0change\u00a0inVolume | | | | Rate | | |\n| **Interest Earning Assets:** | | | | | | | | | | | | |\n| Loans | | $ | 1,223 | | | $ | 2,210 | | | $ | (987 | ) |\n| Taxable investment securities | | | (762 | ) | | | (211 | ) | | | (551 | ) |\n| Tax-exempt investment securities | | | (281 | ) | | | 26 | | | | (307 | ) |\n| Federal funds sold\u00a0& interest bearing deposits | | | 17 | | | | 11 | | | | 6 | |\n| | | | | | | | | | | | | |\n| **Total Interest Earning Assets** | | $ | 197 | | | $ | 2,036 | | | $ | (1,839 | ) |\n| | | | | | | | | | | | | |\n| **Interest Bearing Liabilities:** | | | | | | | | | | | | |\n| Savings deposits | | $ | 108 | | | $ | 65 | | | $ | 43 | |\n| Other time deposits | | | (297 | ) | | | (233 | ) | | | (64 | ) |\n| Other borrowed money | | | (3 | ) | | | (1 | ) | | | (2 | ) |\n| Federal funds purchased and securities sold under agreement to repurchase | | | 63 | | | | (13 | ) | | | 76 | |\n| | | | | | | | | | | | | |\n| **Total Interest Bearing Liabilities** | | $ | (129 | ) | | $ | (182 | ) | | $ | 53 | |\n| | | | | | | | | | | | | |\n\n","source":"FMAO\/10-K\/0001193125-17-051316"} {"title":"ITEM\u00a07. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS","text":"Furniture and equipment steadily increases as we continue to add facilities and invest in technology. Annual maintenance costs\ncontinue to grow and become a greater piece of the overall cost. As new services are provided to our customers, the backroom cost to supply them continues to rise. The Company accepts it is an expected cost of doing business and keeping our services\nrelevant to the industry. Data processing expense increased $109\u00a0thousand during 2016 as compared to an increased $50\u00a0thousand during 2015 and\nby $38\u00a0thousand in 2014 over 2013. The Company continues to investigate ways to reduce this expense. The pricing on many services, however, is based on number of accounts and the Bank fully expects those to increase with the growth from the\nnewer offices and overall Bank growth. The Bank began conducting a review of its core operating system in 2015 which culminated with a decision in the\nsummer 2016 to extend the contract with the Bank\u0092s existing provider, FiServ, for an additional seven year period. The Bank expects to see a current reduction in monthly expenses, though that reduction will be utilized to provide additional new\nproduct offerings and fund growth. Overall, data processing expense for 2017 may be similar to 2016 with a wider variety of customer offerings. The FDIC\nassessment has a decreasing cost trend and that is expected to continue into 2017 as the fourth quarter 2016 assessment was again below that of the previous quarter. This line item speaks to the health of the Bank and the financial industry. The\nassessment for 2016 was down $78\u00a0thousand from 2015. The last line item with significant variation in noninterest expense to discuss is \u0093other\ngeneral and administrative.\u0094 The line item increased by $439\u00a0thousand during 2016 to end at $6.1\u00a0million as of December\u00a031, 2016. $249\u00a0thousand of the increased expense was a result of management\u0092s decision to\naccelerate the issuance of \u0093chip\u0094 debit cards along with the normal replacement of cards due to fraud and expiration dates. The chip enhanced cards were to help decrease fraud and establish liability with the merchant if the chip was not\nused in the transaction. The Bank\u0092s cost due to fraud was not lower yet in 2016; however it is hoped it will help mitigate fraud losses in 2017. Advertising and public relations increased also in 2016 by $113\u00a0thousand. With the addition of\nnew offices, the credit card launch in conjunction with Bowling Green State University\u0092s athletic department, it was expected to be higher than 2015. The Bank also celebrates the anniversary of office openings with a special event in each\ncommunity. 2015 experienced a decrease in the \u0093other\u0094 general and administrative line item. The decrease of $348\u00a0thousand for 2015 as\ncompared to 2014 can be mainly attributed to a $195.7\u00a0thousand reduction in marketing and consulting costs. A renegotiation of one service provider contract along with the maturity of another during 2015 led to the decrease. Another contributor\nto the reduction was lower losses due to NSF and fraud. The Bank applauds the work of our front-line staff to recognize possible fraud and scams attempted on our customers and stopping them before they can occur. An investment in additional fraud\ndetection software has also helped our back office personnel to detect possible digital fraud. This was down $60.2\u00a0thousand in 2015 compared to an increase in 2014 of $40.9\u00a0thousand. Allowance for Credit Losses Provision expense increased\nby $496\u00a0thousand for 2016 in response to the significant loan growth for the period. It decreased by $566\u00a0thousand for 2015, following an increase of $333\u00a0thousand for 2014. The decrease for 2015 was due to the consistent strong asset\nquality of the Bank\u0092s loan portfolio as evidenced by low levels of both net charge-offs and delinquencies. The increase for 2014 was needed to account for the loan growth and the net charge-off activity\nof \n2014. Sustained strong asset quality kept the provision expense lower than the growth alone would have warranted. Net charge-offs were $394, $473, and $480\u00a0thousand for 2016, 2015 and 2014,\nrespectively. Commercial and Industrial loans had the largest charge-off activity in 2015. The consumer portfolios had the highest levels of charge-off activity in 2016\nand 2014. The Company segregates its Allowance for Credit Losses (ACL) into two reserves: The ACL and the Allowance for Unfunded Loan Commitments and\nLetters of Credit (AULC). When combined, these reserves constitute the total ACL. The AUCL is included in other liabilities on the consolidated balance sheets. The Bank\u0092s ALLL methodology captures trends in leading, current, and lagging indicators which will directly affect the Bank\u0092s allocation amount. The\nBank monitors trends in such leading indicators as delinquency, unemployment changes in the Bank\u0092s service area, experience and ability of staff, regulatory trends, and credit concentrations. A current indicator such as the total watch list\nloan amount to Capital, and a lagging indicator such as the charge off amount are referenced as well. A matrix formed by loan type from these indicators is used in making ALLL adjustments. Watch list loan balances are comprised of loans graded 5-8. These loan balances increased $14.3\u00a0million as of\nDecember\u00a031, 2016 as compared to same date 2015. The largest increases occurring in the lowest risk grade of 5. The loan grades of 7, which have a greater likelihood of default, all decreased for 2016. The Bank is mindful of the grade 5 loans\nbut expects the number to decrease during first half 2017. All other measurements of asset quality improved during 2016. The watch list loan balances decreased 53.6% or $7.2\u00a0million from December\u00a031, 2014 to December\u00a031, 2015. The\nbalances decreased mainly due to successful results from collection efforts. Given the size of the decrease, it is no surprise it is attributed mainly to the commercial real estate portfolio decreasing by $5.9\u00a0million. Three customers made up\nthe bulk of the balances with one of three finding funding elsewhere. Commercial loans (non-real estate) on the Bank\u0092s watch list also had a nice decrease during 2015, though just not as high at\n$1.9\u00a0million. At yearend 2016, 59.7% of the watch list was comprised of loans classified as special mention, with an additional 39.0% classified as\nsubstandard and the remaining 1.3% classified as doubtful. The large increases in special mention and substandard are mainly driven by two loan relationships in the Bank\u0092s commercial real estate portfolio. Of the aggregate watch list loan balances, as of December\u00a031, 2015, special mention accounted for 36.6% with substandard comprising 49.1% and doubtful\naccounting for the final 14.3%. In comparison to 2014, special mention was down $7.2\u00a0million, substandard up slightly by $161\u00a0thousand and doubtful down almost exactly the same amount at $162\u00a0thousand. For 2014, the increase in special mention is offset by significant decreases in the substandard classifications of those same commercial related portfolios.\nOverall, substandard and doubtful loans decreased 42.5% or $2.9\u00a0million as compared to yearend 2013. In response to these fluctuations and loan growth during 2014 and 2015, the Bank changed ALLL to outstanding loan coverage percentage changed\nto 0.89% as of December\u00a031, 2016, 0.88% as of December\u00a031, 2015, and 0.95% as of December\u00a031, 2014. The above indicators impacting ALLL\nare reviewed quarterly. Some of the indicators are quantifiable and, as such, will automatically adjust the ALLL once calculated. These indicators include the ratio of past due loans to total loans, loans past due greater than 30 days, and the ratio\nof watch list loans to capital, with the watch list made up of loans graded 5, 6 or 7 on a scale of 1 (best) to 7 (worst). Other indicators consist of more subjective data used to evaluate the potential for inherent losses in the Bank\u0092s loan\nportfolio. For example, the economic indicator uses the unemployment statistics from the communities in our market area to help determine whether the ALLL should be adjusted. At the end of each of 2014, 2015 and 2016, a slight improvement was noted\nin unemployment figures. All aggregate commercial and agricultural credits including real estate loans of $250,000 and over are reviewed annually by both\ncredit committees and internal loan review to look for early signs of deterioration. To establish the specific reserve allocation for real estate, a\ndiscount to the market value is established to account for liquidation expenses. The discounting percentage used for real estate mirrors the discounting of real estate as provided for in the Bank\u0092s Loan Policy. However, unique or unusual\ncircumstances may be present which will affect the real estate value and, when appropriately identified, can adjust the discounting percentage at the discretion of management. The ACL increased $736, $153 and $755\u00a0thousand during 2016, 2015 and 2014 respectively. The large increase\nin 2016 directly correlates to the large increase in loan balances. With the improved asset quality, the metrics upon which the ACL is calculated did not support a larger increase in 2015 even though loan growth occurred. The percentage of ACL to\nthe total loan portfolio was 0.98% as of December\u00a031, 2014, 0.91% as of December\u00a031, 2015 and 0.92% as of December\u00a031, 2016. December\u00a031, 2016 had the lowest loans past due 30+ day percentage at 0.23% in the last ten years.\nDecember\u00a031, 2014 and 2015 were still at respectable lows of 0.37% and 0.32%. Please see Note 4 in the consolidated financial statement for\nadditional tables regarding the composition of the ACL. Federal Income Taxes Effective tax rates were 28.53%, 26.97%, and 28.64% for 2016, 2015 and 2014 respectively. The effect of tax-exempt\ninterest from holding tax-exempt securities and Industrial Development Bonds (IDBs) was $468, $554, and $634\u00a0thousand for 2016, 2015, and 2014, respectively. All years included an increase into a higher\ntax bracket for income over $10\u00a0million. Behind the decrease in 2015 is one of the benefits from the establishment of the Captive subsidiary. Material Changes in Financial Condition The shifts in\nthe balance sheet during 2016 and 2015 have positioned the Company for continued improvement in profitability. On the asset side, interest income increased primarily from loan growth with funding for the increase provided by a decrease in the\ninvestment portfolio, growth in core deposits and growth in other borrowings generated in 2015 which carried over to 2016. The cost of funds was impacted by the shift of interest bearing liabilities to noninterest and the limited use of time\ndeposits in 2016 with a decrease in time deposits in 2015. Both contributed to improved profitability in 2016 and 2015, and the Company expects continued improvement through 2017 and into 2018. Average earning assets increased throughout 2016 and 2015. Loan growth in both years was the main factor. 2014 was also aided by the Custar acquisition which\ntook place in December 2013 and brought in $29\u00a0million in deposits. 2015 also benefited from the Sylvania office having been in office for a full year along with the growth in the other newer offices. 2016 had two offices open, one in each half\nof the year. Securities The investment portfolio is\nprimarily used to provide overall liquidity for the Bank. It is also used to provide required collateral for pledging to the Bank\u0092s Ohio public depositors for amounts on deposit in excess of the FDIC coverage limits. It may also be used to\npledge for additional borrowings from third parties. Investments are made with the above criteria in mind while still seeking a fair market rate of return, and looking for maturities that fall within the projected overall strategy of the Bank. The\npossible need to fund growth is also a consideration. During 2016, the Bank began to utilize Promontory\u0092s ICS, product to replace pledged\nsecurities; thereby increasing liquidity. ICS utilizes a nation-wide bank network to provide FDIC insurance coverage to the Bank\u0092s depositors. The Bank is using the product to replace pledged securities to the Bank\u0092s Ohio public customers\nand for commercial sweep customers previously utilizing daily repurchase agreements to protect balances over $250\u00a0thousand. All of the Bank\u0092s\nsecurity portfolio is categorized as available for sale and as such is recorded at market value. Security balances as of December\u00a031 are summarized below:","markdown_table":"\n\n| | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | (In Thousands) | | | | | | | | | | |\n| | | 2016 | | | | 2015 | | | | 2014 | | |\n| Beginning Year | | $ | 2,056 | | | $ | 2,023 | | | $ | 2,066 | |\n| Capitalized Additions | | | 555 | | | | 407 | | | | 301 | |\n| Amortization | | | (419 | ) | | | (374 | ) | | | (344 | ) |\n| Valuation Allowance | | | \u0097 | | | | \u0097 | | | | \u0097 | |\n| | | | | | | | | | | | | |\n| End of Year | | $ | 2,192 | | | $ | 2,056 | | | $ | 2,023 | |\n| | | | | | | | | | | | | |\n\n","source":"FMAO\/10-K\/0001193125-17-051316"} {"title":"ITEM\u00a07. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS","text":"The following table sets forth the maturities of investment securities as of December\u00a031, 2016 and the weighted average\nyields of such securities calculated on the basis of cost and effective yields weighted for the scheduled maturity of each security. Tax-equivalent adjustments, using a thirty-four percent rate, have been made\nin yields on obligations of state and political subdivisions. Stocks of domestic corporations have not been included. Maturities of mortgage-backed securities are based on the stated maturity date of the security. Due to prepayments, actual\nmaturities may be different.","markdown_table":"\n\n| | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | (In Thousands) | | | | | | | | | | |\n| | | 2016 | | | | 2015 | | | | 2014 | | |\n| U.S. Treasury | | $ | 24,775 | | | $ | 38,505 | | | $ | 25,393 | |\n| U.S. Government agencies | | | 82,474 | | | | 98,220 | | | | 119,234 | |\n| Mortgage-backed securities | | | 48,461 | | | | 26,324 | | | | 29,562 | |\n| State and local governments | | | 62,817 | | | | 72,066 | | | | 74,303 | |\n| | | | | | | | | | | | | |\n| | | $ | 218,527 | | | $ | 235,115 | | | $ | 248,492 | |\n| | | | | | | | | | | | | |\n\n","source":"FMAO\/10-K\/0001193125-17-051316"} {"title":"ITEM\u00a07. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS","text":"As of December\u00a031, 2016 the Bank did not hold a large block of any one investment security in excess of 10% of\nstockholders\u0092 equity. The largest segment of holdings is in US Governments. The Bank also holds stock in the Federal Home Loan Bank of Cincinnati at a cost of $3.7\u00a0million. This is required in order to obtain Federal Home Loan Bank loans.\nThe Bank also owns stock of Farmer Mac with a carrying value of $37.4\u00a0thousand which is required to participate loans in the program. Loan\nPortfolio The Bank\u0092s various loan portfolios are subject to varying levels of credit risk. Management mitigates these risks through portfolio\ndiversification and through standardization of lending policies and procedures. Risks are mitigated through an adherence to the Bank\u0092s loan\npolicies, with any exception being recorded and approved by senior management or committees comprised of senior management. The Bank\u0092s loan policies define parameters to essential underwriting guidelines such as\nloan-to-value ratio, cash flow and debt-to-income ratio, loan requirements and covenants,\nfinancial information tracking, collection practice and others. The maximum loan amount to any one \nborrower is limited by the Bank\u0092s legal lending limits and is stated in policy. On a broader basis, the Bank restricts total aggregate funding in comparison to Bank capital to any one\nbusiness or agricultural sector by an approved sector percentage to capital limitation. The following table shows the Bank\u0092s loan portfolio by\ncategory of loan as of December 31st of each year, including loans held for sale:","markdown_table":"\n\n| | | | | | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | Maturities(Amounts in Thousands) | | | | | | | | | | | | | | |\n| | | | | | | | | | | After One Year | | | | | | |\n| | | Within One Year | | | | | | | | Within Five Years | | | | | | |\n| | | Amount | | | | Yield | | | | Amount | | | | Yield | | |\n| U.S. Treasury | | $ | 10,542 | | | | 0.61 | % | | $ | 14,233 | | | | 1.11 | % |\n| U.S. Government agencies | | | \u0097 | | | | 0.00 | % | | | 43,245 | | | | 1.29 | % |\n| Mortgage-backed securities | | | \u0097 | | | | 0.00 | % | | | 4,144 | | | | 2.59 | % |\n| State and local governments | | | 7,805 | | | | 2.14 | % | | | 18,927 | | | | 2.11 | % |\n| Taxable state and local governments | | | 884 | | | | 2.02 | % | | | 5,185 | | | | 1.75 | % |\n| | | | | | | | | | | | | | | | | |\n| | | After Five Years | | | | | | | | | | | | | | |\n| | | Within Ten Years | | | | | | | | After Ten Years | | | | | | |\n| | | Amount | | | | Yield | | | | Amount | | | | Yield | | |\n| U.S. Treasury | | $ | \u0097 | | | | 0.00 | % | | $ | \u0097 | | | | 0.00 | % |\n| U.S. Government agencies | | | 39,229 | | | | 1.97 | % | | | \u0097 | | | | 0.00 | % |\n| Mortgage-backed securities | | | 3,224 | | | | 2.92 | % | | | 41,093 | | | | 2.03 | % |\n| State and local governments | | | 23,784 | | | | 2.00 | % | | | 3,662 | | | | 1.98 | % |\n| Taxable state and local governments | | | 2,570 | | | | 4.50 | % | | | \u0097 | | | | 0.00 | % |\n\n","source":"FMAO\/10-K\/0001193125-17-051316"} {"title":"ITEM\u00a07. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS","text":"The following table shows the maturity of loans as of December\u00a031, 2016:","markdown_table":"\n\n| | | | | | | | | | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | (In Thousands) | | | | | | | | | | | | | | | | | | |\n| | | 2016 | | | | 2015 | | | | 2014 | | | | 2013 | | | | 2012 | | |\n| Loans: | | | | | | | | | | | | | | | | | | | | |\n| Consumer Real Estate | | $ | 87,273 | | | $ | 88,189 | | | $ | 97,550 | | | $ | 92,438 | | | $ | 80,287 | |\n| Agricultural Real Estate | | | 63,391 | | | | 58,525 | | | | 50,895 | | | | 44,301 | | | | 40,143 | |\n| Agricultural | | | 84,563 | | | | 82,654 | | | | 74,611 | | | | 65,449 | | | | 57,770 | |\n| Commercial Real Estate | | | 377,481 | | | | 322,762 | | | | 270,188 | | | | 248,893 | | | | 199,999 | |\n| Commercial and Industrial | | | 109,256 | | | | 100,125 | | | | 100,126 | | | | 99,498 | | | | 101,624 | |\n| Consumer | | | 33,179 | | | | 27,770 | | | | 24,277 | | | | 21,406 | | | | 20,413 | |\n| Industrial Development Bonds | | | 5,732 | | | | 6,491 | | | | 4,698 | | | | 4,358 | | | | 1,299 | |\n| | | | | | | | | | | | | | | | | | | | | |\n| | | $ | 760,875 | | | $ | 686,516 | | | $ | 622,345 | | | $ | 576,343 | | | $ | 501,535 | |\n| | | | | | | | | | | | | | | | | | | | | |\n\n","source":"FMAO\/10-K\/0001193125-17-051316"} {"title":"ITEM\u00a07. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS","text":"The following table presents the total of loans due after one year which has either 1) predetermined interest rates (fixed) or\n2) floating or adjustable interest rates (variable):","markdown_table":"\n\n| | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | (In Thousands) | | | | | | | | | | |\n| | | | | | | After\u00a0One | | | | | | |\n| | | Within | | | | Year\u00a0Within | | | | After | | |\n| | | One Year | | | | Five Years | | | | Five Years | | |\n| Consumer Real Estate | | $ | 2,900 | | | $ | 12,258 | | | $ | 72,115 | |\n| Agricultural Real Estate | | | 911 | | | | 3,156 | | | | 59,324 | |\n| Agricultural | | | 51,411 | | | | 22,771 | | | | 10,381 | |\n| Commercial real estate | | | 7,636 | | | | 105,377 | | | | 264,468 | |\n| Commercial and Industrial | | | 49,757 | | | | 35,400 | | | | 24,099 | |\n| Consumer | | | 5,880 | | | | 20,212 | | | | 7,087 | |\n| Industrial Development Bonds | | | 1,031 | | | | 85 | | | | 4,616 | |\n| | | | | | | | | | | | | |\n| | | $ | 119,526 | | | $ | 199,259 | | | $ | 442,090 | |\n| | | | | | | | | | | | | |\n\n","source":"FMAO\/10-K\/0001193125-17-051316"} {"title":"ITEM\u00a07. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS","text":"The following table summarizes the Company\u0092s nonaccrual, past due 90 days or more and still accruing loans,\nand accruing troubled debt restructurings as of December\u00a031 for each of the last five years:","markdown_table":"\n\n| | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | Fixed | | | | Variable | | | | | | |\n| | | Rate | | | | Rate | | | | Total | | |\n| Consumer Real Estate | | $ | 78,607 | | | $ | 5,766 | | | $ | 84,373 | |\n| Agricultural Real Estate | | | 50,932 | | | | 11,548 | | | | 62,480 | |\n| Agricultural | | | 32,236 | | | | 916 | | | | 33,152 | |\n| Commercial Real Estate | | | 291,128 | | | | 78,717 | | | | 369,845 | |\n| Commercial and Industrial | | | 47,787 | | | | 11,712 | | | | 59,499 | |\n| Consumer | | | 27,299 | | | | \u0097 | | | | 27,299 | |\n| Industrial Development Bonds | | | 4,701 | | | | \u0097 | | | | 4,701 | |\n\n","source":"FMAO\/10-K\/0001193125-17-051316"} {"title":"ITEM\u00a07. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS","text":"Although loans may be classified as non-performing, some pay on a regular basis, and\nmany continue to pay interest irregularly or at less than original contractual rates. Interest income that would have been recorded under the original terms of these loans would have aggregated $116.1\u00a0thousand for 2016, $117.1 for 2015 and\n$52.3\u00a0thousand for 2014. Any collections of interest on nonaccrual loans are included in interest income when collected unless it is on an impaired loan with a specific allocation. A collection of interest on an impaired loan with a specific\nallocation is applied to the loan balance to decrease the allocation. Total interest collections, whether on an accrued or cash basis, amounted to $64\u00a0thousand for 2016, $96\u00a0thousand for 2015 and $87\u00a0thousand for 2014.\n$20.6\u00a0thousand of interest collected in 2015 was applied to reduce the specific allocation and was applied for the same reason in 2014. Loans are\nplaced on nonaccrual status in the event that the loan is in past due status for more than 90 days or payment in full of principal and interest is not expected. The Bank had nonaccrual loan balances of $1.4\u00a0million at December\u00a031, 2016\ncompared to balances of $2.0 and $1.7\u00a0million as of year-end 2015 and 2014. All of the balances of nonaccrual loans for the past three years were collaterally secured. As of December\u00a031, 2016 the Bank had $20.4\u00a0million of loans which it considers to be \u0093potential problem loans\u0094 in that the borrowers are\nexperiencing financial difficulties. At December\u00a031, 2015, the Bank had $7.0\u00a0million of these loans. The increase in 2016 relates to mainly two relationships. These loans are subject to constant management attention and are reviewed at\nleast monthly. The amount of the potential problem loans was considered in management\u0092s review of the loan loss reserve at December\u00a031, 2016 and 2015. In extending credit to families, businesses and governments, banks accept a measure of risk against which an allowance for possible loan loss is established\nby way of expense charges to earnings. This expense is determined by management based on a detailed monthly review of the risk factors affecting the loan portfolio, including general economic conditions, changes in the portfolio mix, past due\nloan-loss experience and the financial condition of the bank\u0092s borrowers. As of December\u00a031, 2016, the Bank had loans outstanding to\nindividuals and firms engaged in the various fields of agriculture in the amount of $84.6\u00a0million with an additional $63.4\u00a0million in agricultural real estate loans these compared to $82.7 and $58.5\u00a0million respectively as of\nDecember\u00a031, 2015. The ratio of this segment of loans to the total loan portfolio is not considered unusual for a bank engaged in and servicing rural communities. Interest rate modification to reflect a decrease in market interest rates or maintain a relationship with the debtor, where the debtor is not experiencing\nfinancial difficulty and can obtain funding from other sources, is not considered a troubled debt restructuring. As of December\u00a031, 2016, the Bank had $0.7\u00a0million of its loans that were classified as troubled debt restructurings, of which\n$138.3\u00a0thousand are included in non-accrual loans. This compares to $1.1\u00a0million as of same date 2015 and the Bank had almost $797.2\u00a0thousand classified as such as of December\u00a031, 2014.\nUpdated appraisals are required on all collateral dependent loans once they are deemed impaired. The Bank may also require an updated appraisal of a\nwatch list loan which the Bank monitors under their loan policy. On a quarterly basis, Bank management reviews properties supporting asset dependent loans to consider market events that may indicate a change in value has occurred. To determine observable market value, collateral asset values securing an impaired loan are periodically evaluated. Maximum time of re-evaluation is every 12 months for chattels and titled vehicles and every two years for real estate. In this process, third party evaluations are obtained and heavily relied upon. Until such time that updated\nappraisals are received, the Bank may discount the existing collateral value used. Performing \u0093non-watch list\u0094 loans secured in whole or in part\nby real estate, do not require an updated appraisal unless the loan is rewritten and additional funds advanced. Watch List loans secured in whole or in part by real estate require updated appraisals every two years. All loans are subject to loan to\nvalues as found in the Bank\u0092s loan policies irrespective of their grade. The Bank\u0092s watch list is reviewed on a quarterly basis by management and any questions to value are addressed at that time. The majority of the Bank\u0092s loans are made in the market by lenders who live and work in the market. Thus, their evaluation of the independent valuation\nis also valuable and serves as a double check. On extremely rare occasions, the Bank will make adjustments to the recorded values of collateral securing\ncommercial real estate loans without acquiring an updated appraisal for the subject property. The Bank has no formalized policy for determining when collateral value adjustments between regularly scheduled appraisals are necessary, nor does it use\nany specific methodology for applying such adjustments. However, on a quarterly basis as part of its normal operations, the Bank\u0092s senior management and the Loan Review Committee will meet to review all commercial credits either deemed to be\nimpaired or on the Bank\u0092s watch list. In addition to analyzing the recent performance of these loans, management and the Enterprise Risk Management Committee will also consider any general market conditions that might warrant adjustments to the\nvalue of particular real estate collateralizing commercial loans. In addition, management conducts annual reviews of all commercial loans exceeding certain outstanding balance thresholds. In each of these situations, any information available to\nmanagement regarding market conditions impacting a specific property or other relevant factors are considered, and lenders familiar with a particular commercial real estate loan and the underlying collateral may be present to provide their opinion\non such factors. If the available information leads management to conclude a valuation adjustment is warranted, such an adjustment may be applied on the basis of the information available. If management concludes that an adjustment is warranted but\nlacks the specific information needed to reasonably quantify the adjustment, management will order a new appraisal on the subject property even though one may not be required under the Bank\u0092s general policies for updating appraisal. Note 4 of the Consolidated Financial Statements may also be reviewed for additional tables dealing with the Bank\u0092s loans and ALLL. ALLL is evaluated based on an assessment of the losses inherent in the loan portfolio. This assessment results in an allowance consisting of two components,\nallocated and unallocated. Management considers several different risk assessments in determining ALLL. The allocated component of ALLL reflects expected\nlosses resulting from an analysis of individual loans, developed through specific credit allocations for individual loans and historical loss experience for each loan category. For those loans where the internal credit rating is at or below a\npredetermined classification and management can reasonably estimate the loss that will be sustained based upon collateral, the borrowers operating activity and economic conditions in which the borrower operates, a specific allocation is made. For\nthose borrowers that are not currently behind in their payment, but for which management believes, based on economic conditions and operating activities of the borrower, the possibility exists for future collection problems, a reserve is\nestablished. The amount of reserve allocated to each loan portfolio is based on past loss experiences and the different levels of risk within each loan portfolio. The historical loan loss portion is determined using a historical loss analysis by\nloan category. The unallocated portion of the reserve for loan losses is determined based on management\u0092s assessment of general economic conditions\nas well as specific economic factors in the Bank\u0092s marketing area. This assessment inherently involves a higher degree of uncertainty. It represents estimated inherent but undetected losses within the portfolio that are probable due to\nuncertainties in economic conditions, delays in obtaining information, including unfavorable information about a borrower\u0092s financial condition and other current risk factors that may not have yet manifested themselves in the Bank\u0092s\nhistorical loss factors used to determine the allocated component of the allowance. Actual charge-off of loan\nbalances is based upon periodic evaluations of the loan portfolio by management. These evaluations consider several factors, including, but not limited to, general economic conditions, financial condition of the borrower, and collateral. As presented in the table below, charge-offs decreased to $550\u00a0thousand for 2016, the lowest level of the five years presented. 75.6% of the charge-offs\nstemmed from the consumer related portfolios. Charge-offs were $1.0\u00a0million for 2015, preceded by $778\u00a0thousand for 2014, $1.3\u00a0million for 2013, and $891\u00a0thousand for 2012. Recoveries were also the lowest in 2016 at\n$156\u00a0thousand compared to $557, $298, $374 and $286\u00a0thousand for 2015, 2014, 2013 and 2012, respectively. The net charge-offs for the last five years were all under $1\u00a0million. 2016 was the lowest at $394\u00a0thousand. Higher provision expense was used to fund the ALLL for loan growth in 2014 and 2016. For 2012, 2013 and 2015, the\nprovision was used to replenish the balance decreased by the net charge-off activity. Overall, the ALLL increased from $5.2\u00a0million at yearend 2012 to $6.8\u00a0million at yearend 2016. After adding the\nallowance for unfunded loan commitments, the ACL ended 2016 just over $7\u00a0million. As the ratios on the bottom of the following table show, the trends for each have continually improved over the five years shown. Asset quality and the ACL are\nboth strong and emphasize the level of credit quality. In reviewing the bigger picture of the allowance for credit loss, the years with the higher\npercentage of ACL to total nonperforming loans ratio account for the lower level of nonaccrual and watch list loans. This demonstrates the extended time period with which it has taken to achieve resolution and\/or collection of these loans. In 2012,\nthe provision expense was to offset the higher year-end watch list values. A smaller portion of the allowance was needed to fund the impaired loans as collateral remained sufficient to cover the outstanding\namounts in most cases. 2014\u0092s significant and continued loan growth since fourth quarter 2013 was the reason behind 2014\u0092s higher balances as asset quality remained strong. The ratio of ACL to nonperforming loans increased significantly in\n2014 which is why provision loan expense was lower in 2015 in comparison. The ACL to nonperforming loans for 2015 remained more than adequate and emphasizes the existing strong level of credit quality. The following table presents a reconciliation of the allowance for credit losses for the years ended\nDecember\u00a031, 2016, 2015, 2014, 2013 and 2012:","markdown_table":"\n\n| | | | | | | | | | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | (In Thousands) | | | | | | | | | | | | | | | | | | |\n| | | 2016 | | | | 2015 | | | | 2014 | | | | 2013 | | | | 2012 | | |\n| Non-accrual loans | | $ | 1,384 | | | $ | 2,041 | | | $ | 1,705 | | | $ | 3,329 | | | $ | 4,828 | |\n| Accruing loans past due 90 days or more | | | \u0097 | | | | \u0097 | | | | \u0097 | | | | \u0097 | | | | 1 | |\n| Troubled Debt Restructurings, not included above | | | 559 | | | | 878 | | | | 471 | | | | 485 | | | | \u0097 | |\n| | | | | | | | | | | | | | | | | | | | | |\n| Total | | $ | 1,943 | | | $ | 2,919 | | | $ | 2,176 | | | $ | 3,814 | | | $ | 4,829 | |\n| | | | | | | | | | | | | | | | | | | | | |\n\n","source":"FMAO\/10-K\/0001193125-17-051316"} {"title":"ITEM\u00a07. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS","text":"*\nNonperforming loans are defined as all loans on nonaccrual, plus any loans past due 90 days not on nonaccrual. Allocation of ALLL per Loan Category in terms of dollars and percentage of loans in each category to total loans\nis as follows:","markdown_table":"\n\n| | | | | | | | | | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | (In Thousands) | | | | | | | | | | | | | | | | | | |\n| | | 2016 | | | | 2015 | | | | 2014 | | | | 2013 | | | | 2012 | | |\n| Loans | | $ | 760,149 | | | $ | 685,878 | | | $ | 621,926 | | | $ | 576,113 | | | $ | 501,402 | |\n| | | | | | | | | | | | | | | | | | | | | |\n| Daily average of outstanding loans | | $ | 724,076 | | | $ | 627,194 | | | $ | 581,483 | | | $ | 507,126 | | | $ | 492,697 | |\n| | | | | | | | | | | | | | | | | | | | | |\n| Allowance for Loan Losses-Jan 1 | | $ | 6,057 | | | $ | 5,905 | | | $ | 5,194 | | | $ | 5,224 | | | $ | 5,091 | |\n| Loans Charged off: | | | | | | | | | | | | | | | | | | | | |\n| Consumer Real Estate | | | 106 | | | | 38 | | | | 168 | | | | 147 | | | | 246 | |\n| Agricultural Real Estate | | | \u0097 | | | | \u0097 | | | | \u0097 | | | | \u0097 | | | | \u0097 | |\n| Agricultural | | | 21 | | | | \u0097 | | | | \u0097 | | | | \u0097 | | | | 6 | |\n| Commercial Real Estate | | | 93 | | | | 143 | | | | 229 | | | | 164 | | | | 98 | |\n| Commercial and Industrial | | | 20 | | | | 536 | | | | \u0097 | | | | 513 | | | | 47 | |\n| Consumer | | | 310 | | | | 313 | | | | 381 | | | | 438 | | | | 494 | |\n| | | | | | | | | | | | | | | | | | | | | |\n| | | $ | 550 | | | $ | 1,030 | | | $ | 778 | | | $ | 1,262 | | | $ | 891 | |\n| | | | | | | | | | | | | | | | | | | | | |\n| Loan Recoveries: | | | | | | | | | | | | | | | | | | | | |\n| Consumer Real Estate | | $ | 28 | | | $ | 41 | | | $ | 34 | | | $ | 20 | | | $ | 60 | |\n| Agricultural Real Estate | | | \u0097 | | | | \u0097 | | | | \u0097 | | | | \u0097 | | | | \u0097 | |\n| Agricultural | | | 10 | | | | 64 | | | | 44 | | | | 5 | | | | 12 | |\n| Commercial Real Estate | | | 20 | | | | 204 | | | | 4 | | | | 23 | | | | 7 | |\n| Commercial and Industrial | | | 11 | | | | 91 | | | | 20 | | | | 141 | | | | 30 | |\n| Consumer | | | 87 | | | | 157 | | | | 196 | | | | 185 | | | | 177 | |\n| | | | | | | | | | | | | | | | | | | | | |\n| | | $ | 156 | | | $ | 557 | | | $ | 298 | | | $ | 374 | | | $ | 286 | |\n| | | | | | | | | | | | | | | | | | | | | |\n| Net Charge Offs | | $ | 394 | | | $ | 473 | | | $ | 480 | | | $ | 888 | | | $ | 605 | |\n| Provision for loan loss | | | 1,121 | | | | 625 | | | | 1,191 | | | | 858 | | | | 738 | |\n| Acquisition provision for loan loss | | | \u0097 | | | | \u0097 | | | | \u0097 | | | | \u0097 | | | | \u0097 | |\n| Allowance for Loan\u00a0& Lease Losses - Dec 31 | | $ | 6,784 | | | $ | 6,057 | | | $ | 5,905 | | | $ | 5,194 | | | $ | 5,224 | |\n| Allowance for Unfunded Loan Commitments & Letters of Credit Dec 31 | | | 217 | | | | 208 | | | | 207 | | | | 163 | | | | 162 | |\n| | | | | | | | | | | | | | | | | | | | | |\n| Total Allowance for Credit Losses - Dec 31 | | $ | 7,001 | | | $ | 6,265 | | | $ | 6,112 | | | $ | 5,357 | | | $ | 5,386 | |\n| | | | | | | | | | | | | | | | | | | | | |\n| Ratio of net charge-offs to average Loans outstanding | | | 0.05 | % | | | 0.08 | % | | | 0.08 | % | | | 0.18 | % | | | 0.12 | % |\n| | | | | | | | | | | | | | | | | | | | | |\n| Ratio of the Allowance for Loan Loss to Nonperforming Loans | | | 490.39 | % | | | 293.75 | % | | | 346.30 | % | | | 156.03 | % | | | 108.20 | % |\n| | | | | | | | | | | | | | | | | | | | | |\n\n","source":"FMAO\/10-K\/0001193125-17-051316"} {"title":"ITEM\u00a07. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS","text":"Deposits The amount of\noutstanding time certificates of deposits and other time deposits in amounts of $100,000 or more by maturity as of December\u00a031, 2016 are as follows: \n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\u00a0\n\u00a0\u00a0\n(In Thousands)\n\u00a0\n\n\u00a0\n\u00a0\u00a0\n\u00a0\n\u00a0\n\u00a0\u00a0\nOver\u00a0Three\n\u00a0\n\u00a0\u00a0\nOver Six\n\u00a0\n\u00a0\u00a0\n\u00a0\n\u00a0\n\n\u00a0\n\u00a0\u00a0\n\u00a0\n\u00a0\n\u00a0\u00a0\nMonths\n\u00a0\n\u00a0\u00a0\nMonths\u00a0Less\n\u00a0\n\u00a0\u00a0\nOver\n\u00a0\n\n\u00a0\n\u00a0\u00a0\nUnder\n\u00a0\n\u00a0\u00a0\nLess than\n\u00a0\n\u00a0\u00a0\nThan One\n\u00a0\n\u00a0\u00a0\nOne\n\u00a0\n\n\u00a0\n\u00a0\u00a0\nThree\u00a0Months\n\u00a0\n\u00a0\u00a0\nSix\u00a0Months\n\u00a0\n\u00a0\u00a0\nYear\n\u00a0\n\u00a0\u00a0\nYear\n\u00a0\n\n Time Deposits\n\u00a0\u00a0\n$\n21,606\n\u00a0\u00a0\n\u00a0\u00a0\n$\n9,038\n\u00a0\u00a0\n\u00a0\u00a0\n$\n13,071\n\u00a0\u00a0\n\u00a0\u00a0\n$\n56,225\n\u00a0\u00a0\n\n\n\u00a0\u00a0\n \u00a0\n \u00a0\n\u00a0\n\u00a0\u00a0\n \u00a0\n \u00a0\n\u00a0\n\u00a0\u00a0\n \u00a0\n \u00a0\n\u00a0\n\u00a0\u00a0\n \u00a0\n \u00a0\n\u00a0\nThe following table presents the average amount of and average rate paid on each deposit category:","markdown_table":"\n\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | 2016 | | | | | | | | 2015 | | | | | | | | 2014 | | | | | | | | 2013 | | | | | | | | 2012 | | | | | | |\n| | | Amount | | | | | | | | Amount | | | | | | | | Amount | | | | | | | | Amount | | | | | | | | Amount | | | | | | |\n| | | (000\u0092s) | | | | % | | | | (000\u0092s) | | | | % | | | | (000\u0092s) | | | | % | | | | (000\u0092s) | | | | % | | | | (000\u0092s) | | | | % | | |\n| Balance at End of Period Applicable To: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Consumer Real Estate | | $ | 316 | | | | 11.43 | | | $ | 338 | | | | 12.82 | | | $ | 537 | | | | 15.69 | | | $ | 257 | | | | 16.05 | | | $ | 368 | | | | 16.01 | |\n| Agricultural Real Estate | | | 241 | | | | 8.33 | | | | 211 | | | | 8.52 | | | | 184 | | | | 8.18 | | | | 131 | | | | 7.69 | | | | 113 | | | | 8.01 | |\n| Agricultural | | | 616 | | | | 11.14 | | | | 582 | | | | 12.07 | | | | 547 | | | | 12.00 | | | | 326 | | | | 11.36 | | | | 290 | | | | 11.52 | |\n| Commercial Real Estate | | | 3,250 | | | | 49.59 | | | | 2,516 | | | | 46.98 | | | | 2,367 | | | | 43.43 | | | | 2,107 | | | | 43.19 | | | | 1,749 | | | | 39.89 | |\n| Commercial and Industrial | | | 1,318 | | | | 15.14 | | | | 1,229 | | | | 15.56 | | | | 1,421 | | | | 16.86 | | | | 1,359 | | | | 18.03 | | | | 2,183 | | | | 20.53 | |\n| Consumer | | | 394 | | | | 4.37 | | | | 337 | | | | 4.05 | | | | 323 | | | | 3.84 | | | | 292 | | | | 3.68 | | | | 268 | | | | 4.04 | |\n| Unallocated | | | 649 | | | | 0.00 | | | | 844 | | | | 0.00 | | | | 526 | | | | 0.00 | | | | 722 | | | | 0.00 | | | | 253 | | | | 0.00 | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Allowance for Loan\u00a0& Lease Losses | | $ | 6,784 | | | | 100.00 | | | $ | 6,057 | | | | 100.00 | | | $ | 5,905 | | | | 100.00 | | | $ | 5,194 | | | | 100.00 | | | $ | 5,224 | | | | 100.00 | |\n| Off Balance Sheet Commitments | | | 217 | | | | | | | | 208 | | | | | | | | 207 | | | | | | | | 163 | | | | | | | | 162 | | | | | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Total Allowance for Credit Losses | | $ | 7,001 | | | | | | | $ | 6,265 | | | | | | | $ | 6,112 | | | | | | | $ | 5,357 | | | | | | | $ | 5,386 | | | | | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n\n","source":"FMAO\/10-K\/0001193125-17-051316"} {"title":"ITEM\u00a07. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS","text":"Liquidity Liquidity remains adequate though down from prior years as the Bank has decreased the investment portfolio to fund loans. The Bank has access to\n$58\u00a0million of unsecured borrowings through correspondent banks and $71.9\u00a0million of unpledged securities which may be sold or used as collateral. The amount of unpledged securities increase almost $42.5\u00a0million as compared to 2015.\nThis was accomplished with utilizing Promontory\u0092s ICS product to protect Ohio public fund depositors and commercial sweep customers with FDIC coverage rather than pledged securities. For the Bank, an additional $4.7\u00a0million is also\navailable from the Federal Home Loan Bank based on current collateral pledging with up to $115.7\u00a0million available provided adequate collateral is pledged. Maintaining sufficient funds to meet depositor and borrower needs on a daily basis continues to be among management\u0092s top priorities. This is\naccomplished not only by immediate liquid resources of cash, due from banks and federal funds sold, but also by the Bank\u0092s available for sale securities portfolio. The average aggregate balance of these assets was $228.0 for 2016 and\n$262.1\u00a0million for 2015, and $296.5\u00a0million for 2014. This represented 22.3%, 28.0% and 31.8% of total average assets, respectively. Of the almost $201.2\u00a0million of debt securities in the bank\u0092s portfolio as of December\u00a031,\n2016, $16.7\u00a0million, or 8.3% of the portfolio, is expected to receive payments or mature in 2017. This liquidity provides the opportunity to fund loan growth by analysis of the lowest cost and source of funds whether by increasing deposits,\nsales or runoff of investments or utilizing debt. In addition to the Bank\u0092s investment portfolio, the Company has $17.3\u00a0million held in the\nholding company\u0092s investment portfolio. $2.6\u00a0million of those investments will mature or receive payments in the next twelve months. These funds provide liquidity to the Company. The Bank has been declaring additional dividends each\nquarter to provide this liquidity to the Company. In future years, the Captive will also upstream dividends to the Company once reserve levels are adequately provided for. This will also provide additional liquidity for Company activities. Historically, the primary source of liquidity has been core deposits that include noninterest bearing and interest bearing demand deposits, savings, money\nmarket accounts and time deposits of individuals. Core deposit balances as of year-end 2016 increased in all categories. Overall deposits increased an average of $39.7\u00a0million in 2016, $2.6\u00a0million\nin 2015 and $913\u00a0thousand in 2014. The Bank also utilized Federal Funds purchased at times during 2014 through 2016. The average balance for 2016 and 2015 was $1.9\u00a0million and $1.2\u00a0million respectively. The Bank used this temporary\nfunding source heavier in December 2015 while it secured more permanent funding. During 2016, it was used heavily in the third quarter. The Bank is comfortable accessing these funds on a regular basis. Historically, the primary use of new funds is placing the funds back into the community through loans for the acquisition of new homes, consumer products and\nfor business development. The use of new funds for loans is measured by the loan to deposit ratio. The Bank\u0092s average loan to deposit ratio was 87.9% for 2016, 80.7% for 2015 and 76.4% for 2014. The Bank\u0092s goal is for this ratio to be\nhigher in the 80-90\u00a0percent range with loan growth being the driver. The Bank ended the year 2016 at an 89.4% loan to deposit ratio. Short-term debt such as federal funds purchased and securities sold under agreement to repurchase also provides the Company with liquidity. Short-term debt\nfor both federal funds purchased and securities sold under agreement to repurchase amounted to $70.3 at December\u00a031, 2016, $78.8\u00a0million at the end of 2015 compared to $56.0\u00a0million at the end of 2014. These accounts are used to\nprovide a sweep product to the Bank\u0092s commercial customers. As ICS is implemented, the sweep balances will move into interest bearing deposits. \u0093Other borrowings\u0094 are also a source of funds. Other borrowings consist of loans from the Federal Home Loan Bank of Cincinnati. These funds are then\nused to provide loans in our community. The Bank utilized this funding source in December 2015 by borrowing $10\u00a0million. Prior borrowings from this source had decreased by $4.5\u00a0million to none at December\u00a031, 2014. This compares to\nconsistent borrowings during 2016 of $10\u00a0million. The decreased borrowings were payoffs of matured notes in 2013 and 2014. Asset\/Liability\nManagement The primary functions of asset\/liability management are to assure adequate liquidity and maintain an appropriate balance between interest\nearning assets and interest bearing liabilities. It involves the management of the balance sheet mix, maturities, re-pricing characteristics and pricing components to provide an adequate and stable net\ninterest margin with an acceptable level of risk. Interest rate sensitivity management seeks to avoid fluctuating net interest margins and to enhance consistent growth of net interest income through periods of changing interest rates. Changes in net income, other than those related to volume arise when interest rates on assets re-price in a time frame or interest rate environment that is different from that of the re-pricing period for liabilities. Changes in net interest income also arise from\nchanges in the mix of interest-earning assets and interest-bearing liabilities. Historically, the Bank has maintained liquidity through cash flows\ngenerated in the normal course of business, loan repayments, maturing earning assets, the acquisition of new deposits, and borrowings. The Bank\u0092s asset and liability management program is designed to maximize net interest income over the long\nterm while taking into consideration both credit and interest rate risk. Interest rate sensitivity varies with different types of interest-earning assets and interest-bearing liabilities. Overnight federal funds on which rates change daily and loans\nthat are tied to the market rate differ considerably from long-term investment securities and fixed rate loans. Similarly, time deposits over $100,000 and money market certificates are much more interest rate sensitive than passbook savings\naccounts. The Bank utilizes shock analysis to examine the amount of exposure an instant rate change of 100, 200, 300 and 400\u00a0basis points in both increasing and decreasing directions would have on the financials. Acceptable ranges of earnings\nand equity at risk are established and decisions are made to maintain those levels based on the shock results. Impact of Inflation and Changing Prices\nThe consolidated financial statements and notes thereto presented herein have been prepared in accordance with generally accepted accounting\nprinciples, which require the measurement of financial position and operating results in terms of historical dollars without considering the changes in the relative purchasing power of money over time due to inflation. The impact of inflation is\nreflected in the increased cost of the Company\u0092s operations. Unlike most industrial companies, nearly all the assets and liabilities of the Company are monetary in nature. As a result, interest rates have a greater impact on the Company\u0092s\nperformance than do the effects of general levels of inflation. Interest rates do not necessarily move in the same direction or to the same extent as the prices of goods and service. Contractual Obligations Contractual Obligations of the\nCompany totaled $263.2\u00a0million as of December\u00a031, 2016. Time deposits represent contractual agreements for certificates of deposits held by its customers. Long term debt represents the borrowings with the Federal Home Loan Bank and is\nfurther defined in Note 4 and 9 of the Consolidated Financial Statements.","markdown_table":"\n\n| | | | | | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | (In Thousands) | | | | | | | | | | | | | | |\n| | | Non-Interest | | | | Interest | | | | Savings | | | | Time | | |\n| | | DDAs | | | | DDAs | | | | Accounts | | | | Accounts | | |\n| December\u00a031, 2016: | | | | | | | | | | | | | | | | |\n| Average balance | | $ | 169,510 | | | $ | 207,057 | | | $ | 239,939 | | | $ | 194,753 | |\n| Average rate | | | 0.00 | % | | | 0.61 | % | | | 0.18 | % | | | 0.99 | % |\n| December\u00a031, 2015: | | | | | | | | | | | | | | | | |\n| Average balance | | $ | 162,028 | | | $ | 184,941 | | | $ | 227,328 | | | $ | 189,822 | |\n| Average rate | | | 0.00 | % | | | 0.62 | % | | | 0.18 | % | | | 0.90 | % |\n| December\u00a031, 2014: | | | | | | | | | | | | | | | | |\n| Average balance | | $ | 152,155 | | | $ | 178,285 | | | $ | 216,405 | | | $ | 214,680 | |\n| Average rate | | | 0.00 | % | | | 0.51 | % | | | 0.17 | % | | | 0.94 | % |\n\n","source":"FMAO\/10-K\/0001193125-17-051316"} {"title":"ITEM\u00a07. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS","text":"Capital Resources Stockholders\u0092 equity was $125.6\u00a0million as of December\u00a031, 2016 compared to $120.1\u00a0million at December\u00a031, 2015. Dividends declared\nduring 2016 were $0.91 per share totaling $4.2\u00a0million and dividends declared during 2015 were $0.87 per share totaling $3.99\u00a0million. Throughout 2016, the Company purchased 7,000 shares and awarded 16,150 shares of restricted stock awards\nto 74 employees. During 2015, the Company purchased 30,685 shares and awarded 16,000 shares of restricted stock to 67 employees. For a summary of activity as it relates to the Company\u0092s restricted stock awards, please refer to Note 11: Employee\nBenefit Plans in the consolidated financial statements. On December\u00a031, 2016 the Company held 579,125 shares in Treasury Stock and 43,150 unvested shares of restricted stock. At yearend 2015, the Company held 587,466 shares in Treasury stock\nand 38,995 unvested shares of restricted stock. On January\u00a020, 2017 the Company announced the authorization by its Board of Directors for the Company\u0092s repurchase, \neither on the open market, or in privately negotiated transactions, of up to 200,000 shares of its outstanding common stock commencing January\u00a020, 2017 and ending December\u00a031, 2017. The\nCompany has a history of approving a similar resolution to be in effect each year for at least the last five years. The Company continues to have a\nstrong capital base and maintains regulatory capital ratios that are above the defined regulatory capital ratios. At December\u00a031, 2016, the Bank and the Company had total risk-based capital ratios of 12.73% and 15.28%, respectively. Core\ncapital to risk-based asset ratios of 11.91% and 14.46% for the Bank and the Company, respectively, are well in excess of regulatory guidelines. The Bank\u0092s leverage ratio of 9.75% is also substantially in excess of regulatory guidelines, as is\nthe Company\u0092s at 11.77%. Under Basel III, the common equity Tier 1 Capital to risk-weighted assets ratios are also well above the required 4.50% and the 6.50% well capitalized levels with the Company at 14.46% and the Bank at 11.91%. For\nfurther discussion and analysis of regulatory capital requirements, refer to Note 15 of the Audited Financial Statements. The Company\u0092s subsidiaries\nare restricted by regulations from making dividend distributions in excess of certain prescribed amounts. Upon prior regulatory approval, the Bank may be allowed to pay above the prescribed amount.","markdown_table":"\n\n| | | | | | | | | | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | Payment Due by Period (In Thousands) | | | | | | | | | | | | | | | | | | |\n| | | | | | | Less\u00a0than | | | | 1-3 | | | | 3-5 | | | | More\u00a0than | | |\n| Contractual Obligations | | Total | | | | 1 year | | | | Years | | | | Years | | | | 5 years | | |\n| Securities sold under agreement to repurchase | | $ | 53,324 | | | $ | 32,814 | | | $ | 20,510 | | | $ | \u0097 | | | $ | \u0097 | |\n| Time Deposits | | | 198,830 | | | | 79,407 | | | | 72,563 | | | | 46,037 | | | | 823 | |\n| Dividends Payable | | | 1,053 | | | | 1,053 | | | | \u0097 | | | | \u0097 | | | | \u0097 | |\n| Long Term Debt | | | 10,000 | | | | \u0097 | | | | 10,000 | | | | \u0097 | | | | \u0097 | |\n| | | | | | | | | | | | | | | | | | | | | |\n| Total | | $ | 263,207 | | | $ | 113,274 | | | $ | 103,073 | | | $ | 46,037 | | | $ | 823 | |\n| | | | | | | | | | | | | | | | | | | | | |\n\n","source":"FMAO\/10-K\/0001193125-17-051316"} {"title":"ITEM\u00a07. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF\nOPERATIONS","text":"The following tables show changes in interest income, interest expense and net interest resulting from changes in\nvolume and rate variances for major categories of earnings assets and interest bearing liabilities.","markdown_table":"\n\n| | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | **2012** | | | | | | | | | | |\n| | | (In Thousands) | | | | | | | | | | |\n| | | AverageBalance | | | | Interest\/Dividends | | | | Yield\/Rate | | |\n| **ASSETS** | | | | | | | | | | | | |\n| | | | | | | | | | | | | |\n| **Interest Earning Assets:** | | | | | | | | | | | | |\n| Loans | | $ | 492,697 | | | $ | 26,489 | | | | 5.41 | % |\n| Taxable investment securities | | | 289,864 | | | | 4,802 | | | | 1.66 | % |\n| Tax-exempt investment securities | | | 65,330 | | | | 1,936 | | | | 4.49 | % |\n| Federal funds sold\u00a0& interest bearing deposits | | | 32,068 | | | | 46 | | | | 0.14 | % |\n| | | | | | | | | | | | | |\n| **Total Interest Earning Assets** | | | 879,959 | | | $ | 33,273 | | | | 3.92 | % |\n| | | | | | | | | | | | | |\n| | | | | | | | | | | | | |\n| **Non-Interest Earning Assets:** | | | | | | | | | | | | |\n| Cash and cash equivalents | | | 16,814 | | | | | | | | | |\n| Other assets | | | 39,342 | | | | | | | | | |\n| | | | | | | | | | | | | |\n| **Total Assets** | | $ | 936,115 | | | | | | | | | |\n| | | | | | | | | | | | | |\n| | | | | | | | | | | | | |\n| **LIABILITIES AND SHAREHOLDERS\u0092 EQUITY** | | | | | | | | | | | | |\n| | | | | | | | | | | | | |\n| **Interest Bearing Liabilities:** | | | | | | | | | | | | |\n| Savings deposits | | $ | 372,997 | | | $ | 1,982 | | | | 0.53 | % |\n| Other time deposits | | | 285,214 | | | | 3,592 | | | | 1.26 | % |\n| Other borrowed money | | | 15,333 | | | | 434 | | | | 2.83 | % |\n| Federal funds purchased and securities sold under agreement to repurchase | | | 54,776 | | | | 242 | | | | 0.44 | % |\n| | | | | | | | | | | | | |\n| **Total Interest Bearing Liabilities** | | | 728,320 | | | $ | 6,250 | | | | 0.86 | % |\n| | | | | | | | | | | | | |\n| | | | | | | | | | | | | |\n| **Non-Interest Bearing Liabilities:** | | | | | | | | | | | | |\n| Non-interest bearing demand deposits | | | 88,588 | | | | | | | | | |\n| Other | | | 11,458 | | | | | | | | | |\n| | | | | | | | | | | | | |\n| **Total Liabilities** | | | 828,366 | | | | | | | | | |\n| | | | | | | | | | | | | |\n| | | | | | | | | | | | | |\n| **Shareholders\u0092 Equity** | | | 107,749 | | | | | | | | | |\n| | | | | | | | | | | | | |\n| | | | | | | | | | | | | |\n| **Total Liabilities and Shareholders\u0092 Equity** | | $ | 936,115 | | | | | | | | | |\n| | | | | | | | | | | | | |\n| | | | | | | | | | | | | |\n| Interest\/Dividend income\/yield | | | | | | $ | 33,273 | | | | 3.92 | % |\n| Interest Expense \/ yield | | | | | | $ | 6,250 | | | | 0.86 | % |\n| | | | | | | | | | | | | |\n| Net Interest Spread | | | | | | $ | 27,023 | | | | 3.06 | % |\n| | | | | | | | | | | | | |\n| Net Interest Margin | | | | | | | | | | | 3.21 | % |\n| | | | | | | | | | | | | |\n\n","source":"FMAO\/10-K\/0001193125-15-061460"} {"title":"ITEM\u00a07. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF\nOPERATIONS","text":"As mentioned in the discussion earlier, in reviewing the 2014 to 2013, the change in volume is the main driver for the\nimproved ratio which is opposite of the change between 2013 to 2012 where an impact in change due to volume is evident; however the largest impact was due to rate. The strategy since 2010 is to extend the maturities of time deposit\n\u0093specials\u0094 to over 24 months to prepare for rising rates. The other strategy employed since 2011 was to increase core deposits by offering innovative products focused on customer needs, such as higher interest rates and fraud notification.\nIn exchange for these accounts, customers were asked to utilize services that benefited both the Bank and themselves. Smaller time deposit rate shoppers had an option to perhaps change their behavior of banking or allow those deposits to run off.\nThe new core deposit products were indeed embraced by our customers and have helped to attain the deposit portfolio mix sought by the Bank. Non-Interest Income The discussion now turns to the noninterest activity of 2014 operations, beginning with the revenue portion. In comparing line items of the consolidated\nstatement of income for years ended 2012 through 2014, it can be seen where the Company has been spending its time and the impact of the recession and slow recovery. This section will focus on the significant noninterest items that impacted the\noperations of the Company. The Company has concerns with the increased costs associated with regulatory compliance such as the possible loss of revenue\nfrom new regulations stemming from the Dodd-Frank Act. History has proven the concern is justified. One area of revenue impacted was overdraft fees. Updated Regulation E guidelines were implemented on August\u00a015, 2010 and the Bank has ended each\nyear since with a lower revenue stream. This has occurred in spite of the addition of the new offices since 2010. At year-end 2012 and 2013, the number of checking accounts again increased along with the balances; however average collected overdraft\nfees per account decreased as compared to 2011. In the last two years, 2013 and 2014, checking balances have increased while average revenue per account continued to decline. Overdraft fees in 2014 accounted for $2.5 million in noninterest income\nand $2.7 million for 2013. This represents 65.45% of the line item service charges and fees on the income statement which was down from 2013\u0092s percentage of 71.5%. The Bank has made this an area of focus for 2014 as this revenue stream remains\nunder intense regulator review. The decrease in the percentage is due to an increase in the service charge revenue on checking accounts with the new offerings and discontinuation of some checking products. Service charges on checking accounts,\nexcluding Health Savings Accounts, were up $208.7 thousand for 2014 as compared to 2013. The Bank has long promoted the use of debit cards by its\ncustomers and continued that philosophy with the introduction of additional new products. 2014 revenue improved $250.5 and $558.8 thousand from ATM\/debit\ncard usage as compared to 2013 and 2012, respectively. The Bank receives interchange revenue from each \u0093swipe\u0094 of the card. In 2011, this revenue stream was at risk of being reduced by the Federal Reserve regulation of the interchange fee.\nThe establishment of a tiered pricing for banks under $10 billion has helped to protect the profitability from such fees, although the concern remains as to how long this tiered pricing will remain in effect. While this revenue stream continues to\nimprove with more depositors using electronic methods for purchasing, the expense of fraud has offset a portion of the revenue gain. Further discussion can be found in the non-interest expense section regarding the net effect of debit card activity.\nOverall, noninterest income decreased for 2014 as compared to both 2013 and 2012. Unfortunately, this has become a trend mainly due to the duration of\nthe flat rate interest environment. In 2012, the largest positive impact on the income statement was derived from sales activity; including net gain on\nsale of loans and net gain on sale of securities. During 2012, the net gain on sale of loans, which is derived from sales of real estate loans into the secondary market, was the most significant factor for this category. The gain on residential real\nestate loans accounted for $1.3 million and $725 thousand was derived from gain on sales of agricultural real estate. Both of these programs are offered to our customers to enable them to have a fixed rate loan while the Bank limits its interest\nrate risk exposure. Of these loan types, the Bank sells 100% of the residential loans and 90% of the agricultural loans into the secondary market. 2013 or 2014 activity did not reach the same high levels as 2012. Gains of $452.7 and $194.3 thousand\nwere recorded for residential and agricultural real estate respectively for 2014 along with gains of $865 and $258 thousand were recorded for residential and agricultural real estate respectively for 2013. In conjunction with these sales, the Bank\nmaintains servicing rights and those income amounts during all three years are included in the customer service fees line item and account for over a $1 million in revenue each year. However, new sales in 2012 catapulted this income higher than 2013\nor 2014. The last line item in the noninterest income section as was discussed previously is the net gain on sale of investments. The Bank has taken\nadvantage of this opportunity the last three years and expects to continue as long as the rates remain low and the yield curve is favorable to the transaction. The Bank will not increase short-term gain at the sacrifice of long-term profitability.\nAll of the sales of securities in 2014 of $57.9 million were used to fund loan growth while only some of the $91 million in proceeds realized on the sale of securities in 2013 were used to fund loan growth. This is a source of funds that will\ncontinue to be analyzed for use in the coming year. Gains of $494 thousand were recorded for 2014 as compared to $775 and $852 thousand for 2013 and 2012 respectively. Overall, noninterest income decreased $654 thousand in 2014 following a year where it had decreased $758\nthousand. Some of the revenue may not be easily duplicated as it is dependent on economic and market conditions to provide the opportunity. However, the increased revenue amounts from deposit and loan services should continue to provide improved\nprofitability in the future. Gains on sales should also continue in the near term though when it will change is unknown at this time. Moving to the\nnoninterest expense side, overall, noninterest expense increased 4.2% in 2014 as compared to 2013 and 2012 which were basically equal at $24.2 million. The largest factor behind the higher 2014 level was the impact of employee salaries and wages on\nthe income statement. Employee wages increased $633.3 thousand in 2014 over 2013; they increased $513.4 thousand in 2013 compared to 2012. Three main components flow into salaries and wages: base salary, deferred costs, and incentives composed of\nthe expense of restricted stock awards and performance incentives. Base pay has increased with the addition of the three offices of Waterville, Custar and Sylvania and through normal yearly increases to the remainder of the employees. Base was up\n$474.1 thousand for 2014 over the previous year and 2013 was up $408.1 thousand over 2012. The full time equivalent number at each yearend of employees increased to 260 for 2014 compared to 2012\u0092s 248. Incentive pay as it related to performance was up $209.5 thousand in 2014 over 2013. Both measurements used to award incentive pay had improved in 2014 and\nemployees benefited accordingly. This followed a year in which the incentive performance pay was down $110.1 thousand from 2012. The Banks\u0092 performance was not up to the level of 2012, even though the number of employees receiving an incentive\nwas higher. (For further discussion in incentive pay, see note 11 of the consolidated financial statements.) While net loss on sale of other assets\nowned, mainly OREO property, does not represent income for the years presented, the decrease in the amount of the loss for 2014 and 2013, as compared to 2012, does contribute to improved profitability. The loss of $634 thousand for 2012 stems not\nonly from sales but also from write-downs in the carrying value of those properties still held on the Bank\u0092s balance sheet. The number of properties decreased and the carrying value declined in 2014 to $1.1 million and 2013 to $2.3 million from\n$3.6 million in 2012. The mortgage refinancing activity has declined over the last three years. A correlating expense to that activity is the\namortization of mortgage servicing rights. The amortization is the expense that offsets the income recognized when the loan is first made. Income is recorded when the mortgage loan is first sold with servicing retained and is therefore recognized\nwithin one year. The amortization, however, is calculated over the life of the loan and accelerated as loans are paid off early. An increase in this expense can be driven by two activities: an increase in the number of sold loans and\/or by the\nacceleration of the expense from payoff and refinance activity. The best picture of the bottom line impact is achieved by netting the income with the expense each year. 2014 had net expense of $42.7 thousand, 2013 had a net income of $2 thousand and\n2012 had net expense of $8 thousand. Of course, the value (or income) of the mortgage servicing right when sold also impacts the net position. While gain on sale of these loans was high in 2012, the net position was an expense indicating the\nactivity was mainly refinance. 2013 had new loan activity and lower refinance activity making the additions and amortization almost equal. The number of loans and balances also indicates this as the levels have remained fairly constant. 2014 was a\nyear with limited sales and the amortization expense was therefore higher than the capitalized additions. As of December\u00a031, 2014, there were 3,638 loans serviced with balances of $275.4 million. As of December 2013, there were 3,684 loans\nserviced with balances of $282.1 million. As of December 2012, there were 3,674 loans serviced with balances of $280.4 million. The impact of mortgage\nservicing rights to both noninterest income and expense is shown in the following table:","markdown_table":"\n\n| | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | 2014 vs 2013 | | | | | | | | | | |\n| | | (In Thousands) | | | | | | | | | | |\n| | | NetChange | | | | Due\u00a0to\u00a0change\u00a0inVolume | | | | Rate | | |\n| **Interest Earning Assets:** | | | | | | | | | | | | |\n| Loans | | $ | 3,092 | | | $ | 3,667 | | | $ | (575 | ) |\n| Taxable investment securities | | | (1,027 | ) | | | (1,577 | ) | | | 550 | |\n| Tax-exempt investment securities | | | (25 | ) | | | 50 | | | | (75 | ) |\n| Federal funds sold\u00a0& interest bearing deposits | | | (15 | ) | | | (20 | ) | | | 5 | |\n| | | | | | | | | | | | | |\n| **Total Interest Earning Assets** | | $ | 2,025 | | | $ | 2,120 | | | $ | (95 | ) |\n| | | | | | | | | | | | | |\n| | | | | | | | | | | | | |\n| **Interest Bearing Liabilities:** | | | | | | | | | | | | |\n| Savings deposits | | $ | (26 | ) | | $ | (20 | ) | | $ | (6 | ) |\n| Other time deposits | | | (709 | ) | | | (391 | ) | | | (318 | ) |\n| Other borrowed money | | | (159 | ) | | | (159 | ) | | | \u0097 | |\n| Federal funds purchased and securities sold under agreement to repurchase | | | 6 | | | | 30 | | | | (24 | ) |\n| | | | | | | | | | | | | |\n| | | | | | | | | | | | | |\n| **Total Interest Bearing Liabilities** | | $ | (888 | ) | | $ | (540 | ) | | $ | (348 | ) |\n| | | | | | | | | | | | | |\n| | | | | | | | | | | | | |\n| | | 2013 vs 2012 | | | | | | | | | | |\n| | | (In Thousands) | | | | | | | | | | |\n| | | NetChange | | | | Due\u00a0to\u00a0change\u00a0inVolume | | | | Rate | | |\n| **Interest Earning Assets:** | | | | | | | | | | | | |\n| Loans | | $ | (1,511 | ) | | $ | 781 | | | $ | (2,292 | ) |\n| Taxable investment securities | | | (205 | ) | | | (35 | ) | | | (170 | ) |\n| Tax-exempt investment securities | | | (117 | ) | | | (44 | ) | | | (73 | ) |\n| Federal funds sold\u00a0& interest bearing deposits | | | (12 | ) | | | (14 | ) | | | 2 | |\n| | | | | | | | | | | | | |\n| **Total Interest Earning Assets** | | $ | (1,845 | ) | | $ | 688 | | | $ | (2,533 | ) |\n| | | | | | | | | | | | | |\n| | | | | | | | | | | | | |\n| **Interest Bearing Liabilities:** | | | | | | | | | | | | |\n| Savings deposits | | $ | (507 | ) | | $ | 144 | | | $ | (651 | ) |\n| Other time deposits | | | (874 | ) | | | (434 | ) | | | (440 | ) |\n| Other borrowed money | | | (271 | ) | | | (245 | ) | | | (26 | ) |\n| Federal funds purchased and securities sold under agreement to repurchase | | | 6 | | | | 6 | | | | \u0097 | |\n| | | | | | | | | | | | | |\n| | | | | | | | | | | | | |\n| **Total Interest Bearing Liabilities** | | $ | (1,646 | ) | | $ | (529 | ) | | $ | (1,117 | ) |\n| | | | | | | | | | | | | |\n\n","source":"FMAO\/10-K\/0001193125-15-061460"} {"title":"ITEM\u00a07. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF\nOPERATIONS","text":"Occupancy expense decreased by $144 thousand in 2014 as compared to 2013 and by $168 thousand in 2013 as compared to 2012.\nAlthough real estate taxes and building depreciation were higher on our office locations, these were offset by the increased rental income from the Bank\u0092s investment services. $97.7 thousand more was collected in 2014 as compared to 2013 and\n2013 collected $217 thousand more than 2012. Data processing expense increased $38 thousand during 2014 and by $93 thousand in 2013. The Company continues to\ninvestigate ways to reduce this expense. The pricing on many services, however, is based on number of accounts and the Bank fully expects those to increase with the growth from the newer additions of the Waterville, Custar and Sylvania offices and\noverall Bank growth. The FDIC assessment decreased in 2012 as new regulation changed the method of calculation in the summer of 2011. 2012 represented\nthe first full year under the new method. As can be seen, the change to calculations based on asset size rather than deposits has been very beneficial to F&M. 2013 was higher than 2012 as the Bank grew in size by $19.3 million over 2012 and was\nlower in 2014 by $32 thousand as the Bank decreased in size by $24.7 million. The last line item in the noninterest expense is \u0093other general and\nadministrative\u0094. While it is higher by $461 thousand in 2014 following a smaller increase of $449 thousand in 2013 over 2012\u0092s $5.1 million, the fluctuation is not isolated to a single source. The primary factors impacting this fluctuation\nin 2014 and 2013 are increases in both ATM expense and core deposit intangible expenses. The increased expense of $52.7 and $376.3 thousand relating to ATM and debit cards in 2014 and 2013 respectively, over the previous year is caused by many\nfactors. First, 2012 was lower due to incentive credits received by the Bank for switching providers and these credits were depleted early in 2013. Increased usage during both years corresponds to increases in both revenue and cost. Finally, fraud\nincreases cost as new cards have to be issued to limit the risk exposure. The fraud losses themselves are not recognized in this breakout, however the cost of replacement cards is. The Bank is not currently deploying chip technology within its\ncards; however the Bank is aware the adoption of embedded chips will increase this expense in the coming years. 2014 experienced additional expense over 2013 in consulting ($161.7 thousand), audit and accounting fees ($166.5 thousand) and\nadvertising ($101.3 thousand). The first two line items increased related to the new deposit products offered and the establishment of an affiliate\nsubsidiary by the Company. To establish the new subsidiary, actuarial studies and consulting services were utilized to determine the feasibility and benefit thereof. By establishing at yearend, the Company has enabled 2015 to fully capture the\nbenefits with limited additional cost. The affiliate is a Captive insurance company insuring the Company and the Bank in addition to their coverage before the formation. The Captive has provided additional coverage that was not available from our\ncurrent carriers or was cost prohibitive. The Captive also provides a tax benefit to the Company with its formation in Nevada. The increase in advertising expense is warranted with the Bank\u0092s increased marketing area. Provision for loan losses is the last non-interest line item to discuss. The provision expense increased $333 thousand for 2014. The increase was needed to\noffset account for the loan growth and the net charge-off activity of 2014. Sustained strong asset quality kept the provision expense lower than the growth alone would have warranted. The provision expense for 2013 was higher than for 2012 by $120\nthousand. Net charge-offs of $480 and $888 thousand for 2014 and 2013, respectively, were in the middle of the $605 thousand recorded for 2012. Commercial and Industrial loans had the largest charge-off activity in 2013, while 2014 and 2012 were\nimpacted with higher levels in the consumer portfolios. Further analysis by loan type is presented in the discussion of the allowance for credit losses. Allowance for Credit Losses The Company segregates its\nAllowance for Credit Losses (ACL) into two reserves: The ACL and the Allowance for Unfunded Loan Commitments and Letters of Credit (AULC). When combined, these reserves constitute the total ACL. The AUCL is included in other liabilities on the\nconsolidated balance sheets. The Bank\u0092s ALLL methodology captures trends in leading, current, and lagging indicators which will directly affect the\nBank\u0092s allocation amount. The Bank monitors trends in such leading indicators as delinquency, unemployment changes in the Bank\u0092s service area, experience and ability of staff, regulatory trends, and credit concentrations. A current\nindicator such as the total watch list loan amount to Capital, and a lagging indicator such as the charge off amount are referenced as well. A matrix formed by loan type from these indicators is used in making ALLL adjustments. Special mention loan balances increased 21.2% or $1.7 million overall as of yearend 2014 compared to same date 2013. The increase is in the commercial and\ncommercial real estate portfolios. The largest increase of $2.1 million was in the commercial real estate caused mainly by one large relationship being downgraded. Agricultural real estate showed a decrease of $618 thousand offsetting the above\nincrease. Special Mention loan balances decreased 40.6% or $5.4 million as of December\u00a031, 2013 as compared to\nDecember\u00a031, 2012. The balances decreased due to pay offs received and improved performance of the companies, thereby resulting in an upgrade out of special mention. This improvement was preceded by an increase of 26.5% or $2.8 million from\n2011 to 2012. For 2014, the increase in special mention is offset by significant decreases in the substandard classifications of those same commercial related portfolios. Overall, substandard and doubtful loans decreased 42.5% or $2.9 million as\ncompared to yearend 2013. A similar level of improvement is evident in substandard and doubtful loans during the same time frames for a year ago. 2013 had a decrease of 71.1%, or $2.5 million, compared to 2012. In response to these fluctuations and\nloan growth during 2014, the Bank changed ALLL to outstanding loan coverage percentage to .95% as of December\u00a031, 2014 from .90% as of December\u00a031, 2013 and 1.04% as of December\u00a031, 2012. The above indicators are reviewed quarterly. Some of the indicators are quantifiable and, as such, will automatically adjust the ALLL once calculated. These\nindicators include the ratio of past due loans to total loans, loans past due greater than 30 days, and watch list loans to capital ratios, with the watch list made up of loans graded 5, 6 or 7 on a scale of 1 (best) to 7 (worst). Other indicators\nuse more subjective data to the extent possible to evaluate the potential for inherent losses in the Bank\u0092s loan portfolio. For example, the economic indicator uses the unemployment statistics from the communities in our market area to help\ndetermine whether the ALLL should be adjusted. At the end of each of 2012, 2013 and 2014, a slight improvement was noted in unemployment figures and several local firms were calling a small number of employees back from layoff while planning some\nexpansion. All aggregate commercial and agricultural credits including real estate loans of $250,000 and over are reviewed annually by both credit\ncommittees and internal loan review to look for early signs of deterioration. To establish the specific reserve allocation for real estate, a discount to\nthe market value is established to account for liquidation expenses. The discounting percentage used for real estate mirrors the discounting of real estate as provided for in the Bank\u0092s Loan Policy. However, unique or unusual circumstances may\nbe present which will affect the real estate value and, when appropriately identified, can adjust the discounting percentage at the discretion of management. The ACL increased $755 thousand during 2014, which was preceded by a $29 thousand decrease during 2013. The large increase in 2014 directly correlates to the\nlarge increase in loan balances. With the improved asset quality, the percentage of ACL to the total loan portfolio actually decreased from 1.07% as of December\u00a031, 2012 to .93% as of December\u00a031, 2013 and .95% as of December\u00a031,\n2014.\u00a0December\u00a031, 2013 had the lowest loans past due 30+ day percentage at .25% in the Bank\u0092s known history, December\u00a031, 2014 was still at a respectable low of .37%. Please see Note 4 in the consolidated financial statement for additional tables regarding the composition of the ACL. Federal Income Taxes Effective tax rates were 28.64%,\n28.53% and 28.51% for 2014, 2013 and 2012 respectively. The effect of tax-exempt interest from holding tax-exempt securities and Industrial Development Bonds (IDBs) was $649, $640, and $677 thousand for 2014, 2013, and 2012, respectively. All years\nincluded an increase into a higher tax bracket for income over $10 million. Material Changes in Financial Condition The shifts in the balance sheet during 2014 have positioned the Company for continued improvement in profitability. On the asset side, the Company experiences\nan increase in asset yield due to loan growth with funding provided by a decrease in the investment portfolio. The cost of funds was impacted by the shift of interest bearing liabilities to noninterest and the decrease in time deposits and other\nborrowed money. Both contributed to improved profitability in 2014 and expected liabilities improvement in future years. Average earning assets increased\n$1.5 million during 2013 over 2012. The main cause of fluctuation was the opening of the Waterville office in 2013 and the repositioning of the balance sheet. The Custar acquisition had minimal effect on the average balance of earning assets, given\nthat it took place in December 2013. The $29 million of deposits from the Custar acquisition impacted 2014. Average interest bearing liabilities decreased $16.5 thousand over 2012. The decrease in balances was due to the runoff of time deposits and\npayoff of debt from FHLB. Savings deposits increased nicely in 2013 due to the success of the KASASA suite of products and Health Savings Accounts. Securities The investment portfolio is primarily used to provide overall liquidity for the Bank. It is also used to provide required collateral for pledging to the\nBank\u0092s Ohio public depositors for amounts on deposit in excess of the FDIC coverage limits. It may also be used to pledge for additional borrowings from third parties. Investments are made with the above criteria in mind while still seeking a\nfair market rate of return, and looking for maturities that fall within the projected overall strategy of the Bank. The possible need to fund growth is also a consideration. All of the Bank\u0092s security portfolio is categorized as available for sale and as such is recorded at market value. Security balances as of December\u00a031 are summarized below:","markdown_table":"\n\n| | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | (In Thousands) | | | | | | | | | | |\n| | | 2014 | | | | 2013 | | | | 2012 | | |\n| Beginning Year | | $ | 2,066 | | | $ | 2,063 | | | $ | 2,071 | |\n| Capitalized Additions | | | 301 | | | | 429 | | | | 761 | |\n| Amortization | | | (344 | ) | | | (426 | ) | | | (769 | ) |\n| Valuation Allowance | | | \u0097 | | | | \u0097 | | | | \u0097 | |\n| | | | | | | | | | | | | |\n| End of Year | | $ | 2,023 | | | $ | 2,066 | | | $ | 2,063 | |\n| | | | | | | | | | | | | |\n\n","source":"FMAO\/10-K\/0001193125-15-061460"} {"title":"ITEM\u00a07. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF\nOPERATIONS","text":"The following table sets forth the maturities of investment securities as of December\u00a031, 2014 and the weighted average\nyields of such securities calculated on the basis of cost and effective yields weighted for the scheduled maturity of each security. Tax-equivalent adjustments, using a thirty-four percent rate, have been made in yields on obligations of state and\npolitical subdivisions. Stocks of domestic corporations have not been included. [Remainder of this page intentionally left blank.]","markdown_table":"\n\n| | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | (In Thousands) | | | | | | | | | | |\n| | | 2014 | | | | 2013 | | | | 2012 | | |\n| U.S. Treasury | | $ | 25,393 | | | $ | 25,272 | | | $ | 10,568 | |\n| U.S. Government agency | | | 119,234 | | | | 172,972 | | | | 220,200 | |\n| Mortgage-backed securities | | | 29,562 | | | | 44,792 | | | | 53,006 | |\n| State and local governments | | | 74,303 | | | | 81,473 | | | | 72,131 | |\n| | | | | | | | | | | | | |\n| | | $ | 248,492 | | | $ | 324,509 | | | $ | 355,905 | |\n| | | | | | | | | | | | | |\n\n","source":"FMAO\/10-K\/0001193125-15-061460"} {"title":"ITEM\u00a07. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF\nOPERATIONS","text":"As of December\u00a031, 2013 the Bank did not hold a large block of any one investment security, except for U.S. Government\nagencies. The Bank also holds stock in the Federal Home Loan Bank of Cincinnati at a cost of $3.7 million. This is required in order to obtain Federal Home Loan Bank loans. The Bank also acquired stock in the Federal Home Loan Bank of Indianapolis\nat a cost of $231.4 thousand through its acquisition of Knisely Bank. There were no borrowings at the time of acquisition associated with Federal Home Loan Bank of Indianapolis. The Bank had requested Federal Home Loan Bank of Indianapolis to buy\nback its stock when the acquisition of Knisely was completed in January 2008. A five year waiting period was imposed and the stock was ultimately redeemed in full during 2013. An early redemption of 42,000 shares occurred in 2010 with another 41,000\nshares redeemed in 2011. These decreased the aggregate holdings to a value of $148.4 thousand which was redeemed in 2013. The Bank also owns stock of Farmer Mac with a carrying value of $37.4 thousand which is required to participate loans in the\nprogram. Loan Portfolio The Bank\u0092s various\nloan portfolios are subject to varying levels of credit risk. Management mitigates these risks through portfolio diversification and through standardization of lending policies and procedures. Risks are mitigated through an adherence to the Bank\u0092s loan policies, with any exception being recorded and approved by senior management or committees\ncomprised of senior management. The Bank\u0092s loan policies define parameters to essential underwriting guidelines such as loan-to-value ratio, cash flow and debt-to-income ratio, loan requirements and covenants, financial information tracking,\ncollection practice and others. The maximum loan amount to any one borrower is limited by the Bank\u0092s legal lending limits and is stated in policy. On a broader basis, the Bank restricts total aggregate funding in comparison to Bank capital to\nany one business or agricultural sector by an approved sector percentage to capital limitation. The following table shows the Bank\u0092s loan portfolio by category of loan as of December\u00a031st of each year, including loans held for sale:","markdown_table":"\n\n| | | | | | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | Maturities(Amounts in Thousands) | | | | | | | | | | | | | | |\n| | | | | | | | | | | After One Year | | | | | | |\n| | | Within\u00a0One\u00a0Year | | | | | | | | Within\u00a0Five\u00a0Years | | | | | | |\n| | | Amount | | | | Yield | | | | Amount | | | | Yield | | |\n| U.S. Treasury | | $ | \u0097 | | | | \u0097 | | | $ | 20,174 | | | | 0.89 | % |\n| U.S. Government agency | | | 16,571 | | | | 2.40 | % | | | 92,163 | | | | 1.32 | % |\n| Mortgage-backed securities | | | \u0097 | | | | \u0097 | | | | \u0097 | | | | \u0097 | |\n| State and local governments | | | 5,922 | | | | 1.85 | % | | | 38,352 | | | | 2.38 | % |\n| Taxable state and local governments | | | 1,012 | | | | 3.00 | % | | | 6,092 | | | | 1.78 | % |\n| | | | | | | | | | | | | | | | | |\n| | | After Five Years | | | | | | | | | | | | | | |\n| | | Within Ten Years | | | | | | | | After Ten Years | | | | | | |\n| | | Amount | | | | Yield | | | | Amount | | | | Yield | | |\n| U.S. Treasury | | $ | 5,218 | | | | 1.28 | % | | $ | \u0097 | | | | \u0097 | |\n| U.S. Government agency | | | 10,501 | | | | 1.58 | % | | | \u0097 | | | | \u0097 | |\n| Mortgage-backed securities | | | 12,250 | | | | 2.69 | % | | | 17,312 | | | | 2.33 | % |\n| State and local governments | | | 14,754 | | | | 3.11 | % | | | 5,881 | | | | 2.29 | % |\n| Taxable state and local governments | | | 997 | | | | 2.60 | % | | | 1,293 | | | | 5.57 | % |\n\n","source":"FMAO\/10-K\/0001193125-15-061460"} {"title":"ITEM\u00a07. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF\nOPERATIONS","text":"The following table shows the maturity of loans as of December\u00a031, 2014:","markdown_table":"\n\n| | | | | | | | | | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | (In Thousands) | | | | | | | | | | | | | | | | | | |\n| Loans: | | 2014 | | | | 2013 | | | | 2012 | | | | 2011 | | | | 2010 | | |\n| Commercial real estate | | $ | 270,188 | | | $ | 248,893 | | | $ | 199,999 | | | $ | 198,266 | | | $ | 194,268 | |\n| Agricultural real estate | | | 50,895 | | | | 44,301 | | | | 40,143 | | | | 31,993 | | | | 33,650 | |\n| Consumer real estate | | | 97,550 | | | | 92,438 | | | | 80,287 | | | | 84,477 | | | | 86,036 | |\n| Commercial and industrial | | | 100,126 | | | | 99,498 | | | | 101,624 | | | | 114,497 | | | | 117,344 | |\n| Agricultural | | | 74,611 | | | | 65,449 | | | | 57,770 | | | | 52,598 | | | | 65,400 | |\n| Consumer | | | 24,277 | | | | 21,406 | | | | 20,413 | | | | 23,375 | | | | 29,008 | |\n| Industrial Development Bonds | | | 4,698 | | | | 4,358 | | | | 1,299 | | | | 1,196 | | | | 1,965 | |\n| | | | | | | | | | | | | | | | | | | | | |\n| | | $ | 622,345 | | | $ | 576,343 | | | $ | 501,535 | | | $ | 506,402 | | | $ | 527,671 | |\n| | | | | | | | | | | | | | | | | | | | | |\n\n","source":"FMAO\/10-K\/0001193125-15-061460"} {"title":"ITEM\u00a07. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF\nOPERATIONS","text":"The following table presents the total of loans due after one year which has either 1) predetermined interest rates (fixed) or\n2) floating or adjustable interest rates (variable):","markdown_table":"\n\n| | | | | | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | (In Thousands) | | | | | | | | | | | | | | |\n| | | WithinOne\u00a0Year | | | | After\u00a0OneYear\u00a0WithinFive\u00a0Years | | | | AfterFive\u00a0Years | | | | Total | | |\n| Commercial Real Estate | | $ | 27,291 | | | $ | 92,076 | | | $ | 150,821 | | | $ | 270,188 | |\n| Agricultural Real Estate | | | 3,546 | | | | 14,289 | | | | 33,060 | | | | 50,895 | |\n| Consumer Real Estate | | | 11,118 | | | | 19,377 | | | | 67,055 | | | | 97,550 | |\n| Commercial and industrial | | | 58,741 | | | | 36,159 | | | | 5,226 | | | | 100,126 | |\n| Agricultural | | | 47,831 | | | | 22,826 | | | | 3,954 | | | | 74,611 | |\n| Consumer | | | 5,652 | | | | 14,265 | | | | 4,360 | | | | 24,277 | |\n| Industrial Development Bonds | | | 2,499 | | | | 126 | | | | 2,073 | | | | 4,698 | |\n| | | | | | | | | | | | | | | | | |\n| | | $ | 156,678 | | | $ | 199,118 | | | $ | 266,549 | | | $ | 622,345 | |\n| | | | | | | | | | | | | | | | | |\n\n","source":"FMAO\/10-K\/0001193125-15-061460"} {"title":"ITEM\u00a07. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF\nOPERATIONS","text":"The following table summarizes the Company\u0092s nonaccrual and past due 90 days or more and still accruing loans as of\nDecember\u00a031 for each of the last five years:","markdown_table":"\n\n| | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | (In Thousands) | | | | | | | | | | |\n| | | FixedRate | | | | VariableRate | | | | Total | | |\n| Commercial Real Estate | | $ | 181,908 | | | $ | 60,989 | | | $ | 242,897 | |\n| Agricultural Real Estate | | | 35,306 | | | | 12,043 | | | | 47,349 | |\n| Consumer Real Estate | | | 75,894 | | | | 10,538 | | | | 86,432 | |\n| Commercial and industrial loans | | | 39,617 | | | | 1,768 | | | | 41,385 | |\n| Agricultural | | | 25,842 | | | | 938 | | | | 26,780 | |\n| Consumer, Master Card and Overdrafts | | | 18,625 | | | | \u0097 | | | | 18,625 | |\n| Industrial Development Bonds | | | 2,199 | | | | \u0097 | | | | 2,199 | |\n\n","source":"FMAO\/10-K\/0001193125-15-061460"} {"title":"ITEM\u00a07. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF\nOPERATIONS","text":"Although loans may be classified as non-performing, some pay on a regular basis, and many continue to pay\ninterest irregularly or at less than original contractual rates. Interest income that would have been recorded under the original terms of these loans would have aggregated $52.3 thousand for 2014, $139.1 thousand for 2013 and $544.8 thousand for\n2012. Any collections of interest on nonaccrual loans are included in interest income when collected unless it is on an impaired loan with a specific allocation. A collection of interest on an impaired loan with a specific allocation is applied to\nthe loan balance to decrease the allocation. Total interest collections, whether on an accrued or cash basis, amounted to $87 thousand for 2014, $60 thousand for 2013 and $26 thousand for 2012. None of the interest collected in 2012 was applied to\nreduce a specific allocation. $12.8 thousand dollars of interest collected in 2014 was applied to reduce the specific allocation. Loans are placed on\nnonaccrual status in the event that the loan is in past due status for more than 90 days or payment in full of principal and interest is not expected. The loss of interest due to the high balances in nonaccruals as of 2012 impacted the yield on\nloans. The Bank had nonaccrual loan balances of $4.8 million at December\u00a021, 2012 compared to balances of $3.3 and $1.7 million as of year-end 2013 and 2014, respectively. All of the balances of nonaccrual loans for the past three years were\ncollaterally secured. As of December\u00a031, 2014 the Bank had $13.5 million of loans which it considers to be \u0093potential problem loans\u0094 in\nthat the borrowers are experiencing financial difficulties. At December\u00a031, 2013, the Bank had $14.8 million of these loans. These loans are subject to constant management attention and are reviewed at least monthly. The amount of the potential\nproblem loans was considered in management\u0092s review of the loan loss reserve at December\u00a031, 2014 and 2013. In extending credit to families,\nbusinesses and governments, banks accept a measure of risk against which an allowance for possible loan loss is established by way of expense charges to earnings. This expense is determined by management based on a detailed monthly review of the\nrisk factors affecting the loan portfolio, including general economic conditions, changes in the portfolio mix, past due loan-loss experience and the financial condition of the bank\u0092s borrowers. As of December\u00a031, 2014, the Bank had loans outstanding to individuals and firms engaged in the various fields of agriculture in the amount of $74.6\nmillion with an additional $50.1 million in agricultural real estate loans these compared to $65.4 and $44.3 million respectively as of December\u00a031, 2013. The ratio of this segment of loans to the total loan portfolio is not considered unusual\nfor a bank engaged in and servicing rural communities. Loan modifications granted are typically for seasonality issues where cash flow has decreased. The\ntime period involved is generally quite short in relation to the loan term. For example, a typical modification may consist of interest only payments for 90 days. We consider this treatment of interest only payments for a short time as an\ninsignificant delay in payment. Consequently, we do not consider these occurrences as \u0093troubled debt restructurings\u0094. Interest rate modification to reflect a decrease in market interest rates or maintain a relationship with the debtor,\nwhere the debtor is not experiencing financial difficulty and can obtain funding from other sources, is not considered a troubled debt restructuring. As of December\u00a031, 2014, the Bank had $797.2 thousand of its loans that were classified as\ntroubled debt restructurings. This compares to $911.2 thousand as of same date 2013 and the Bank had almost $5.5 million classified as such as of December\u00a031, 2012. The Bank is occasionally ordered by the courts to give terms to a borrower that\nare better than what the Bank would like for the risk associated with that credit but not below or beyond rates and terms available for better credits in our market. Therefore, the Bank has not done any modifications that it would classify as\n\u0093troubled debt restructurings\u0094 under those circumstances. Updated appraisals are required on all collateral dependent loans once they are\ndeemed impaired. The Bank may also require an updated appraisal of a watch list loan which the Bank monitors under their loan policy. On a quarterly basis, Bank management reviews properties supporting asset dependent loans to consider market events\nthat may indicate a change in value has occurred. To determine observable market price, collateral asset values securing an impaired loan are\nperiodically evaluated. Maximum time of re-evaluation is every 12 months for chattels and titled vehicles and every two years for real estate. In this process, third party evaluations are obtained and heavily relied upon. Until such time that\nupdated appraisals are received, the Bank may discount the existing collateral value used. Performing \u0093non-watch list\u0094 loans secured in whole\nor in part by real estate, do not require an updated appraisal unless the loan is rewritten and additional funds advanced. Watch List loans secured in whole or in part by real \nestate require updated appraisals every two years. All loans are subject to loan to values as found in the Bank\u0092s loan policies irrespective of their grade. The Bank\u0092s watch list is\nreviewed on a quarterly basis by management and any questions to value are addressed at that time. The majority of the Bank\u0092s loans are made in the\nmarket by lenders who live and work in the market. Thus, their evaluation of the independent valuation is also valuable and serves as a double check. On\nextremely rare occasions, the Bank will make adjustments to the recorded values of collateral securing commercial real estate loans without acquiring an updated appraisal for the subject property. The Bank has no formalized policy for determining\nwhen collateral value adjustments between regularly scheduled appraisals are necessary, nor does it use any specific methodology for applying such adjustments. However, on a quarterly basis as part of its normal operations, the Bank\u0092s senior\nmanagement and the Loan Review Committee will meet to review all commercial credits either deemed to be impaired or on the Bank\u0092s watch list. In addition to analyzing the recent performance of these loans, management and the Loan Review\nCommittee will also consider any general market conditions that might warrant adjustments to the value of particular real estate collateralizing commercial loans. In addition, management conducts annual reviews of all commercial loans exceeding\ncertain outstanding balance thresholds. In each of these situations, any information available to management regarding market conditions impacting a specific property or other relevant factors is considered, and lenders familiar with a particular\ncommercial real estate loan and the underlying collateral may be present to provide their opinion on such factors. If the available information leads management to conclude a valuation adjustment is warranted, such an adjustment may be applied on\nthe basis of the information available. If management concludes that an adjustment is warranted but lacks the specific information needed to reasonably quantify the adjustment, management will order a new appraisal on the subject property even\nthough one may not be required under the Bank\u0092s general policies for updating appraisal. Note 4 of the Consolidated Financial Statements may also be\nreviewed for additional tables dealing with the Bank\u0092s loans and ALLL. ALLL is evaluated based on an assessment of the losses inherent in the loan\nportfolio. This assessment results in an allowance consisting of two components, allocated and unallocated. Management considers several different risk\nassessments in determining ALLL. The allocated component of ALLL reflects expected losses resulting from an analysis of individual loans, developed through specific credit allocations for individual loans and historical loss experience for each loan\ncategory. For those loans where the internal credit rating is at or below a predetermined classification and management can reasonably estimate the loss that will be sustained based upon collateral, the borrowers operating activity and economic\nconditions in which the borrower operates, a specific allocation is made. For those borrowers that are not currently behind in their payment, but for which management believes, based on economic conditions and operating activities of the borrower,\nthe possibility exists for future collection problems, a reserve is established. The amount of reserve allocated to each loan portfolio is based on past loss experiences and the different levels of risk within each loan portfolio. The historical\nloan loss portion is determined using a historical loss analysis by loan category. The unallocated portion of the reserve for loan losses is determined\nbased on management\u0092s assessment of general economic conditions as well as specific economic factors in the Bank\u0092s marketing area. This assessment inherently involves a higher degree of uncertainty. It represents estimated inherent but\nundetected losses within the portfolio that are probable due to uncertainties in economic conditions, delays in obtaining information, including unfavorable information about a borrower\u0092s financial condition and other current risk factors that\nmay not have yet manifested themselves in the Bank\u0092s historical loss factors used to determine the allocated component of the allowance. Actual\ncharge-off of loan balances is based upon periodic evaluations of the loan portfolio by management. These evaluations consider several factors, including, but not limited to, general economic conditions, financial condition of the borrower, and\ncollateral. As presented below, charge-offs decreased to $778 thousand for 2014 and increased to $1.3 million for 2013 and decreased to $891 thousand for\n2012 and $2.7 million for 2011. The provision expense also decreased in 2012 and 2011 and increased for 2013 and 2014. 2014 and 2013 had provision expense of $1.2 million and $858 thousand respectively. 2012 had provision expense of $738 thousand\nwith 2011 having provision expense of $1.7 million. The Commercial and Industrial portfolio had the largest net charge-off position in 2011 through 2014. Consumer real estate and consumer\u00a0& other loans were the loan categories which had the\nlargest net charge-off position in 2012. The ratio of \nnet charge offs to average loans outstanding is evidence of the recognition of troubled loans and the write down of collateral values in 2011. The improvement in asset quality during the periods\nshown is reflected in the increased percentage of the allowance for loan loss to nonperforming loans. The years with the higher percentage of ACL to\ntotal loans ratio account for the higher level of nonaccrual and watch list loans, which demonstrates the extended time period with which it has taken to achieve resolution and\/or collection of these loans. The ALLL for 2010 and 2011 decreased due\nto the improvement in the asset quality as the balances in impaired loans and nonaccruals were drastically reduced over the same time periods. In 2012, the increase in provision expense was to offset the higher year-end watch list values.\n2013\u0092s lower balance again recognizes the improvement in asset quality. The monetary decrease is minimal. However, the decrease as a percentage of loans is wider as compared to 2012 due to loan growth during 2013. A smaller portion of the\nallowance was needed to fund the impaired loans as collateral remained sufficient to cover the outstanding amounts in most cases. 2014\u0092s significant and continued loan growth since fourth quarter 2013 was the reason behind 2014\u0092s higher\nbalances as asset quality remained strong. [Remainder of this page intentionally left blank.] The following table presents a reconciliation of the allowance for credit losses for the years ended\nDecember\u00a031, 2014, 2013, 2012, 2011 and 2010:","markdown_table":"\n\n| | | | | | | | | | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | (In Thousands) | | | | | | | | | | | | | | | | | | |\n| | | 2014 | | | | 2013 | | | | 2012 | | | | 2011 | | | | 2010 | | |\n| Non-accrual loans | | $ | 1,705 | | | $ | 3,329 | | | $ | 4,828 | | | $ | 2,131 | | | $ | 5,844 | |\n| Accruing loans past due 90 days or more | | | \u0097 | | | | \u0097 | | | | 1 | | | | \u0097 | | | | 48 | |\n| | | | | | | | | | | | | | | | | | | | | |\n| Total | | $ | 1,705 | | | $ | 3,329 | | | $ | 4,829 | | | $ | 2,131 | | | $ | 5,892 | |\n| | | | | | | | | | | | | | | | | | | | | |\n\n","source":"FMAO\/10-K\/0001193125-15-061460"} {"title":"ITEM\u00a07. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF\nOPERATIONS","text":"*\nNonperforming loans are defined as all loans on nonaccrual, plus any loans past due 90 days not on nonaccrual. Allocation of ALLL per Loan Category in terms of dollars and percentage of loans in each category to total loans\nis as follows:","markdown_table":"\n\n| | | | | | | | | | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | (In Thousands) | | | | | | | | | | | | | | | | | | |\n| | | 2014 | | | | 2013 | | | | 2012 | | | | 2011 | | | | 2010 | | |\n| Loans | | $ | 621,926 | | | $ | 576,113 | | | $ | 501,402 | | | $ | 506,215 | | | $ | 527,589 | |\n| | | | | | | | | | | | | | | | | | | | | |\n| Daily average of outstanding loans | | $ | 592,162 | | | $ | 507,126 | | | $ | 492,697 | | | $ | 504,058 | | | $ | 550,698 | |\n| | | | | | | | | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | | | | | | | |\n| Allowance for Loan Losses - Jan 1 | | $ | 5,194 | | | $ | 5,224 | | | $ | 5,091 | | | $ | 5,706 | | | $ | 6,008 | |\n| Loans Charged off: | | | | | | | | | | | | | | | | | | | | |\n| Commercial Real Estate | | | 229 | | | | 164 | | | | 98 | | | | 360 | | | | 1,147 | |\n| Ag Real Estate | | | \u0097 | | | | \u0097 | | | | \u0097 | | | | \u0097 | | | | \u0097 | |\n| Consumer Real Estate | | | 168 | | | | 147 | | | | 246 | | | | 423 | | | | 507 | |\n| Commercial and Industrial | | | \u0097 | | | | 513 | | | | 47 | | | | 1,500 | | | | 4,188 | |\n| Agricultural | | | \u0097 | | | | \u0097 | | | | 6 | | | | 24 | | | | 136 | |\n| Consumer\u00a0& other loans | | | 381 | | | | 438 | | | | 494 | | | | 374 | | | | 444 | |\n| | | | | | | | | | | | | | | | | | | | | |\n| | | $ | 778 | | | $ | 1,262 | | | $ | 891 | | | $ | 2,681 | | | $ | 6,422 | |\n| | | | | | | | | | | | | | | | | | | | | |\n| Loan Recoveries: | | | | | | | | | | | | | | | | | | | | |\n| Commercial Real Estate | | $ | 4 | | | $ | 23 | | | $ | 7 | | | $ | 32 | | | $ | 52 | |\n| Ag Real Estate | | | \u0097 | | | | \u0097 | | | | \u0097 | | | | \u0097 | | | | \u0097 | |\n| Consumer Real Estate | | | 34 | | | | 20 | | | | 60 | | | | 61 | | | | 55 | |\n| Commercial and Industrial | | | 20 | | | | 141 | | | | 30 | | | | 19 | | | | 515 | |\n| Agricultural | | | 44 | | | | 5 | | | | 12 | | | | 67 | | | | 17 | |\n| Consumer\u00a0& other loans | | | 196 | | | | 185 | | | | 177 | | | | 172 | | | | 156 | |\n| | | | | | | | | | | | | | | | | | | | | |\n| | | $ | 298 | | | $ | 374 | | | $ | 286 | | | $ | 351 | | | $ | 795 | |\n| | | | | | | | | | | | | | | | | | | | | |\n| Net Charge Offs | | $ | 480 | | | $ | 888 | | | $ | 605 | | | $ | 2,330 | | | $ | 5,627 | |\n| Provision for loan loss | | | 1,191 | | | | 858 | | | | 738 | | | | 1,715 | | | | 5,325 | |\n| Acquisition provision for loan loss | | | \u0097 | | | | \u0097 | | | | \u0097 | | | | \u0097 | | | | \u0097 | |\n| Allowance for Loan\u00a0& Lease Losses - Dec 31 | | $ | 5,905 | | | $ | 5,194 | | | $ | 5,224 | | | $ | 5,091 | | | $ | 5,706 | |\n| Allowance for Unfunded Loan Commitments & Letters of Credit Dec\u00a031 | | | 207 | | | | 163 | | | | 162 | | | | 130 | | | | 153 | |\n| | | | | | | | | | | | | | | | | | | | | |\n| Total Allowance for Credit Losses - Dec 31 | | $ | 6,112 | | | $ | 5,357 | | | $ | 5,386 | | | $ | 5,221 | | | $ | 5,859 | |\n| | | | | | | | | | | | | | | | | | | | | |\n| Ratio of net charge-offs to average Loans outstanding | | | 0.08 | % | | | 0.18 | % | | | 0.12 | % | | | 0.46 | % | | | 1.02 | % |\n| | | | | | | | | | | | | | | | | | | | | |\n| Ratio of the Allowance for Loan Loss to Nonperforming Loans | | | 346.30 | % | | | 156.03 | % | | | 108.20 | % | | | 238.90 | % | | | 97.63 | % |\n| | | | | | | | | | | | | | | | | | | | | |\n\n","source":"FMAO\/10-K\/0001193125-15-061460"} {"title":"ITEM\u00a07. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF\nOPERATIONS","text":"Deposits The amount of\noutstanding time certificates of deposits and other time deposits in amounts of $100,000 or more by maturity as of December\u00a031, 2014 are as follows: \n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\u00a0\n\u00a0\u00a0\n(In Thousands)\n\u00a0\n\n\u00a0\n\u00a0\u00a0\nUnderThree\u00a0Months\n\u00a0\n\u00a0\u00a0\nOver\u00a0ThreeMonthsLess\u00a0thanSix\u00a0Months\n\u00a0\n\u00a0\u00a0\nOver\u00a0SixMonths\u00a0LessThan\u00a0OneYear\n\u00a0\n\u00a0\u00a0\nOverOneYear\n\u00a0\n\n Time Deposits\n\u00a0\u00a0\n$\n9,536\n\u00a0\u00a0\n\u00a0\u00a0\n$\n14,218\n\u00a0\u00a0\n\u00a0\u00a0\n$\n16,858\n\u00a0\u00a0\n\u00a0\u00a0\n$\n40,985\n\u00a0\u00a0\n\n\n\u00a0\u00a0\n \u00a0\n \u00a0\n\u00a0\n\u00a0\u00a0\n \u00a0\n \u00a0\n\u00a0\n\u00a0\u00a0\n \u00a0\n \u00a0\n\u00a0\n\u00a0\u00a0\n \u00a0\n \u00a0\n\u00a0\nThe following table presents the average amount of and average rate paid on each deposit category:","markdown_table":"\n\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | 2014 | | | | | | | | 2013 | | | | | | | | 2012 | | | | | | | | 2011 | | | | | | | | 2010 | | | | | | |\n| | | Amount | | | | | | | | Amount | | | | | | | | Amount | | | | | | | | Amount | | | | | | | | Amount | | | | | | |\n| | | (000\u0092s) | | | | % | | | | (000\u0092s) | | | | % | | | | (000\u0092s) | | | | % | | | | (000\u0092s) | | | | % | | | | (000\u0092s) | | | | % | | |\n| Balance at End of Period Applicable To: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Commercial Real Estate | | $ | 2,367 | | | | 43.43 | | | $ | 2,107 | | | | 43.19 | | | $ | 1,749 | | | | 39.89 | | | $ | 2,087 | | | | 39.74 | | | $ | 1,868 | | | | 36.82 | |\n| Ag Real Estate | | | 184 | | | | 8.18 | | | | 131 | | | | 7.69 | | | | 113 | | | | 8.01 | | | | 140 | | | | 6.32 | | | | 122 | | | | 6.38 | |\n| Consumer Real Estate | | | 537 | | | | 15.69 | | | | 257 | | | | 16.05 | | | | 368 | | | | 16.01 | | | | 260 | | | | 16.12 | | | | 258 | | | | 16.31 | |\n| Commercial and Industrial | | | 1,421 | | | | 16.10 | | | | 1,359 | | | | 17.27 | | | | 2,183 | | | | 20.27 | | | | 1,948 | | | | 22.62 | | | | 2,354 | | | | 22.24 | |\n| Agricultural | | | 547 | | | | 12.00 | | | | 326 | | | | 11.36 | | | | 290 | | | | 11.52 | | | | 267 | | | | 10.38 | | | | 327 | | | | 12.40 | |\n| Consumer, Overdrafts and other loans | | | 323 | | | | 3.84 | | | | 292 | | | | 3.68 | | | | 268 | | | | 4.04 | | | | 315 | | | | 4.58 | | | | 380 | | | | 5.48 | |\n| Unallocated | | | 526 | | | | 0.76 | | | | 722 | | | | 0.76 | | | | 253 | | | | 0.26 | | | | 74 | | | | 0.24 | | | | 397 | | | | 0.37 | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Allowance for Loan\u00a0& Lease Losses | | $ | 5,905 | | | | 100.00 | | | $ | 5,194 | | | | 100.00 | | | $ | 5,224 | | | | 100.00 | | | $ | 5,091 | | | | 100.00 | | | $ | 5,706 | | | | 100.00 | |\n| Off Balance Sheet Commitments | | | 207 | | | | | | | | 163 | | | | | | | | 162 | | | | | | | | 130 | | | | | | | $ | 153 | | | | | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Total Allowance for Credit Losses | | $ | 6,112 | | | | | | | $ | 5,357 | | | | | | | $ | 5,386 | | | | | | | $ | 5,221 | | | | | | | $ | 5,859 | | | | | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n\n","source":"FMAO\/10-K\/0001193125-15-061460"} {"title":"ITEM\u00a07. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF\nOPERATIONS","text":"Liquidity Liquidity remains high though down from prior years as the Bank has decreased the investment portfolio to fund loans. The Bank has access to $58 million of\nunsecured borrowings through correspondent banks and $71.6 million of unpledged securities which may be sold or used as collateral. An additional $15.0 million is also available from the Federal Home Loan Bank based on current collateral pledging\nwith up to $112.6 million available provided adequate collateral is pledged. Maintaining sufficient funds to meet depositor and borrower needs on a daily\nbasis continues to be among management\u0092s top priorities. This is accomplished not only by immediate liquid resources of cash, due from banks and federal funds sold, but also by the Bank\u0092s available for sale securities portfolio. The\naverage aggregate balance of these assets was $296.5 for 2014 and $387.7 million for 2013, and $397.3 million for 2012. This represented 31.8 percent and 42.5 percent of total average assets, respectively. Of the almost $248.5 million of debt\nsecurities in the company\u0092s portfolio as of December\u00a031, 2014, $23.5 million, or 9.5 percent of the portfolio, is expected to receive payments or mature in 2015. The availability of the funds may be reduced by the need to utilize\nsecurities for pledging purposes on public deposits. This liquidity provides the opportunity to fund loan growth by analysis of the lowest cost and source of funds whether by increasing deposits, sales or runoff of investments or utilizing debt.\nHistorically, the primary source of liquidity has been core deposits that include noninterest bearing and interest bearing demand deposits, savings,\nmoney market accounts and time deposits of individuals. Core deposit balances as of year-end 2014 increased in all categories with the exception of time deposits. Overall deposits increased an average of $913 thousand in 2014, $4.7 million during\n2013 and $20.7 million in average deposits in 2012. The Bank also utilized Federal Funds purchased at times during 2012 through 2014. The average balance for 2014 and 2013 was $1.4 million and $785.5 thousand respectively, which was mainly for\nverification of borrowing procedures should the need arise and while awaiting the influx of deposits from the Custar acquisition. Historically, the\nprimary use of new funds is placing the funds back into the community through loans for the acquisition of new homes, consumer products and for business development. The use of new funds for loans is measured by the loan to deposit ratio. The\nBank\u0092s average loan to deposit ratio was 76.4 percent for 2014, 66.2 percent for 2013 and 65 percent for 2012. The lower ratios in 2013 and 2012 were due to the success of the deposit gathering function, the residential mortgage loans being\nsold in the secondary market and the lack of loan demand. The Bank\u0092s goal is for this ratio to be higher in the 80-90 percent range with loan growth being the driver. Short-term debt such as federal funds purchased and securities sold under agreement to repurchase also provides the Company with liquidity. Short-term debt\nfor both federal funds purchased and securities sold under agreement to repurchase amounted to $56.0 million at the end of 2014 compared to $69.8 million at the end of 2013 and to $51.3 million at the end of 2012. These accounts are used to provide\na sweep product to the Bank\u0092s commercial customers. Though no federal funds were purchased at year end, the Bank does have arrangements with correspondent Banks that can be utilized when necessary. \u0093Other borrowings\u0094 are also a source of funds. Other borrowings consist of loans from the Federal Home Loan Bank of Cincinnati. These funds are then\nused to provide fixed rate mortgage loans secured by homes in our community. Borrowings from this source decreased by $4.5 million to none at December\u00a031, 2014. This compares to decreased borrowings during 2013 of $7.1 million and decreased\nborrowings during 2012 of $5.1 million to $11.6 million to end at December\u00a031, 2012. The decreased borrowings were payoffs of matured notes in 2013 and 2014. Sufficient funds were available to fund growth so new advances were not needed. Asset\/Liability Management The primary functions of\nasset\/liability management are to assure adequate liquidity and maintain an appropriate balance between interest earning assets and interest bearing liabilities. It involves the management of the balance sheet mix, maturities, re-pricing\ncharacteristics and pricing components to provide an adequate and stable net interest margin with an acceptable level of risk. Interest rate sensitivity management seeks to avoid fluctuating net interest margins and to enhance consistent growth of\nnet interest income through periods of changing interest rates. Changes in net income, other than those related to volume arise when interest rates on\nassets re-price in a time frame or interest rate environment that is different from that of the re-pricing period for liabilities. Changes in net interest income also arise from changes in the mix of interest-earning assets and interest-bearing\nliabilities. Historically, the Bank has maintained liquidity through cash flows generated in the normal course of business,\nloan repayments, maturing earning assets, the acquisition of new deposits, and borrowings. The Bank\u0092s asset and liability management program is designed to maximize net interest income over the long term while taking into consideration both\ncredit and interest rate risk. Interest rate sensitivity varies with different types of interest-earning assets and interest-bearing liabilities. Overnight federal funds on which rates change daily and loans that are tied to the market rate differ\nconsiderably from long-term investment securities and fixed rate loans. Similarly, time deposits over $100,000 and money market certificates are much more interest rate sensitive than passbook savings accounts. The Bank utilizes shock analysis to\nexamine the amount of exposure an instant rate change of 100, 200, 300 and 400 basis points in both increasing and decreasing directions would have on the financials. Acceptable ranges of earnings and equity at risk are established and decisions are\nmade to maintain those levels based on the shock results. Impact of Inflation and Changing Prices The consolidated financial statements and notes thereto presented herein have been prepared in accordance with generally accepted accounting principles, which\nrequire the measurement of financial position and operating results in terms of historical dollars without considering the changes in the relative purchasing power of money over time due to inflation. The impact of inflation is reflected in the\nincreased cost of the Company\u0092s operations. Unlike most industrial companies, nearly all the assets and liabilities of the Company are monetary in nature. As a result, interest rates have a greater impact on the Company\u0092s performance than\ndo the effects of general levels of inflation. Interest rates do not necessarily move in the same direction or to the same extent as the prices of goods and service. Contractual Obligations Contractual Obligations of the\nCompany totaled $252.4 million as of December\u00a031, 2014. Time deposits represent contractual agreements for certificates of deposits held by its customers. Long term debt represents the borrowings with the Federal Home Loan Bank and is further\ndefined in Note 4 and 9 of the Consolidated Financial Statements.","markdown_table":"\n\n| | | | | | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | (In Thousands) | | | | | | | | | | | | | | |\n| | | Non-Interest | | | | Interest | | | | Savings | | | | Time | | |\n| | | DDAs | | | | DDAs | | | | Accounts | | | | Accounts | | |\n| December\u00a031, 2014: | | | | | | | | | | | | | | | | |\n| Average balance | | $ | 151,752 | | | $ | 207,103 | | | $ | 216,405 | | | $ | 214,680 | |\n| Average rate | | | 0.00 | % | | | 0.51 | % | | | 0.17 | % | | | 0.92 | % |\n| | | | | | | | | | | | | | | | | |\n| December 31, 2013: | | | | | | | | | | | | | | | | |\n| Average balance | | $ | 104,024 | | | $ | 202,914 | | | $ | 197,157 | | | $ | 250,737 | |\n| Average rate | | | 0.00 | % | | | 0.53 | % | | | 0.19 | % | | | 1.06 | % |\n| | | | | | | | | | | | | | | | | |\n| December\u00a031, 2012: | | | | | | | | | | | | | | | | |\n| Average balance | | $ | 84,217 | | | $ | 190,273 | | | $ | 182,724 | | | $ | 285,214 | |\n| Average rate | | | 0.00 | % | | | 0.70 | % | | | 0.33 | % | | | 1.24 | % |\n\n","source":"FMAO\/10-K\/0001193125-15-061460"} {"title":"ITEM\u00a07. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF\nOPERATIONS","text":"Capital Resources Stockholders\u0092 equity was $114.5 million as of December\u00a031, 2014 compared to $108.6 million at December\u00a031, 2013. Dividends declared during 2014\nwere $.84 per share totaling $3.86 million and during 2013 were $0.81 per share totaling $3.75 million. During 2014, the Company purchased 23,570 shares and awarded 13,250 restricted shared to 61 employees. During 2013, the Company purchased 56,000\nshares and awarded 11,000 restricted shares to 53 employees. For a summary of activity as it relates to the Company\u0092s restricted stock awards, please refer to Note 11: Employee Benefit Plans in the consolidated financial statements. At yearend\n2014, the Company held 572,772 shares in Treasury stock and 33,390 unvested shares of restricted stock. At year-end 2013, the Company held 561,562 shares in Treasury stock and 31,890 unvested shares of restricted stock. On January\u00a016, 2015 the\nCompany announced the authorization by its Board of Directors for the Company\u0092s repurchase, either on the open market, or in privately negotiated transactions, of up to 200,000 shares of its outstanding common stock commencing January\u00a016,\n2015 and ending December\u00a031, 2015. The decrease in the equity balance of 2013 as compared to 2012 was due to the market value fluctuation of our\navailable for sale investment portfolio. The Company continues to have a strong capital base and maintains regulatory capital ratios that are above the\ndefined regulatory capital ratios. At December\u00a031, 2014, the Bank and the Company had total risk-based capital ratios of 14.35% and 16.68%, respectively. Core capital to risk-based asset ratios of 13.46% and 15.79% for the Bank and the Company,\nrespectively, are well in excess of regulatory guidelines. The Bank\u0092s leverage ratio of 10.01% is also substantially in excess of regulatory guidelines, as is the Company\u0092s at 11.70%. For further discussion and analysis of regulatory\ncapital requirements, refer to Note 15 of the Audited Financial Statements. The Company\u0092s subsidiaries are restricted by regulations from making\ndividend distributions in excess of certain prescribed amounts. Upon prior regulatory approval, the Bank may be allowed to pay above the prescribed amount.","markdown_table":"\n\n| | | | | | | | | | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | Payment Due by Period (In Thousands) | | | | | | | | | | | | | | | | | | |\n| Contractual Obligations | | Total | | | | Less\u00a0than1\u00a0year | | | | 1-3Years | | | | 3-5Years | | | | More\u00a0than5\u00a0years | | |\n| | | | | | | | | | | | | | | | | | | | | |\n| Securities sold under agreement to repurchase | | $ | 55,962 | | | $ | 55,962 | | | $ | \u0097 | | | $ | \u0097 | | | $ | \u0097 | |\n| | | | | | | | | | | | | | | | | | | | | |\n| Time Deposits | | | 195,500 | | | | 97,439 | | | | 69,220 | | | | 27,917 | | | | 924 | |\n| | | | | | | | | | | | | | | | | | | | | |\n| Dividends Payable | | | 965 | | | | 965 | | | | \u0097 | | | | \u0097 | | | | \u0097 | |\n| | | | | | | | | | | | | | | | | | | | | |\n| Long Term Debt | | | \u0097 | | | | \u0097 | | | | \u0097 | | | | \u0097 | | | | \u0097 | |\n| | | | | | | | | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | | | | | | | |\n| Total | | $ | 252,427 | | | $ | 154,366 | | | $ | 69,220 | | | $ | 27,917 | | | $ | 924 | |\n| | | | | | | | | | | | | | | | | | | | | |\n\n","source":"FMAO\/10-K\/0001193125-15-061460"} {"title":"ITEM 7. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS","text":"Salaries and wages increased $172 thousand in 2010 over 2009. Three main components flow into\nsalaries and wages: base salary, deferred costs from loans and incentive pay. Base salaries\ndecreased during 2010 even with the addition of the Hicksville office by $338 thousand. The\ndeferred costs component actually decreased by $318 thousand which in effect increases salary\nexpense and incentive pay increased $192 thousand. (For further discussion on incentive pay, see\nnote 11 of the consolidated financial statements). During the first part of 2009, some of the\nBank\u0092s lending officers were also very busy in auto loan financing. This activity was spurred by\ngovernment and auto manufacturer incentives along with large banks exiting the market in the first\nhalf of the year. The consumer loan portfolio grew by 26%, or almost $6\u00a0million. This increased\nactivity offset the increased salary expense as deferred costs from these loans are recorded as a\ndeduction to the salary expense when the loans are made. While salaries and wages decreased in\n2009","markdown_table":"\n\n\n| | | | | | | | | | | | | |\n| | | **December 31** | | | | **December 31** | | | | **December 31** | | |\n| | | **2010** | | | | **2009** | | | | **2008** | | |\n| | | | | **(In thousands)** | | | | | | | | |\n\n| | | | | | | | | | | | | |\n| Capitalized Additions (Noninterest income) | | $ | 685 | | | $ | 1,158 | | | $ | 447 | |\n| | | | | | | | | | | | | |\n| Amortizations (Noninterest expense) | | | (684 | ) | | | (933 | ) | | | (370 | ) |\n| | | | | | | | | | | | | |\n| | | | | | | | | | | | | |\n| Net Noninterest income | | $ | 1 | | | $ | 225 | | | $ | 77 | |\n| | | | | | | | | | | | | |\n\n\n","source":"FMAO\/10-K\/0000950123-11-020919"} {"title":"ITEM 7. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS","text":"The following tables show changes in interest income, interest expense and net interest\nresulting from changes in volume and rate variances for major categories of earnings assets and\ninterest bearing liabilities.","markdown_table":"\n\n\n| | | | | | | | | | | | | |\n| | | **2008** | | | | | | | | | | |\n| | | **(In Thousands)** | | | | | | |\n| | | **Average** | | | | **Interest\/** | | | | | | |\n| | | **Balance** | | | | **Dividends** | | | | **Yield\/Rate** | | |\n\n| **ASSETS** | | | | | | | | | | | | |\n| | | | | | | | | | | | | |\n| **Interest Earning Assets:** | | | | | | | | | | | | |\n| Loans (1) | | $ | 544,310 | | | $ | 34,994 | | | | 6.46 | % |\n| Taxable investment securities | | | 146,877 | | | | 6,963 | | | | 4.74 | % |\n| Tax-exempt investment securities | | | 42,361 | | | | 1,594 | | | | 5.70 | % |\n| Federal funds sold & interest bearing deposits | | | 9,423 | | | | 273 | | | | 2.90 | % |\n| | | | | | | | | | | | | |\n| **Total Interest Earning Assets** | | | 742,971 | | | $ | 43,824 | | | | 6.03 | % |\n| | | | | | | | | | | | | |\n| | | | | | | | | | | | | |\n| **Non-Interest Earning Assets:** | | | | | | | | | | | | |\n| Cash and cash equivalents | | | 19,399 | | | | | | | | | |\n| Other assets | | | 35,317 | | | | | | | | | |\n| | | | | | | | | | | | | |\n| **Total Assets** | | $ | 797,687 | | | | | | | | | |\n| | | | | | | | | | | | | |\n| | | | | | | | | | | | | |\n| **LIABILITIES AND SHAREHOLDERS\u0092 EQUITY** | | | | | | | | | | | | |\n| | | | | | | | | | | | | |\n| **Interest Bearing Liabilities:** | | | | | | | | | | | | |\n| Savings deposits | | $ | 240,880 | | | $ | 2,760 | | | | 1.15 | % |\n| Other time deposits | | | 314,005 | | | | 12,467 | | | | 3.97 | % |\n| Other borrowed money | | | 38,110 | | | | 1,747 | | | | 4.58 | % |\n| Federal funds purchased and securities sold under agreement to repurchase | | | 49,014 | | | | 1,127 | | | | 2.30 | % |\n| | | | | | | | | | | | | |\n| **Total Interest Bearing Liabilities** | | | 642,009 | | | $ | 18,101 | | | | 2.82 | % |\n| | | | | | | | | | | | | |\n| | | | | | | | | | | | | |\n| **Non-Interest Bearing Liabilities:** | | | | | | | | | | | | |\n| Non-interest bearing demand deposits | | | 53,208 | | | | | | | | | |\n| Other | | | 12,928 | | | | | | | | | |\n| | | | | | | | | | | | | |\n| **Total Liabilities** | | | 708,145 | | | | | | | | | |\n| | | | | | | | | | | | | |\n| | | | | | | | | | | | | |\n| **Shareholders\u0092 Equity** | | | 89,542 | | | | | | | | | |\n| | | | | | | | | | | | | |\n| | | | | | | | | | | | | |\n| **Total Liabilities and Shareholders\u0092 Equity** | | $ | 797,687 | | | | | | | | | |\n| | | | | | | | | | | | | |\n| | | | | | | | | | | | | |\n| Interest\/Dividend income\/yield | | | | | | $ | 43,824 | | | | 6.03 | % |\n| Interest Expense \/ yield | | | | | | $ | 18,101 | | | | 2.82 | % |\n| | | | | | | | | | | | | |\n| Net Interest Spread | | | | | | $ | 25,723 | | | | 3.21 | % |\n| | | | | | | | | | | | | |\n| Net Interest Margin | | | | | | | | | | | 3.60 | % |\n| | | | | | | | | | | | | |\n\n\n","source":"FMAO\/10-K\/0000950123-11-020919"} {"title":"ITEM 7. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS","text":"As mentioned in the discussion earlier, in reviewing the 2010 to 2009 comparison, an impact in\nchange due to volume is evident, where as the 2009 to 2008 comparison shows the impact was due\nmainly to rate. What did remain the same in the two comparisons is that the change in interest in\ntotal is still due mainly to rate change. The strategy during 2010 and currently is to extend the\nmaturities of time deposit \u0093specials\u0094 to over 24\u00a0months to prepare for rising rates. The other\nstrategy employed during 2009 and 2010 was to increase core deposits by offering innovative\nproducts focused on customer needs: higher interest rates. In exchange for a high\ninterest-bearing checking account, customers were asked to utilize services that benefited both\nthe Bank and themselves. Smaller time deposit rate shoppers had an option to perhaps change their\nbehavior of banking or those deposits were allowed to run off. The new core deposit products were\nindeed embraced by our customers and have helped to reach the deposit portfolio mix the Bank was\nafter.","markdown_table":"\n\n\n| | | | | | | | | | | | | |\n| | | **2009 vs 2008** | | | | | | | | | | |\n| | | **(In Thousands)** | | | | | | | | | | |\n| | | **Net** | | | | **Due to change in** | | | | | | |\n| | | **Change** | | | | **Volume** | | | | **Rate** | | |\n\n| **Interest Earning Assets:** | | | | | | | | | | | | |\n| **Loans** | | **$** | **(1,409** | **)** | | **$** | **941** | | | **$** | **(2,350** | **)** |\n| **Taxable investment securities** | | | **(1,165** | **)** | | | **(0** | **)** | | | **(1,165** | **)** |\n| **Tax-exempt investment securities** | | | **92** | | | | **249** | | | | **(157** | **)** |\n| **Federal funds sold & interest bearing deposits** | | | **(228** | **)** | | | **73** | | | | **(301** | **)** |\n| | | | | | | | | | | | | |\n| **Total Interest Earning Assets** | | **$** | **(2,710** | **)** | | **$** | **1,263** | | | **$** | **(3,973** | **)** |\n| | | | | | | | | | | | | |\n| | | | | | | | | | | | | |\n| **Interest Bearing Liabilities:** | | **$** | **(1,005** | **)** | | **$** | **189** | | | **$** | **(1,194** | **)** |\n| **Savings deposits** | | | **(3,215** | **)** | | | **143** | | | | **(3,358** | **)** |\n| **Other time deposits** | | | **(20** | **)** | | | **18** | | | | **(38** | **)** |\n| **Other borrowed money** | | | | | | | **\u0097** | | | | | |\n| **Federal funds purchased and securities sold under agreement to repurchase** | | | **(641** | **)** | | | **(71** | **)** | | | **(570** | **)** |\n| | | | | | | | | | | | | |\n| **Total Interest Bearing Liabilities** | | **$** | **(4,881** | **)** | | **$** | **279** | | | **$** | **(5,160** | **)** |\n| | | | | | | | | | | | | |\n\n\n","source":"FMAO\/10-K\/0000950123-11-020919"} {"title":"ITEM 7. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS","text":"The following table sets forth the maturities of investment securities as of December\u00a031,\n2010 and the weighted average yields of such securities calculated on the basis of cost and\neffective yields weighted for the scheduled maturity of each security. Tax-equivalent\nadjustments, using a thirty-four percent rate have been made in yields on obligations of state and\npolitical subdivisions. Stocks of domestic corporations have not been included.","markdown_table":"\n\n\n| | | | | | | | | | | | | |\n| | | **(In Thousands)** | | | | | | | | | | |\n| | | **2010** | | | | **2009** | | | | **2008** | | |\n\n| | | | | | | | | | | | | |\n| U.S. Treasury | | $ | 32,278 | | | $ | 5,219 | | | $ | \u0097 | |\n| U.S. Government agency | | | 165,704 | | | | 104,676 | | | | 82,675 | |\n| Mortgage-backed securities | | | 24,531 | | | | 36,848 | | | | 51,826 | |\n| State and local governments | | | 64,804 | | | | 60,538 | | | | 43,160 | |\n| | | | | | | | | | | | | |\n| | | $ | 287,317 | | | $ | 207,281 | | | $ | 177,661 | |\n| | | | | | | | | | | | | |\n\n\n","source":"FMAO\/10-K\/0000950123-11-020919"} {"title":"ITEM 7. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS","text":"As of December\u00a031, 2010 the Bank did not hold a large block of any one investment security,\nexcept for U.S. Government agencies. The Bank also holds stock in the Federal Home Loan Bank of\nCincinnati at a cost of $4.2\u00a0million. This is required in order to obtain Federal Home Loan Bank\nLoans. The Bank also acquired stock in the Federal Home Loan Bank of Indianapolis at a cost of\n$231.4 thousand and Banker\u0092s Bancorp, Inc at a cost of $50.8 thousand through its acquisition of\nKnisely Bank. There were no borrowings at the time of acquisition associated with Federal Home\nLoan Bank of Indianapolis. The Bank had requested Federal Home Loan Bank of Indianapolis to buy\nback its stock when the acquisition of Knisely was completed in January\u00a02008. A five year waiting\nperiod was imposed and the stock will be redeemed in full by January\u00a03, 2013. An early redemption\nof 42,000 shares occurred in November\u00a02010, decreasing the holdings to a value of $189.4 thousand.\nThe value of the stock in Banker\u0092s Bancorp, Inc was written down to zero at the end of 2009 as the\ninstitution was taken over by its regulators. The Bank also owns stock of Farmer Mac with a\ncarrying value of $27.4 thousand which is required to participate loans in the program.\nLoan Portfolio\nThe Bank\u0092s various loan portfolios are subject to varying levels of credit risk. Management\nmitigates these risks through portfolio diversification and through standardization of lending\npolicies and procedures.\nRisks are mitigated through an adherence to Loan Policy with any exception being recorded and\napproved by Senior Management or committees comprised of Senior Management. Loan Policy defines\nparameters to essential underwriting guidelines such as loan-to-value ratio, cash flow and\ndebt-to-income ratio, loan requirements and covenants, financial information tracking, collection\npractice and others. Limitation to any one borrower is defined by the Bank\u0092s legal lending limits\nand is stated in policy. On a broader basis, the Bank restricts total aggregate funding in\ncomparison to Bank capital to any one business or agricultural sector by an approved sector\npercentage to capital limitation.\nThe following table shows the Bank\u0092s loan portfolio by category of loan as of December\n31st of each year, including loans held for sale:","markdown_table":"\n\n\n| | | | | | | | | | | | | | | | | |\n| | | **Maturities** | | | | | | | | | | | | | | |\n| | | **(Amounts in Thousands)** | | | | | | | | | | | | | | |\n| | | **After Five Years** | | | | | | | | | | | | | | |\n| | | **Within Ten Years** | | | | | | | | **After Ten Years** | | | | | | |\n| | | **Amount** | | | | **Yield** | | | | **Amount** | | | | **Yield** | | |\n\n| | | | | | | | | | | | | | | | | |\n| U.S. Treasury | | $ | 9,552 | | | | 1.62 | % | | | \u0097 | | | $ | 0.00 | % |\n| U.S. Government agency | | | 38,814 | | | | 2.26 | % | | | \u0097 | | | | 0.00 | % |\n| Mortgage-backed securities | | | 2,564 | | | | 4.70 | % | | | 18,198 | | | | 4.63 | % |\n| State and local governments | | | 28,795 | | | | 3.31 | % | | | 15,078 | | | | 4.23 | % |\n| Taxable state and local governments | | | 967 | | | | 3.14 | % | | | \u0097 | | | | 0.00 | % |\n\n\n","source":"FMAO\/10-K\/0000950123-11-020919"} {"title":"ITEM 7. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS","text":"The following table shows the maturity of loans as of December\u00a031, 2010:","markdown_table":"\n\n\n| | | | | | | | | | | | | | | | | | | | | |\n| | | **(In Thousands)** | | | | | | | | | | | | | | | | | | | |\n| **Loans:** | | **2010** | | | | **2009** | | | | **2008** | | | | **2007** | | | | **2006** | | |\n\n| | | | | | | | | | | | | | | | | | | | | |\n| Commercial real estate | | $ | 185,033 | | | $ | 214,849 | | | $ | 226,761 | | | $ | 181,340 | | | $ | 162,363 | |\n| Agricultural real estate | | | 33,650 | | | | 41,045 | | | | 48,607 | | | | 45,518 | | | | 49,564 | |\n| Consumer real estate | | | 95,271 | | | | 98,599 | | | | 89,773 | | | | 102,660 | | | | 86,688 | |\n| Commercial and industrial | | | 117,344 | | | | 120,543 | | | | 112,526 | | | | 104,188 | | | | 101,788 | |\n| Agricultural | | | 65,400 | | | | 59,813 | | | | 56,322 | | | | 58,809 | | | | 69,301 | |\n| Consumer | | | 29,008 | | | | 32,581 | | | | 26,469 | | | | 27,796 | | | | 27,388 | |\n| Industrial Development Bonds | | | 1,965 | | | | 2,552 | | | | 7,572 | | | | 9,289 | | | | 7,335 | |\n| | | | | | | | | | | | | | | | | | | | | |\n| | | $ | 527,671 | | | $ | 569,982 | | | $ | 568,030 | | | $ | 529,600 | | | $ | 504,427 | |\n| | | | | | | | | | | | | | | | | | | | | |\n\n\n","source":"FMAO\/10-K\/0000950123-11-020919"} {"title":"ITEM 7. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS","text":"The following table presents the total of loans due after one year which has either 1)\npredetermined interest rates (fixed)\u00a0or 2) floating or adjustable interest rates (variable):","markdown_table":"\n\n\n| | | | | | | | | | | | | | | | | |\n| | | **(In Thousands)** | | | | | | | | | | | | | | |\n| | | | | | | **After One** | | | | | | | | | | |\n| | | **Within** | | | | **Year Within** | | | | **After** | | | | | | |\n| | | **One Year** | | | | **Five Years** | | | | **Five Years** | | | | **Total** | | |\n\n| | | | | | | | | | | | | | | | | |\n| Commercial Real Estate | | $ | 36,523 | | | $ | 105,168 | | | $ | 43,342 | | | $ | 185,033 | |\n| Agricultural Real Estate | | | 2,738 | | | | 13,546 | | | | 17,366 | | | | 33,650 | |\n| Consumer Real Estate | | | 8,009 | | | | 23,094 | | | | 64,168 | | | | 95,271 | |\n| Commercial and industrial loans | | | 83,554 | | | | 25,387 | | | | 8,403 | | | | 117,344 | |\n| Agricultural | | | 48,038 | | | | 14,196 | | | | 3,166 | | | | 65,400 | |\n| Consumer, Credit Card and Overdrafts | | | 6,002 | | | | 20,723 | | | | 2,283 | | | | 29,008 | |\n| Industrial Development Bonds | | | 556 | | | | 446 | | | | 963 | | | | 1,965 | |\n\n\n","source":"FMAO\/10-K\/0000950123-11-020919"} {"title":"ITEM 7. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS","text":"The following table summarizes the Company\u0092s nonaccrual and past due loans as of December\u00a031\nfor each of the last five years:","markdown_table":"\n\n\n| | | | | | | | | | | | | |\n| | | **(In Thousands)** | | | | | | | | | | |\n| | | **Fixed** | | | | **Variable** | | | | | | |\n| | | **Rate** | | | | **Rate** | | | | **Total** | | |\n\n| | | | | | | | | | | | | |\n| Commercial Real Estate | | $ | 57,162 | | | $ | 91,314 | | | $ | 148,476 | |\n| Agricultural Real Estate | | | 18,918 | | | | 11,682 | | | | 30,600 | |\n| Consumer Real Estate | | | 74,095 | | | | 13,267 | | | | 87,362 | |\n| Commercial and industrial loans | | | 26,831 | | | | 6,324 | | | | 33,155 | |\n| Agricultural | | | 17,138 | | | | 224 | | | | 17,362 | |\n| Consumer, Master Card and Overdrafts | | | 23,006 | | | | 3,664 | | | | 26,670 | |\n| Industrial Development Bonds | | | 1,409 | | | | \u0097 | | | | 1,409 | |\n\n\n","source":"FMAO\/10-K\/0000950123-11-020919"} {"title":"ITEM 7. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS","text":"Although loans may be classified as non-performing, some pay on a regular basis, and many\ncontinue to pay interest irregularly or at less than original contractual rates. Interest income\nthat would have been recorded under the original terms of these loans was $0.91\u00a0million for 2010,\n$2.0 for 2009, and $1.4 for 2008. Any collections of interest on nonaccrual loans are included in\ninterest income when collected unless it is on an impaired loan with a specific allocation. A\ncollection of interest on an impaired loan with a specific allocation is applied to the loan\nbalance to decrease the allocation needed. Total interest collections amounted to $41 thousand for\n2010, $290 thousand for 2009, and $332 thousand for 2008. $3 thousand of interest collected in\n2010 was applied to reduce the specific allocation, $6 thousand of interest collected in 2009 and\n$20 thousand of interest collected in 2008 was applied to reduce the specific allocations.","markdown_table":"\n\n\n| | | | | | | | | | | | | | | | | | | | | |\n| | | **(In Thousands)** | | | | | | | | | | | | | | | | | | |\n| | | **2010** | | | | **2009** | | | | **2008** | | | | **2007** | | | | **2006** | | |\n\n| | | | | | | | | | | | | | | | | | | | | |\n| Nonaccrual loans | | $ | 5,844 | | | $ | 14,054 | | | $ | 13,575 | | | | 4918 | | | | 4254 | |\n| Accruing loans past due 90\u00a0days or more | | | 48 | | | | 69 | | | | 2,524 | | | | \u0097 | | | | \u0097 | |\n| | | | | | | | | | | | | | | | | | | | | |\n| Total | | $ | 5,892 | | | $ | 14,123 | | | $ | 16,099 | | | $ | 4,918 | | | $ | 4,254 | |\n| | | | | | | | | | | | | | | | | | | | | |\n\n\n","source":"FMAO\/10-K\/0000950123-11-020919"} {"title":"ITEM 7. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS","text":"*\u00a0\n\u00a0\nNonperforming loans are defined as all loans on nonaccrual, plus any loans past due 90\u00a0days\nnot on nonaccrual.\n\nAllocation of ALLL per Loan Category in terms of dollars and percentage of loans in each category\nto total loans is as follows:","markdown_table":"\n\n\n| | | | | | | | | | | | | |\n| | | **(In Thousands)** | | | | | | | | | | |\n| | | **2010** | | | | **2009** | | | | **2008** | | |\n\n| | | | | | | | | | | | | |\n| Loans | | $ | 527,589 | | | $ | 569,919 | | | $ | 568,030 | |\n| | | | | | | | | | | | | |\n| Daily average of outstanding loans | | $ | 550,698 | | | $ | 558,869 | | | $ | 544,859 | |\n| | | | | | | | | | | | | |\n| | | | | | | | | | | | | |\n| Allowance for Loan Losses-Jan 1 | | $ | 6,008 | | | $ | 5,496 | | | $ | 5,922 | |\n| Loans Charged off: | | | | | | | | | | | | |\n| Commercial Real Estate | | | 1,147 | | | | \u0097 | | | | \u0097 | |\n| Ag Real Estate | | | \u0097 | | | | \u0097 | | | | \u0097 | |\n| Consumer Real Estate | | | 507 | | | | 452 | | | | 194 | |\n| Commercial and Industrial | | | 4,188 | | | | 2,235 | | | | 71 | |\n| Agricultural | | | 136 | | | | 230 | | | | 1,912 | |\n| Consumer & other loans | | | 444 | | | | 371 | | | | 384 | |\n| | | | | | | | | | | | | |\n| | | | 6,422 | | | | 3,288 | | | | 2,561 | |\n| | | | | | | | | | | | | |\n| Loan Recoveries: | | | | | | | | | | | | |\n| Commercial Real Estate | | | 52 | | | | \u0097 | | | | \u0097 | |\n| Ag Real Estate | | | \u0097 | | | | \u0097 | | | | \u0097 | |\n| Consumer Real Estate | | | 55 | | | | 11 | | | | 87 | |\n| Commercial and Industrial | | | 515 | | | | 72 | | | | 78 | |\n| Agricultural | | | 17 | | | | 6 | | | | 4 | |\n| Consumer & other loans | | | 156 | | | | 153 | | | | 179 | |\n| | | | | | | | | | | | | |\n| | | | 795 | | | | 242 | | | | 348 | |\n| | | | | | | | | | | | | |\n| Net Charge Offs | | | 5,627 | | | | 3,046 | | | | 2,213 | |\n| Provision for loan loss | | | 5,325 | | | | 3,558 | | | | 1,787 | |\n| Acquisition provision for loan loss | | | \u0097 | | | | \u0097 | | | | \u0097 | |\n| | | | | | | | | | | | | |\n| Allowance for Loan & Lease Losses \u0097 Dec 31 | | $ | 5,706 | | | $ | 6,008 | | | $ | 5,496 | |\n| Allowance for Unfunded Loan Commitments & Letters of Credit Dec 31 | | | 153 | | | | 227 | | | | 226 | |\n| | | | | | | | | | | | | |\n| Total Allowance for Credit Losses \u0097 Dec 31 | | $ | 5,859 | | | $ | 6,235 | | | $ | 5,722 | |\n| | | | | | | | | | | | | |\n| Ratio of net charge-offs to average Loans outstanding | | | 1.02 | % | | | 0.55 | % | | | 0.41 | % |\n| | | | | | | | | | | | | |\n| Ratio of the Allowance for Loan Loss to Nonperforming Loans | | | 97.63 | % | | | 42.75 | % | | | 40.48 | % |\n| | | | | | | | | | | | | |\n\n\n","source":"FMAO\/10-K\/0000950123-11-020919"} {"title":"ITEM 7. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS","text":"Deposits\nThe amount of outstanding time certificates of deposits and other time deposits in amounts of\n$100,000 or more by maturity as of December\u00a031, 2010 are as follows:\n\n\n\n\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\n\n\u00a0\n\u00a0\n(In Thousands)\n\u00a0\n\n\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\nOver Three\n\u00a0\n\u00a0\nOver Six\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\n\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\nMonths\n\u00a0\n\u00a0\nMonths Less\n\u00a0\n\u00a0\nOver\n\u00a0\n\n\n\u00a0\n\u00a0\nUnder\n\u00a0\n\u00a0\nLess than\n\u00a0\n\u00a0\nThan One\n\u00a0\n\u00a0\nOne\n\u00a0\n\n\n\u00a0\n\u00a0\nThree Months\n\u00a0\n\u00a0\nSix Months\n\u00a0\n\u00a0\nYear\n\u00a0\n\u00a0\nYear\n\u00a0\n\n\n\n\nTime Deposits\n\u00a0\n$\n30,925\n\u00a0\n\u00a0\n$\n25,178\n\u00a0\n\u00a0\n$\n24,969\n\u00a0\n\u00a0\n$\n51,299\n\u00a0\n\n\n\nThe following table presents the average amount of and average rate paid on each deposit\ncategory:","markdown_table":"\n\n\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | | **2010** | | | | | | | | **2009** | | | | | | | | **2008** | | | | | | | | **2007** | | | | | | | | **2006** | | | | | | |\n| | | **Amount (000\u0092s)** | | | | **%** | | | | **Amount (000\u0092s)** | | | | **%** | | | | **Amount (000\u0092s)** | | | | **%** | | | | **Amount (000\u0092s)** | | | | **%** | | | | **Amount (000\u0092s)** | | | | **%** | | |\n\n| Balance at End of Period Applicable To: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Commercial Real Estate | | $ | 1,868 | | | | 35.07 | | | $ | 1,810 | | | | 37.69 | | | $ | 1,810 | | | | 39.92 | | | $ | 1,358 | | | | 34.24 | | | $ | 1,221 | | | | 32.19 | |\n| Ag Real Estate | | | 122 | | | | 6.38 | | | | 120 | | | | 7.20 | | | | 130 | | | | 8.56 | | | | 117 | | | | 8.59 | | | | 162 | | | | 9.83 | |\n| Consumer Real Estate | | | 258 | | | | 16.31 | | | | 439 | | | | 17.30 | | | | 386 | | | | 15.80 | | | | 381 | | | | 19.38 | | | | 288 | | | | 17.19 | |\n| Commercial and Industrial | | | 2,354 | | | | 14.23 | | | | 2,494 | | | | 21.15 | | | | 2,278 | | | | 19.81 | | | | 1,859 | | | | 19.67 | | | | 2,721 | | | | 20.18 | |\n| Agricultural | | | 327 | | | | 22.24 | | | | 647 | | | | 10.49 | | | | 413 | | | | 9.92 | | | | 1,676 | | | | 11.10 | | | | 250 | | | | 13.74 | |\n| Consumer, Overdrafts and other loans | | | 777 | | | | 5.77 | | | | 498 | | | | 6.16 | | | | 479 | | | | 5.99 | | | | 531 | | | | 7.00 | | | | 634 | | | | 6.88 | |\n| Unallocated | | | \u0097 | | | | | | | | \u0097 | | | | | | | | \u0097 | | | | | | | | \u0097 | | | | | | | | 318 | | | | | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Allowance for Loan & Lease Losses | | | 5,706 | | | | 100.00 | | | | 6,008 | | | | 100.00 | | | | 5,496 | | | | 100.00 | | | | 5,922 | | | | 100.00 | | | | 5,594 | | | | 100.00 | |\n| Off Balance Sheet Commitments | | | 153 | | | | | | | | 227 | | | | | | | | 226 | | | | | | | | 156 | | | | | | | | 168 | | | | | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Total Allowance for Credit Losses | | $ | 5,859 | | | | | | | $ | 6,235 | | | | | | | $ | 5,722 | | | | | | | $ | 6,078 | | | | | | | $ | 5,762 | | | | | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n\n\n","source":"FMAO\/10-K\/0000950123-11-020919"} {"title":"ITEM 7. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS","text":"Liquidity\nLiquidity remains high with the Bank also having access to $27\u00a0million of\nunsecured borrowings through correspondent banks and $76\u00a0million of unpledged\nsecurities which may be sold or used as collateral. An additional $6.2\u00a0million\nis also available from the Federal Home Loan Bank based on current collateral\npledging with up to $115\u00a0million available provided adequate collateral is\npledged.\nMaintaining sufficient funds to meet depositor and borrower needs on a daily basis continues\nto be among our management\u0092s top priorities. This is\naccomplished not only by the immediately liquid resources of cash, due from banks and federal funds\nsold, but also by the Bank\u0092s available for sale securities portfolio. The average aggregate\nbalance of these assets was $274\u00a0million for 2010, compared to $216\u00a0million for 2009, and $220\nmillion for 2008. This represented 31.25\u00a0percent, 26.3\u00a0percent, and 28.0\u00a0percent of total average\nassets, respectively. Of the almost $288\u00a0million of debt securities in the company\u0092s portfolio as\nof December\u00a031, 2010, $39\u00a0million or 13.7\u00a0percent of the portfolio is expected to receive payments\nor mature in 2011. Taking into consideration possible calls of the debt","markdown_table":"\n\n\n| | | | | | | | | | | | | | | | | |\n| | | **(In Thousands)** | | | | | | | | | | | | | | |\n| | | **Non-Interest** | | | | **Interest** | | | | **Savings** | | | | **Time** | | |\n| | | **DDAs** | | | | **DDAs** | | | | **Accounts** | | | | **Accounts** | | |\n\n| December\u00a031, 2010: | | | | | | | | | | | | | | | | |\n| Average balance | | $ | 60,489 | | | $ | 167,382 | | | $ | 138,044 | | | $ | 321,018 | |\n| Average rate | | | 0.00 | % | | | 0.96 | % | | | 0.42 | % | | | 2.16 | % |\n| | | | | | | | | | | | | | | | | |\n| December\u00a031, 2009: | | | | | | | | | | | | | | | | |\n| Average balance | | $ | 55,793 | | | $ | 145,259 | | | $ | 112,086 | | | $ | 317,619 | |\n| Average rate | | | 0.00 | % | | | 1.02 | % | | | 0.24 | % | | | 2.91 | % |\n| | | | | | | | | | | | | | | | | |\n| December\u00a031, 2008: | | | | | | | | | | | | | | | | |\n| Average balance | | $ | 52,152 | | | $ | 130,887 | | | $ | 109,993 | | | $ | 314,005 | |\n| Average rate | | | 0.00 | % | | | 1.46 | % | | | 0.77 | % | | | 3.97 | % |\n\n\n","source":"FMAO\/10-K\/0000950123-11-020919"} {"title":"ITEM 7. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS","text":"Other borrowings are also a source of funds. Other borrowings consist of loans from the\nFederal Home Loan Bank of Cincinnati. These funds are then used to provide fixed rate mortgage\nloans secured by homes in our community. Borrowings from this source decreased by $4.3\u00a0million to\n$29.9\u00a0million at December\u00a031, 2010. This compares to decreased borrowings during 2009 of $11.4\nmillion to $34.2\u00a0million at December\u00a031,\n2009 and increased borrowings during 2008 of $13.8\u00a0million to $45.6\u00a0million to end at December\u00a031,\n2008. The increased borrowings in 2008 and 2007 were used to fund loan growth and were a cheaper\nsource of funds than certificate of deposits. The decreased borrowings were payoffs of matured\nnotes in 2009. Sufficient funds were available to fund growth so new advances were not needed in\n2009.","markdown_table":"\n\n\n| | | | | | | | | | | | | | | | | | | | | |\n| | | | | | | **Daily Securities Sold Under Agreement to Repurchase** | | | | | | | | | | | | | | |\n| | | | | | | | | | | **Maximum Amount** | | | | | | | | | | |\n| | | **Amount Outstanding** | | | | | | | | **Borrowings Outstanding** | | | | **Approximate Average** | | | | **Approximate Weighted** | | |\n| | | **at End of Period** | | | | **Weighted Average Rate** | | | | **Month End** | | | | **Outstanding in Period** | | | | **Average Interest Rate** | | |\n| | | **(000\u0092S)** | | | | **End of Period** | | | | **(000\u0092s)** | | | | **(000\u0092s)** | | | | **For the period** | | |\n\n| 2010 | | $ | 37,191 | | | | 0.36 | % | | $ | 37,501 | | | $ | 34,046 | | | | 0.36 | % |\n| 2009 | | $ | 33,457 | | | | 0.42 | % | | $ | 40,530 | | | $ | 37,696 | | | | 0.48 | % |\n| 2008 | | $ | 40,014 | | | | 0.50 | % | | $ | 47,644 | | | $ | 40,113 | | | | 1.96 | % |\n\n\n","source":"FMAO\/10-K\/0000950123-11-020919"} {"title":"ITEM 7. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS","text":"Capital Resources\nStockholders\u0092 equity was $94.4\u00a0million as of December\u00a031, 2010 compared to $93.6\u00a0million at\nDecember\u00a031, 2009. Dividends declared during 2010 were $0.73 per share totaling $3.44\u00a0million and\n2009 were $0.72 per share totaling $3.41\u00a0million. During 2010, the Company purchased 48,130 shares\nand awarded 10,150 restricted shares to 53 employees under its long term incentive plan. During\n2009, the Company purchased 28,907 shares and awarded 10,000 restricted shares to 49 employees.\nFor a summary of activity as it relates to the Company\u0092s restricted stock awards, please refer to\nNote 11: Employee Benefit Plans in the consolidated financial statements. At year end 2010, the\nCompany held 477,106 shares in Treasury stock and 28,925 shares in unearned stock awards as\ncompared to 2009, the Company held 437,551 shares in Treasury stock and 27,775 in unearned stock\nawards. On January\u00a021, 2011 the Company announced the authorization by its Board of Directors for\nthe Company\u0092s repurchase, either on the open market, or in privately negotiated transactions, of\nup to 200,000 shares of its outstanding common stock commencing January\u00a021, 2011 and ending\nDecember\u00a031, 2011.\nThe Company continues to have a strong capital base and to maintain regulatory capital ratios that\nare significantly above the defined regulatory capital ratios.\nAt December\u00a031, 2010, The Farmers & Merchants State Bank and Farmers & Merchants Bancorp, Inc had\ntotal risk-based capital ratios of 14.88% and 14.95%, respectively. Core capital to risk-based\nasset ratios of 11.56% and 14.02% are well in excess of regulatory guidelines. The Bank\u0092s leverage\nratio of 8.1% is also substantially in excess of regulatory guidelines as is the Company\u0092s at\n9.82%.\nThe Company\u0092s subsidiaries are restricted by regulations from making dividend distributions in\nexcess of certain prescribed amounts.","markdown_table":"\n\n\n| | | | | | | | | | | | | | | | | | | | | |\n| | | | | | | **Payment Due by Period (In Thousands)** | | | | | | | | | | | | | | |\n| | | | | | | **Less than** | | | | **1-3** | | | | **3-5** | | | | **More than** | | |\n| **Contractual Obligations** | | **Total** | | | | **1 year** | | | | **Years** | | | | **Years** | | | | **5 years** | | |\n\n| Securities sold under agreement to repurchase | | $ | 51,241 | | | $ | 51,241 | | | $ | \u0097 | | | $ | \u0097 | | | $ | \u0097 | |\n| | | | | | | | | | | | | | | | | | | | | |\n| Time Deposits | | | 317,364 | | | | 176,254 | | | | 106,498 | | | | 33,211 | | | | 1,401 | |\n| | | | | | | | | | | | | | | | | | | | | |\n| Dividends Payable | | | 894 | | | | 894 | | | | \u0097 | | | | \u0097 | | | | \u0097 | |\n| | | | | | | | | | | | | | | | | | | | | |\n| Long Term Debt | | | 29,874 | | | | 13,212 | | | | 12,162 | | | | 4,500 | | | | \u0097 | |\n| | | | | | | | | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | | | | | | | |\n| Total | | $ | 399,373 | | | $ | 241,601 | | | $ | 118,660 | | | $ | 37,711 | | | $ | 1,401 | |\n| | | | | | | | | | | | | | | | | | | | | |\n\n\n","source":"FMAO\/10-K\/0000950123-11-020919"} {"title":"ITEM\u00a07. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF\nOPERATIONS","text":"Salaries and wages decreased $173 thousand in 2012 as compared to 2011. 2011 had increased over 2010 by $439 thousand.\nBase salary, incentive, deferred costs from loans and restricted stock awards are compiled in this line item. One similarity between 2012 and 2011 is the increase in the incentive pay for the past two years and is reflective of the Company\noutperforming its budget and performing better than the peer average. Base salaries decreased all three years even with the addition of the Hicksville office in July of 2010. Lower loan activity, continued increase in volume of transactions\nprocessed electronically, and a continuing decrease in \u0093lobby\u0094 traffic allowed the Company to decrease the workforce through attrition. Deferred costs from loans, which is an offset to salary expense, was larger in 2012 by $474 thousand\nthan 2011 and 2011 was smaller by $201.7 thousand than 2010. Again, 2012 is reflective of large refinancing activity of which 2011 experienced lower levels. Occupancy expense decreased by $82 thousand in 2012 as compared to 2011. Although real estate taxes and building repairs were higher, these were offset by lower insurance and utilities costs. Occupancy\nexpense increased by $45 thousand in 2011 as compared to 2010. The largest expense increase in 2011 occupancy expense was utilities, which was driven by the additional office added in July 2010. Data processing expense increased $141 thousand during 2012 and by only $25 thousand in 2011. A positive reduction in data processing expense of $183\nthousand occurred in 2010. The larger reduction in 2010 was mainly due to the reduction of costs as the Bank switched its core service provider in February. The Company continues to investigate ways to reduce this expense. The pricing on many\nservices, however, is based on number of accounts and the Bank fully expects those to increase with the addition of the Waterville office and overall Bank growth. The FDIC assessment continues to decrease as new regulation changed the method of calculation in the summer of 2011. 2012 represented the first full year under the new method. As can be seen, the change\nto calculations based on asset size rather than deposits has been very beneficial to F&M. The last line item in the noninterest expense\nis other general and administrative. While it is higher by $944 thousand in 2012 following a decrease of $176 thousand in 2011 over 2010\u0092s $4.3 million, the fluctuation is not isolated to a single source. The largest fluctuation relates to\nlegal and loan collection expenses. 2011 included a reimbursement of over $300 thousand in costs with the collection of one relationship that took three years to complete. ATM expense, consulting and state taxes continue to trend upwards.\nThe largest cost decrease of $3.6 million to the Bank in 2011 was the Provision for Loan Losses and it was the largest increase in 2010. In\n2012, it decreased another $977 thousand as compared to 2011. A tough economic environment existed for most businesses in our primary market area during 2007 through 2010. Gross charge-offs were $6.4 million for 2010 and $2.7 million for 2011, and\n$891 thousand for 2012. Recoveries were $286, $351, and $795 thousand for 2012, 2011, and 2010, respectively. For all three years, activity was mainly commercial and commercial real estate driven in the provision allocation with charge-off activity\nrelated to consumer portfolios, including real estate, in 2012. Further analysis by loan type is presented in the discussion of the allowance for credit losses. Net Interest Income The primary source of the Company\u0092s traditional banking revenue\nis net interest income. Net interest income is the difference between interest income on interest earning assets, such as loans and securities, and interest expense on liabilities used to fund those assets, such as interest bearing deposits and\nother borrowings. Net interest income is \naffected by changes in both interest rates and the amount and composition of earning assets and liabilities. The change in net interest income is most often measured as a result of two statistics\n\u0096 interest spread and net interest margin. The difference between the yields on earning assets and the rates paid for interest bearing liabilities supporting those funds represents the interest spread. Because noninterest bearing sources of\nfunds such as demand deposits and stockholders\u0092 equity also support earning assets, the net interest margin exceeds the interest spread. Overall, we continue to see compression in the net interest margin and spread with the risk remaining fairly constant. The net interest margin decreased\nby 26 basis points and the net interest spread decreased by 24 basis points in comparing 2012 to 2011, with both sides of the equation having lower yields. Major improvement occurred in the decrease of nonaccrual and watch list loans in 2011 with a\nslight uptick in 2012 due to one commercial relationship. Nonaccruals had increased during the first part of 2010 and decreased due to charge-off and payoff during the second half, specifically the fourth quarter. In first quarter of 2011, the Bank\ncollected $640 thousand of nonaccured interest from a large agricultural loan that took three years to collect. During the fourth quarter 2011, the Bank again collected on a large agricultural loan that was in nonaccrual though the collection period\nwas all in 2011. This was why the loan yield only decreased 4 basis points from 2010. During third quarter 2012, a commercial relationship caused the nonaccrual and impaired loan totals to increase over 2011 yearend levels. Short term rates remained\nflat throughout the years and long term rates lowered during the year 2012. Earning assets increased during the year in actual and average\nbalance. The interest collected on the earning assets decreased; the yield decreasing for 2012 as compared to 2011 and 2010 in all portfolios. The largest decrease in yield occurred in the loans. As a reminder, 2011 included a collection of over\n$600 thousand in nonaccrual interest which aided the yield. 2012 was hampered by negative loan growth, lower variable loan repricing and overall loan refinancing. Investment securities had lower yields due to the large amount of calls on government\nsponsored agencies and the yield on new purchases as the growth in the portfolio was over $38.2 million in average. It was not unusual for a called security to be replaced with a new security with a yield lower by 50 basis points or more. Overall,\nthis portfolio\u0092s yield was 23 basis points lower in 2012 than in 2011, preceded by a 87 basis points drop in 2011 as compared to 2010. Loans which have the highest earning asset yield decreased in average by $11.4 million when comparing 2012 to 2011 average balance and having decreased\n$46.6 million in average balance between 2011 and 2010. While the overall change in yield in the loan portfolio for 2011 was due mainly to the change in balance rather than to the change in rate, the 2012 yield was impacted more by rate decrease\nthan the change in balance. Given that the loan portfolio represented only 56% of the earning assets in 2012 as compared to 59% in 2011 and 67% in 2010, it stands to reason that the overall asset yield decreased in every year since 2009. Coupling\nthis with the growth in earning assets being invested in securities and Federal Funds Sold and interest bearing bank balances, the overall yield on earning assets decreased 50 basis points as compared to 2011 and 108 basis points lower than 2010.\nSpread is the difference between what the Company earns on its assets and what it pays on its liabilities. It is on this spread that the\nCompany must fund its operations and generate profit. When the asset yield decreases so must the cost of funds to maintain profitability. It becomes increasingly challenging as the asset yield gets closer to the prime lending rate, or the break-even\npoint, of operations. Looking at the other side of the balance sheet and the interest cost of funds, a decrease in the cost is apparent for\n2012 as compared to both 2011 and 2010. Unfortunately, in the three years presented the asset yield decreased more than the cost of funds decreased and the net interest margin and spread decreased as compared to 2009. The impact of the change in the portfolio mix was a factor in the liabilities as it was in the assets. All portfolios decreased in cost of funds in\ncomparing 2012 to 2011and 2011 to 2010. The growth in balances was related to the growth in the new KASASA product offerings which rewarded customers by paying a higher interest rate for deposits which was offset by noninterest related Bank earnings\nand savings. By participating in the KASASA Saver product, a customer may have earned as much as 135 basis points more than the Bank\u0092s basic savings account. Even with the increased interest cost to the Bank for offering these products, the\nBank was still able to decrease its cost of funds by 26 basis points. Time deposits and other borrowed money both decreased in cost and balances. The Bank borrowed funds from the Federal Home Loan Bank in the first quarter of 2010, to lock in lower\nrates to replace maturities coming due in the second through fourth quarter of the year. The Bank did not borrow any additional funds in 2011 or 2012, and the cost of those funds was again lower in 2012 since the associated expense of the matured\nadvances was gone for a full year. The Bank paid off $5.1 and $3.2 million of FHLB borrowings during 2012 and 2011 respectively. The average balance of other borrowed money was lower by $10.1 and $12.1 million at December\u00a031, 2012 and 2011,\nrespectively. The following tables present net interest income, interest spread and net interest margin for the three\nyears 2010 through 2012, comparing average outstanding balances of earning assets and interest bearing liabilities with the associated interest income and expense. The tables show their corresponding average rates of interest earned and paid. The\ntax-exempt asset yields have been tax adjusted to reflect a marginal corporate tax rate of 34%. Average outstanding loan balances include non-performing loans and mortgage loans held for sale. Average outstanding security balances are computed based\non carrying values including unrealized gains and losses on available-for-sale securities. The percentage of interest earning assets to total\nassets increased in 2012 over 2011 and 2011 over 2010 and remained above 90% at a respectable 94% and 93.9% for 2012 and 2011, respectively. As stated previously, the decreased yield on the assets was greater than the decreased cost of funds during all presented years. While the average\nbalance on interest bearing liabilities increased, the costs on those funds were significantly lower. The average cost for 2012 was .86% compared to 2011\u0092s 1.12% and 2010\u0092s 1.53%. The balances in noninterest bearing liabilities also\nincreased during the last three years. The largest fluctuation in the cost of funds was in the other time deposits. The cost on savings\ndecreased 10 basis points while on time deposits the cost decreased 33 basis points. The Bank has focused on increasing its core deposit base to lessen the dependency on higher cost time deposits. The Bank has also attempted to increase the duration\nof the time deposits; however, customers have maintained a short-term, twelve month focus. The yield on Tax-Exempt investment securities\nshown in the following charts were computed on a tax equivalent basis. The yield on Loans has been tax adjusted for the portion of tax-exempt IDB loans included in the total. Total Interest Earning Assets is therefore also reflecting a tax\nequivalent yield in both line items, also with the Net Interest Spread and Margin. The adjustments were based on a 34% tax rate. [Remainder of this page intentionally left blank.]","markdown_table":"\n\n| | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | (In Thousands) | | | | | | |\n| | | 2012 | | | | 2011 | | |\n| Beginning Year | | $ | 2,071 | | | $ | 2,178 | |\n| Capitalized Additions | | | 761 | | | | 391 | |\n| Amortization | | | (769 | ) | | | (498 | ) |\n| Valuation Allowance | | | \u0097 | | | | \u0097 | |\n| | | | | | | | | |\n| End of Year | | $ | 2,063 | | | $ | 2,071 | |\n| | | | | | | | | |\n\n","source":"FMAO\/10-K\/0001193125-13-073008"} {"title":"ITEM\u00a07. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF\nOPERATIONS","text":"The following tables show changes in interest income, interest expense and net interest resulting from changes in volume\nand rate variances for major categories of earnings assets and interest bearing liabilities.","markdown_table":"\n\n| | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | **2010** | | | | | | | | | | |\n| | | (In Thousands) | | | | | | | | | | |\n| | | Average | | | | Interest\/ | | | | | | |\n| | | Balance | | | | Dividends | | | | Yield\/Rate | | |\n| **ASSETS** | | | | | | | | | | | | |\n| **Interest Earning Assets:** | | | | | | | | | | | | |\n| Loans (1) | | $ | 550,698 | | | $ | 32,860 | | | | 6.00 | % |\n| Taxable investment securities | | | 176,885 | | | | 4,847 | | | | 2.74 | % |\n| Tax-exempt investment securities | | | 59,537 | | | | 2,091 | | | | 5.32 | % |\n| Federal funds sold\u00a0& interest bearing deposits | | | 35,195 | | | | 95 | | | | 0.27 | % |\n| | | | | | | | | | | | | |\n| **Total Interest Earning Assets** | | | 822,315 | | | $ | 39,893 | | | | 5.00 | % |\n| | | | | | | | | | | | | |\n| **Non-Interest Earning Assets:** | | | | | | | | | | | | |\n| Cash and cash equivalents | | | 14,046 | | | | | | | | | |\n| Other assets | | | 42,096 | | | | | | | | | |\n| | | | | | | | | | | | | |\n| **Total Assets** | | $ | 878,457 | | | | | | | | | |\n| | | | | | | | | | | | | |\n| **LIABILITIES AND SHAREHOLDERS\u0092 EQUITY** | | | | | | | | | | | | |\n| **Interest Bearing Liabilities:** | | | | | | | | | | | | |\n| Savings deposits | | $ | 305,426 | | | $ | 2,190 | | | | 0.72 | % |\n| Other time deposits | | | 321,018 | | | | 6,936 | | | | 2.16 | % |\n| Other borrowed money | | | 37,517 | | | | 1,459 | | | | 3.89 | % |\n| Federal funds purchased and securties sold under agreement to repurchase | | | 46,530 | | | | 278 | | | | 0.60 | % |\n| | | | | | | | | | | | | |\n| **Total Interest Bearing Liabilities** | | | 710,491 | | | $ | 10,863 | | | | 1.53 | % |\n| | | | | | | | | | | | | |\n| **Non-Interest Bearing Liabilities:** | | | | | | | | | | | | |\n| Non-interest bearing demand deposits | | | 63,108 | | | | | | | | | |\n| Other | | | 10,207 | | | | | | | | | |\n| | | | | | | | | | | | | |\n| **Total Liabilities** | | | 783,806 | | | | | | | | | |\n| | | | | | | | | | | | | |\n| **Shareholders\u0092 Equity** | | | 94,651 | | | | | | | | | |\n| | | | | | | | | | | | | |\n| **Total Liabilities and Shareholders\u0092 Equity** | | $ | 878,457 | | | | | | | | | |\n| | | | | | | | | | | | | |\n| Interest\/Dividend income\/yield | | | | | | $ | 39,893 | | | | 5.00 | % |\n| Interest Expense \/ yield | | | | | | $ | 10,863 | | | | 1.53 | % |\n| | | | | | | | | | | | | |\n| Net Interest Spread | | | | | | $ | 29,030 | | | | 3.47 | % |\n| | | | | | | | | | | | | |\n| Net Interest Margin | | | | | | | | | | | 3.68 | % |\n| | | | | | | | | | | | | |\n\n","source":"FMAO\/10-K\/0001193125-13-073008"} {"title":"ITEM\u00a07. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF\nOPERATIONS","text":"As mentioned in the discussion earlier, in reviewing the 2012 to 2011 and the 2011 to 2010 comparison, an impact in\nchange due to volume is evident; however the largest impact was due to rate. The strategy during 2010, 2011 and beyond is to extend the maturities of time deposit \u0093specials\u0094 to over 24 months to prepare for rising rates. The other strategy\nemployed during 2010 through 2012 was to increase core deposits by offering innovative products focused on customer needs: higher interest rates. In exchange for a high interest-bearing checking account, customers were asked to utilize services that\nbenefited both the Bank and themselves. Smaller time deposit rate shoppers had an option to perhaps change their behavior of banking or allow those deposits to run off. The new core deposit products were indeed embraced by our customers and have\nhelped to attain the deposit portfolio mix sought by the Bank. Allowance for Credit Losses The Company segregates its Allowance for Loan and Lease Losses (ALLL) into two reserves: The ALLL and the Allowance for Unfunded Loan Commitments and Letters of Credit (AULC). When combined, these\nreserves constitute the total Allowance for Credit Losses (ACL). The Bank\u0092s ALLL methodology captures trends in leading, current, and\nlagging indicators which will directly affect the Bank\u0092s allocation amount. Trends in such leading indicators as delinquency, unemployment changes in the Bank\u0092s service area, experience and ability of staff, regulatory trends, and credit\nconcentrations are employed. A current indicator such as the total watch list loan amount to Capital, and a lagging indicator such as the charge off amount are referenced as well. A matrix is formed by loan type from these indicators that is\nresponsive in making ALLL adjustments. Special Mention loan balances increased 26.5% or $2.8 million as of 2012 compared to same date 2011.\nSubstandard and doubtful loan balances increased 7.1% or $793 thousand comparing the same dates as above. In response to this change, the Bank increased its ALLL to outstanding loan coverage percentage to 1.04% as of December\u00a031, 2012 as\ncompared to 1.01% as of December\u00a031, 2011. The Bank experienced a 4.5% decrease in Special Mention loan balances as of December\u00a031, 2011 as compared to December\u00a031, 2010. The Bank also experienced a 38.5% decrease or $7 million\ndecrease in Substandard and Doubtful loan balances as of December\u00a031, 2011 as compared to 2010. The above indicators are reviewed\nquarterly. Some of the indicators are quantifiable and as such will automatically adjust the ALLL once calculated. These indicators include the ratio of past due loans to total loans, loans past due greater than 30 days, and watch list to capital\nratios with the watch list made up of loans graded 5, 6 or 7 on a 1 to 7 scale, 1 being the best rating. Other indicators use more subjective data to the extent possible to evaluate the potential for inherent losses in the Bank\u0092s loan\nportfolio. For example, the economic indicator uses the unemployment statistics from the communities in our market area to help determine whether the ALLL should be adjusted. At the end of 2011 and 2012, a slight improvement was noted in\nunemployment figures and several local firms were calling a small number of employees back from layoff while planning some expansion. The current recalls do not begin to approximate the number of positions lost. All aggregate commercial and agricultural credits including real estate loans of $250,000 and over are reviewed annually by both credit committees and\ninternal loan review to look for early signs of deterioration. To establish the specific reserve allocation in the instance of real estate, a\ndiscount to the market value is established to account for liquidation expenses. The discounting percentage used for real estate mirrors the discounting of real estate as provided for in the Bank\u0092s Loan Policy. However, unique or unusual\ncircumstances may be present which will affect the real estate value and, when appropriately identified, can adjust the discounting percentage at the discretion of management. The ACL increased $165 thousand during 2012, preceded by a $638 thousand decrease during 2011. With the decrease in loan balances, the percentage of ACL to the total loan portfolio actually increased from\n1.03% as of December\u00a031, 2011 to 1.07% as of December\u00a031, 2012. As of December\u00a031, 2011, the percentage of ACL to the total loan portfolio decreased to 1.03% from 1.12% as of December\u00a031, 2010, due to the improvement in troubled\nloan totals and a past due 30+ days percentage of .67%. This was the lowest since yearend 2006. Please see Note 4 in the consolidated\nfinancial statement for additional tables regarding the composition of the ACL. Federal Income Taxes Effective tax rates were 28.51%, 25.36%, and 25.44%, for 2012, 2011, and 2010, respectively. The effect of tax-exempt interest from holding tax-exempt\nsecurities and Industrial Development Bonds (IDBs) was $677, $689, and $744 thousand for 2012, 2011, and 2010, respectively. 2012 included an increase into a higher tax bracket for income over $10 million. Financial Condition Average earning assets increased $23.5 million during 2012 over 2011 and 2011\u0092s were higher by $34.2 million as compared to 2010. The main cause of fluctuation was the Hicksville acquisition and the\nrepositioning of the balance sheet. Average interest bearing liabilities increased $69 thousand over 2011 and 2011\u0092s increased $17.8 million from 2010. The increase in balances was due to the success of the KASASA suite of products to attract\nfunds into the savings deposit bucket and an increase in Health Savings Accounts. The increases there were larger than the decreases due to debit pay down. Securities The investment portfolio is primarily used to provide overall liquidity for the\nBank. It is also used to provide required collateral for pledging to the Bank\u0092s Ohio public depositors for amounts on deposit over the FDIC coverage limits. It may also be used to pledge for additional borrowings from third parties. Investments\nare made with the above criteria in mind while still seeking a fair market rate of return, and looking for maturities that fall within the projected overall strategy of the Bank. The possible need to fund growth is also a consideration. All of the Bank\u0092s security portfolio is categorized as available for sale, with the exception of stock, and as such is recorded at market value.\nSecurity balances as of December\u00a031 are summarized below:","markdown_table":"\n\n| | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | 2011 vs 2010 | | | | | | | | | | |\n| | | (In Thousands) | | | | | | | | | | |\n| | | Net | | | | Due\u00a0to\u00a0change\u00a0in | | | | | | |\n| | | Change | | | | Volume | | | | Rate | | |\n| **Interest Earning Assets:** | | | | | | | | | | | | |\n| Loans | | $ | (3,020 | ) | | $ | (2,799 | ) | | $ | (221 | ) |\n| Taxable investment securities | | | (54 | ) | | | 2,158 | | | | (2,212 | ) |\n| Tax-exempt investment securities | | | (135 | ) | | | 97 | | | | (232 | ) |\n| Federal funds sold\u00a0& interest bearing deposits | | | (24 | ) | | | 1 | | | | (25 | ) |\n| | | | | | | | | | | | | |\n| **Total Interest Earning Assets** | | $ | (3,233 | ) | | $ | (543 | ) | | $ | (2,690 | ) |\n| | | | | | | | | | | | | |\n| **Interest Bearing Liabilities:** | | | | | | | | | | | | |\n| Savings deposits | | $ | 11 | | | $ | 318 | | | $ | (307 | ) |\n| Other time deposits | | | (2,158 | ) | | | (424 | ) | | | (1,734 | ) |\n| Other borrowed money | | | (576 | ) | | | (469 | ) | | | (107 | ) |\n| Federal funds purchased and securities sold under agreement to repurchase | | | 16 | | | | 30 | | | | (14 | ) |\n| | | | | | | | | | | | | |\n| **Total Interest Bearing Liabilities** | | $ | (2,707 | ) | | $ | (545 | ) | | $ | (2,162 | ) |\n| | | | | | | | | | | | | |\n\n","source":"FMAO\/10-K\/0001193125-13-073008"} {"title":"ITEM\u00a07. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF\nOPERATIONS","text":"The following table sets forth the maturities of investment securities as of December\u00a031, 2012 and the weighted\naverage yields of such securities calculated on the basis of cost and effective yields weighted for the scheduled maturity of each security. Tax-equivalent adjustments, using a thirty-four percent rate have been made in yields on obligations of\nstate and political subdivisions. Stocks of domestic corporations have not been included. [Remainder of this page\nintentionally left blank.] Securities (Continued)","markdown_table":"\n\n| | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | (In Thousands) | | | | | | | | | | |\n| | | 2012 | | | | 2011 | | | | 2010 | | |\n| U.S. Treasury | | $ | 10,568 | | | $ | 26,691 | | | $ | 32,278 | |\n| U.S. Government agency | | | 220,200 | | | | 177,797 | | | | 165,704 | |\n| Mortgage-backed securities | | | 53,006 | | | | 55,413 | | | | 24,531 | |\n| State and local governments | | | 72,131 | | | | 67,618 | | | | 64,804 | |\n| | | | | | | | | | | | | |\n| | | $ | 355,905 | | | $ | 327,519 | | | $ | 287,317 | |\n| | | | | | | | | | | | | |\n\n","source":"FMAO\/10-K\/0001193125-13-073008"} {"title":"ITEM\u00a07. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF\nOPERATIONS","text":"As of December\u00a031, 2012 the Bank did not hold a large block of any one investment security, except for U.S.\nGovernment agencies. The Bank also holds stock in the Federal Home Loan Bank of Cincinnati at a cost of $4.2 million. This is required in order to obtain Federal Home Loan Bank loans. The Bank also acquired stock in the Federal Home Loan Bank of\nIndianapolis at a cost of $231.4 thousand through its acquisition of Knisely Bank. There were no borrowings at the time of acquisition associated with Federal Home Loan Bank of Indianapolis. The Bank had requested Federal Home Loan Bank of\nIndianapolis to buy back its stock when the acquisition of Knisely was completed in January 2008. A five year waiting period was imposed and the stock will be redeemed in full in 2013. An early redemption of 42,000 shares occurred in 2010 with\nanother 41,000 shares redeemed in 2011. These decreased the holdings to a value of $148.4 thousand. The Bank also owns stock of Farmer Mac with a carrying value of $37.4 thousand which is required to participate loans in the program. Loan Portfolio The Bank\u0092s various\nloan portfolios are subject to varying levels of credit risk. Management mitigates these risks through portfolio diversification and through standardization of lending policies and procedures. Risks are mitigated through an adherence to Loan Policy with any exception being recorded and approved by senior management or committees comprised of\nsenior management. Loan Policy defines parameters to essential underwriting guidelines such as loan-to-value ratio, cash flow and debt-to-income ratio, loan requirements and covenants, financial information tracking, collection practice and others.\nLimitation to any one borrower is defined by the Bank\u0092s legal lending limits and is stated in policy. On a broader basis, the Bank restricts total aggregate funding in comparison to Bank capital to any one business or agricultural sector by an\napproved sector percentage to capital limitation. The following table shows the Bank\u0092s loan portfolio by category of loan as of\nDecember\u00a031st of each year, including loans held for\nsale:","markdown_table":"\n\n| | | | | | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | Maturities | | | | | | | | | | | | | | |\n| | | (Amounts in Thousands) | | | | | | | | | | | | | | |\n| | | | | | | | | | | After\u00a0One\u00a0Year | | | | | | |\n| | | Within\u00a0One\u00a0Year | | | | | | | | Within\u00a0Five\u00a0Years | | | | | | |\n| | | Amount | | | | Yield | | | | Amount | | | | Yield | | |\n| U.S. Treasury | | $ | \u0097 | | | | \u0097 | | | $ | \u0097 | | | | \u0097 | |\n| U.S. Government agency | | | 34,999 | | | | 1.17 | % | | | 129,414 | | | | 1.56 | % |\n| Mortgage-backed securities | | | \u0097 | | | | \u0097 | | | | 200 | | | | 4.34 | % |\n| State and local governments | | | 8,634 | | | | 2.49 | % | | | 23,770 | | | | 2.42 | % |\n| Taxable state and local governments | | | \u0097 | | | | \u0097 | | | | 3,579 | | | | 2.85 | % |\n| | | | | | | | | | | | | | | | | |\n| | | Maturities | | | | | | | | | | | | | | |\n| | | (Amounts in Thousands) | | | | | | | | | | | | | | |\n| | | After Five Years | | | | | | | | | | | | | | |\n| | | Within\u00a0Ten\u00a0Years | | | | | | | | After Ten Years | | | | | | |\n| | | Amount | | | | Yield | | | | Amount | | | | Yield | | |\n| U.S. Treasury | | $ | 10,568 | | | | 1.14 | % | | $ | \u0097 | | | | \u0097 | |\n| U.S. Government agency | | | 55,787 | | | | 1.38 | % | | | \u0097 | | | | \u0097 | |\n| Mortgage-backed securities | | | 20,955 | | | | 2.36 | % | | | 31,851 | | | | 2.03 | % |\n| State and local governments | | | 24,301 | | | | 3.27 | % | | | 8,979 | | | | 4.63 | % |\n| Taxable state and local governments | | | 1,322 | | | | 2.32 | % | | | 1,546 | | | | 5.57 | % |\n\n","source":"FMAO\/10-K\/0001193125-13-073008"} {"title":"ITEM\u00a07. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF\nOPERATIONS","text":"The following table shows the maturity of loans as of December\u00a031, 2012:","markdown_table":"\n\n| | | | | | | | | | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | (In Thousands) | | | | | | | | | | | | | | | | | | |\n| Loans: | | 2012 | | | | 2011 | | | | 2010 | | | | 2009 | | | | 2008 | | |\n| Commercial real estate | | $ | 199,999 | | | $ | 198,266 | | | $ | 194,268 | | | $ | 214,849 | | | $ | 226,761 | |\n| Agricultural real estate | | | 40,143 | | | | 31,993 | | | | 33,650 | | | | 41,045 | | | | 48,607 | |\n| Consumer real estate | | | 80,287 | | | | 84,477 | | | | 86,036 | | | | 98,599 | | | | 89,773 | |\n| Commercial and industrial | | | 101,624 | | | | 114,497 | | | | 117,344 | | | | 120,543 | | | | 112,526 | |\n| Agricultural | | | 57,770 | | | | 52,598 | | | | 65,400 | | | | 59,813 | | | | 56,322 | |\n| Consumer | | | 20,413 | | | | 23,375 | | | | 29,008 | | | | 32,581 | | | | 26,469 | |\n| Industrial Development Bonds | | | 1,299 | | | | 1,196 | | | | 1,965 | | | | 2,552 | | | | 7,572 | |\n| | | | | | | | | | | | | | | | | | | | | |\n| | | $ | 501,535 | | | $ | 506,402 | | | $ | 527,671 | | | $ | 569,982 | | | $ | 568,030 | |\n| | | | | | | | | | | | | | | | | | | | | |\n\n","source":"FMAO\/10-K\/0001193125-13-073008"} {"title":"ITEM\u00a07. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF\nOPERATIONS","text":"The following table presents the total of loans due after one year which has either 1) predetermined interest rates\n(fixed) or 2) floating or adjustable interest rates (variable):","markdown_table":"\n\n| | | | | | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | (In Thousands) | | | | | | | | | | | | | | |\n| | | | | | | After One | | | | | | | | | | |\n| | | Within | | | | Year\u00a0Within | | | | After | | | | | | |\n| | | One Year | | | | Five Years | | | | Five Years | | | | Total | | |\n| Commercial Real Estate | | $ | 25,448 | | | $ | 103,857 | | | $ | 70,694 | | | $ | 199,999 | |\n| Agricultural Real Estate | | | 3,337 | | | | 10,136 | | | | 26,670 | | | $ | 40,143 | |\n| Consumer Real Estate | | | 9,535 | | | | 14,424 | | | | 56,328 | | | $ | 80,287 | |\n| Commercial and industrial | | | 58,744 | | | | 39,716 | | | | 3,164 | | | $ | 101,624 | |\n| Agricultural | | | 37,153 | | | | 18,116 | | | | 2,501 | | | $ | 57,770 | |\n| Consumer | | | 5,345 | | | | 13,238 | | | | 1,830 | | | $ | 20,413 | |\n| Industrial Development Bonds | | | 417 | | | | 490 | | | | 392 | | | $ | 1,299 | |\n| | | | | | | | | | | | | | | | | |\n| | | $ | 139,979 | | | $ | 199,977 | | | $ | 161,579 | | | $ | 501,535 | |\n| | | | | | | | | | | | | | | | | |\n\n","source":"FMAO\/10-K\/0001193125-13-073008"} {"title":"ITEM\u00a07. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF\nOPERATIONS","text":"The following table summarizes the Company\u0092s nonaccrual and past due 90 days or more and still accruing\nloans as of December\u00a031 for each of the last five years:","markdown_table":"\n\n| | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | Fixed | | | | Variable | | | | | | |\n| | | Rate | | | | Rate | | | | | | |\n| Commercial Real Estate | | $ | 112,939 | | | $ | 60,786 | | | $ | 173,725 | |\n| Agricultural Real Estate | | | 28,002 | | | | 8,843 | | | $ | 36,845 | |\n| Consumer Real Estate | | | 64,162 | | | | 6,865 | | | $ | 71,027 | |\n| Commercial and industrial loans | | | 35,620 | | | | 7,512 | | | $ | 43,132 | |\n| Agricultural | | | 19,939 | | | | 631 | | | $ | 20,570 | |\n| Consumer, Master Card and Overdrafts | | | 15,068 | | | | 3,557 | | | $ | 18,625 | |\n| Industrial Development Bonds | | | 882 | | | | \u0097 | | | $ | 882 | |\n\n","source":"FMAO\/10-K\/0001193125-13-073008"} {"title":"ITEM\u00a07. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF\nOPERATIONS","text":"Although loans may be classified as non-performing, some pay on a regular basis, and many continue to pay interest\nirregularly or at less than original contractual rates. Interest income that would have been recorded under the original terms of these loans was $544.8 thousand for 2012, $101.6 thousand for 2011, and $910 thousand for 2010. Any collections of\ninterest on nonaccrual loans are included in interest income when collected unless it is on an impaired loan with a specific allocation. A collection of interest on an impaired loan with a specific allocation is applied to the loan balance to\ndecrease the allocation needed. Total interest collections whether on an accrued or cash basis amounted to $26 thousand for 2012, $1.2 million for 2011 and $61 thousand for 2010. None of the interest collected in 2012 or 2011 was applied to reduce a\nspecific allocation. $3 thousand of interest collected in 2010 was applied to reduce the specific allocation. Loans are placed on nonaccrual\nstatus in the event that the loan is in past due status for more than 90 days or payment in full of principal and interest is not expected. The loss of interest due to the high balances in nonaccruals as of 2010 and 2012 impacted the yield on loans.\nThe collection of interest on nonaccrual loans helped the yield in 2011.\u00a0December\u00a031, 2012 had nonaccrual loan balances of $4.8 million compared to $2.1 and $5.8 million nonaccrual loan balances as of yearend 2011 and 2010, respectively.\nAll of the balances of nonaccrual loans for the three years were secured. As of December\u00a031, 2012 the Bank had $24.7 million of loans\nwhich it considers to be potential problem loans in that the borrowers are experiencing financial difficulties compared to December\u00a031, 2011 when the Bank had $22.7 million of these loans. These loans are subject to constant management\nattention and are reviewed at least monthly. The amount of the potential problem loans was considered in management\u0092s review of the loan\nloss reserve required at December\u00a031, 2012 and 2011. In extending credit to families, businesses and governments, banks accept a measure\nof risk against which an allowance for possible loan loss is established by way of expense charges to earnings. This expense, used to enlarge a bank\u0092s allowance for loan losses, is determined by management based on a detailed monthly review of\nthe risk factors affecting the loan portfolio, including general economic conditions, changes in the portfolio mix, past due loan-loss experience and the financial condition of the bank\u0092s borrowers. As of December\u00a031, 2012, the Bank had loans outstanding to individuals and firms engaged in the various fields of agriculture in the amount of $57.8\nmillion with an additional $40.1 million in agricultural real estate loans. The ratio of this segment of loans to the total loan portfolio is not considered unusual for a bank engaged in and servicing rural communities. Loan modifications granted are typically for seasonality issues where cash flow is decreased. The time period involved is generally quite short in\nrelation to the loan term. For example, a typical modification may consist of interest only payments for 90 days. We consider this treatment of interest only payments for a short time as an insignificant delay in payment. Consequently, we do not\nconsider these occurrences as \u0093troubled debt restructurings\u0094. Interest rate modification to reflect a decrease in market interest rates or maintain a relationship with the debtor, where the debtor is not experiencing financial difficulty\nand can obtain funding from other sources, is not considered a troubled debt restructuring. As of December\u00a031, 2012, the Bank had $5.5 million of its loans that were classified as troubled debt restructurings. The Bank had almost $3.2 million\nclassified as such as of December\u00a031, 2011. The Bank is occasionally ordered by the courts to give terms to a borrower that are better than what the Bank would like for the risk associated with that credit but not below or beyond rates and\nterms available for better credits in our market. Therefore, the Bank has not done any modifications that it would classify as \u0093troubled debt restructurings\u0094 under those circumstances. Updated appraisals are required on all collateral dependent loans once they are deemed impaired. The Bank\nmay also require an updated appraisal of a watch list loan which the Bank monitors under their loan policy. On a quarterly basis, Bank management reviews properties supporting asset dependent loans to consider market events that may indicate a\nchange in value has occurred. To determine observable market price, collateral asset values securing an impaired loan are periodically\nevaluated. Maximum time of re-evaluation is every 12 months for chattels and titled vehicles and every two years for real estate. In this process, third party evaluations are obtained and heavily relied upon. Until such time that updated appraisals\nare received, the Bank may discount the existing collateral value used. Performing non-watch list customers secured in whole or in part by\nreal estate do not require an updated appraisal unless the loan is rewritten and additional funds advanced. Watch List customers secured in whole or in part by real estate require updated appraisals every two years. All loans are subject to loan to\nvalues as found in Loan Policy no matter what their grade. Our watch list is reviewed on a quarterly basis by management and any questions to value are addressed at that time. The majority of the Bank\u0092s loans are made in the market by lenders that live and work in the market. Thus, their evaluation of the independent valuation is also valuable and serves as a double check.\nOn extremely rare occasions, the Bank will make adjustments to the recorded values of collateral securing commercial real estate loans\nwithout acquiring an updated appraisal for the subject property. The Bank has no formalized policy for determining when collateral value adjustments between regularly scheduled appraisals are necessary, nor does it use any specific methodology for\napplying such adjustments. However, on a quarterly basis as part of its normal operations, the Bank\u0092s senior management and the Loan Review Committee will meet to review all commercial credits either deemed to be impaired or on the Bank\u0092s\nWatch List. In addition to analyzing the recent performance of these loans, management and the Loan Review Committee will also consider any general market conditions that might warrant adjustments to the value of particular real estate\ncollateralizing commercial loans. In addition, management conducts annual reviews of all commercial loans exceeding certain outstanding balance thresholds. In each of these situations, any information available to management regarding market\nconditions impacting a specific property or other relevant factors is considered, and lenders familiar with a particular commercial real estate loan and the underlying collateral may be present to provide their opinion on such factors. If the\navailable information leads management to conclude a valuation adjustment is warranted, such an adjustment may be applied on the basis of the information available. If management concludes that an adjustment is warranted but lacks the specific\ninformation needed to reasonably quantify the adjustment, management will order a new appraisal on the subject property even though one may not be required under the Bank\u0092s general policies for updating appraisal. Note 4 of the Consolidated Financial Statements may also be reviewed for additional tables dealing with the Bank\u0092s loans and ALLL. ALLL is evaluated based on an assessment of the losses inherent in the loan portfolio. This assessment results in an allowance consisting of two\ncomponents, allocated and unallocated. Management considers several different risk assessments in determining ALLL. The allocated component\nof ALLL reflects expected losses resulting from an analysis of individual loans, developed through specific credit allocations for individual loans and historical loss experience for each loan category. For those loans where the internal credit\nrating is at or below a predetermined classification and management can reasonably estimate the loss that will be sustained based upon collateral, the borrowers operating activity and economic conditions in which the borrower operates, a specific\nallocation is made. For those borrowers that are not currently behind in their payment, but for which management believes based on economic conditions and operating activities of the borrower, the possibility exists for future collection problems, a\nreserve is established. The amount of reserve allocated to each loan portfolio is based on past loss experiences and the different levels of risk within each loan portfolio. The historical loan loss portion is determined using a historical loss\nanalysis by loan category. The unallocated portion of the reserve for loan losses is determined based on management\u0092s assessment of\ngeneral economic conditions as well as specific economic factors in the Bank\u0092s marketing area. This assessment inherently involves a higher degree of uncertainty. It represents estimated inherent but undetected losses within the portfolio that\nare probable due to uncertainties in economic conditions, delays in obtaining information, including unfavorable information about a borrower\u0092s financial condition and other current risk factors that may not have yet manifested themselves in\nthe Bank\u0092s historical loss factors used to determine the allocated component of the allowance. Actual charge-off of loan balances is based upon periodic evaluations of the loan portfolio by management.\nThese evaluations consider several factors, including, but not limited to, general economic conditions, financial condition of the borrower, and collateral. As presented below, charge-offs decreased to $891 thousand for 2012 and $2.7 million for 2011 preceded by an increase to $6.4 million for 2010. The provision also decreased in 2012 and 2011 and increased\nfor 2010. 2012 had provision expense of $738 thousand compared 2011 had provision expense of $1.7 million and 2010 expense of $5.3 million. The Commercial and Industrial portfolio had the largest net charge-off position in 2009 thru 2011. The loan\ncategories, consumer real estate and consumer\u00a0& other loans, had the largest net charge-off position in 2012. The ratio of net charge offs to average loans outstanding is evidence of the recognition of troubled loans and the write down of\ncollateral values. The improvement in asset quality during the periods shown is reflected in the increased percentage of the allowance for loan loss to nonperforming loans. The increase percentage of ACL to total loans ratio provides for the high level of nonaccrual and watch list loans and recognizes the extended time period with which it has taken to achieve resolution\nand\/or collection of these loans. The ALLL for 2010 and 2011 decreased due to the improvement in the asset quality as the balances in impaired loans and nonaccruals were drastically reduced over the same time periods. In 2012, the increase is to\noffset the higher yearend watch list values. A smaller portion of the allowance was needed to fund the impaired loans as collateral remained sufficient to cover the outstanding amounts in most cases. [Remainder of this page intentionally left blank.] The following table presents a reconciliation of the allowance for credit losses for the years ended\nDecember\u00a031, 2012, 2011 and 2010:","markdown_table":"\n\n| | | | | | | | | | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | (In Thousands) | | | | | | | | | | | | | | | | | | |\n| | | 2012 | | | | 2011 | | | | 2010 | | | | 2009 | | | | 2008 | | |\n| Non-accrual loans | | $ | 4,828 | | | $ | 2,131 | | | $ | 5,844 | | | $ | 14,054 | | | $ | 13,575 | |\n| Accruing loans past due 90 days or more | | | 1 | | | | \u0097 | | | | 48 | | | | 69 | | | | 2,524 | |\n| | | | | | | | | | | | | | | | | | | | | |\n| Total | | $ | 4,829 | | | $ | 2,131 | | | $ | 5,892 | | | $ | 14,123 | | | $ | 16,099 | |\n| | | | | | | | | | | | | | | | | | | | | |\n\n","source":"FMAO\/10-K\/0001193125-13-073008"} {"title":"ITEM\u00a07. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF\nOPERATIONS","text":"*\nNonperforming loans are defined as all loans on nonaccrual, plus any loans past due 90 days not on nonaccrual. Allocation of ALLL per Loan Category in terms of dollars and percentage of loans in each category to total\nloans is as follows:","markdown_table":"\n\n| | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | (In Thousands) | | | | | | | | | | |\n| | | 2012 | | | | 2011 | | | | 2010 | | |\n| Loans | | $ | 501,402 | | | $ | 506,215 | | | $ | 527,589 | |\n| | | | | | | | | | | | | |\n| Daily average of outstanding loans | | $ | 492,697 | | | $ | 504,058 | | | $ | 550,698 | |\n| | | | | | | | | | | | | |\n| Allowance for Loan Losses-Jan 1 | | $ | 5,091 | | | $ | 5,706 | | | $ | 6,008 | |\n| Loans Charged off: | | | | | | | | | | | | |\n| Commercial Real Estate | | | 98 | | | | 360 | | | | 1,147 | |\n| Ag Real Estate | | | \u0097 | | | | \u0097 | | | | \u0097 | |\n| Consumer Real Estate | | | 246 | | | | 423 | | | | 507 | |\n| Commercial and Industrial | | | 47 | | | | 1,500 | | | | 4,188 | |\n| Agricultural | | | 6 | | | | 24 | | | | 136 | |\n| Consumer & other loans | | | 494 | | | | 374 | | | | 444 | |\n| | | | | | | | | | | | | |\n| | | $ | 891 | | | $ | 2,681 | | | $ | 6,422 | |\n| | | | | | | | | | | | | |\n| Loan Recoveries: | | | | | | | | | | | | |\n| Commercial Real Estate | | | 7 | | | | 32 | | | | 52 | |\n| Ag Real Estate | | | \u0097 | | | | \u0097 | | | | \u0097 | |\n| Consumer Real Estate | | | 60 | | | | 61 | | | | 55 | |\n| Commercial and Industrial | | | 30 | | | | 19 | | | | 515 | |\n| Agricultural | | | 12 | | | | 67 | | | | 17 | |\n| Consumer & other loans | | | 177 | | | | 172 | | | | 156 | |\n| | | | | | | | | | | | | |\n| | | $ | 286 | | | $ | 351 | | | $ | 795 | |\n| | | | | | | | | | | | | |\n| Net Charge Offs | | $ | 605 | | | $ | 2,330 | | | $ | 5,627 | |\n| Provision for loan loss | | | 738 | | | | 1,715 | | | | 5,325 | |\n| Acquisition provision for loan loss | | | \u0097 | | | | \u0097 | | | | \u0097 | |\n| | | | | | | | | | | | | |\n| Allowance for Loan\u00a0& Lease Losses\u0097Dec 31 | | $ | 5,224 | | | $ | 5,091 | | | $ | 5,706 | |\n| Allowance for Unfunded Loan Commitments & Letters of Credit Dec 31 | | | 162 | | | | 130 | | | | 153 | |\n| | | | | | | | | | | | | |\n| Total Allowance for Credit Losses\u0097Dec 31 | | $ | 5,386 | | | $ | 5,221 | | | $ | 5,859 | |\n| | | | | | | | | | | | | |\n| Ratio of net charge-offs to average Loans outstanding | | | 0.12 | % | | | 0.46 | % | | | 1.02 | % |\n| | | | | | | | | | | | | |\n| Ratio of the Allowance for Loan Loss to Nonperforming Loans | | | 108.20 | % | | | 238.90 | % | | | 97.63 | % |\n| | | | | | | | | | | | | |\n\n","source":"FMAO\/10-K\/0001193125-13-073008"} {"title":"ITEM\u00a07. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF\nOPERATIONS","text":"Deposits The amount of outstanding time certificates of deposits and other time deposits in amounts of $100,000 or more by maturity as of December\u00a031, 2012\nare as follows: \n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\u00a0\n\u00a0\u00a0\n(In Thousands)\n\u00a0\n\n\u00a0\n\u00a0\u00a0\n\u00a0\n\u00a0\n\u00a0\u00a0\nOver\u00a0Three\n\u00a0\n\u00a0\u00a0\nOver Six\n\u00a0\n\u00a0\u00a0\n\u00a0\n\u00a0\n\n\u00a0\n\u00a0\u00a0\n\u00a0\n\u00a0\n\u00a0\u00a0\nMonths\n\u00a0\n\u00a0\u00a0\nMonths\u00a0Less\n\u00a0\n\u00a0\u00a0\nOver\n\u00a0\n\n\u00a0\n\u00a0\u00a0\nUnder\n\u00a0\n\u00a0\u00a0\nLess than\n\u00a0\n\u00a0\u00a0\nThan One\n\u00a0\n\u00a0\u00a0\nOne\n\u00a0\n\n\u00a0\n\u00a0\u00a0\nThree\u00a0Months\n\u00a0\n\u00a0\u00a0\nSix\u00a0Months\n\u00a0\n\u00a0\u00a0\nYear\n\u00a0\n\u00a0\u00a0\nYear\n\u00a0\n\n Time Deposits\n\u00a0\u00a0\n$\n12,600\n\u00a0\u00a0\n\u00a0\u00a0\n$\n19,226\n\u00a0\u00a0\n\u00a0\u00a0\n$\n31,545\n\u00a0\u00a0\n\u00a0\u00a0\n$\n58,404\n\u00a0\u00a0\nThe following table presents the average amount of and average rate paid on each deposit category:","markdown_table":"\n\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | 2012 | | | | | | | | 2011 | | | | | | | | 2010 | | | | | | | | 2009 | | | | | | | | 2008 | | | | | | |\n| | | Amount | | | | | | | | Amount | | | | | | | | Amount | | | | | | | | Amount | | | | | | | | Amount | | | | | | |\n| | | (000\u0092s) | | | | % | | | | (000\u0092s) | | | | % | | | | (000\u0092s) | | | | % | | | | (000\u0092s) | | | | % | | | | (000\u0092s) | | | | % | | |\n| Balance at End of Period Applicable To: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Commercial Real Estate | | $ | 1,749 | | | | 39.89 | | | $ | 2,087 | | | | 39.74 | | | $ | 1,868 | | | | 36.82 | | | $ | 1,810 | | | | 39.99 | | | $ | 1,810 | | | | 39.92 | |\n| Ag Real Estate | | | 113 | | | | 8.01 | | | | 140 | | | | 6.32 | | | | 122 | | | | 6.38 | | | | 120 | | | | 7.20 | | | | 130 | | | | 8.56 | |\n| Consumer Real Estate | | | 368 | | | | 16.01 | | | | 260 | | | | 16.12 | | | | 258 | | | | 16.31 | | | | 439 | | | | 15.01 | | | | 386 | | | | 15.80 | |\n| Commercial and Industrial | | | 2,183 | | | | 20.27 | | | | 1,948 | | | | 22.62 | | | | 2,354 | | | | 22.24 | | | | 2,494 | | | | 21.15 | | | | 2,278 | | | | 19.81 | |\n| Agricultural | | | 290 | | | | 11.52 | | | | 267 | | | | 10.39 | | | | 327 | | | | 12.40 | | | | 647 | | | | 10.49 | | | | 413 | | | | 9.92 | |\n| Consumer, Overdrafts and other loans | | | 268 | | | | 4.04 | | | | 315 | | | | 4.58 | | | | 380 | | | | 5.48 | | | | 479 | | | | 5.72 | | | | 479 | | | | 5.99 | |\n| Unallocated | | | 253 | | | | 0.26 | | | | 74 | | | | 0.24 | | | | 397 | | | | 0.37 | | | | 19 | | | | 0.45 | | | | 0 | | | | | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Allowance for Loan\u00a0& Lease Losses | | $ | 5,224 | | | | 100.00 | | | $ | 5,091 | | | | 100.00 | | | $ | 5,706 | | | | 100.00 | | | $ | 6,008 | | | | 100.00 | | | | 5,496 | | | | 100.00 | |\n| Off Balance Sheet Commitments | | | 162 | | | | | | | | 130 | | | | | | | $ | 153 | | | | | | | $ | 227 | | | | | | | | 226 | | | | | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Total Allowance for Credit Losses | | $ | 5,386 | | | | | | | $ | 5,221 | | | | | | | $ | 5,859 | | | | | | | $ | 6,235 | | | | | | | $ | 5,722 | | | | | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n\n","source":"FMAO\/10-K\/0001193125-13-073008"} {"title":"ITEM\u00a07. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF\nOPERATIONS","text":"Liquidity Liquidity remains high and the Bank has access to $42 million of unsecured borrowings through correspondent banks and $159 million of unpledged securities which may be sold or used as collateral. An\nadditional $6.2 million is also available from the Federal Home Loan Bank based on current collateral pledging with up to $128 million available provided adequate collateral is pledged. Maintaining sufficient funds to meet depositor and borrower needs on a daily basis continues to be among our management\u0092s top priorities. This is accomplished not only by the immediately liquid\nresources of cash, due from banks and federal funds sold, but also by the Bank\u0092s available for sale securities portfolio. The average aggregate balance of these assets was $397.3million for 2012, compared to $356 million for 201, and $274\nmillion for 2010. This represented 42.5 percent, 39 percent, and 31.3 percent of total average assets, respectively. Of the almost $356 million of debt securities in the company\u0092s portfolio as of December\u00a031, 2012, $50.7million or 14.3\npercent of the portfolio is expected to receive payments or mature in 2013. The availability of the funds may be reduced by the need to utilize securities for pledging purposes on public deposits. This liquidity provides the opportunity to fund loan\ngrowth without having to aggressively price deposits. Historically, the primary source of liquidity has been core deposits that include\nnoninterest bearing and interest bearing demand deposits, savings, money market accounts and time deposits of individuals. Core deposits increased as of yearend balances in 2012, in all categories. Overall deposits increased an average of $20.7\nmillion during 2012 compared to 2011\u0092s increase over 2010 of $34.6 million in average deposits. These represent changes of 2.9 percent and 8.3 percent in average total deposits, respectively. The Bank also utilized Federal Funds purchased at\ntimes during 2011 and 2012. The average balance for 2012 was $2 thousand, which was mainly for verification of borrowing procedures should the need arise. Again, historically, the primary use of new funds is placing the funds back into the community through loans for the acquisition of new homes, consumer products and for business development. The use of\nnew funds for loans is measured by the loan to deposit ratio. The Company\u0092s average loan to deposit ratio for 2012 was 65 percent, 2011 was 68.24 percent and 2010 was 78.13 percent. The lower ratios in 2012 and 2011 were due to the success of\nthe deposit gathering function, the residential mortgage loans being sold in the secondary market and the lack of loan demand. The Company\u0092s goal is for this ratio to be higher with loan growth being the driver; however, this was and may be\ndifficult to achieve in 2013 with borrowers still taking a conservative approach to increasing their liabilities. Short-term debt such as\nfederal funds purchased and securities sold under agreement to repurchase also provides the Company with liquidity. Short-term debt for both federal funds purchased and securities sold under agreement to repurchase amounted to $51.3 million at the\nend of 2012 compared to $52.4 million at the end of 2011 and to $51.2 million at the end of 2010. These accounts are used to provide a sweep product to the Bank\u0092s commercial customers. Though no federal funds were purchased at year end, the Bank does have arrangements with correspondent Banks that can be utilized when necessary. Other borrowings are also a source of funds. Other borrowings consist of loans from the Federal Home Loan Bank of Cincinnati. These funds are then used to provide fixed rate mortgage loans secured by\nhomes in our community. Borrowings from this source decreased by $5.1 million to $11.6 million at December\u00a031, 2012. This compares to decreased borrowings during 2011 of $13.2 million to $16.7 million at December\u00a031, 2011 and increased\nborrowings during 2010 of $4.3 million to $29.9 million to end at December\u00a031, 2010. The decreased borrowings were payoffs of matured notes in 2011 and 2012. Sufficient funds were available to fund growth so new advances were not needed.\nAsset\/Liability Management The primary functions of asset\/liability management are to assure adequate liquidity and maintain an appropriate balance between interest earning assets\nand interest bearing liabilities. It involves the management of the balance sheet mix, maturities, re-pricing characteristics and pricing components to provide an adequate and stable net interest margin with an acceptable level of risk. Interest\nrate sensitivity management seeks to avoid fluctuating net interest margins and to enhance consistent growth of net interest income through periods of changing interest rates. Changes in net income, other than those related to volume arise when interest rates on assets re-price in a time frame or interest rate environment that is different from that of the re-pricing period for\nliabilities. Changes in net interest income also arise from changes in the mix of interest-earning assets and interest-bearing liabilities. Historically, the Bank has maintained liquidity through cash flows generated in the normal course of\nbusiness, loan repayments, maturing earning assets, the acquisition of new deposits, and borrowings. The Bank\u0092s asset and liability management program is designed to maximize net interest income over the long term while taking into\nconsideration both credit and interest rate risk. Interest rate sensitivity varies with different types of interest-earning assets and interest-bearing liabilities. Overnight federal funds on which rates change daily and loans that are tied to the\nmarket rate differ considerably from long-term investment securities and fixed rate loans. Similarly, time deposits over $100,000 and money market certificates are much more interest rate sensitive than passbook savings accounts. The Bank utilizes\nshock analysis to examine the amount of exposure an instant rate change of 100, 200, and 300 basis points in both increasing and decreasing directions would have on the financials. Acceptable ranges of earnings and equity at risk are established and\ndecisions are made to maintain those levels based on the shock results. Impact of Inflation and Changing Prices The consolidated financial statements and notes thereto presented herein have been prepared in accordance with generally accepted accounting principles,\nwhich require the measurement of financial position and operating results in terms of historical dollars without considering the changes in the relative purchasing power of money over time due to inflation. The impact of inflation is reflected in\nthe increased cost of the Company\u0092s operations. Unlike most industrial companies, nearly all the assets and liabilities of the Company are monetary in nature. As a result, interest rates have a greater impact on the Company\u0092s performance\nthan do the effects of general levels of inflation. Interest rates do not necessarily move in the same direction or to the same extent as the prices of goods and service. Contractual Obligations Contractual Obligations of the Company totaled $333.4 million as\nof December\u00a031, 2012. Time deposits represent contractual agreements for certificates of deposits held by its customers. Long term debt represents the borrowings with the Federal Home Loan Bank and is further defined in Note 4 and 9 of the\nConsolidated Financial Statements.","markdown_table":"\n\n| | | | | | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | (In Thousands) | | | | | | | | | | | | | | |\n| | | Non-Interest | | | | Interest | | | | Savings | | | | Time | | |\n| | | DDAs | | | | DDAs | | | | Accounts | | | | Accounts | | |\n| December\u00a031, 2012: | | | | | | | | | | | | | | | | |\n| Average balance | | $ | 84,217 | | | $ | 190,273 | | | $ | 182,724 | | | $ | 285,214 | |\n| Average rate | | | \u0097 | | | | 0.70 | % | | | 0.33 | % | | | 1.24 | % |\n| | | | | | | | | | | | | | | | | |\n| December\u00a031, 2011: | | | | | | | | | | | | | | | | |\n| Average balance | | $ | 70,547 | | | $ | 185,463 | | | $ | 164,352 | | | $ | 301,394 | |\n| Average rate | | | \u0097 | | | | 0.81 | % | | | 0.43 | % | | | 1.59 | % |\n| | | | | | | | | | | | | | | | | |\n| December\u00a031, 2010: | | | | | | | | | | | | | | | | |\n| Average balance | | $ | 60,489 | | | $ | 167,382 | | | $ | 138,044 | | | $ | 321,018 | |\n| Average rate | | | \u0097 | | | | 0.96 | % | | | 0.42 | % | | | 2.16 | % |\n\n","source":"FMAO\/10-K\/0001193125-13-073008"} {"title":"ITEM\u00a07. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF\nOPERATIONS","text":"Capital Resources Stockholders\u0092 equity was $110.2 million as of December\u00a031, 2012 compared to $105.1 million at December\u00a031, 2011. Dividends declared during 2012 were $0.78 per share totaling $3.64 million\nand 2011 were $0.76 per share totaling $3.56 million. During 2012, the Company purchased 42,144 shares and awarded 11,000 restricted shares to 54 employees. For a summary of activity as it relates to the Company\u0092s restricted stock awards,\nplease refer to Note 11: Employee Benefit Plans in the consolidated financial statements. At yearend 2012, the Company held 515,942 shares in Treasury stock and 30,670 shares in unearned stock awards as compared to 2011, the Company held 483,663\nshares in Treasury stock and 29,715 in unearned stock awards. On January\u00a018, 2013 the Company announced the authorization by its Board of Directors for the Company\u0092s repurchase, either on the open market, or in privately negotiated\ntransactions, of up to 200,000 shares of its outstanding common stock commencing January\u00a018, 2013 and ending December\u00a031, 2013. Capital Resources (Continued) The Company continues to have a strong capital base and to maintain regulatory capital ratios that are significantly above the defined regulatory capital ratios. At December\u00a031, 2012, The Farmers\u00a0& Merchants State Bank and Farmers\u00a0& Merchants Bancorp, Inc had total risk-based capital ratios\nof 14.74% and 17.35%, respectively. Core capital to risk-based asset ratios of 13.85% and 16.45% are well in excess of regulatory guidelines. The Bank\u0092s leverage ratio of 8.92% is also substantially in excess of regulatory guidelines as is the\nCompany\u0092s at 10.67%. For further discussion and analysis of regulatory capital requirements, refer to Note 14 of the Audited Financial Statements. The Company\u0092s subsidiaries are restricted by regulations from making dividend distributions in excess of certain prescribed amounts. Upon prior regulatory approval, the Bank may be allowed to pay\nabove the prescribed amount.","markdown_table":"\n\n| | | | | | | | | | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | Payment Due by Period (In Thousands) | | | | | | | | | | | | | | | | | | |\n| | | | | | | Less than | | | | 1-3 | | | | 3-5 | | | | More\u00a0than | | |\n| Contractual Obligations | | Total | | | | 1 year | | | | Years | | | | Years | | | | 5 years | | |\n| Securities sold under agreement to repurchase | | $ | 51,312 | | | $ | 35,173 | | | $ | 16,139 | | | $ | \u0097 | | | $ | \u0097 | |\n| | | | | | | | | | | | | | | | | | | | | |\n| Time Deposits | | | 269,507 | | | | 132,584 | | | | 113,048 | | | | 22,153 | | | | 1,722 | |\n| | | | | | | | | | | | | | | | | | | | | |\n| Dividends Payable | | | 931 | | | | 931 | | | | \u0097 | | | | \u0097 | | | | \u0097 | |\n| | | | | | | | | | | | | | | | | | | | | |\n| Long Term Debt | | | 11,600 | | | | 7,100 | | | | 4,500 | | | | \u0097 | | | | \u0097 | |\n| | | | | | | | | | | | | | | | | | | | | |\n| Total | | $ | 333,350 | | | $ | 175,788 | | | $ | 133,687 | | | $ | 22,153 | | | $ | 1,722 | |\n| | | | | | | | | | | | | | | | | | | | | |\n\n","source":"FMAO\/10-K\/0001193125-13-073008"} {"title":"ITEM\u00a07. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF\nOPERATIONS","text":"The following tables show changes in interest income, interest expense and net interest resulting from changes in\nvolume and rate variances for major categories of earnings assets and interest bearing liabilities.","markdown_table":"\n\n| | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | **2015** | | | | | | | | | | |\n| | | (In Thousands) | | | | | | | | | | |\n| | | AverageBalance | | | | Interest\/Dividends | | | | Yield\/Rate | | |\n| **ASSETS** | | | | | | | | | | | | |\n| **Interest Earning Assets:** | | | | | | | | | | | | |\n| Loans | | $ | 627,194 | | | $ | 29,293 | | | | 4.68 | % |\n| Taxable investment securities | | | 177,833 | | | | 2,808 | | | | 1.58 | % |\n| Tax-exempt investment securities | | | 66,156 | | | | 1,513 | | | | 3.47 | % |\n| Federal funds sold\u00a0& interest bearing deposits | | | 14,359 | | | | 36 | | | | 0.25 | % |\n| | | | | | | | | | | | | |\n| **Total Interest Earning Assets** | | | 885,542 | | | $ | 33,650 | | | | 3.90 | % |\n| | | | | | | | | | | | | |\n| **Non-Interest Earning Assets:** | | | | | | | | | | | | |\n| Cash and cash equivalents | | | 21,333 | | | | | | | | | |\n| Other assets | | | 47,284 | | | | | | | | | |\n| | | | | | | | | | | | | |\n| **Total Assets** | | $ | 954,159 | | | | | | | | | |\n| | | | | | | | | | | | | |\n| **LIABILITIES AND SHAREHOLDERS\u0092 EQUITY** | | | | | | | | | | | | |\n| **Interest Bearing Liabilities:** | | | | | | | | | | | | |\n| Savings deposits | | $ | 412,269 | | | $ | 1,557 | | | | 0.38 | % |\n| Other time deposits | | | 189,822 | | | | 1,712 | | | | 0.90 | % |\n| Other borrowed money | | | 108 | | | | 1 | | | | 0.93 | % |\n| Federal funds purchased and securities sold under agreement to repurchase | | | 57,918 | | | | 317 | | | | 0.55 | % |\n| | | | | | | | | | | | | |\n| **Total Interest Bearing Liabilities** | | | 660,117 | | | $ | 3,587 | | | | 0.54 | % |\n| | | | | | | | | | | | | |\n| **Non-Interest Bearing Liabilities:** | | | | | | | | | | | | |\n| Non-interest bearing demand deposits | | | 162,028 | | | | | | | | | |\n| Other | | | 14,461 | | | | | | | | | |\n| | | | | | | | | | | | | |\n| **Total Liabilities** | | | 836,606 | | | | | | | | | |\n| | | | | | | | | | | | | |\n| **Shareholders\u0092 Equity** | | | 117,553 | | | | | | | | | |\n| | | | | | | | | | | | | |\n| **Total Liabilities and Shareholders\u0092 Equity** | | $ | 954,159 | | | | | | | | | |\n| | | | | | | | | | | | | |\n| Interest\/Dividend income\/yield | | | | | | $ | 33,650 | | | | 3.89 | % |\n| Interest Expense \/ yield | | | | | | | 3,587 | | | | 0.54 | % |\n| | | | | | | | | | | | | |\n| Net Interest Spread | | | | | | $ | 30,063 | | | | 3.35 | % |\n| | | | | | | | | | | | | |\n| Net Interest Margin | | | | | | | | | | | 3.49 | % |\n| | | | | | | | | | | | | |\n\n","source":"FMAO\/10-K\/0001193125-18-062514"} {"title":"ITEM\u00a07. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF\nOPERATIONS","text":"Non-Interest Income In\ncomparing line items of the consolidated statements of income for years ended 2015 through 2017, it can be seen where the Company has been spending its time and the impact of the recession and slow recovery. This section will focus on the\nsignificant noninterest items that impacted the operations of the Company. Non-interest income decreased in total for 2017 as compared to 2016, ending at\n$10.7 million. 2016 had non-interest income of $11.4 million which had exceeded 2015\u0092s $10.8 million. The Company has concerns with the increased costs associated with regulatory compliance such as the possible loss\nof revenue from new regulations stemming from the Dodd-Frank Act. History has proven the concern is justified. One area of revenue impacted was overdraft fees. The Bank has ended each of the last 4 years with a lower revenue stream from overdraft\nfees. This has occurred in spite of the addition of the new offices. Each year, the number of checking accounts has increased along with the balances; however average collected overdraft fees per account decreased. Overdraft fees in 2017 accounted\nfor $2.3 million, 2016 and 2015 accounted for $2.4 million in noninterest income. The Bank had made this an area of focus for 2015 as this revenue stream remains under intense regulator review. In 2015, the Bank adjusted its overdraft program and\nrenamed it \u0093Courtesy Pay.\u0094 Courtesy Pay establishes dynamic limits based on a customer\u0092s behavior and likelihood of repayment. The Bank has sought to better service the customer\u0092s needs while decreasing the need for collections\nand improving profitability. At the current time, profitability has not improved and in 2016 it only slowed the amount of decrease. Service charges on checking accounts increased for 2017. During the second quarter 2017, new business checking\nproducts were announced and existing business accounts were converted to one of three new products, Business Essential, Edge or Elite. The new products provided customers with new options to bundle services and for the Bank to utilize the full\nrelationship to determine pricing. This was the next step of implementation for the Bank\u0092s \u0093earn to free\u0094 strategic initiative. Upgrades to our digital products and services continue to occur in both retail and business lines.\nIncreases in the number of accounts and the number of services being utilized by our customers accounted for the increase in fees. These fees were up $292.7 thousand in 2017 as compared to 2016. Service charges on checking accounts had leveled off\nin 2016 only $67.7 thousand higher than 2015. This improvement is credited to the new checking accounts mentioned previously. The Bank has long promoted\nthe use of debit cards by its customers and continued that philosophy with the introduction of additional new products. 2017 revenue improved $172.5 thousand, 2016 revenue improved $122.4 thousand, and 2015 revenue improved $142.9 thousand from\nATM\/debit card usage as compared to each of the respective prior years. The Bank receives interchange revenue from each use by a customer of a Bank issued ATM\/debit the card. While this revenue stream continues to improve with more depositors using\nelectronic methods for purchasing, the expense attributable to card fraud has offset a portion of the revenue gain. Further discussion can be found in the non-interest expense section regarding the net effect of debit card activity. Noninterest income from net gain on sales of loans was the highest in 2016 of the three year periods shown. The change may be related to the increase in rates\nafter the long duration of the flat interest rate environment. The net gain on sale of loans is derived from sales of real estate loans into the secondary market. Of these loan types, the Bank sells 100% of the residential loans and 90% of the\nagricultural loans into the secondary market. Gains of $648.9 and $162.2 thousand were recorded for residential and agricultural real estate respectively for 2017. Gains of $683.7 and $204.0 thousand were recorded for residential and agricultural\nreal estate respectively for 2016. Gains of $559.6 and $140.8 thousand were recorded for residential and agricultural real estate respectively for 2015. In conjunction with these sales, the Bank maintains servicing rights and those income amounts\nduring all three years are included in the customer service fees line item and accounted for $460 thousand in 2017, $555.3 thousand in 2016 and $406.5 thousand in revenue for 2015. The last line item in the noninterest income section is the net gain on sale of investments. The Bank has taken advantage of this opportunity the last three\nyears and expects to continue as long as the yield curve is favorable to the transaction. The Bank will not increase short-term gains at the sacrifice of long-term profitability. The opportunity greatly lessened in 2017 with the increase in rates.\nThe available for sale security portfolio switched from an unrealized gain position into an unrealized loss position. The decrease in the balance of the security portfolio was due to calls and maturities and not sales made during 2017. Sales were\nmade early in the first quarter before the additional rate hike in March and in May before the rate hike in June occurred and with much lower gains than in the prior years. All of the sales of securities in 2017, 2016 and 2015 of $13.6, $85.7, and\n$47.0 million respectively were used to fund loan growth. This is a source of funds that will continue to be analyzed for use in the coming year. Gains of $47 thousand were recorded for 2017, $588 thousand for 2016, and $451 thousand for 2015. This\nline item was largely responsible for the lower non-interest income of 2017 as compared to 2016 and 2015. Non-Interest Expense Noninterest expense increased 4.7% in 2017 as compared to 2016 and was preceded by a 5.2% increase in 2016 as compared to 2015. Represented in dollars, 2017\nwas $1.3 million higher than 2016 and 2016 was $1.4 million higher than 2015. The largest factor behind the increase in both years was the expense of employee salaries and wages. During 2017, an additional $993 thousand was spent over 2016 which\ncorrelates to an 8.6% increase. When making the same analysis for 2016 as compared to 2015, 2016\u0092s costs increased $713 thousand or 6.5%. Three main components flow \ninto salaries and wages: base salary, deferred costs, and incentives composed of the expense of restricted stock awards and performance incentives. Base pay has increased with the addition of the\nthree offices of Huntertown, Bowling Green and Sylvania, as well as from the operations of the Captive and through normal yearly increases to the remainder of the employees. Base pay was up $731.2 thousand for 2017 over the previous year and 2016\nwas up $669.7 thousand over 2015. The full time equivalent number of employees at each yearend increased to 275 for 2017, to 273 for 2016 compared to 2015\u0092s 265. Incentive pay as it related to performance was up $234.2 thousand in 2017 over 2016 and up $177.4 thousand in 2016 over 2015. Measurements used for award\nincentive pay had improved in 2017 and 2016 and employees benefited accordingly. The expense for the restricted stock awards has also increased each of the last three years as more shares have been granted to a larger number of employees and the\nmarket value of the shares has increased. The market value of the Company\u0092s stock increased significantly with the listing on NASDAQ and being included in the Russell 3000 Index during the second quarter of 2017. An equivalent number of\nrestricted shares were awarded as compared to 2016 though the value of these rewards was higher; therefore the expense for 2017 was higher by $105.3 thousand as compared to 2016 and will likely be higher in 2018 due to the value of the 2017 awards.\n2016\u0092s cost for this program was $87.9 thousand higher than 2015. The awards incorporate a three year vesting period so the increase of any one year carries forward through the next two years. This expense should continue to increase as the\nCompany continues its expansion strategy. For further discussion in incentive pay and restricted stock awards, see Note 11 of the consolidated financial statements. Along with the salary and wage increase was an increase in employee benefits in 2017 as compared to 2016. Employee group insurance accounted for the largest\nportion of the cost, which was an increase of $181.9 thousand over 2016. This was due to an increase in the cost to provide to a larger number of employees along with a higher level of medical claims. The cost of the 401-K retirement plan also\nincreased $72.7 thousand for 2017 as compared to 2016. Overall, employee benefits increased $312 thousand or 9.4% from 2016. Employee benefits decreased\nin 2016 which correlated directly to a lower level of medical expense. As the Bank is partially self-insured, lower claims during 2016 decreased the expense. The cost of the 401-K retirement plan increased each year as the profit share component\nincreased along with the number of employees participating. Employee group insurance was down $266.9 thousand for 2016. Overall, employee benefits were down $232 thousand or 6.5% from 2015. Net occupancy expense typically increases as the Company expands, which is what has occurred for 2017 and 2016. One factor that can offset occupancy expense\nis the receipt by the Company of building rent as it is netted out of occupancy expense. The greatest contributor to building rent comes from the division of FM Investments within the Bank. This division experienced a stronger 2017; however the\ndepartment was short staffed most of 2015 and 2016. The improved performance of $85.9 thousand in 2017 assisted in keeping the overall increase to net occupancy to $30 thousand. The 1-4 family mortgage refinancing activity has been slow over the last three years though increasing slightly each year. A correlating expense to that\nactivity is the amortization of mortgage servicing rights. The amortization is the expense that offsets the income recognized when the loan is first made. Income is recorded when the mortgage loan is first sold with servicing retained and is\ntherefore recognized within one year. The amortization, however, is calculated over the life of the loan and accelerated as loans are paid off early. An increase in this expense can be driven by two activities: an increase in the number of sold\nloans and\/or by the acceleration of the expense from payoff and refinance activity. The best picture of the bottom line impact is achieved by netting the income with the expense each year. The line items for 2017 indicate a higher number of new\nloans versus refinances as compared to 2016. The net income for 2017 was $107 thousand; 2016 had net income of $136 thousand and was preceded by net income of $33 thousand for 2015. Of course, the value (or income) of the mortgage servicing right\nwhen sold also impacts the net position. As of December\u00a031, 2017, 3,636 loans are being serviced with corresponding balances of $288.6 million. 2016 had 3,599 loans serviced with corresponding balances of $280.4 million. This was almost\nidentical to the December\u00a031, 2015 number and balance of loans 1-4 family being serviced. As of December 2015, 3,598 loans were being serviced with balances of $275.7 million. The impact of mortgage servicing rights to both noninterest income and expense is shown in the following table:","markdown_table":"\n\n| | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | 2017 vs 2016 | | | | | | | | | | |\n| | | (In Thousands) | | | | | | | | | | |\n| | | NetChange | | | | Due\u00a0to\u00a0change\u00a0inVolume | | | | Rate | | |\n| **Interest Earning Assets:** | | | | | | | | | | | | |\n| Loans | | $ | 3,492 | | | $ | 2,757 | | | $ | 735 | |\n| Taxable investment securities | | | 85 | | | | (294 | ) | | | 379 | |\n| Tax-exempt investment securities | | | (184 | ) | | | (108 | ) | | | (76 | ) |\n| Federal funds sold & interest bearing deposits | | | 128 | | | | 18 | | | | 110 | |\n| | | | | | | | | | | | | |\n| **Total Interest Earning Assets** | | $ | 3,521 | | | $ | 2,373 | | | $ | 1,148 | |\n| | | | | | | | | | | | | |\n| **Interest Bearing Liabilities:** | | | | | | | | | | | | |\n| Savings deposits | | $ | 612 | | | $ | 274 | | | $ | 338 | |\n| Other time deposits | | | 254 | | | | (62 | ) | | | 316 | |\n| Other borrowed money | | | (1 | ) | | | (1 | ) | | | \u0097 | |\n| Federal funds purchased and securities sold under agreement to repurchase | | | 39 | | | | (231 | ) | | | 270 | |\n| | | | | | | | | | | | | |\n| **Total Interest Bearing Liabilities** | | $ | 904 | | | $ | (20 | ) | | $ | 924 | |\n| | | | | | | | | | | | | |\n| | | | | | | | | | | | | |\n| | | 2016 vs 2015 | | | | | | | | | | |\n| | | (In Thousands) | | | | | | | | | | |\n| | | NetChange | | | | Due to change inVolume | | | | Rate | | |\n| **Interest Earning Assets:** | | | | | | | | | | | | |\n| Loans | | $ | 4,410 | | | $ | 4,537 | | | $ | (127 | ) |\n| Taxable investment securities | | | (78 | ) | | | (82 | ) | | | 4 | |\n| Tax-exempt investment securities | | | (284 | ) | | | (373 | ) | | | 89 | |\n| Federal funds sold\u00a0& interest bearing deposits | | | 29 | | | | (3 | ) | | | 32 | |\n| | | | | | | | | | | | | |\n| **Total Interest Earning Assets** | | $ | 4,077 | | | $ | 4,079 | | | $ | (2 | ) |\n| | | | | | | | | | | | | |\n| **Interest Bearing Liabilities:** | | | | | | | | | | | | |\n| Savings deposits | | $ | 133 | | | $ | 131 | | | $ | 2 | |\n| Other time deposits | | | 215 | | | | 44 | | | | 171 | |\n| Other borrowed money | | | 147 | | | | 92 | | | | 55 | |\n| Federal funds purchased and securities sold under agreement to repurchase | | | 141 | | | | 38 | | | | 103 | |\n| | | | | | | | | | | | | |\n| **Total Interest Bearing Liabilities** | | $ | 636 | | | $ | 305 | | | $ | 331 | |\n| | | | | | | | | | | | | |\n\n","source":"FMAO\/10-K\/0001193125-18-062514"} {"title":"ITEM\u00a07. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF\nOPERATIONS","text":"Furniture and equipment steadily increases as we continue to add facilities and invest in technology. Annual maintenance costs\ncontinue to grow and become a greater piece of the overall cost. As new services are provided to our customers, the backroom cost to supply them continues to rise. The Company accepts it is an expected cost of doing business and keeping our services\nrelevant to the industry. Data processing costs were actually lower in 2017 as compared to 2016 by $196 thousand. Two reasons for the improvement was the\nnegotiation of an extended contract with our core processor and 2016 had the additional cost of upgrading Bank customer debit cards to incorporate EMV chip card technology. Both already better align with our future strategies while controlling\ncosts. Data processing expense increased $109 thousand during 2016 as compared to an increased $50 thousand during 2015. The Bank began conducting a\nreview of its core operating system in 2015 which culminated with a decision in the summer 2016 to extend the contract with the Bank\u0092s existing provider, Fiserv, for an additional seven year period. The Bank saw a current reduction in monthly\nexpenses, though that reduction will be utilized to provide additional new product offerings and fund growth. The pricing on many services, however, is based on number of accounts and the Bank fully expects those to increase with the growth from the\nnewer offices and overall Bank growth. Overall, data processing expense for 2018 may be similar or slightly higher to 2017 with a wider variety of customer offerings. The FDIC assessment has a decreasing cost trend and that is expected to continue into 2018 as the fourth quarter 2017 assessment was again below that of the\nprevious quarter. This line item speaks to the health of the Bank and the financial industry. The assessment for 2017 was down $77 thousand from 2016 and the assessment for 2016 was down $78 thousand from 2015. The last line item with significant variation in noninterest expense to discuss is \u0093other general and administrative.\u0094 Though 2017 did not increase\nby as large an amount as 2016 had when compared to 2015, it was still an increase of $200 thousand. The two main reasons behind the increase were the costs associated with listing on the NASDAQ stock market and the cost of offering the Insured Cash\nSweep product. Both of these costs have been previously explained along with the benefits that have been provided by incurring said costs. The increase in 2016 over 2015 was much higher at $439 thousand. $249 thousand of the increased expense was a\nresult of management\u0092s decision to accelerate the issuance of \u0093chip\u0094 debit cards along with the normal replacement of cards due to fraud and expiration dates. The chip enhanced cards were to help decrease fraud and establish liability\nwith the merchant if the chip was not used in the transaction. The Bank\u0092s cost due to fraud was not lower in 2016; however it helped to mitigate fraud losses in 2017. Advertising and public relations increased also in 2016 by $113 thousand.\nWith the addition of new offices, the credit card launch in conjunction with Bowling Green State University\u0092s athletic department, it was expected to be higher than 2015. The Bank also celebrates the anniversary of office openings with a\nspecial event in each community. Allowance for Credit Losses Provision expense decreased by $899 thousand for 2017 as compared to 2016. Provision expense increased by $496 thousand for 2016 in response to the significant\nloan growth for the period. The decrease for 2017 was due to the consistent strong asset quality of the Bank\u0092s loan portfolio as evidenced by low levels of both net charge-offs and delinquencies. Sustained strong asset quality kept the\nprovision expense lower than the growth alone would have warranted. Net charge-offs were $138, $394, and $473 thousand for 2017, 2016 and 2015, respectively. The consumer portfolios had the highest levels of charge-off activity in 2017 and 2016 at\n$263 and $310 thousand \nrespectively. Net charge offs in the consumer portfolio was $161 and $223 thousand for 2017 and 2016 respectively. The Company segregates its Allowance for Credit Losses (ACL) into two reserves: The ACL and the Allowance for Unfunded Loan Commitments and Letters of Credit\n(AULC). When combined, these reserves constitute the total ACL. The AUCL is included in other liabilities on the consolidated balance sheets. The\nBank\u0092s ALLL methodology captures trends in leading, current, and lagging indicators which will directly affect the Bank\u0092s allocation amount. The Bank monitors trends in such leading indicators as delinquency, unemployment changes in the\nBank\u0092s service area, experience and ability of staff, regulatory trends, and credit concentrations. A current indicator such as the total watch list loan amount to Capital, and a lagging indicator such as the charge off amount are referenced as\nwell. A matrix formed by loan type from these indicators is used in making ALLL adjustments. Watch list loan balances are comprised of loans graded 5-8.\nAt yearend December\u00a031, 2017 these loans totaled $20.8 million and were $75.9 thousand lower than December\u00a031, 2016. The balances were very similar; however, approximately $1.3 million moved from Agricultural to Commercial Real Estate\nbetween yearend 2017 and 2016. Grade 5 decreased $1.8 million in 2017 as compared to 2016 and Grade 6 increased in the same comparison. The majority of the downgrade is represented by one commercial customer. Those associated loans are adequately\nsecured by collateral. These loan balances increased $14.3 million as of December\u00a031, 2016 as compared to same date 2015. The largest increases occurring in the lowest risk grade of 5. The loan grades of 7, which have a greater likelihood of\ndefault, all decreased for 2016. All other measurements of asset quality improved during 2016. At December\u00a031, 2017, 49.8% of the watch list was\nclassified as special mention, with an additional 49.3% classified as substandard. A very small 0.6% or $111.3 thousand of the $20.8 million watch list was classified as doubtful. At yearend 2016, 59.7% of the watch list was comprised of loans\nclassified as special mention, with an additional 39.0% classified as substandard and the remaining 1.3% classified as doubtful. The large increases in special mention and substandard were mainly driven by two loan relationships in the Bank\u0092s\ncommercial real estate portfolio. Of the aggregate watch list loan balances, as of December\u00a031, 2015, special mention accounted for 36.6% with\nsubstandard comprising 49.1% and doubtful accounting for the final 14.3%. In response to these fluctuations and loan growth during 2015 through 2017, the\nBank\u0092s ALLL to outstanding loan coverage percentage changed to 0.83% as of December\u00a031, 2017, 0.89% as of December\u00a031, 2016, and 0.88% as of December\u00a031, 2015. The above indicators impacting ALLL are reviewed quarterly. Some of the indicators are quantifiable and, as such, will automatically adjust the ALLL once\ncalculated. These indicators include the ratio of past due loans to total loans, loans past due greater than 30 days, and the ratio of watch list loans to capital, with the watch list made up of loans graded 5, 6 or 7 on a scale of 1 (best) to 7\n(worst). Other indicators consist of more subjective data used to evaluate the potential for inherent losses in the Bank\u0092s loan portfolio. For example, the economic indicator uses the unemployment statistics from the communities in our market\narea to help determine whether the ALLL should be adjusted. At the end of each of 2015, 2016 and 2017, improvements were noted in unemployment figures. All aggregate commercial and agricultural credits including real estate loans of $250,000 and over are reviewed annually by both credit committees and\ninternal loan review to look for early signs of deterioration. To establish the specific reserve allocation for real estate, a discount to the market\nvalue is established to account for liquidation expenses. The discounting percentage used for real estate mirrors the discounting of real estate as provided for in the Bank\u0092s Loan Policy. However, unique or unusual circumstances may be present\nwhich will affect the real estate value and, when appropriately identified, can adjust the discounting percentage at the discretion of management. The\nACL increased $94, $736, and $153 thousand during 2017, 2016 and 2015 respectively. The large increase in 2016 directly correlates to the large increase in loan balances. With the improved asset quality, the metrics upon which the ACL is calculated\ndid not support a larger increase in 2017 even though loan growth occurred. The percentage of ACL to the total loan portfolio was 0.91% as of December\u00a031, 2015 and 0.92% as of December\u00a031, 2016, and 0.86% as\n\nof December\u00a031, 2017. December\u00a031, 2017 had the lowest loans past due 30+ day percentage at 0.13% in the last ten years. December\u00a031, 2015 and 2016 were still at respectable lows\nof 0.32% and 0.23%. Please see Note 4 in the consolidated financial statement for additional tables regarding the composition of the ACL. Federal Income Taxes Effective tax rates were 28.95%,\n28.53%, and 26.97%, for 2017, 2016 and 2015 respectively. The effect of tax-exempt interest from holding tax-exempt securities and Industrial Development Bonds (IDBs) was $413, $468, and $554 thousand for 2017, 2016, and 2015, respectively. All\nyears included an increase into a higher tax bracket for income over $10 million. Behind the decrease in 2015 is one of the benefits from the establishment of the Captive subsidiary. Material Changes in Financial Condition The shifts in\nthe balance sheet during 2017 and 2016 have positioned the Company for continued improvement in profitability. On the asset side, interest income increased primarily from loan growth with funding for the increase provided by a decrease in the\ninvestment portfolio, growth in core deposits and growth in other borrowings generated in 2015 which carried over to 2016 and most of 2017. $5 million of other borrowings were paid off in December of 2017. The cost of funds was impacted by the\nincrease of both interest bearing liabilities and noninterest bearing deposits. Both contributed to improved profitability in 2017 and 2016, and the Company expects continued improvement through 2018. Average earning assets increased in balances throughout 2017 and 2016. Newer offices have contributed the most towards new loan production. Loan growth in\nboth years was the main factor. 2016 had two offices open, one in each half of the year and operating fully throughout 2017. An additional office will open in early 2018. Securities The investment portfolio is primarily used to\nprovide overall liquidity for the Bank. It is also used to provide required collateral for pledging to the Bank\u0092s Ohio public depositors for amounts on deposit in excess of the FDIC coverage limits. It may also be used to pledge for additional\nborrowings from third parties. Investments are made with the above criteria in mind while still seeking a fair market rate of return, and looking for maturities that fall within the projected overall strategy of the Bank. The possible need to fund\nfuture loan growth is also a consideration. During 2016, the Bank began to utilize Promontory\u0092s ICS, product to replace pledged securities; thereby\nincreasing liquidity. ICS utilizes a nation-wide bank network to provide FDIC insurance coverage to the Bank\u0092s depositors. The Bank is using the product to replace pledged securities to the Bank\u0092s Ohio public customers and for commercial\nsweep customers previously utilizing daily repurchase agreements to protect balances over $250 thousand. The majority of the commercial accounts converted in 2017 and is evidenced by the movement of funds out of repurchase agreements into interest\nbearing deposits. All of the Bank\u0092s security portfolio is categorized as available for sale and as such is recorded at market value. Security balances as of December\u00a031 are summarized below:","markdown_table":"\n\n| | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | (In Thousands) | | | | | | | | | | |\n| | | 2017 | | | | 2016 | | | | 2015 | | |\n| Beginning Year | | $ | 2,192 | | | $ | 2,056 | | | $ | 2,023 | |\n| Capitalized Additions | | | 460 | | | | 555 | | | | 407 | |\n| Amortization | | | (353 | ) | | | (419 | ) | | | (374 | ) |\n| Valuation Allowance | | | \u0097 | | | | \u0097 | | | | \u0097 | |\n| | | | | | | | | | | | | |\n| End of Year | | $ | 2,299 | | | $ | 2,192 | | | $ | 2,056 | |\n| | | | | | | | | | | | | |\n\n","source":"FMAO\/10-K\/0001193125-18-062514"} {"title":"ITEM\u00a07. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF\nOPERATIONS","text":"The following table sets forth the maturities of investment securities as of December\u00a031, 2017 and the\nweighted average yields of such securities calculated on the basis of cost and effective yields weighted for the scheduled maturity of each security. Tax-equivalent adjustments, using a thirty-four percent rate, have been made in yields on\nobligations of state and political subdivisions. Stocks of domestic corporations have not been included. Maturities of mortgage-backed securities are based on the stated maturity date of the security. Due to prepayments, actual maturities may be\ndifferent.","markdown_table":"\n\n| | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | (In Thousands) | | | | | | | | | | |\n| | | 2017 | | | | 2016 | | | | 2015 | | |\n| U.S. Treasury | | $ | 20,978 | | | $ | 24,775 | | | $ | 38,505 | |\n| U.S. Government agencies | | | 80,466 | | | | 82,474 | | | | 98,220 | |\n| Mortgage-backed securities | | | 39,510 | | | | 48,461 | | | | 26,324 | |\n| State and local governments | | | 55,444 | | | | 62,817 | | | | 72,066 | |\n| | | | | | | | | | | | | |\n| | | $ | 196,398 | | | $ | 218,527 | | | $ | 235,115 | |\n| | | | | | | | | | | | | |\n\n","source":"FMAO\/10-K\/0001193125-18-062514"} {"title":"ITEM\u00a07. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF\nOPERATIONS","text":"As of December\u00a031, 2017 the Bank did not hold a large block of any one investment security in excess of 10% of\nstockholders\u0092 equity. The largest segment of holdings is in US Governments. The Bank also holds stock in the Federal Home Loan Bank of Cincinnati at a cost of $3.7 million. This is required in order to obtain Federal Home Loan Bank loans. The\nBank also owns stock of Farmer Mac with a carrying value of $37.4 thousand which is required to participate loans in the program. Loan Portfolio\nThe Bank\u0092s various loan portfolios are subject to varying levels of credit risk. Management mitigates these risks through portfolio\ndiversification and through standardization of lending policies and procedures. Risks are mitigated through an adherence to the Bank\u0092s loan\npolicies, with any exception being recorded and approved by senior management or committees comprised of senior management. The Bank\u0092s loan policies define parameters to essential underwriting guidelines such as loan-to-value ratio, cash flow\nand debt-to-income ratio, loan requirements and covenants, financial information tracking, collection practice and others. The maximum loan amount to any one borrower is limited by the Bank\u0092s legal lending limits and is stated in policy. On a\nbroader basis, the Bank restricts total aggregate funding in comparison to Bank capital to any one business or agricultural sector by an approved sector percentage to capital limitation. The following table shows the Bank\u0092s loan portfolio by category of loan as of December\u00a031st of each year, excluding loans held for sale:","markdown_table":"\n\n| | | | | | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | Maturities | | | | | | | | | | | | | | |\n| | | (Amounts in Thousands) | | | | | | | | | | | | | | |\n| | | | | | | | | | | After One Year | | | | | | |\n| | | Within One Year | | | | | | | | Within Five Years | | | | | | |\n| | | Amount | | | | Yield | | | | Amount | | | | Yield | | |\n| U.S. Treasury | | $ | \u0097 | | | | 0.00 | % | | $ | 20,978 | | | | 1.30 | % |\n| U.S. Government agencies | | | 10,449 | | | | 1.27 | % | | | 42,818 | | | | 1.61 | % |\n| Mortgage-backed securities | | | \u0097 | | | | 0.00 | % | | | 2,711 | | | | 2.64 | % |\n| State and local governments | | | 11,169 | | | | 1.65 | % | | | 16,813 | | | | 2.16 | % |\n| Taxable state and local governments | | | \u0097 | | | | 0.00 | % | | | 3,076 | | | | 2.19 | % |\n| | | | | | | | | | | | | | | | | |\n| | | After Five Years | | | | | | | | | | | | | | |\n| | | Within Ten Years | | | | | | | | After Ten Years | | | | | | |\n| | | Amount | | | | Yield | | | | Amount | | | | Yield | | |\n| U.S. Treasury | | $ | \u0097 | | | | 0.00 | % | | $ | \u0097 | | | | 0.00 | % |\n| U.S. Government agencies | | | 27,199 | | | | 2.00 | % | | | \u0097 | | | | 0.00 | % |\n| Mortgage-backed securities | | | 2,118 | | | | 2.92 | % | | | 34,681 | | | | 2.00 | % |\n| State and local governments | | | 15,983 | | | | 1.63 | % | | | 2,775 | | | | 2.03 | % |\n| Taxable state and local governments | | | 5,628 | | | | 3.27 | % | | | \u0097 | | | | 0.00 | % |\n\n","source":"FMAO\/10-K\/0001193125-18-062514"} {"title":"ITEM\u00a07. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF\nOPERATIONS","text":"The following table shows the maturity of loans as of December\u00a031, 2017:","markdown_table":"\n\n| | | | | | | | | | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | (In Thousands) | | | | | | | | | | | | | | | | | | |\n| Loans: | | 2017 | | | | 2016 | | | | 2015 | | | | 2014 | | | | 2013 | | |\n| Consumer Real Estate | | $ | 83,620 | | | $ | 86,234 | | | $ | 88,189 | | | $ | 97,426 | | | $ | 91,882 | |\n| Agricultural Real Estate | | | 64,073 | | | | 62,375 | | | | 57,277 | | | | 50,560 | | | | 44,301 | |\n| Agricultural | | | 95,111 | | | | 84,563 | | | | 82,654 | | | | 74,611 | | | | 65,449 | |\n| Commercial Real Estate | | | 410,520 | | | | 377,481 | | | | 322,762 | | | | 270,188 | | | | 248,893 | |\n| Commercial and Industrial | | | 126,275 | | | | 109,256 | | | | 100,125 | | | | 100,126 | | | | 99,498 | |\n| Consumer | | | 37,757 | | | | 33,179 | | | | 27,770 | | | | 24,277 | | | | 21,406 | |\n| Industrial Development Bonds | | | 6,415 | | | | 5,732 | | | | 6,491 | | | | 4,698 | | | | 4,358 | |\n| | | | | | | | | | | | | | | | | | | | | |\n| | | $ | 823,771 | | | $ | 758,820 | | | $ | 685,268 | | | $ | 621,886 | | | $ | 575,787 | |\n| | | | | | | | | | | | | | | | | | | | | |\n\n","source":"FMAO\/10-K\/0001193125-18-062514"} {"title":"ITEM\u00a07. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF\nOPERATIONS","text":"The following table presents the total of loans due after one year which has either 1) predetermined interest rates (fixed) or\n2) floating or adjustable interest rates (variable):","markdown_table":"\n\n| | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | (In\u00a0Thousands) | | | | | | | | | | |\n| | | | | | | After One | | | | | | |\n| | | Within | | | | Year Within | | | | After | | |\n| | | One Year | | | | Five Years | | | | Five Years | | |\n| Consumer Real Estate | | $ | 1,185 | | | $ | 13,979 | | | $ | 68,456 | |\n| Agricultural Real Estate | | | 756 | | | | 5,910 | | | | 57,407 | |\n| Agricultural | | | 60,164 | | | | 25,499 | | | | 9,448 | |\n| Commercial real estate | | | 29,728 | | | | 125,694 | | | | 255,098 | |\n| Commercial and Industrial | | | 71,521 | | | | 36,402 | | | | 18,352 | |\n| Consumer | | | 5,634 | | | | 23,946 | | | | 8,177 | |\n| Industrial Development Bonds | | | 800 | | | | 65 | | | | 5,550 | |\n| | | | | | | | | | | | | |\n| | | $ | 169,788 | | | $ | 231,495 | | | $ | 422,488 | |\n| | | | | | | | | | | | | |\n\n","source":"FMAO\/10-K\/0001193125-18-062514"} {"title":"ITEM\u00a07. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF\nOPERATIONS","text":"The following table summarizes the Company\u0092s nonaccrual, past due 90 days or more and still accruing loans,\nand accruing troubled debt restructurings as of December\u00a031 for each of the last five years:","markdown_table":"\n\n| | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | (in Thousands) | | | | | | | | | | |\n| | | Fixed | | | | Variable | | | | | | |\n| | | Rate | | | | Rate | | | | Total | | |\n| Consumer Real Estate | | $ | 76,836 | | | $ | 5,599 | | | $ | 82,435 | |\n| Agricultural Real Estate | | | 50,971 | | | | 12,346 | | | | 63,317 | |\n| Agricultural | | | 34,248 | | | | 699 | | | | 34,947 | |\n| Commercial Real Estate | | | 289,452 | | | | 91,340 | | | | 380,792 | |\n| Commercial and Industrial | | | 45,730 | | | | 9,024 | | | | 54,754 | |\n| Consumer | | | 32,101 | | | | 22 | | | | 32,123 | |\n| Industrial Development Bonds | | | 5,615 | | | | \u0097 | | | | 5,615 | |\n| | | | | | | | | | | | | |\n| | | $ | 534,953 | | | $ | 119,030 | | | $ | 653,983 | |\n| | | | | | | | | | | | | |\n\n","source":"FMAO\/10-K\/0001193125-18-062514"} {"title":"ITEM\u00a07. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF\nOPERATIONS","text":"Although loans may be classified as non-performing, some pay on a regular basis, and many continue to pay interest irregularly\nor at less than original contractual rates. Interest income that would have been recorded under the original terms of these loans would have aggregated $205.4 thousand for 2017, $116.1 for 2016 and $117.1 thousand for 2015. Any collections of\ninterest on nonaccrual loans are included in interest income when collected unless it is on an impaired loan with a specific allocation. A collection of interest on an impaired loan with a specific allocation is applied to the loan balance to\ndecrease the allocation. Total interest collections, whether on an accrued or cash basis, amounted to $57 thousand for 2017, $64 thousand for 2016, $96 thousand for 2015 and $87 thousand for 2014. Loans are placed on nonaccrual status in the event that the loan is in past due status for more than 90 days or payment in full of principal and interest is\nnot expected. The Bank had nonaccrual loan balances of $1.0 million at December\u00a031, 2017 compared to balances of $1.4 and $2.0 million as of year-end 2016 and 2015. All of the balances of nonaccrual loans for the past three years were\ncollaterally secured. As of December\u00a031, 2017 the Bank had $20.8 million of loans which it considers to be \u0093potential problem loans\u0094 in\nthat the borrowers are experiencing financial difficulties. At December\u00a031, 2016, the Bank had $20.6 million of these loans. The increase in 2016 relates to mainly two relationships. At December\u00a031, 2015, the Bank had $7.0 million of these\nloans. These loans are subject to constant management attention and are reviewed at least monthly. The amount of the potential problem loans was considered in management\u0092s review of the loan loss reserve at December\u00a031, 2017 and 2016. In extending credit to families, businesses and governments, banks accept a measure of risk against which an allowance for possible loan loss is established\nby way of expense charges to earnings. This expense is determined by management based on a detailed monthly review of the risk factors affecting the loan portfolio, including general economic conditions, changes in the portfolio mix, past due\nloan-loss experience and the financial condition of the bank\u0092s borrowers. As of December\u00a031, 2017, the Bank had loans outstanding to\nindividuals and firms engaged in the various fields of agriculture in the amount of $95.1 million with an additional $64.1 million in agricultural real estate loans these compared to $84.6 and $62.4 million respectively as of December\u00a031, 2016.\nThe ratio of this segment of loans to the total loan portfolio is not considered unusual for a bank engaged in and servicing rural communities. Interest\nrate modification to reflect a decrease in market interest rates or maintain a relationship with the debtor, where the debtor is not experiencing financial difficulty and can obtain funding from other sources, is not considered a troubled debt\nrestructuring. As of December\u00a031, 2017, the Bank had $0.7 million of its loans that were classified as troubled debt restructurings, of which $149.1 thousand are included in non-accrual loans. This compares to $0.7 million as of same date 2016\nand the Bank had $1.1 million classified as such as of December\u00a031, 2015. Updated appraisals are required on all collateral dependent loans once\nthey are deemed impaired. The Bank may also require an updated appraisal of a watch list loan which the Bank monitors under their loan policy. On a quarterly basis, Bank management reviews properties supporting asset dependent loans to consider\nmarket events that may indicate a change in value has occurred. To determine observable market value, collateral asset values securing an impaired loan\nare periodically evaluated. Maximum time of re-evaluation is every 12 months for chattels and titled vehicles and every two years for real \nestate. In this process, third party evaluations are obtained and heavily relied upon. Until such time that updated appraisals are received, the Bank may discount the existing collateral value\nused. Performing \u0093non-watch list\u0094 loans secured in whole or in part by real estate, do not require an updated appraisal unless the loan is\nrewritten and additional funds advanced. Watch List loans secured in whole or in part by real estate require updated appraisals every two years. All loans are subject to loan to values as found in the Bank\u0092s loan policies irrespective of their\ngrade. The Bank\u0092s watch list is reviewed on a quarterly basis by management and any questions to value are addressed at that time. The majority of\nthe Bank\u0092s loans are made in the market by lenders who live and work in the market. Thus, their evaluation of the independent valuation is also valuable and serves as a double check. On extremely rare occasions, the Bank will make adjustments to the recorded values of collateral securing commercial real estate loans without acquiring an\nupdated appraisal for the subject property. The Bank has no formalized policy for determining when collateral value adjustments between regularly scheduled appraisals are necessary, nor does it use any specific methodology for applying such\nadjustments. However, on a quarterly basis as part of its normal operations, the Bank\u0092s senior management and the Loan Review Committee will meet to review all commercial credits either deemed to be impaired or on the Bank\u0092s watch list. In\naddition to analyzing the recent performance of these loans, management and the Enterprise Risk Management Committee will also consider any general market conditions that might warrant adjustments to the value of particular real estate\ncollateralizing commercial loans. In addition, management conducts annual reviews of all commercial loans exceeding certain outstanding balance thresholds. In each of these situations, any information available to management regarding market\nconditions impacting a specific property or other relevant factors are considered, and lenders familiar with a particular commercial real estate loan and the underlying collateral may be present to provide their opinion on such factors. If the\navailable information leads management to conclude a valuation adjustment is warranted, such an adjustment may be applied on the basis of the information available. If management concludes that an adjustment is warranted but lacks the specific\ninformation needed to reasonably quantify the adjustment, management will order a new appraisal on the subject property even though one may not be required under the Bank\u0092s general policies for updating appraisal. Note 4 of the Consolidated Financial Statements may also be reviewed for additional tables dealing with the Bank\u0092s loans and ALLL. ALLL is evaluated based on an assessment of the losses inherent in the loan portfolio. This assessment results in an allowance consisting of two components,\nallocated and unallocated. Management considers several different risk assessments in determining ALLL. The allocated component of ALLL reflects expected\nlosses resulting from an analysis of individual loans, developed through specific credit allocations for individual loans and historical loss experience for each loan category. For those loans where the internal credit rating is at or below a\npredetermined classification and management can reasonably estimate the loss that will be sustained based upon collateral, the borrowers operating activity and economic conditions in which the borrower operates, a specific allocation is made. For\nthose borrowers that are not currently behind in their payment, but for which management believes, based on economic conditions and operating activities of the borrower, the possibility exists for future collection problems, a reserve is\nestablished. The amount of reserve allocated to each loan portfolio is based on past loss experiences and the different levels of risk within each loan portfolio. The historical loan loss portion is determined using a historical loss analysis by\nloan category. The unallocated portion of the reserve for loan losses is determined based on management\u0092s assessment of general economic conditions\nas well as specific economic factors in the Bank\u0092s marketing area. This assessment inherently involves a higher degree of uncertainty. It represents estimated inherent but undetected losses within the portfolio that are probable due to\nuncertainties in economic conditions, delays in obtaining information, including unfavorable information about a borrower\u0092s financial condition and other current risk factors that may not have yet manifested themselves in the Bank\u0092s\nhistorical loss factors used to determine the allocated component of the allowance. Actual charge-off of loan balances is based upon periodic evaluations\nof the loan portfolio by management. These evaluations consider several factors, including, but not limited to, general economic conditions, financial condition of the borrower, and collateral. As presented in the table on the next page, charge-offs decreased to $288 thousand for 2017, the lowest level of\nthe five years presented. 91.3% of the charge-offs stemmed from the consumer related portfolios. Charge-offs were $550 thousand for 2016, $1.0 million for 2015, preceded by $778 thousand for 2014 and $1.3 million for 2013. Recoveries were also the\nlowest in 2017 at $150 thousand compared to $156, $557, $298, and $374 thousand for 2016, 2015, 2014 and 2013, respectively. The net charge-offs for the last five years were all under $1 million. 2017 was the lowest at $138 thousand. Higher provision expense was used to fund the ALLL for loan growth in 2014 and 2016. For 2013 and 2015, the provision was used to replenish the balance\ndecreased by the net charge-off activity. Overall, the ALLL increased from $5.2 million at yearend 2013 to $6.9 million at yearend 2017. After adding the allowance for unfunded loan commitments, the ACL ended 2017 just under $7.1 million. As the\nratios on the bottom of the following table show, the trends for each have continually improved over the five years shown. Asset quality and the ACL are both strong and emphasize the level of credit quality. In reviewing the bigger picture of the allowance for credit loss, the years with the higher percentage of ACL to total nonperforming loans ratio account for\nthe lower level of nonaccrual and watch list loans. This demonstrates the extended time period with which it has taken to achieve resolution and\/or collection of these loans. 2014\u0092s significant and continued loan growth since fourth quarter\n2013 was the reason behind 2014\u0092s higher balances as asset quality remained strong. The ratio of ACL to nonperforming loans increased significantly in 2014 which is why provision loan expense was lower in 2015 in comparison. The ACL to\nnonperforming loans for 2015 remained more than adequate and emphasizes the existing strong level of credit quality. 2017 did not warrant a large provision as the asset quality continued to strengthen. Loan growth occurred, though not at the double\ndigit percentage increases of 2015 and 2016. The following table presents a reconciliation of the allowance for credit losses for the years ended\nDecember\u00a031, 2017, 2016, 2015, 2014 and 2013:","markdown_table":"\n\n| | | | | | | | | | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | (In Thousands) | | | | | | | | | | | | | | | | | | |\n| | | 2017 | | | | 2016 | | | | 2015 | | | | 2014 | | | | 2013 | | |\n| Non-accrual loans | | $ | 1,003 | | | $ | 1,384 | | | $ | 2,041 | | | $ | 1,705 | | | $ | 3,329 | |\n| Accruing loans past due 90 days or more | | | \u0097 | | | | \u0097 | | | | \u0097 | | | | \u0097 | | | | \u0097 | |\n| Troubled Debt Restructurings, not included above | | | 534 | | | | 559 | | | | 878 | | | | 471 | | | | 485 | |\n| | | | | | | | | | | | | | | | | | | | | |\n| Total | | $ | 1,537 | | | $ | 1,943 | | | $ | 2,919 | | | $ | 2,176 | | | $ | 3,814 | |\n| | | | | | | | | | | | | | | | | | | | | |\n\n","source":"FMAO\/10-K\/0001193125-18-062514"} {"title":"ITEM\u00a07. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF\nOPERATIONS","text":"*\nNonperforming loans are defined as all loans on nonaccrual, plus any loans past due 90 days not on nonaccrual. Allocation of ALLL per Loan Category in terms of dollars and percentage of loans in each category to total loans\nis as follows:","markdown_table":"\n\n| | | | | | | | | | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | (In Thousands) | | | | | | | | | | | | | | | | | | |\n| | | 2017 | | | | 2016 | | | | 2015 | | | | 2014 | | | | 2013 | | |\n| Loans | | $ | 823,024 | | | $ | 758,094 | | | $ | 684,630 | | | $ | 621,467 | | | $ | 575,557 | |\n| | | | | | | | | | | | | | | | | | | | | |\n| Daily average of outstanding loans | | $ | 783,140 | | | $ | 724,076 | | | $ | 627,194 | | | $ | 581,483 | | | $ | 507,126 | |\n| | | | | | | | | | | | | | | | | | | | | |\n| Allowance for Loan Losses-Jan 1 | | $ | 6,784 | | | $ | 6,057 | | | $ | 5,905 | | | $ | 5,194 | | | $ | 5,224 | |\n| Loans Charged off: | | | | | | | | | | | | | | | | | | | | |\n| Consumer Real Estate | | | 4 | | | | 106 | | | | 38 | | | | 168 | | | | 147 | |\n| Agricultural Real Estate | | | \u0097 | | | | \u0097 | | | | \u0097 | | | | \u0097 | | | | \u0097 | |\n| Agricultural | | | \u0097 | | | | 21 | | | | \u0097 | | | | \u0097 | | | | \u0097 | |\n| Commercial Real Estate | | | 21 | | | | 93 | | | | 143 | | | | 229 | | | | 164 | |\n| Commercial and Industrial | | | \u0097 | | | | 20 | | | | 536 | | | | \u0097 | | | | 513 | |\n| Consumer | | | 263 | | | | 310 | | | | 313 | | | | 381 | | | | 438 | |\n| | | | | | | | | | | | | | | | | | | | | |\n| | | | 288 | | | | 550 | | | | 1,030 | | | | 778 | | | | 1,262 | |\n| | | | | | | | | | | | | | | | | | | | | |\n| Loan Recoveries: | | | | | | | | | | | | | | | | | | | | |\n| Consumer Real Estate | | | 13 | | | | 28 | | | | 41 | | | | 34 | | | | 20 | |\n| Agricultural Real Estate | | | \u0097 | | | | \u0097 | | | | \u0097 | | | | \u0097 | | | | \u0097 | |\n| Agricultural | | | 8 | | | | 10 | | | | 64 | | | | 44 | | | | 5 | |\n| Commercial Real Estate | | | 15 | | | | 20 | | | | 204 | | | | 4 | | | | 23 | |\n| Commercial and Industrial | | | 12 | | | | 11 | | | | 91 | | | | 20 | | | | 141 | |\n| Consumer | | | 102 | | | | 87 | | | | 157 | | | | 196 | | | | 185 | |\n| | | | | | | | | | | | | | | | | | | | | |\n| | | | 150 | | | | 156 | | | | 557 | | | | 298 | | | | 374 | |\n| | | | | | | | | | | | | | | | | | | | | |\n| Net Charge Offs | | | 138 | | | | 394 | | | | 473 | | | | 480 | | | | 888 | |\n| Provision for loan loss | | | 222 | | | | 1,121 | | | | 625 | | | | 1,191 | | | | 858 | |\n| Acquisition provision for loan loss | | | \u0097 | | | | \u0097 | | | | \u0097 | | | | \u0097 | | | | \u0097 | |\n| Allowance for Loan\u00a0& Lease Losses\u0097Dec 31 | | | 6,868 | | | | 6,784 | | | | 6,057 | | | | 5,905 | | | | 5,194 | |\n| Allowance for Unfunded Loan Commitments & Letters of Credit Dec 31 | | | 227 | | | | 217 | | | | 208 | | | | 207 | | | | 163 | |\n| | | | | | | | | | | | | | | | | | | | | |\n| Total Allowance for Credit Losses\u0097Dec 31 | | $ | 7,095 | | | $ | 7,001 | | | $ | 6,265 | | | $ | 6,112 | | | $ | 5,357 | |\n| | | | | | | | | | | | | | | | | | | | | |\n| Ratio of net charge-offs to average Loans outstanding | | | 0.02 | % | | | 0.05 | % | | | 0.08 | % | | | 0.08 | % | | | 0.18 | % |\n| | | | | | | | | | | | | | | | | | | | | |\n| Ratio of the Allowance for Loan Loss to Nonperforming Loans | | | 684.83 | % | | | 490.39 | % | | | 293.75 | % | | | 346.30 | % | | | 156.03 | % |\n| | | | | | | | | | | | | | | | | | | | | |\n\n","source":"FMAO\/10-K\/0001193125-18-062514"} {"title":"ITEM\u00a07. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF\nOPERATIONS","text":"Deposits The amount of\noutstanding time certificates of deposits and other time deposits in amounts of $100,000 or more by maturity as of December\u00a031, 2017 are as follows: \n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\u00a0\n\u00a0\u00a0\n(In Thousands)\n\u00a0\n\n\u00a0\n\u00a0\u00a0\n\u00a0\n\u00a0\n\u00a0\u00a0\nOver Three\n\u00a0\n\u00a0\u00a0\nOver Six\n\u00a0\n\u00a0\u00a0\n\u00a0\n\u00a0\n\n\u00a0\n\u00a0\u00a0\n\u00a0\n\u00a0\n\u00a0\u00a0\nMonths\n\u00a0\n\u00a0\u00a0\nMonths\u00a0Less\n\u00a0\n\u00a0\u00a0\nOver\n\u00a0\n\n\u00a0\n\u00a0\u00a0\nUnder\n\u00a0\n\u00a0\u00a0\nLess\u00a0than\n\u00a0\n\u00a0\u00a0\nThan One\n\u00a0\n\u00a0\u00a0\nOne\n\u00a0\n\n\u00a0\n\u00a0\u00a0\nThree\u00a0Months\n\u00a0\n\u00a0\u00a0\nSix\u00a0Months\n\u00a0\n\u00a0\u00a0\nYear\n\u00a0\n\u00a0\u00a0\nYear\n\u00a0\n\n Time Deposits\n\u00a0\u00a0\n$\n9,264\n\u00a0\n\u00a0\u00a0\n$\n18,821\n\u00a0\n\u00a0\u00a0\n$\n15,858\n\u00a0\n\u00a0\u00a0\n$\n48,424\n\u00a0\n\n\n\u00a0\u00a0\n \u00a0\n \u00a0\n\u00a0\n\u00a0\u00a0\n \u00a0\n \u00a0\n\u00a0\n\u00a0\u00a0\n \u00a0\n \u00a0\n\u00a0\n\u00a0\u00a0\n \u00a0\n \u00a0\n\u00a0\nThe following table presents the average amount of and average rate paid on each deposit category:","markdown_table":"\n\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | 2017 | | | | | | | | 2016 | | | | | | | | 2015 | | | | | | | | 2014 | | | | | | | | 2013 | | | | | | |\n| | | Amount | | | | | | | | Amount | | | | | | | | Amount | | | | | | | | Amount | | | | | | | | Amount | | | | | | |\n| | | (000\u0092s) | | | | % | | | | (000\u0092s) | | | | % | | | | (000\u0092s) | | | | % | | | | (000\u0092s) | | | | % | | | | (000\u0092s) | | | | % | | |\n| Balance at End of Period Applicable To: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Consumer Real Estate | | $ | 343 | | | | 10.11 | | | $ | 316 | | | | 11.33 | | | $ | 338 | | | | 12.85 | | | $ | 537 | | | | 15.68 | | | $ | 257 | | | | 15.97 | |\n| Agricultural Real Estate | | | 244 | | | | 7.78 | | | | 241 | | | | 8.22 | | | | 211 | | | | 8.35 | | | | 184 | | | | 8.13 | | | | 131 | | | | 7.70 | |\n| Agricultural | | | 667 | | | | 11.57 | | | | 616 | | | | 11.17 | | | | 582 | | | | 12.09 | | | | 547 | | | | 12.00 | | | | 326 | | | | 11.37 | |\n| Commercial Real Estate | | | 3,149 | | | | 49.81 | | | | 3,250 | | | | 49.72 | | | | 2,516 | | | | 47.07 | | | | 2,367 | | | | 43.48 | | | | 2,107 | | | | 43.24 | |\n| Commercial and Industrial | | | 1,546 | | | | 16.14 | | | | 1,318 | | | | 15.18 | | | | 1,229 | | | | 15.58 | | | | 1,421 | | | | 16.87 | | | | 1,359 | | | | 18.04 | |\n| Consumer | | | 441 | | | | 4.59 | | | | 394 | | | | 4.38 | | | | 337 | | | | 4.06 | | | | 323 | | | | 3.84 | | | | 292 | | | | 3.68 | |\n| Unallocated | | | 478 | | | | 0.00 | | | | 649 | | | | 0.00 | | | | 844 | | | | 0.00 | | | | 526 | | | | 0.00 | | | | 722 | | | | 0.00 | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Allowance for Loan\u00a0& Lease Losses | | $ | 6,868 | | | | 100.00 | | | $ | 6,784 | | | | 100.00 | | | $ | 6,057 | | | | 100.00 | | | $ | 5,905 | | | | 100.00 | | | $ | 5,194 | | | | 100.00 | |\n| Off Balance Sheet Commitments | | | 227 | | | | | | | | 217 | | | | | | | | 208 | | | | | | | | 207 | | | | | | | | 163 | | | | | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Total Allowance for Credit Losses | | $ | 7,095 | | | | | | | $ | 7,001 | | | | | | | $ | 6,265 | | | | | | | $ | 6,112 | | | | | | | $ | 5,357 | | | | | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n\n","source":"FMAO\/10-K\/0001193125-18-062514"} {"title":"ITEM\u00a07. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF\nOPERATIONS","text":"Liquidity Liquidity remains adequate though down from prior years as the Bank has decreased the investment portfolio to fund loans. The Bank has access to $69 million of\nunsecured borrowings through correspondent banks and $94.6 million of unpledged securities which may be sold or used as collateral. The amount of unpledged securities increase almost $22.8 million as compared to 2016. This was accomplished with\nutilizing Promontory\u0092s ICS product to protect Ohio public fund depositors and commercial sweep customers with FDIC coverage rather than pledged securities. For the Bank, an additional $5.7 million is also available from the Federal Home Loan\nBank based on current collateral pledging with up to $116.8 million available provided adequate collateral is pledged. Maintaining sufficient funds to\nmeet depositor and borrower needs on a daily basis continues to be among management\u0092s top priorities. This is accomplished not only by immediate liquid resources of cash, due from banks and federal funds sold, but also by the Bank\u0092s\navailable for sale securities portfolio. The average aggregate balance of these assets was $206.3 for 2017, $228.0 for 2016 and $262.1 million for 2015. This represented 19.2%, 22.3%, and 28.0% of total average assets, respectively. Of the almost\n$196.4 million of debt securities in the bank\u0092s portfolio as of December\u00a031, 2017, $21.6 million, or 11.0% of the portfolio, is expected to receive payments or mature in 2018. This liquidity provides the opportunity to fund loan growth by\nanalysis of the lowest cost and source of funds whether by increasing deposits, sales or runoff of investments or utilizing debt. In addition to the\nBank\u0092s investment portfolio, the Company has $18.9 million held in the holding company\u0092s investment portfolio. $5.1 million of those investments will mature or receive payments in the next twelve months. These funds provide liquidity to\nthe Company. The Bank has been declaring additional dividends each quarter to provide this liquidity to the Company. The Captive has also upstreamed dividends to the Company and is expected to continue annually as long as reserve levels are\nadequately provided for. This provides additional liquidity for Company activities. Historically, the primary source of liquidity has been core deposits\nthat include noninterest bearing and interest bearing demand deposits, savings, money market accounts and time deposits of individuals. Core deposit balances increased in all categories with the exception of time deposits as of December\u00a031,\n2017 compared to same date 2016. Average total savings balances increased $72.6 million in 2017 as compared to 2016. Core deposit balances as of year-end 2016 increased in all categories. Overall deposits increased an average of $47.1 million in\n2016 and $2.6 million in 2015. The Bank also utilized Federal Funds purchased at times during 2015 through 2017. The average balance for 2017 was $2.2 million, for 2016 and 2015 was $1.9 million and $1.2 million respectively. The Bank used this\ntemporary funding source heavier in December 2015 while it secured more permanent funding. During 2016, it was used heavily in the third quarter. The Bank is comfortable accessing these funds on a regular basis. Historically, the primary use of new funds is placing the funds back into the community through loans for the acquisition of new homes, consumer products and\nfor business development. The use of new funds for loans is measured by the loan to deposit ratio. The Bank\u0092s average loan to deposit ratio was 88.2% for 2017, 87.9% for 2016, and 80.7% for 2015. The Bank\u0092s goal is for this ratio to be\nhigher in the 80-90 percent range with loan growth being the driver. The Bank ended the year 2017 at an 89.6% loan to deposit ratio. Short-term debt such\nas federal funds purchased and securities sold under agreement to repurchase also provides the Company with liquidity. Short-term debt for both federal funds purchased and securities sold under agreement to repurchase amounted to $39.5 million at\nDecember\u00a031, 2017, $70.3 million at December\u00a031, 2016, and $78.8 million at the end of 2015. These accounts are used to provide a sweep product to the Bank\u0092s commercial customers and for some term deposits. As ICS was implemented, the\nsweep balances moved into interest bearing deposits and for yearend 2017 the repurchase agreements are for term deposits only. \u0093Other\nborrowings\u0094 are also a source of funds. Other borrowings consist of loans from the Federal Home Loan Bank of Cincinnati. These funds are then used to provide loans in our community. The Bank utilized this funding source in December 2015 by\nborrowing $10 million. These remained consistent borrowings during 2016 and in December of 2017 $5 million matured and was paid off. Asset\/Liability Management The primary functions of asset\/liability management are to assure adequate liquidity and maintain an appropriate balance between interest earning assets and\ninterest bearing liabilities. It involves the management of the balance sheet mix, maturities, re-pricing characteristics and pricing components to provide an adequate and stable net interest margin with an acceptable level of risk. Interest rate\nsensitivity management seeks to avoid fluctuating net interest margins and to enhance consistent growth of net interest income through periods of changing interest rates. Changes in net income, other than those related to volume arise when interest rates on assets re-price in a time frame or interest rate environment that is\ndifferent from that of the re-pricing period for liabilities. Changes in net interest income also arise from changes in the mix of interest-earning assets and interest-bearing liabilities. Historically, the Bank has maintained liquidity through cash flows generated in the normal course of business, loan repayments, maturing earning assets, the\nacquisition of new deposits, and borrowings. The Bank\u0092s asset and liability management program is designed to maximize net interest income over the long term while taking into consideration both credit and interest rate risk. Interest rate\nsensitivity varies with different types of interest-earning assets and interest-bearing liabilities. Overnight federal funds on which rates change daily and loans that are tied to the market rate differ considerably from long-term investment\nsecurities and fixed rate loans. Similarly, time deposits over $100,000 and money market certificates are much more interest rate sensitive than passbook savings accounts. The Bank utilizes shock analysis to examine the amount of exposure an instant\nrate change of 100, 200, 300 and 400 basis points in both increasing and decreasing directions would have on the financials. Acceptable ranges of earnings and equity at risk are established and decisions are made to maintain those levels based on\nthe shock results. Impact of Inflation and Changing Prices The consolidated financial statements and notes thereto presented herein have been prepared in accordance with generally accepted accounting principles, which\nrequire the measurement of financial position and operating results in terms of historical dollars without considering the changes in the relative purchasing power of money over time due to inflation. The impact of inflation is reflected in the\nincreased cost of the Company\u0092s operations. Unlike most industrial companies, nearly all the assets and liabilities of the Company are monetary in nature. As a result, interest rates have a greater impact on the Company\u0092s performance than\ndo the effects of general levels of inflation. Interest rates do not necessarily move in the same direction or to the same extent as the prices of goods and service. Contractual Obligations Contractual Obligations of the\nCompany totaled $569 million as of December\u00a031, 2017. Excluded from the chart is Federal Funds Purchased of $10.4 million which are immediately payable the next business day. Time deposits represent contractual agreements for certificates of\ndeposits held by its customers. Long term debt represents the borrowings with the Federal Home Loan Bank and is further defined in Note 4 and 9 of the Consolidated Financial Statements.","markdown_table":"\n\n| | | | | | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | (In Thousands) | | | | | | | | | | | | | | |\n| | | Non-Interest | | | | Interest | | | | Savings | | | | Time | | |\n| | | DDAs | | | | DDAs | | | | Accounts | | | | Accounts | | |\n| December\u00a031, 2017: | | | | | | | | | | | | | | | | |\n| Average balance | | $ | 180,129 | | | $ | 286,912 | | | $ | 232,668 | | | $ | 188,443 | |\n| Average rate | | | 0.00 | % | | | 0.76 | % | | | 0.14 | % | | | 1.16 | % |\n| December\u00a031, 2016: | | | | | | | | | | | | | | | | |\n| Average balance | | $ | 169,510 | | | $ | 207,057 | | | $ | 239,939 | | | $ | 194,753 | |\n| Average rate | | | 0.00 | % | | | 0.61 | % | | | 0.18 | % | | | 0.99 | % |\n| December\u00a031, 2015: | | | | | | | | | | | | | | | | |\n| Average balance | | $ | 162,028 | | | $ | 184,941 | | | $ | 227,328 | | | $ | 189,822 | |\n| Average rate | | | 0.00 | % | | | 0.62 | % | | | 0.18 | % | | | 0.90 | % |\n\n","source":"FMAO\/10-K\/0001193125-18-062514"} {"title":"ITEM\u00a07. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF\nOPERATIONS","text":"Capital Resources Stockholders\u0092 equity was $134.1 million as of December\u00a031, 2017 compared to $125.6 million at December\u00a031, 2016. Dividends declared during 2017\nwere $0.50 per share totaling $4.6 million and dividends declared during 2016 were $0.46 per share totaling $4.2 million. Throughout 2017, the Company awarded 32,000 shares of restricted stock awards to 74 employees. During 2016, the Company\npurchased 14,000 shares and awarded 32,300 shares of restricted stock to 74 employees. For a summary of activity as it relates to the Company\u0092s restricted stock awards, please refer to Note 11: Employee Benefit Plans in the consolidated\nfinancial statements. On December\u00a031, 2017 the Company held 1,134,120 shares in Treasury Stock and 92,350 unvested shares of restricted stock. At yearend 2016, the Company held 1,158,250 shares in Treasury stock and 86,300 unvested shares of\nrestricted stock. On January\u00a019, 2018 the Company announced the authorization by its Board of Directors for the Company\u0092s repurchase, either on the open market, or in privately negotiated transactions, of up to 400,000 shares of its\noutstanding common stock commencing January\u00a019, 2018 and ending December\u00a031, 2018. The Company has a history of approving a similar resolution to be in effect each year for at least the last five years. The Company continues to have a strong capital base and maintains regulatory capital ratios that are above the defined regulatory capital ratios. At\nDecember\u00a031, 2017, the Bank and the Company had total risk-based capital ratios of 12.84% and 15.52%, respectively. Core capital to risk-based asset ratios of 12.04% and 14.73% for the Bank and the Company, respectively, are well in excess of\nregulatory guidelines. The Bank\u0092s leverage ratio of 9.92% is also substantially in excess of regulatory guidelines, as is the Company\u0092s at 12.02%. Under Basel III, the common equity Tier 1 Capital to risk-weighted assets ratios are also\nwell above the required 4.50% and the 6.50% well capitalized levels with the Company at 14.73% and the Bank at 12.04%. For further discussion and analysis of regulatory capital requirements, refer to Note 15 of the Audited Financial Statements. The Company\u0092s subsidiaries are restricted by regulations from making dividend distributions in excess of certain prescribed amounts. Upon prior\nregulatory approval, the Bank may be allowed to pay above the prescribed amount.","markdown_table":"\n\n| | | | | | | | | | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | Payment Due by Period (In Thousands) | | | | | | | | | | | | | | | | | | |\n| | | | | | | Less than | | | | 1-3 | | | | 3-5 | | | | More than | | |\n| Contractual Obligations | | Total | | | | 1 year | | | | Years | | | | Years | | | | 5 years | | |\n| Securities sold under agreement to repurchase | | $ | 29,070 | | | $ | 27,060 | | | $ | 2,010 | | | $ | \u0097 | | | $ | \u0097 | |\n| Time Deposits | | | 187,566 | | | | 83,734 | | | | 64,061 | | | | 39,142 | | | | 629 | |\n| Dividends Payable | | | 1,600 | | | | 1,600 | | | | \u0097 | | | | \u0097 | | | | \u0097 | |\n| Building Leases | | | 345,818 | | | | 66,818 | | | | 72,000 | | | | 77,000 | | | | 130,000 | |\n| Long Term Debt | | | 5,000 | | | | 5,000 | | | | \u0097 | | | | \u0097 | | | | \u0097 | |\n| | | | | | | | | | | | | | | | | | | | | |\n| Total | | $ | 569,054 | | | $ | 184,212 | | | $ | 138,071 | | | $ | 116,142 | | | $ | 130,629 | |\n| | | | | | | | | | | | | | | | | | | | | |\n\n","source":"FMAO\/10-K\/0001193125-18-062514"} {"title":"Financial \u2013 Exposures","text":"*Includes Owner Occupied\u00a0\u00a0Report on Adjusted Loans as of December 31, 2020Our credit administration is closely monitoring and analyzing these higher risk segments within the loan portfolio, tracking loan payment deferrals, customer liquidity and providing timely reports to senior management and the board of directors.\u00a0\u00a0The Bank is in frequent contact with our borrowers during this time of uncertainty and has had only one COVID-19 related downgrade which was less than $10 million during 2020.\u00a0\u00a0The Bank has stress tested our top five commercial concentrations which include retail commercial real estate, hotels, multi-family, industrial commercial real estate and assisted living.\u00a0\u00a0An outside third party has reviewed 55% of our commercial portfolio along with our internal credit department having reviewed 75% of our loan portfolio as a result of new money, renewals or annual reviews.\u00a0\u00a0Based on the Company\u2019s capital levels, prudent underwriting policies, loan concentration diversification and our geographic footprint, we expect to be able to manage the economic risks and uncertainties associated with the pandemic and remain adequately capitalized.","markdown_table":"\n\n\n| Industry Segments (Dollars in Thousands) | | Outstanding Loan Balance | | | | Percent of Total Loan Portfolio | | | | Payment Deferment | | | | Percent of Total Loans Adjusted with Deferment | | | | Interest Only Modifications | | | | Percent of Total Loans Adjusted with Interest Only | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| Hospitality (Hotels) | | $ | 88,160 | | | | 6.75 | % | | $ | - | | | | 0.00 | % | | $ | - | | | | 0.00 | % |\n| Restaurants | | | 20,610 | | | | 1.58 | % | | | - | | | | 0.00 | % | | | 13 | | | | 0.36 | % |\n| Retail Commercial \u00a0\u00a0 Real Estate \\* | | | 105,785 | | | | 8.10 | % | | | - | | | | 0.00 | % | | | 2,321 | | | | 64.85 | % |\n| Entertainment | | | 25,230 | | | | 1.93 | % | | | - | | | | 0.00 | % | | | 1,245 | | | | 34.79 | % |\n| Car Dealers | | | 30,301 | | | | 2.32 | % | | | - | | | | 0.00 | % | | | - | | | | 0.00 | % |\n| Gas Stations | | | 19,830 | | | | 1.52 | % | | | - | | | | 0.00 | % | | | - | | | | 0.00 | % |\n| Other | | | 735,433 | | | | 56.34 | % | | | - | | | | 0.00 | % | | | - | | | | 0.00 | % |\n| Total | | $ | 1,025,349 | | | | 78.54 | % | | $ | - | | | | 0.00 | % | | $ | 3,579 | | | | 100.00 | % |\n| | | | | | | | | | | | | | | | | | | | | | | | | |\n| # of Customers | | | | | | | | | | | - | | | | | | | 5 | | | | | | |\n\n","source":"FMAO\/10-K\/0001564590-21-007929"} {"title":"Net Interest Income","text":"The following tables show changes in interest income, interest expense and net interest resulting from changes in volume and rate variances for major categories of earnings assets and interest bearing liabilities.","markdown_table":"\n\n\n| | | 2018 | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | (In Thousands) | | | | | | | | | | |\n| | | Average | | | | Interest\/ | | | | | | |\n| | | Balance | | | | Dividends | | | | Yield\/Rate | | |\n| ASSETS | | | | | | | | | | | | |\n| Interest Earning Assets: | | | | | | | | | | | | |\n| Loans | | $ | 831,614 | | | $ | 42,303 | | | | 5.09 | % |\n| Taxable investment securities | | | 147,186 | | | | 2,863 | | | | 1.95 | % |\n| Tax-exempt investment securities | | | 48,059 | | | | 930 | | | | 2.45 | % |\n| Federal funds sold & interest bearing deposits | | | 21,218 | | | | 333 | | | | 1.57 | % |\n| Total Interest Earning Assets | | | 1,048,077 | | | $ | 46,429 | | | | 4.46 | % |\n| Non-Interest Earning Assets: | | | | | | | | | | | | |\n| Cash and cash equivalents | | | 35,486 | | | | | | | | | |\n| Other assets | | | 28,650 | | | | | | | | | |\n| Total Assets | | $ | 1,112,213 | | | | | | | | | |\n| LIABILITIES\u00a0AND\u00a0SHAREHOLDERS'\u00a0EQUITY | | | | | | | | | | | | |\n| Interest Bearing Liabilities: | | | | | | | | | | | | |\n| Savings deposits | | $ | 551,746 | | | $ | 3,453 | | | | 0.63 | % |\n| Other time deposits | | | 183,512 | | | | 2,536 | | | | 1.38 | % |\n| Other borrowed money | | | 4,946 | | | | 80 | | | | 1.62 | % |\n| Federal funds purchased and securities sold under \u00a0\u00a0 agreement to repurchase | | | 26,252 | | | | 503 | | | | 1.92 | % |\n| Total Interest Bearing Liabilities | | | 766,456 | | | $ | 6,572 | | | | 0.86 | % |\n| Non-Interest Bearing Liabilities: | | | | | | | | | | | | |\n| Non-interest bearing demand deposits | | | 194,548 | | | | | | | | | |\n| Other | | | 13,570 | | | | | | | | | |\n| Total Liabilities | | | 974,574 | | | | | | | | | |\n| Shareholders' Equity | | | 137,639 | | | | | | | | | |\n| Total Liabilities and Shareholders' Equity | | $ | 1,112,213 | | | | | | | | | |\n| Interest\/Dividend income\/yield | | | | | | $ | 46,429 | | | | 4.46 | % |\n| Interest Expense\/cost | | | | | | | 6,572 | | | | 0.86 | % |\n| Net Interest Spread | | | | | | $ | 39,857 | | | | 3.60 | % |\n| Net Interest Margin | | | | | | | | | | | 3.83 | % |\n\n","source":"FMAO\/10-K\/0001564590-21-007929"} {"title":"Non-Interest Expense","text":"Furniture and equipment steadily increase as we continue to add facilities and invest in technology. Annual maintenance costs continue to grow and become a greater piece of the overall cost. As new services are provided to our customers, the backroom cost to supply them continues to rise. The Company accepts it is an expected cost of doing business and keeping our services relevant to the industry. Data processing costs were lower in 2020 as compared to 2019 by $785.0 thousand of which $867.6 thousand was acquisition related for termination fees incurred in 2019. Overall, data processing expense for 2019 was expected to be higher with the addition of the six acquired Indiana offices. Data processing expense increased $1.2 million during 2019 as compared to 2018.\u00a0\u00a0As the pricing on many services is based on number of accounts and the Bank fully expects those to increase with the growth from the newer offices and overall Bank growth, this line item is expected to also increase.The FDIC assessment increased over 2019 while 2019 decreased as compared to 2018. This line item speaks to the health of the Bank and the financial industry. The assessment for 2020 was up $450.0 thousand compared to 2019 as a result of the total assessment base increasing. In 2020, Small Bank Assessment Credits of $125.9 thousand were applied to first quarter\u2019s invoice. Credits in the amount of $204.2 thousand were applied to third and fourth quarter 2019\u2019s invoice. The assessment for 2019 was down $143.0 thousand from 2018.The last line items with significant variation in noninterest expense to discuss is \u201cconsulting fees\u201d and \u201cother general and administrative.\u201d Consulting fees increased by $300.0 thousand in 2020 over 2019 while decreased $259.9 thousand in 2019 compared to 2018. In 2020, $167.0 thousand was paid to the firm who assisted with identifying profit enhancements, $48.0 thousand for Chief Information Officer search, $25.0 thousand to Kasasa for contract termination and $34.0 thousand to develop a predictive customer behavior model. During 2019, consultants were used to complete a pay study review, assist with developing a three year strategic plan and to identify profit enhancement initiatives. Acquisition costs incurred in 2019 and 2018 total $1.28 million and $742.1 thousand respectively with expenses being recorded in multiple line items. Core deposit intangible expense which is included in the other general and administrative line decreased in 2020 compared to 2019 by $7.0 thousand; however, increased in 2019 compared to 2018 by $560.0 thousand with the acquisition. Advertising and public relations decreased in 2020 by $237.0 thousand with many events canceled due to the pandemic; however, had increased in 2019 by $682 thousand over 2018. With the addition of new offices in both years behind the increases, 2020 was expected to increase due to additional offices being added. The Bank also celebrates the anniversary of office openings with a special event in each community.","markdown_table":"\n\n\n| | | (In Thousands) | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | 2020 | | | | 2019 | | | | 2018 | | |\n| Beginning of Year | | $ | 2,629 | | | $ | 2,385 | | | $ | 2,299 | |\n| Capitalized Additions | | | 1,722 | | | | 731 | | | | 450 | |\n| Amortization | | | (1,031 | ) | | | (487 | ) | | | (364 | ) |\n| Valuation Allowance | | | - | | | | - | | | | - | |\n| End of Year | | $ | 3,320 | | | $ | 2,629 | | | $ | 2,385 | |\n\n","source":"FMAO\/10-K\/0001564590-21-007929"} {"title":"Securities","text":"The following table sets forth the maturities of investment securities as of December 31, 2020 and the weighted average yields of such securities calculated on the basis of cost and effective yields weighted for the scheduled maturity of each security.\u00a0\u00a0Tax-equivalent adjustments, using a twenty-one percent rate, have been made in yields on obligations of state and political subdivisions.\u00a0\u00a0Stocks of domestic corporations have not been included. Maturities of mortgage-backed securities are based on the stated maturity date of the security. Due to prepayments, actual maturities may be different.","markdown_table":"\n\n\n| | | (In Thousands) | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | 2020 | | | | 2019 | | | | 2018 | | |\n| U.S. Treasury | | $ | - | | | $ | 10,021 | | | $ | 22,830 | |\n| U.S. Government agencies | | | 124,241 | | | | 62,445 | | | | 69,327 | |\n| Mortgage-backed securities | | | 113,056 | | | | 95,197 | | | | 36,262 | |\n| State and local governments | | | 70,515 | | | | 54,630 | | | | 40,028 | |\n| | | $ | 307,812 | | | $ | 222,293 | | | $ | 168,447 | |\n\n","source":"FMAO\/10-K\/0001564590-21-007929"} {"title":"Securities","text":"As of December 31, 2020, the Bank did not hold a large block of any one investment security in excess of 10% of stockholders\u2019 equity. The largest segment of holdings is in U.S. Government agencies. The Bank also holds stock in the Federal Home Loan Bank of Cincinnati and Indianapolis at a cost of $5.8 million. This is required in order to obtain Federal Home Loan Bank loans.","markdown_table":"\n\n\n| | | After Five Years | | | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | Within Ten Years | | | | | | | | After Ten Years | | | | | | |\n| | | Amount | | | | Yield | | | | Amount | | | | Yield | | |\n| U.S. Treasury | | $ | - | | | | 0.00 | % | | $ | - | | | | 0.00 | % |\n| U.S. Government agencies | | | 83,610 | | | | 1.12 | % | | | - | | | | 0.00 | % |\n| Mortgage-backed securities | | | 7,409 | | | | 1.70 | % | | | 105,426 | | | | 1.60 | % |\n| State and local governments | | | 8,318 | | | | 1.79 | % | | | 1,749 | | | | 1.86 | % |\n| Taxable state and local governments | | | 34,702 | | | | 2.06 | % | | | - | | | | 1.79 | % |\n\n","source":"FMAO\/10-K\/0001564590-21-007929"} {"title":"Loan Portfolio","text":"The following table shows the maturity of loans excluding fair value adjustments as of December 31, 2020:","markdown_table":"\n\n\n| | | (In Thousands) | | | | | | | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| Loans: | | 2020 | | | | 2019 | | | | 2018 | | | | 2017 | | | | 2016 | | |\n| Consumer Real Estate | | $ | 175,588 | | | $ | 165,349 | | | $ | 80,766 | | | $ | 83,620 | | | $ | 86,234 | |\n| Agricultural Real Estate | | | 189,159 | | | | 199,105 | | | | 68,609 | | | | 64,073 | | | | 62,375 | |\n| Agricultural | | | 94,358 | | | | 111,820 | | | | 108,495 | | | | 95,111 | | | | 84,563 | |\n| Commercial Real Estate | | | 588,825 | | | | 551,309 | | | | 419,784 | | | | 410,520 | | | | 377,481 | |\n| Commercial and Industrial | | | 189,246 | | | | 135,631 | | | | 121,793 | | | | 126,275 | | | | 109,256 | |\n| Consumer | | | 52,540 | | | | 49,237 | | | | 41,953 | | | | 37,757 | | | | 33,179 | |\n| Other | | | 15,757 | | | | 8,314 | | | | 5,889 | | | | 6,415 | | | | 5,732 | |\n| | | $ | 1,305,473 | | | $ | 1,220,765 | | | $ | 847,289 | | | $ | 823,771 | | | $ | 758,820 | |\n\n","source":"FMAO\/10-K\/0001564590-21-007929"} {"title":"Loan Portfolio","text":"The following table presents the total of loans excluding fair value adjustments due after one year which has either 1) predetermined interest rates (fixed) or 2) floating or adjustable interest rates (variable):","markdown_table":"\n\n\n| | | (In Thousands) | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | | | | | After One | | | | | | |\n| | | Within | | | | Year Within | | | | After | | |\n| | | One Year | | | | Five Years | | | | Five Years | | |\n| Consumer Real Estate | | $ | 5,810 | | | $ | 31,538 | | | $ | 138,295 | |\n| Agricultural Real Estate | | | 5,612 | | | | 4,045 | | | | 180,123 | |\n| Agricultural | | | 53,083 | | | | 27,835 | | | | 13,443 | |\n| Commercial Real Estate | | | 21,532 | | | | 307,834 | | | | 259,571 | |\n| Commercial and Industrial | | | 61,416 | | | | 109,373 | | | | 18,642 | |\n| Consumer | | | 1,520 | | | | 38,099 | | | | 12,900 | |\n| Other | | | 2,223 | | | | 134 | | | | 13,397 | |\n| | | $ | 151,196 | | | $ | 518,858 | | | $ | 636,371 | |\n\n","source":"FMAO\/10-K\/0001564590-21-007929"} {"title":"Loan Portfolio","text":"The following table summarizes the Company\u2019s nonaccrual, past due 90 days or more and still accruing loans, and accruing troubled debt restructurings as of December 31 for each of the last five years:","markdown_table":"\n\n\n| | | (In Thousands) | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | Fixed | | | | Variable | | | | | | |\n| | | Rate | | | | Rate | | | | Total | | |\n| Consumer Real Estate | | $ | 157,784 | | | $ | 12,049 | | | $ | 169,833 | |\n| Agricultural Real Estate | | | 159,431 | | | | 24,737 | | | | 184,168 | |\n| Agricultural | | | 38,273 | | | | 3,005 | | | | 41,278 | |\n| Commercial Real Estate | | | 470,321 | | | | 97,084 | | | | 567,405 | |\n| Commercial and Industrial | | | 112,523 | | | | 15,492 | | | | 128,015 | |\n| Consumer | | | 50,999 | | | | - | | | | 50,999 | |\n| Other | | | 13,531 | | | | - | | | | 13,531 | |\n| | | $ | 1,002,862 | | | $ | 152,367 | | | $ | 1,155,229 | |\n\n","source":"FMAO\/10-K\/0001564590-21-007929"} {"title":"Loan Portfolio","text":"Although loans may be classified as non-performing, some pay on a regular basis, and many continue to pay interest irregularly or at less than original contractual rates.\u00a0\u00a0Interest income that would have been recorded under the original terms of these loans would have aggregated $272 thousand for 2020, $193 for 2019 and $99 thousand for 2018. Any collections of interest on nonaccrual loans are included in interest income when collected unless it is on an impaired loan with a specific allocation.\u00a0\u00a0A collection of interest on an impaired loan with a specific allocation is applied to the loan balance to decrease the allocation. Total interest collections, whether on an accrued or cash basis, amounted to $269 thousand for 2020, $117 thousand for 2019 and $69 thousand for 2018. Loans are placed on nonaccrual status in the event that the loan is in past due status for more than 90 days or payment in full of principal and interest is not expected.\u00a0\u00a0The Bank had nonaccrual loan balances of $9.4 million at December 31, 2020 compared to balances of $3.4 million and $542.0 thousand as of year-end 2019 and 2018. All of the balances of nonaccrual loans for the past three years were collaterally secured. As of December 31, 2020, the Bank had $56.3 million of loans which it considers to be \u201cpotential problem loans\u201d in that the borrowers are experiencing financial difficulties which are not reflected in the table above. At December 31, 2019, the Bank had $60.2 million of these loans. At December 31, 2018, the Bank had $7.9 million of these loans.\u00a0\u00a0These loans are subject to constant management attention and are reviewed at least monthly. The amount of the potential problem loans was considered in management\u2019s review of the loan loss reserve at December 31, 2020 and 2019.In extending credit to families, businesses and governments, banks accept a measure of risk against which an allowance for possible loan loss is established by way of expense charges to earnings. This expense is determined by management based on a detailed monthly review of the risk factors affecting the loan portfolio, including general economic conditions, changes in the portfolio mix, past due loan-loss experience and the financial condition of the bank\u2019s borrowers.As of December 31, 2020, the Bank had loans outstanding to individuals and firms engaged in the various fields of agriculture in the amount of $94.4 million with an additional $189.2 million in agricultural real estate loans which compared to $111.8 and $199.1 million respectively as of December 31, 2019.\u00a0\u00a0The ratio of this segment of loans to the total loan portfolio is not considered unusual for a bank engaged in and servicing rural communities.Interest rate modification to reflect a decrease in market interest rates or maintain a relationship with the debtor, where the debtor is not experiencing financial difficulty and can obtain funding from other sources, is not considered a troubled debt restructuring. As of December 31, 2020, the Bank had $6.5 million of its loans that were classified as troubled debt restructurings, of which $5.6 million are included in non-accrual loans.\u00a0\u00a0This compares to $956.3 thousand of troubled debt restructurings, of which $50.3 thousand are included in non-accrual loans for 2019 and $178.1 thousand of troubled debt restructuring, of which $74.4 thousand are included in non-accrual loans for 2018. Updated appraisals are required on all collateral dependent loans once they are deemed impaired.\u00a0\u00a0The Bank may also require an updated appraisal of a watch list loan which the Bank monitors under their loan policy. On a quarterly basis, Bank management reviews properties supporting asset dependent loans to consider market events that may indicate a change in value has occurred.To determine observable market value, collateral asset values securing an impaired loan are periodically evaluated. Maximum time of re-evaluation is every 12 months for chattels and titled vehicles and every two years for real estate.\u00a0\u00a0In this process, third party evaluations are obtained and heavily relied upon. Until such time that updated appraisals are received, the Bank may discount the existing collateral value used.Performing \u201cnon-watch list\u201d loans secured in whole or in part by real estate, do not require an updated appraisal unless the loan is rewritten and additional funds advanced.\u00a0\u00a0Watch List loans secured in whole or in part by real estate require updated appraisals every two years.\u00a0\u00a0All loans are subject to loan to values as found in the Bank\u2019s loan policies irrespective of their grade.\u00a0\u00a0The Bank\u2019s watch list is reviewed on a quarterly basis by management and any questions to value are addressed at that time. The majority of the Bank\u2019s loans are made in the market by lenders who live and work in the market.\u00a0\u00a0Thus, their evaluation of the independent valuation is also valuable and serves as a double check.\u00a0\u00a0On extremely rare occasions, the Bank will make adjustments to the recorded values of collateral securing commercial real estate loans without acquiring an updated appraisal for the subject property. The Bank has no formalized policy for determining when collateral value adjustments between regularly scheduled appraisals are necessary, nor does it use any specific methodology for applying such adjustments. However, on a quarterly basis as part of its normal operations, the Bank\u2019s senior management and the Loan Review Committee will meet to review all commercial credits either deemed to be impaired or on the Bank\u2019s watch list. In addition to analyzing the recent performance of these loans, management and the Enterprise Risk Management Committee will also consider any general market conditions that might warrant adjustments to the value of particular real estate collateralizing commercial loans. In addition, management conducts annual reviews of all commercial loans exceeding certain outstanding balance thresholds. In each of these situations, any information available to management regarding market conditions impacting a specific property or other relevant factors are considered, and lenders familiar with a particular commercial real estate loan and the underlying collateral may be present to provide their opinion on such factors. If the available information leads management to conclude a valuation adjustment is warranted, such an adjustment may be applied on the basis of the information available. If management concludes that an adjustment is warranted but lacks the specific information needed to reasonably quantify the adjustment, management will order a new appraisal on the subject property even though one may not be required under the Bank\u2019s general policies for updating appraisal. Note 4 of the Consolidated Financial Statements may also be reviewed for additional tables dealing with the Bank\u2019s loans and ALLL. ALLL is evaluated based on an assessment of the losses inherent in the loan portfolio.\u00a0\u00a0This assessment results in an allowance consisting of two components, allocated and unallocated. Management considers several different risk assessments in determining ALLL. The allocated component of ALLL reflects expected losses resulting from an analysis of individual loans, developed through specific credit allocations for individual loans and historical loss experience for each loan category.\u00a0\u00a0For those loans where the internal credit rating is at or below a predetermined classification and management can reasonably estimate the loss that will be sustained based upon collateral, the borrowers operating activity and economic conditions in which the borrower operates, a specific allocation is made.\u00a0\u00a0For those borrowers that are not currently behind in their payment, but for which management believes, based on economic conditions and operating activities of the borrower, the possibility exists for future collection problems, a reserve is established.\u00a0\u00a0The amount of reserve allocated to each loan portfolio is based on past loss experiences and the different levels of risk within each loan portfolio.\u00a0\u00a0The historical loan loss portion is determined using a historical loss analysis by loan category.The unallocated portion of the reserve for loan losses is determined based on management\u2019s assessment of general economic conditions as well as specific economic factors in the Bank\u2019s marketing area.\u00a0\u00a0This assessment inherently involves a higher degree of uncertainty.\u00a0\u00a0It represents estimated inherent but undetected losses within the portfolio that are probable due to uncertainties in economic conditions, delays in obtaining information, including unfavorable information about a borrower\u2019s financial condition and other current risk factors that may not have yet manifested themselves in the Bank\u2019s historical loss factors used to determine the allocated component of the allowance.Actual charge-off of loan balances is based upon periodic evaluations of the loan portfolio by management.\u00a0\u00a0These evaluations consider several factors, including, but not limited to, general economic conditions, financial condition of the borrower, and collateral.As presented in the table on the next page, charge-offs decreased to $720 thousand for 2020. 52.8% of the charge-offs stemmed from the consumer related portfolios. Charge-offs were $841 thousand for 2019, $580 thousand for 2018, preceded by $288 thousand for 2017 and $550 thousand for 2016.\u00a0\u00a0Recoveries were $183 thousand in 2020 compared to $156, $163, $150 and $156 thousand for 2019, 2018, 2017 and 2016, respectively. The net charge-offs for the last five years were all under $700 thousand. 2017 was the lowest at $138 thousand. Higher provision expense was used to fund the ALLL for loan growth in 2016 and 2019. 2020 had higher provision expense due to the uncertainty surrounding COVID-19 and its impact on individuals and businesses. For 2017 and 2018, the provision was used to replenish the balance decreased by the net charge-off activity. Overall, the ALLL increased from $6.8 million at year-end 2016 to $13.7 million at year-end 2020. After adding the allowance for unfunded loan commitments, the ACL ended 2020 at $14.3 million. As the ratios on the bottom of the following table show, the trends for each have improved or remained constant over the five years shown. Asset quality and the ACL are both strong and emphasize the level of credit quality. In reviewing the bigger picture of the allowance for credit loss, the years with the higher percentage of ACL to total nonperforming loans ratio account for the lower level of nonaccrual and watch list loans. This demonstrates the extended time period with which it has taken to achieve resolution and\/or collection of these loans. The ratio of ACL to nonperforming loans increased beginning in 2016 with a significant drop in 2019 followed by a slight drop in 2020. 2020\u2019s provision expense was the highest of the five years shown largely due to the uncertainty surrounding COVID-19.\u00a0\u00a0Loan growth occurred in 2020 and 2019 reaching a double-digit percentage increase like 2016. The ACL to nonperforming loans for all years remained more than adequate and emphasizes the existing strong level of credit quality.\u00a0\u00a0The following table presents a reconciliation of the allowance for credit losses for the years ended December 31, 2020, 2019, 2018, 2017 and 2016:","markdown_table":"\n\n\n| | | (In Thousands) | | | | | | | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | 2020 | | | | 2019 | | | | 2018 | | | | 2017 | | | | 2016 | | |\n| Non-accrual loans | | $ | 9,404 | | | $ | 3,400 | | | $ | 542 | | | $ | 1,003 | | | $ | 1,384 | |\n| Accruing loans past due 90 days or more | | | - | | | | - | | | | - | | | | - | | | | - | |\n| Troubled Debt Restructurings, not included above | | | 941 | | | | 980 | | | | 104 | | | | 587 | | | | 559 | |\n| Total | | $ | 10,345 | | | $ | 4,380 | | | $ | 646 | | | $ | 1,590 | | | $ | 1,943 | |\n\n","source":"FMAO\/10-K\/0001564590-21-007929"} {"title":"Loan Portfolio","text":"*Nonperforming loans are defined as all loans on nonaccrual, plus any loans past due 90 days not on nonaccrual.Allocation of ALLL per Loan Category in terms of dollars and percentage of loans in each category to total loans is as follows:","markdown_table":"\n\n\n| | | (In Thousands) | | | | | | | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | 2020 | | | | 2019 | | | | 2018 | | | | 2017 | | | | 2016 | | |\n| Loans | | $ | 1,302,990 | | | $ | 1,218,999 | | | $ | 846,374 | | | $ | 823,024 | | | $ | 758,094 | |\n| Daily average of outstanding loans | | $ | 1,313,675 | | | $ | 1,129,231 | | | $ | 831,614 | | | $ | 783,140 | | | $ | 724,076 | |\n| Allowance for Loan Losses - Jan 1 | | $ | 7,228 | | | $ | 6,775 | | | $ | 6,868 | | | $ | 6,784 | | | $ | 6,057 | |\n| Loans Charged off: | | | | | | | | | | | | | | | | | | | | |\n| Consumer Real Estate | | | 35 | | | | 98 | | | | 63 | | | | 4 | | | | 106 | |\n| Agricultural\u00a0\u00a0Real Estate | | | - | | | | - | | | | - | | | | - | | | | - | |\n| Agricultural | | | - | | | | 37 | | | | - | | | | - | | | | 21 | |\n| Commercial Real Estate | | | 8 | | | | - | | | | 16 | | | | 21 | | | | 93 | |\n| Commercial and Industrial | | | 297 | | | | 215 | | | | 142 | | | | - | | | | 20 | |\n| Consumer | | | 380 | | | | 491 | | | | 359 | | | | 263 | | | | 310 | |\n| | | | 720 | | | | 841 | | | | 580 | | | | 288 | | | | 550 | |\n| Loan Recoveries: | | | | | | | | | | | | | | | | | | | | |\n| Consumer Real Estate | | | 9 | | | | - | | | | 18 | | | | 13 | | | | 28 | |\n| Agricultural\u00a0\u00a0Real Estate | | | - | | | | - | | | | - | | | | - | | | | - | |\n| Agricultural | | | - | | | | 3 | | | | 8 | | | | 8 | | | | 10 | |\n| Commercial Real Estate | | | 10 | | | | 11 | | | | 10 | | | | 15 | | | | 20 | |\n| Commercial and Industrial | | | 24 | | | | 22 | | | | 13 | | | | 12 | | | | 11 | |\n| Consumer | | | 140 | | | | 120 | | | | 114 | | | | 102 | | | | 87 | |\n| | | | 183 | | | | 156 | | | | 163 | | | | 150 | | | | 156 | |\n| Net Charge Offs | | | 537 | | | | 685 | | | | 417 | | | | 138 | | | | 394 | |\n| Provision for loan loss | | | 6,981 | | | | 1,138 | | | | 324 | | | | 222 | | | | 1,121 | |\n| Acquisition provision for loan loss | | | - | | | | - | | | | - | | | | - | | | | - | |\n| Allowance for Loan & Lease Losses - Dec 31 | | | 13,672 | | | | 7,228 | | | | 6,775 | | | | 6,868 | | | | 6,784 | |\n| Allowance for Unfunded Loan \u00a0\u00a0 Commitments & Letters of Credit - Dec 31 | | | 641 | | | | 479 | | | | 274 | | | | 227 | | | | 217 | |\n| Total Allowance for Credit Losses - Dec 31 | | $ | 14,313 | | | $ | 7,707 | | | $ | 7,049 | | | $ | 7,095 | | | $ | 7,001 | |\n| Ratio of net charge-offs to average Loans \u00a0\u00a0 outstanding | | | 0.04 | % | | | 0.06 | % | | | 0.05 | % | | | 0.02 | % | | | 0.05 | % |\n| Ratio of the Allowance for Loan & Lease \u00a0\u00a0 Losses to Nonperforming Loans | | | 145.47 | % | | | 209.70 | % | | | 1249.57 | % | | | 684.83 | % | | | 490.39 | % |\n\n","source":"FMAO\/10-K\/0001564590-21-007929"} {"title":"22","text":"*We\nhave already paid $172,000 toward this total.If\nwe are able to successfully develop our drug, PT00114, and obtain FDA approval, we could then begin marketing and selling it in\nthe United States and generate revenue. FDA approval to begin commercial sales is the singular gating item that will allow us\nto begin generating sales revenue in the U.S., so it will have an enormous impact on our business plan and our financial condition.\nIt is anticipated that the sale of our drug will allow the Company to generate enough sales revenue to support all of our operations\nand to generate a profit. However, given the stage of development, even if FDA Approval is obtained, we do not anticipate generating\nany revenue from sales prior to 2024.Development\nMilestones (upcoming developmental milestones)Upcoming\ndevelopment milestones include confirming efficacy of our lead drug candidate in an animal model in a CRO, conducting toxicology\ntesting in two animal species, and filing an IND application to begin human clinical trials.Human\nResources (current state of employees and future plans towards employeesThe\nCompany has two part-time employees: Garo H. Armen, PhD, the Executive Chairman, and Alexander K. Arrow, MD, the Chief Financial\nOfficer. The Company also has three paid consultants: Andrew Slee, PhD, Development Advisor, Dalia Barsyte, PhD, Chief Technology\nAdvisor, David Lovejoy, PhD, Chief Scientific Advisor, and Christina Fam Faragalla, Director of Project Management.Financing\n\u2013 Capital NeedsIn\naddition to the working capital being generated via the Note Private Offering, the Company anticipates that it will need to raise\nadditional capital in the next year or so to support its research and development activities as it prepares to commence and commences\nhuman clinical trials. The Company does not have any commitments for such additional capital.Over\nthe next two years, we anticipate conducting the following research and development activities at the following estimated costs\nand expense:","markdown_table":"\n\n| | | Estimated Cost | | |\n| --- | --- | --- | --- | --- |\n| 2Q 2020 | | | | |\n| Final Dosing work for Phase I | | $ | 55,000 | |\n| Final Safety and Toxicology Animal studies | | $ | 421,000 | \\* |\n| | | | | |\n| 3Q 2020 | | | | |\n| Complete Stability and Formulation | | $ | 85,000 | |\n| IND application write-up and filing | | $ | 120,000 | |\n| | | | | |\n| 4Q 2020 | | | | |\n| Site selection, patient enrollment | | $ | 850,000 | \\* |\n| | | | | |\n| 1H 2021 | | | | |\n| Human Safety Data generated from Phase I trial | | $ | 450,000 | |\n| | | | | |\n| 2H 2021 | | | | |\n| Human Efficacy Data generated from Phase II trial | | $ | 600,000 | |\n\n","source":"PTIX\/10-K\/0001493152-20-007286"} {"title":"ITEM 7.\nMANAGEMENT\u2019S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF\nOPERATIONS","text":"(1)\n\n\nAs described above, we currently\n aggregate revenues based on the type of user activity monetized. Our\n objective is to optimize total revenues from the user experiences.\n Accordingly, this factor should be considered in evaluating the relative\n revenues generated from our Subscription and Transactional\n Services.\n\n\n\nRevenues\ndecreased approximately $44.8 million, or 39%, to $69.1 million for the year\nended December 31, 2009, compared to $113.9 million for the year ended December\n31, 2008.Subscription\nrevenue consists of content applications billed direct to consumers via mobile\nor land based telephone lines or credit card.\u00a0\u00a0These services are\ndelivered through the Internet to PCs, or mobile phones, or through other\nInternet-connected devices.\u00a0\u00a0Subscription revenue decreased by\napproximately $22.0 million, or 50%, to $22.2 million for the year ended\nDecember 31, 2009, compared to $44.2 million for the year ended December 31,\n2008. The decrease in subscription service revenue was principally attributable\nto a decrease in the number of billable subscribers during the period. At\nDecember 31, 2009 the number of subscribers was 338,000 compared to 501,000 at\nDecember 31, 2008.\u00a0\u00a0This also compares to 346,000 subscribers at\nSeptember 30, 2009.\u00a0 The decrease in billable subscribers from a year ago\nwas due primarily to a significant reduction in mobile customer acquisition\nrates, offset by approximately 70,000 net billable additions from the\nintroduction of the Kazaa music subscription service.\u00a0\u00a0Net billable\nadditions refers to the number of subscribers added during the period, less\nattrition.\u00a0 During 2009, we reduced our mobile marketing spends, which\ndirectly impacted customer acquisition rates. We elected to cut our mobile\nmarketing spends because of the uncertain regulatory and legal environment\nassociated with marketing mobile subscription services and due to the less\nprofitable economics \u2013 a result of higher customer acquisition costs \u2013 of our\nmobile subscription service offerings.Transactional\nrevenue is derived from our online marketing and lead generation activities,\nwhich are targeted and measurable online campaigns and programs for marketing\npartners, corporate advertisers, or their agencies, generating qualified\ncustomer leads, online responses and activities, or increased brand recognition.\nTransactional revenue decreased by approximately $22.9 million or 33% to $46.8\nmillion for the year ended December 31, 2009 compared to $69.7 million for the\nyear ended December 31, 2008. The decrease is principally attributed to the\nreduction in discretionary advertising spending by our search\ncustomers.We also\nexperienced weakness in our marketing services and lead generation business,\nincluding a reduction in page views, site visits, and registrations, which\nmanifested itself in lower revenue for these service lines on a year-over-year\nbasis.\u00a0\u00a0As a result of the slow-down in economic activity in the\nUnited States during 2009, spending on advertising decreased markedly, leading\nto increased competition in the Internet marketing and lead generation markets\nwhich, in turn, created significant downward pricing pressure on our offerings\nand resulted in a lower volume of registrations and leads that could be sourced\nat an attractive price.Operating\nExpenses","markdown_table":"\n\n\n\n\n\n\n\n| | | For the Year | | | | | | | | Change | | | | Change | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | December 31, | | | | | | | | Inc.(Dec.) | | | | Inc.(Dec.) | | |\n| | | 2009 | | | | 2008 | | | | $ | | | | % | | |\n| | | | | | | | | | | | | | | | | |\n| Subscription | | $ | 22,254 | | | $ | 44,196 | | | $ | (21,942 | ) | | | -50 | % |\n| Transactional | | | 46,835 | | | | 69,688 | | | | (22,853 | ) | | | -33 | % |\n| | | | | | | | | | | | | | | | | |\n| Total Revenues (1) | | $ | 69,089 | | | $ | 113,884 | | | $ | (44,795 | ) | | | -39 | % |\n\n\n\n\n\n\n\n","source":"PTIX\/10-K\/0001144204-10-016818"} {"title":"ITEM 7.\nMANAGEMENT\u2019S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF\nOPERATIONS","text":"Cost\nof MediaCost of\nMedia \u2013 3rd party\ndecreased by $31.2 million to $43.3 million for the year ended December 31, 2009\nfrom $74.5 million for the year ended December 31, 2008. Cost of Media \u2013 3 rd party\nincludes media purchased for monetization of both transactional and subscription\nrevenues. Because of its strictly variable nature, this decrease was\nproportionately correlated to the decline in the related revenue.\u00a0\u00a0As\na percentage of revenue, Cost of Media -3rd party\nimproved to 63% for the year ended December 31, 2009 from 65% for the year ended\nDecember 31, 2008.\u00a0\u00a0This improvement in Cost of Media -3rd party\nmargin is attributable to reductions in the pace of mobile customer acquisition,\npartially offset by increased search marketing spend associated with the Kazaa\nmusic subscription service. It is to be expected that for businesses with a\nsignificant recurring revenue component, if direct marketing expense is\nsignificantly curtailed, the business, as a result of the recurring nature of\nrevenue generated by the subscription service, will exhibit a short term period\nof improved Cost of Media \u2013 3 rd party\nmargins.Product\nand DistributionProduct\nand distribution expense increased by $0.8 million to $10.5 million in the year\nended December 31, 2009 as compared to $9.7 million for the year ended December\n31, 2008. Product and distribution expenses are costs necessary to develop and\nmaintain proprietary content and support and maintain our websites and\ntechnology platforms \u2013 which drive both our transactional and subscription based\nrevenues.\u00a0\u00a0In 2009, we experienced higher product and distribution\nexpense as a result of costs incurred to further develop the Kazaa music\nservice, greater royalty and license expense, also associated with Kazaa, and\nother general marketing and distribution technology-related\nexpense.\u00a0\u00a0These higher technology and royalty costs were offset by a\nreduction in product and distribution salary expense. Included in product and\ndistribution cost is stock compensation expense of $111,000 and $7,000 for the\nyear ended December 31, 2009 and 2008, respectively.Selling\nand marketingSelling\nand marketing expense decreased by $1.6 million to $8.4 million in the year\nended December 31, 2009 as compared to $10.0 million for the year ended December\n31, 2008. The decrease is primarily due to a reduction in salaries and other\nmarketing costs, in accordance with the decrease in our revenue over the same\nperiod.\u00a0\u00a0This decrease in selling and marketing expense was partially\noffset by higher customer service expense as a result of new service offerings\nand call center activity.General,\nAdministrative and Other OperatingGeneral\nand administrative expenses decreased by approximately $1.4 million to $14.7\nmillion for the year ended December 31, 2009 compared to $16.1 million for the\nyear ended December 31, 2008. The decrease is due primarily due to a reduction\nin labor and related costs, professional and consulting fees, facilities and\nrelated costs, partially offset by an increase in Sarbanes Oxley consulting\nfees, legal expense and severance payments and accruals to former executives.\nWhile we consider it important to make appropriate and modest investments in\nlabor, facilities, and utilization of third party professional service providers\nto support our continued growth, business development, and corporate governance\ninitiatives, management has also made steps to reduce our overall cost structure\nas a result of the challenging and competitive business environment, and the\nassociated decrease in revenue and unfavorable operating results we have\nexperienced over the last year.\u00a0\u00a0We continue to look for opportunities\nto leverage our existing infrastructure or to generate appropriate cost savings\nwithout affecting employee morale or jeopardizing business development\nopportunities. Included in general and administrative expense is severance of\n$1.1 million for the year ended December 31, 2009 and stock compensation expense\nof $0.7 million and $1.3 million for the year ended December 31, 2009 and 2008,\nrespectively.Depreciation\nand amortizationDepreciation\nand amortization expense decreased $2.2 million to $3.7 million for the year\nended December 31, 2009 compared to $5.9 million for the year ended December 31,\n2008 principally as a result of a reduction in capital expenditure and a\ndecrease of $1.4 million of Ringtone subscriber database amortization expense\nfrom 2008 to 2009. The database was fully amortized by the second quarter of\n2009.Impairment\nof Goodwill and Intangible AssetsThe\nCompany conducts its annual impairment test in the fourth quarter of the year,\nunless an event occurs prior to the fourth quarter that would more likely than\nnot reduce the fair value of the Company below its carrying amount. In\nconnection with our annual goodwill impairment testing conducted in the fourth\nquarter, and for the year ended December 31, 2009, we determined there was\nimpairment of the carrying value of goodwill and intangible assets and recorded\na non-cash charge of $17.3 million compared to an impairment charge of $114.8\nmillion in 2008. The goodwill and intangibles impairment, the majority of which\nis not deductible for income tax purposes, is primarily due to our declining\nmarket price, reduced expectations for future operating results and reduced\nvaluation multiples. Such negative factors are reflected in our stock price and\nmarket capitalization.Loss\nfrom OperationsOperating\nloss decreased to approximately $28.9 million for the year ended December 31,\n2009 compared to $117.1 million for the year ended December 31, 2008. Excluding\nthe effect of goodwill and intangibles impairment in 2009 and 2008, operating\nloss increased to approximately $11.6 million for the year ended December 31,\n2009, compared to $2.3 million for the year ended December 31, 2008. The higher\noperating loss is the result of the revenue decrease, together with\nproportionately higher product and distribution expense, selling and marketing\nexpense and general and administrative expense, offset by an improvement in the\nCost of Media \u2013 3rd party\nmargin.Interest\nincome and dividends\u00a0Interest\nand dividend income decreased approximately $676,000 to $72,000 for the year\nended December 31, 2009, compared to $748,000 for the year ended December 31,\n2008. The reduction is mainly due to a decrease in the balances of cash and\nmarketable securities at December 31, 2009 compared to December 31, 2008, as\nwell as a reduction in the rate of return on invested capital.Interest\nexpenseInterest\nexpense was $76,000 for the year ended December 31, 2009 compared to $147,000\nfor the year ended December 31, 2008. The interest paid is primarily related to\nthe note payable to Ringtone which was paid in January 2009.Other\nIncome (Expense)Other\nincome was $5,000 for the year ended December 31, 2009 compared to other expense\nof ($153,000) for the year ended December 31, 2008. The 2008 expense was due to\na loss on sale of marketable securities.Income\nTaxes\u00a0Income\ntax expense (benefit), before noncontrolling interest and equity in income of\ninvestee, for the year ended December 31, 2009 and 2008 was $0.6 million and\n($0.9) million, respectively and reflects an effective tax rate of 2.2% and 0.7%\nrespectively. The effective tax rates were computed taking into consideration\nnon-deductible impairment charges of $12.1 million and $114.8 million for 2009\nand 2008, respectively, and the establishment of an income tax valuation\nallowance of $11.0 million for 2009.Equity\nin Loss of InvesteeEquity in\nincome of investee was $59,000, net of taxes at December 31, 2009 and represents\nour 36% interest in The Billing Resource, LLC (TBR). We acquired the interest in\nTBR in the 4th Quarter\n2008 and\u00a0\u00a0the operating results were de minimis.Net Loss (Income) Attributable to Noncontrolling\nInterestNet loss attributable to noncontrolling\ninterest was $28,000 for the year ended December 31, 2009 as compared to net\nincome of ($24,000) for the year ended December 31, 2008. This related to our\ninvestment in MECC which was dissolved in June 2009.Net\nLoss Attributable to Atrinsic, Inc.Net loss attributable to Atrinsic Inc., decreased by\n$86.3 million to $29.5 million for the year ended December 31, 2009 as compared\n$115.8 million for the year ended December 31, 2008. This decrease resulted from\nthe factors described above.Liquidity\nand Capital ResourcesWe\ncontinually project anticipated cash requirements, which may include business\ncombinations, capital expenditures, and working capital requirements. As of\nDecember 31, 2009, we had cash and cash equivalents of approximately $16.9\nmillion and working capital of approximately $15.3 million. We used\napproximately $3.0 million in cash for operations for the year ended December\n31, 2009 and, contingent on prospective operating performance, may require\nreductions in discretionary variable costs and other realignments to permanently\nreduce fixed operating costs. We generated $2.4 million in cash from investing\nactivities, principally from proceeds from sale of marketable securities and a\ndistribution from The Billing Resource, offset by the investment in ShopIt. Cash\nused in financing activities was $2.8 million and was principally attributable\nto repayment of the Ringtone note payable of $1.8 million and stock repurchases.\nOur Board of Directors authorized a share repurchase program which expired in\nMay 2009. Under this share repurchase program we purchased 832,392 shares of our\ncommon stock for an aggregate price of $939,000.We\nbelieve that our existing cash and cash equivalents and anticipated cash flows\nfrom operating activities will be sufficient to fund minimum working capital and\ncapital expenditure needs for at least the next twelve months. The extent of our\nfuture capital requirements will depend on many factors, including our results\nof operations. If our cash flows from operations is less than anticipated or our\nworking capital requirements or capital expenditures are greater than\nexpectations, or if we expand our business by acquiring or investing in\nadditional products or technologies, we may need to secure additional debt or\nequity financing. We are continually evaluating various financing strategies to\nbe used to expand our business and fund future growth. There can be no assurance\nthat additional debt or equity financing will be available on acceptable terms,\nif at all. The potential inability to obtain additional debt or equity\nfinancing, if required, could have a material adverse effect on our\noperations.Critical\nAccounting Policies and EstimatesPrinciples\nof ConsolidationThe\nconsolidated financial statements include the accounts of all majority and\nwholly-owned subsidiaries and significant intercompany balances and transactions\nhave been eliminated.The\nequity method is used to account for investments in entities in which we have an\nownership of less than 50% and have significant influence over the operating and\nfinancial policies of the affiliate.Use\nof EstimatesThe\npreparation of financial statements in conformity with generally accepted\naccounting principles requires management to make estimates and assumptions that\naffect the reported amounts of assets, liabilities, revenue and expenses as well\nas the disclosure of contingent assets and liabilities. Management continually\nevaluates its estimates and judgments including those related to allowances for\ndoubtful accounts, useful lives of property, plant and equipment and intangible\nassets, fair value of stock options granted, forfeiture rate of equity based\ncompensation grants, probable losses associated with pre-acquisition\ncontingencies, income taxes and other contingencies. Management bases its\nestimates and judgments on historical experience and other factors that are\nbelieved to be reasonable in the circumstances. Actual results may differ from\nthose estimates. Macroeconomic conditions may directly, or indirectly through\nour business partners and vendors, impact our financial performance and\navailable resources. Such conditions may, in turn, impact the aforementioned\nestimates and assumptions. Management has discussed the development, selection\nand disclosure of these estimates and assumptions with the Audit Committee of\nthe Board of Directors.\u00a0\u00a0Accounts\nReceivable and Related AllowancesThe\nCompany maintains allowances for doubtful accounts for estimated losses which\nmay result from the inability of its customers to make required payments. The\nCompany bases\u00a0its allowances on the likelihood of recoverability of\naccounts receivable by customer, based on past experience,\u00a0the age of the\naccounts receivable balance, the credit quality of the Company\u2019s customers, and,\ntaking into account current collection trends. If specific customer\ncircumstances change or industry trends worsen beyond the Company\u2019s estimates,\nthe Company would be required to increase its allowances for doubtful accounts.\nAlternatively, if trends improve beyond the Company\u2019s estimates, the Company\nwould be required to decrease its allowance for doubtful accounts. The Company\u2019s\nestimates are reviewed periodically, and adjustments are reflected through bad\ndebt expense in the period they become known. Changes in the Company\u2019s bad debt\nexperience can materially affect its results of operations.The\nCompany also makes estimates for refunds and provides for these probable\nuncollectible amounts through a reduction of recorded revenues in the period for\nwhich the sale occurs, based on analyses of previous rates and\ntrends.Due to\nthe payment terms of the carriers requiring in excess of 60 days from the date\nof billing or sale, at its sole discretion, the Company can elect to use trade\ndiscounts in order to facilitate quicker payment. This discount or fee allows\nfor payments of approximately 80% of the prior month\u2019s billings 15 to 20 days\nafter the end of the month. The Company records revenue net of that fee, if\nincurred, which is 3.5% to 5% of the associated revenue.Goodwill\nand Intangible AssetsGoodwill\nrepresents the excess of cost over fair value of net assets of businesses\nacquired. In accordance with ASC 350 formerly Statement of Financial Accounting\nStandards No.\u00a0142 (\u201cSFAS\u00a0142\u201d) \u201cGoodwill and Other Intangible Assets\u201d,\nthe value assigned to goodwill and indefinite lived intangible assets is not\namortized to expense, but rather it is evaluated at least on an annual basis to\ndetermine if there is a potential impairment. If the fair value of the reporting\nunit is less than its carrying value, an impairment loss is recorded to the\nextent that the implied fair value of the reporting unit goodwill is less than\nthe carrying value. If the fair value of an indefinite lived intangible is less\nthan its carrying amount, an impairment loss is recorded. Fair value is\ndetermined based on discounted cash flows, market multiples or appraised values\nas appropriate. Discounted cash flow analysis requires assumptions about the\ntiming and amount of future cash inflows and outflows, risk, the cost of\ncapital, and terminal values. Each of these factors can significantly affect the\nvalue of the intangible asset. The estimates of future cash flows, based on\nreasonable and supportable assumptions and projections, require management\u2019s\njudgment. Any changes in key assumptions about the Company\u2019s businesses and\ntheir prospects, or changes in market conditions, could result in an impairment\ncharge. Some of the more significant estimates and assumptions inherent in the\nintangible asset valuation process include: the timing and amount of projected\nfuture cash flows; the discount rate selected to measure the risks inherent in\nthe future cash flows; and the assessment of the asset\u2019s life cycle and the\ncompetitive trends impacting the asset, including consideration of any\ntechnical, legal or regulatory trends.The\nCompany has determined that there was an impairment of the carrying value\nof\u00a0\u00a0goodwill and non-amortizable intangible assets as a result of\ncompleting its annual impairment analysis as of December\u00a031, 2009. In\nperforming the related valuation analysis the company used various valuation\nmethodologies including probability weighted discounted cash flows, comparable\ntransaction analysis, and market capitalization and comparable company multiple\ncomparison. The results of this review and impact of the impairment are more\nfully described in Note\u00a07\u00a0- \u201cGoodwill and Intangible\nAssets\u201d.Intangible\nassets subject to amortization primarily consist of customer lists, trade names\nand trademarks, and restrictive covenants that were acquired. \u00a0The\nintangible asset values assigned to the identified assets for each acquisition\nwere generally determined based upon the expected discounted aggregate cash\nflows to be derived over the estimated useful life. The method of amortizing the\nintangible asset values reflects, based upon the Company\u2019s historical\nexperience, an accelerated rate of attrition in the subscriber database based\nover the expected life of the underlying subscriber database after considering\nturnover.\u00a0\u00a0Accordingly, the Company amortizes the value assigned to\nsubscriber database based on the actual depletion of the acquired subscriber\ndatabase. The Company reviews the recoverability of its finite-lived intangible\nassets for recoverability whenever events or circumstances indicated that the\ncarrying amount of an asset may not be recoverable. Recoverability is assessed\nby comparison to associated undiscounted cash flows. In the fourth quarter of\n2009, and prior to ASC 350 evaluation, the Company recognized an impairment of\n$2.1 million under ASC 360.Stock-Based\nCompensationThe\nCompany records stock based compensation in accordance with ASC 718 formerly\nFinancial Accounting Standard Board Statement of Financial Accounting Standards\nNo. 123 (revised 2004). In estimating the grant date fair value at stock option\nawards and performance based restricted stock, we use the Black Scholes option\npricing model and other binomial pricing models where appropriate. The key\nassumptions for these models to derive fair value include expected term, rate of\nrisk free returns and volatility. If different assumptions and estimates were\nused, the amounts charged to compensation expense would be\ndifferent.Revenue\nRecognitionThe\nCompany monetizes a portion of its user activities through subscription based\nsources by providing on-going monthly access to and usage of premium products\nand services.\u00a0\u00a0In general, customers are billed at standard rates, at\nthe beginning of the month, and revenues are recognized upon receipt of\ninformation confirming an arrangement. The Company estimates a provision for\nrefunds and credits which is recorded as a reduction to revenues. In determining\nthe estimate for refunds and credits, the Company relies upon historical data,\ncontract information and other factors. The estimated provision for refunds can\nvary from actual results.The\nCompany effectuates its subscription revenues through a carrier or distributors\nwho are paid a transaction fee for their services.\u00a0\u00a0In accordance with\nASC 605 formerly Emerging Issues Task Force (\u201cEITF\u201d No 99-19) \u201cReporting\nRevenues Gross as Principal Versus Net as an Agent\u201d, the Company recognizes as\nrevenues the net amount received from the carrier or distributor, net of their\nfee.\u00a0\u00a0The\nCompany monetizes a portion of its user activities through transactional based\nservices generated primarily from (a) fees earned, primarily on a Cost Per Click\nbasis, from search syndication services; (b) fees earned for the Company's\nsearch engine marketing (\"SEM\") services; and (c) other fees for marketing\nservices including data and list management services, which can be either\nperiodic or transactional. Commission fee revenue is recognized in the period\nthat the Company's advertiser customer generates a sale or other agreed-upon\naction on the Company's affiliate marketing networks or as a result of the\nCompany's SEM services, provided that no significant Company obligations remain,\ncollection of the resulting receivable is reasonably assured, and the fees are\nfixed or determinable. All transaction services revenues are recognized on a\ngross basis in accordance with the provisions of EITF\u00a099-19, due to the\nfact that the Company is the primary obligor and bears all credit risk to its\ncustomer, and publisher expenses that are directly related to a\nrevenue-generating event are recorded as a component of 3rd part Media\nCost.Income\nTaxesThe\nCompany uses the asset and liability method of financial accounting and\nreporting for income taxes required by ASC 740 formerly Statement of Financial\nAccounting Standards No.\u00a0109 (\u201cSFAS 109\u201d), \u201cAccounting for Income Taxes\u201d.\nUnder ASC 740, deferred income taxes reflect the tax impact of temporary\ndifferences between the amount of assets and liabilities recognized for\nfinancial reporting purposes and the amounts recognized for tax\npurposes.We\nmaintain valuation allowances where it is more likely than not that all or a\nportion of\u00a0\u00a0a deferred tax asset will not be realized.Effective\nJanuary\u00a01, 2007, the Company adopted FIN No.\u00a048, \u201cAccounting for\nUncertainty in Income Taxes\u201d subsequently codified under ASC 740-10-25 which\nresulted in no material adjustment in the liability for unrecognized tax\nbenefits. The Company classifies interest expense and penalties related to\nunrecognized tax benefits as income tax expense. ASC 740 clarifies the\naccounting for uncertainty in income taxes recognized in an enterprise\u2019s\nfinancial statements in accordance with ASC 740 and prescribes a recognition\nthreshold and measurement attribute for the financial statement recognition and\nmeasurement of a tax position taken or expected to be taken in a tax return. The\nevaluation of a tax position in accordance with this Interpretation is a\ntwo-step process. The first step is recognition, in which the enterprise\ndetermines whether it is more likely than not that a tax position will be\nsustained upon examination, including resolution of any related appeals or\nlitigation processes, based on the technical merits of the position. The second\nstep is measurement. A tax position that meets the more-likely-than-not\nrecognition threshold is measured to determine the amount of benefit to\nrecognize in the financial statements.The\nCompany and its subsidiaries file income tax returns in the U.S and Canada. The\nCompany is subject to federal,\u00a0\u00a0state and Canadian examinations. The\nstatute of limitations for 2008 and 2009 in all jurisdictions remains open and\nare subject to examination by tax authorities.Contractual\nObligations and Off-Balance Sheet ArrangementsAt\nDecember 31, 2009, the Company did not have any relationships with\nunconsolidated entities or financial partnerships, such as entities often\nreferred to as structured finance or special purpose entities, which would have\nbeen established for the purpose of facilitating off-balance sheet arrangements\nor other contractually narrow or limited purposes. As such, the Company is not\nexposed to any financing, liquidity, market or credit risk that could arise if\nit had engaged in such relationships.The\nfollowing table shows the Company\u2019s future commitments for future minimum lease\npayments required under operating leases that have remaining non cancellable\nlease terms in excess of one year, future commitments under investment and\nmarketing agreements and future commitments under employment agreements as of\nDecember 31, 2009:","markdown_table":"\n\n\n\n\n\n\n\n\n\n\n| | | For\u00a0the\u00a0Year | | | | | | | | Change | | | | Change | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | December\u00a031, | | | | | | | | Inc.(Dec.) | | | | Inc.(Dec.) | | |\n| | | 2009 | | | | 2008 | | | | $ | | | | % | | |\n| Operating Expenses | | | | | | | | | | | | | | | | |\n| Cost of Media \u2013 3rd party | | $ | 43,313 | | | $ | 74,541 | | | $ | (31,228 | ) | | | -42 | % |\n| Product and distribution | | | 10,559 | | | | 9,749 | | | | 810 | | | | 8 | % |\n| Selling and marketing | | | 8,386 | | | | 9,974 | | | | (1,588 | ) | | | -16 | % |\n| General, administrative and other operating | | | 14,706 | | | | 16,060 | | | | (1,354 | ) | | | -8 | % |\n| Depreciation and Amortization | | | 3,698 | | | | 5,867 | | | | (2,169 | ) | | | -37 | % |\n| Impairment of Goodwill and Intangible Assets | | | 17,289 | | | | 114,783 | | | | (97,494 | ) | | | -85 | % |\n| | | | | | | | | | | | | | | | | |\n| Total Operating Expenses | | $ | 97,951 | | | $ | 230,974 | | | $ | (133,023 | ) | | | -58 | % |\n\n\n\n\n\n\n\n\n\n\n","source":"PTIX\/10-K\/0001144204-10-016818"} {"title":"ITEM 7.\nMANAGEMENT\u2019S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF\nOPERATIONS","text":"Recent\nAccounting PronouncementsAdopted\nin 2009In August\n2009, the FASB issued ASU 2009-05 \u201cMeasuring Liabilities at Fair Value\u201d (\u201cASC\n820-10\u201d). ASC 820-10 is effective for interim and annual reporting periods\nbeginning after August 27, 2009.\u00a0\u00a0It clarifies the application of\ncertain valuation techniques in circumstances in which a quoted price in an\nactive market for the identical liability is not available and clarifies that\nwhen estimating the fair value of a liability, the fair value is not adjusted to\nreflect the impact of contractual restrictions that prevent its transfer.\n\u00a0We adopted ASC 820-10 for the year ended December 31, 2009 and it did not\nhave a material impact on our consolidated financial statements.In the\nthird quarter of 2009, the Company adopted the Financial Accounting Standards\nBoard (\u201cFASB\u201d) Accounting Standards Codification (\u201cASC\u201d). The ASC is the source\nof authoritative, nongovernmental GAAP, except for rules and interpretive\nreleases of the Securities and Exchange Commission (SEC).\u00a0\u00a0The\nadoption of the ASC did not have an impact on the Company\u2019s results of\noperations or financial position.In June\n2009, the FASB issued SFAS No. 165, \u201cSubsequent Events\u201d, which has been\nsuperseded by the FASB codification and included in ASC 855-10. \u00a0ASC 855-10\nestablishes general standards of accounting for and disclosure of events that\noccur after the balance sheet date but before financial statements are\nissued.\u00a0\u00a0The effective date of ASC 855-10 is interim or annual\nfinancial periods ending after June 15, 2009.\u00a0\u00a0The adoption of ASC\n855-10 did not have a material effect on the Company\u2019s consolidated financial\nstatements.In\nJune\u00a02008, the FASB issued Staff Position No.\u00a0EITF 03-6-1,\n\u201cDetermining Whether Instruments Granted in Share-Based Payment Transactions Are\nParticipating Securities\u201d which has been superseded by the FASB codification ASC\n260-10 gives guidance as to the circumstances when unvested share-based payment\nawards should be included in the computation of EPS. ASC 260-10 is effective for\nfiscal years beginning after December\u00a015, 2008. The adoption of ASC 260-10\ndid not have an impact on the Company\u2019s financial statements.\u00a0In\nDecember 2007, the FASB issued SFAS No. 141R, \u201cBusiness Combinations\u201d which has\nbeen superseded the FASB codification and included in ASC 805. ASC 805\nestablishes the principles and requirements for how an acquirer: (i) recognizes\nand measures in its financial statements the identifiable assets acquired, the\nliabilities assumed and any non-controlling interest in the acquiree; (ii)\nrecognizes and measures the goodwill acquired in the business combination or a\ngain from a bargain purchase; and (iii) determines what information to disclose\nto enable users of the financial statements to evaluate the nature and financial\neffects of the business combination. ASC 805 is to be applied prospectively to\nbusiness combinations consummated on or after the beginning of the first annual\nreporting period on or after December 15, 2008, with early adoption prohibited.\nPreviously, any release of valuation allowances for certain deferred tax assets\nwould serve to reduce goodwill, whereas under the new standard any release of\nthe valuation allowance related to acquisitions currently or in prior periods\nwill serve to reduce our income tax provision in the period in which the reserve\nis released. Additionally, under ASC 805 transaction-related expenses, which\nwere previously capitalized, will be expensed as incurred. The adoption of ASC\n805 did not have a material effect on our results of operations or financial\nposition.In\nDecember 2007, the FASB issued SFAS No. 160, \u201cNoncontrolling Interests in\nConsolidated Financial Statements,\u201d which has been superseded by the FASB\ncodification and included in ASC 810-10-65-1 and establishes requirements for\nownership interests in subsidiaries held by parties other than us (minority\ninterests) be clearly identified and disclosed in the consolidated statement of\nfinancial position within equity, but separate from the parent's equity. Any\nchanges in the parent's ownership interests are required to be accounted for in\na consistent manner as equity transactions and any noncontrolling equity\ninvestments in deconsolidated subsidiaries must be measured initially at fair\nvalue. ASC 810-10-65-1 is effective, on a prospective basis, for fiscal years\nbeginning after December 15, 2008; however, presentation and disclosure\nrequirements must be retrospectively applied to comparative financial\nstatements. Except for presentation and disclosure requirements, the adoption of\nASC 810-10-65-1 had no material impact on the Company\u2019s financial\nstatements.Not\nYet AdoptedIn\nJune\u00a02009, the FASB issued SFAS No.\u00a0167, \u201cAmendments to FASB\nInterpretation No.\u00a046(R)\u201d (\u201cSFAS No.\u00a0167\u201d) which has been superseded\nby the FASB Codification and included in ASC 810 to require an enterprise to\nperform an analysis to determine whether the enterprise\u2019s variable interest or\ninterests give it a controlling financial interest in a variable interest\nentity. This analysis identifies the primary beneficiary of a variable interest\nentity as one with the power to direct the activities of a variable interest\nentity that most significantly impact the entity\u2019s economic performance and the\nobligation to absorb losses of the entity that could potentially be significant\nto the variable interest. These revisions to ASC 810 will be effective as of the\nbeginning of the annual reporting period commencing after November\u00a015, 2009\nand will be adopted by the Company in the first quarter of 2010. We do not\nbelieve that the adoption of these revisions to ASC 810 will have a material\nimpact to our results of operations or financial position.In\nOctober 2009, FASB approved for issuance Emerging Issues Task Force (EITF) issue\n08-01, Revenue Arrangements with Multiple Deliverables which has been superseded\nby FASB codification and included in ASC 605-25.\u00a0This statement provides\nprinciples for allocation of consideration among its multiple-elements, allowing\nmore flexibility in identifying and accounting for separate deliverables under\nan arrangement. The EITF introduces an estimated selling price method for\nvaluing the elements of a bundled arrangement if vendor-specific objective\nevidence or third-party evidence of selling price is not available, and\nsignificantly expands related disclosure requirements. This standard is\neffective on a prospective basis for revenue arrangements entered into or\nmaterially modified in fiscal years beginning on or after June\u00a015, 2010.\nAlternatively, adoption may be on a retrospective basis, and early application\nis permitted. The Company is currently evaluating the impact of adopting this\npronouncement.","markdown_table":"\n\n\n\n\n\n| | | Operating | | | | Employment | | | | Total | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| (in thousands) | | Leases | | | | Agreements | | | | Obligations | | |\n| 2010 | | $ | 1,165 | | | $ | 717 | | | $ | 1,882 | |\n| 2011 | | | 1,127 | | | | 135 | | | | 1,262 | |\n| 2012 | | | 886 | | | | - | | | | 886 | |\n| 2013 | | | 936 | | | | - | | | | 936 | |\n| 2014 | | | 987 | | | | - | | | | 987 | |\n| 2015 and thereafter | | | 3,618 | | | | - | | | | 3,618 | |\n| | | | | | | | | | | | | |\n| | | $ | 8,719 | | | $ | 852 | | | $ | 9,571 | |\n\n\n\n\n\n","source":"PTIX\/10-K\/0001144204-10-016818"} {"title":"37","text":"*This\nexpenditure may depend on a successful capital raising event.","markdown_table":"\n\n| | | Estimated Cost | | |\n| --- | --- | --- | --- | --- |\n| 1Q 2018 | | | | |\n| Completion of ELISA tests | | $ | 45,000 | |\n| Complete Custom antibodies as an alternative to ELISA | | $ | 21,000 | |\n| | | | | |\n| 2Q 2018 | | | | |\n| Complete Stability and Formulation | | $ | 85,000 | |\n| Write our first IND application | | $ | 80,000 | |\n| | | | | |\n| 3Q 2018 | | | | |\n| Possibly Complete toxicology studies in two species | | $ | 850,000 | \\* |\n| | | | | |\n| 4Q 2018 | | | | |\n| Submit our first IND application | | $ | 60,000 | |\n| | | | | |\n| 1Q 2019 | | | | |\n| Begin dosing healthy volunteers in Phase I trial | | $ | 175,000 | |\n\n","source":"PTIX\/10-K\/0001493152-18-004567"} {"title":"ITEM 7. MANAGEMENT\u2019S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS","text":"Revenues decreased approximately $29.1 million, or 42%, to $40.0 million for the year ended December 31, 2010, compared to $69.1 million for the year ended December 31, 2009.Subscription revenue consists of content applications billed direct to consumers via mobile or land based telephone lines or credit card. These services are delivered through the Internet to PCs, or mobile phones, or through other Internet-connected devices. Subscription revenue decreased by approximately $3.2 million, or 15%, to $19.0 million for the year ended December 31, 2010, compared to $22.2 million for the year ended December 31, 2009. Subscription revenue for the year ended December 31, 2010 includes an increase in Kazaa revenue of $8.0 million compared to the year ended December 31, 2009, without which, our subscription revenue would have decreased by 50%, or $11.0 million year-over-year.\u00a0\u00a0As of December 31, 2010, the Company had approximately 205,000 subscribers, compared to 338,000 as of December 31, 2009.\u00a0\u00a0This decrease in subscribers was partly offset by a 22% increase in average revenue per user (\u201cARPU\u201d) to approximately $6.11 for the year ended December 31, 2010, compared to the year ended December 31, 2009. The increase in ARPU was the result of the higher retail price point of the Kazaa digital music subscription service and improvements in billing efficiency. As of December 31, 2010, the Company has approximately 77,000 Kazaa subscribers.\u00a0\u00a0Relative to the approximately 80,000 Kazaa subscribers we had at the end of 2009, for all of 2010, we experienced a net decrease of 3,000 Kazaa subscribers (new subscriber additions, net of attrition).Transactional revenue is principally derived from our search marketing agency business, which consists of targeted and measurable online campaigns and programs for advertisers, to generate qualified customer leads, sales transactions, or increased brand recognition. Transactional revenue decreased by approximately $25.8 million or 55% to $21.0 million for the year ended December 31, 2010 compared to $46.8 million for year ended December 31, 2009. The decrease in revenue was attributable to the loss of accounts and a reduction in discretionary advertising expenditures by our clients, as well as a result of a restructuring of our agency activities. Beginning in the second quarter, and substantially completed by the end of the third quarter, the Company took proactive steps to eliminate any unprofitable or marginally profitable lead generation campaigns and marketing programs from its Transactional offerings. These steps had the effect of curtailing lead generation sales volume, contributing to the decrease in revenue compared to the year ago period. As a result of this restructuring, the bulk of our Transactional revenue now consists of revenue generated from our search agency business, together with higher yielding marketing campaigns.Operating Expenses","markdown_table":"\n\n\n| | | (in\u00a0thousands) | | | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | | | | | | | | | Change | | | | Change | | |\n| | | For\u00a0the\u00a0Year\u00a0Ended\u00a0December\u00a031, | | | | | | | | Increase\u00a0 (Decrease) | | | | Increase (Decrease) | | |\n| | | 2010 | | | | 2009 | | | | $ | | | | | % | |\n| | | | | | | | | | | | | | | | | |\n| Subscription | | $ | 19,021 | | | $ | 22,254 | | | $ | (3,233 | ) | | | -15 | % |\n| Transactional | | | 21,005 | | | | 46,835 | | | | (25,830 | ) | | | -55 | % |\n| | | | | | | | | | | | | | | | | |\n| Total Revenues | | $ | 40,026 | | | $ | 69,089 | | | $ | (29,063 | ) | | | -42 | % |\n\n\n","source":"PTIX\/10-K\/0001144204-11-020599"} {"title":"ITEM 7. MANAGEMENT\u2019S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS","text":"Cost of MediaCost of Media \u2013 3rd party decreased by $20.8 million to $22.5 million for the year ended December 31, 2010 from $43.3 million for the year ended December 31, 2009. Cost of Media \u2013 3rd party includes media purchased for monetization of both Transactional and Subscription revenues. The decrease in Cost of Media \u2013 3rd party was due to two primary factors. First, approximately 85% of the decrease in Cost of Media \u2013 3rd party was due to the decline in Transactional related revenue which resulted in a corresponding reduction in purchased media. Second, the remaining 15% of the decrease in Cost of Media \u2013 3rd party was due to significantly lower subscriber acquisition rates, and in turn, a lower number of subscribers acquired.The rate of subscriber acquisitions is based on a number of factors, not least of which is subscriber acquisition cost, or \u201cSAC.\u201d During the year ended December 31, 2010, management moderated and limited the rate of subscriber acquisitions in response to (i) the need to preserve cash, (ii) changes in its alternative billing processes, and (iii) anticipated improvements and enhancements to the Kazaa digital music service.During the year ended December 31, 2010, the Company added approximately 396,000 new subscribers, over half of which were Kazaa subscribers. This level of customer acquisition was not sufficient to replace the Company\u2019s existing subscriber base during the year: \u201cNet Adds,\u201d which represents the number of subscribers acquired, net of subscriber attrition, which was a negative 133,000 for the year ended December 31, 2010. Cost of media for the year ended December 31, 2010 includes an increase in Kazaa-related Cost of Media \u2013 3rd party of $2.3 million compared to the year ended December 31, 2009. We anticipate that\u00a0\u00a0our share of the future cash flows of the Kazaa music service to exceed these Kazaa cost of media expenses, although there can be no assurance of this.During 2010, the Company estimates that its SAC per subscriber was approximately $15.34, which reflects a 10% increase in SAC from the year ago period. SAC is dependent on a number of factors, including prevailing market conditions, the type of media, and the ability of the Company to convert leads into subscribers. The Company expects that SAC will fluctuate from period to period based on all of these factors. Management will continue to monitor SAC closely to ensure that the Company acquires customers in a cost effective manner for both its transactional and subscription services. Because of its strictly variable nature, this decrease was proportionately correlated to the decline in the related revenue.Product and DistributionProduct and distribution expense increased by $9.7 million to $20.2 million in the year ended December 31, 2010 as compared to $10.5 million for the year ended December 31, 2009. Product and distribution expenses are costs necessary to provide licensed content and development and support for our products, websites and technology platforms \u2013 which drive both our Transactional and Subscription-based revenues. Compared to the year ended December 2009, in the year ended December 31, 2010 we experienced higher product and distribution expenses of $10.2 million as a result of costs incurred to further develop the Kazaa music service and greater royalty and license expense payable to content owners, also associated with Kazaa. We anticipate that our share of the future cash flows of the Kazaa music service to exceed these Kazaa product and distribution expenses, although there can be no assurance of this. This increase in costs related to Kazaa was partly offset by decreases in staffing costs as we have reduced the number of employees companywide during 2010.\u00a0\u00a0\u00a0Included in product and distribution cost is stock compensation expense of $54,000 and $111,000 for the years ended December 31, 2010 and 2009, respectively.Selling and marketingSelling and marketing expense decreased by $4.4 million to $4.0 million in the year ended December 31, 2010 as compared to $8.4 million for the year ended December 31, 2009. The decrease is primarily due to a reduction in salaries and other marketing costs, in accordance with the decrease in our revenue over the same period.\u00a0Included in selling and marketing cost is stock compensation expense of $43,000 for the year ended December 31, 2010.General, Administrative and Other OperatingGeneral and administrative expenses decreased by approximately $5.6 million to $9.1 million for the year ended December 31, 2010 compared to $14.7 million for the year ended December 31, 2009. The decrease is primarily due to a reduction in workforce, and associated savings, a decrease in professional fees and other efforts to reduce the Company\u2019s overall levels of overhead. The rate of decrease in general, administrative and other operating expense, on a year-over-year basis, is slower than for some other components of operating expenses because of the fixed nature of general and administrative costs, relative to the more variable based costs inherent in other categories of operating expense. Included in general and administrative expense is stock compensation expense of $1.0 million and $0.7 million for the year ended December 31, 2010 and 2009.Depreciation and amortizationDepreciation and amortization expense decreased $2.1 million to $1.6 million for the year ended December 31, 2010 compared to $3.7 million for the year ended December 31, 2009 as a result of a reduction in amortization for intangibles, due to the fact that we recorded an impairment charge of $4.1 million at December 31, 2009.\u00a0\u00a0\u00a0This was partly offset by an increase in depreciation due to a write-off of $0.4 million in property, plant and equipment related to the decision to shut down the Canada facility.Impairment of Goodwill and Intangible AssetsThe Company conducts its annual impairment test in the fourth quarter of the year, unless an event occurs prior to the fourth quarter that would more likely than not reduce the fair value of the Company below its carrying amount. In connection with our annual indefinite lived intangible asset impairment testing conducted in the fourth quarter, and for the year ended December 31, 2010, we determined there was impairment of the carrying value of indefinite lived intangible assets and recorded a non-cash charge of $1.5 million compared to an impairment charge of $2.0 million in 2009. In 2009, goodwill of $13.1 million was also impaired. The goodwill and indefinite lived intangibles impairment, the majority of which is not deductible for income tax purposes, is primarily due to our declining market price, reduced expectations for future operating results and reduced valuation multiples. Such negative factors are reflected in our stock price and market capitalization.As a result of\u00a0significant adverse changes in the business climate, the Company concluded that triggering events had occurred and the Company tested long-lived assets for impairment as of December 31, 2010 and 2009. The Company determined the fair value of such long lived assets and recognized an impairment charge of $3.4 million and $2.2 million for the years ended December 31, 2010 and 2009 respectively.Loss from OperationsOperating loss decreased to approximately $22.3 million for the year ended December 31, 2010 compared to $28.9 million for the year ended December 31, 2009. Excluding the effect of intangible asset impairment in 2010 and 2009, operating loss increased to approximately $17.4 million for the year ended December 31, 2010, compared to $11.6 million for the year ended December 31, 2009. The higher operating loss is the result of the revenue decrease, together with proportionately higher product and distribution expense offset by an improvement in the Cost of Media \u2013 3rd party margin, selling and marketing expenses and general and administrative expenses.Interest income and dividendsInterest and dividend income decreased approximately $62,000 to $10,000 for the year ended December 31, 2010, compared to $72,000 for the year ended December 31, 2009. The reduction is mainly due to a decrease in the balances of cash and marketable securities at December 31, 2010 compared to December 31, 2009, as well as a reduction in the rate of return on invested capital.Interest expenseInterest expense was $16,000 for the year ended December 31, 2010 compared to $76,000 for the year ended December 31, 2009.Other IncomeOther income was $1.7 million for the year ended December 31, 2010 compared to other income of $5,000 for the year ended December 31, 2009. Other income for 2010 was principally comprised of legal settlements and awards (see \u201cItem 3 \u2013 Legal Proceedings\u201d)Income TaxesIncome tax (benefit) expense, before noncontrolling interest and equity in loss (income) of investee, for the year ended December 31, 2010 and 2009 was $(1.1) million and $0.6 million, respectively and reflects an effective tax rate of (5.2)% and 2.2% respectively. The effective tax rates were computed taking into consideration non-deductible impairment charges of $12.1 million for 2009, and the change in the income tax valuation allowance of $8.2 million and $11.1 million for 2010 and 2009, respectively.Equity in (Loss) Income of InvesteeEquity in loss of investee was $183,000 net of taxes at December 31, 2010 compared to equity in income of $59,000 for the year ended December 31, 2009, and represents our 36% interest in The Billing Resource, LLC (TBR).Net Loss Attributable to Noncontrolling InterestNet loss attributable to noncontrolling interest was $28,000 for the year ended December 31, 2009. This related to our investment in MECC which was dissolved in June 2009.Net Loss Attributable to Atrinsic, Inc.Net loss attributable to Atrinsic Inc., decreased by $9.8 million to $19.7 million for the year ended December 31, 2010 as compared $29.5 million for the year ended December 31, 2009. This decrease resulted from the factors described above.Liquidity and Capital ResourcesWe continually project anticipated cash requirements, which may include business combinations, capital expenditures, and working capital requirements. As of December 31, 2010, we had cash and cash equivalents of approximately $6.3 million and working capital of approximately $2.1 million. We used approximately $11.2 million in cash for operations during the year ended December 31, 2010 and, contingent on prospective operating performance may require reductions in discretionary variable costs and other realignments to permanently reduce fixed operating costs. We generated $0.7 million in cash from investing activities, principally from a return of capital from The Billing Resource. Cash used in financing activities was minimal during the fiscal year ended December 31, 2010.In order to fund operations, we need to raise additional capital.\u00a0\u00a0We are currently working with an independent financial advisory firm to assist us in structuring a financing and to engage an investment bank to raise debt or equity capital to fund our immediate cash needs and to finance our longer term growth to further develop the Kazaa business and grow our subscriber base.\u00a0\u00a0We currently have no formal arrangements with respect to additional financing in place and there is no guaranty funding will be available on favorable terms or at all. If we cannot obtain such funds, we will need to significantly curtail or cease our operations.\u00a0\u00a0In addition, the sale of additional equity securities or convertible debt could result in dilution to our stockholders.We continue to evaluate the sale of certain of our assets and businesses.\u00a0\u00a0We cannot provide any assurance that we will be successful in finding suitable purchasers for the sale of such assets.\u00a0\u00a0Even if we are able to find purchasers, we may not be able to obtain attractive terms and conditions for such sales, including attractive pricing. In addition, divestitures of businesses involve a number of risks, including the diversion of management and employee attention, significant costs and expenses, the loss of customer relationships, a decrease in revenues associated with the divested business, and the disruption of operations in the affected business.\u00a0\u00a0Furthermore, divestitures potentially involve significant post-closing separation activities, which could involve the expenditure of significant financial and employee resources. An inability to consummate identified asset sales or manage the post-separation transition arrangements could adversely affect our business, financial condition, results of operations and cash flows.There is substantial doubt about our ability to continue as a going concern. Our consolidated financial statements included in this Annual Report on Form 10-K are prepared using accounting principles generally accepted in the United States of America applicable to a going concern, which contemplates the realization of assets and liquidation of liabilities in the normal course of business. The historical consolidated financial statements included in this Annual Report on Form 10-K do not include any adjustments that might be necessary if we are unable to continue as a going concern. The report of our independent registered public accountants, KPMG LLP, includes an explanatory paragraph related to our ability to continue as a going concern.The assessment of our ability to continue as a going concern was made by management considering, among other factors: (i) our current levels of expenditures, including subscriber acquisition costs, operating expense, including product development, and overhead, (ii) our ongoing working capital needs, (iii) the uncertainty concerning the outcome of any financing, (iv) our fiscal year net loss of $19.7 million and $29.5 million for the years ending December 31, 2010 and 2009, respectively, (v) our $11.2 million and $3.0 million of cash used for operating activities during the years ending December 31, 2010 and 2009, respectively, (vi) the outstanding balance of cash and cash equivalents of $6.3 million as of December 31, 2010, and (vii) our budgets and financial projections of future operations, including the likelihood of achieving operating profitability without the need for additional financing.For periods subsequent to December 31, 2010, we expect losses to continue if we continue expenditures to develop the Kazaa service, acquire subscribers for the Kazaa digital music service, and are not able to reduce other operating expenses and overhead sufficiently to a level in line with our level of revenues.\u00a0\u00a0If we are unable to increase revenues sufficiently or decrease our expenditures to a sustainable level, our financial position, results of operations, cash flows and liquidity will continue to be materially adversely affected. These conditions raise substantial doubt about our ability to continue as a going concern.Based on current financial projections, we believe the continuation of our Company as a going concern is primarily dependent on our ability to, among other factors: (i) consummate a suitable financing, or obtain financing from the sale of our assets or lines of business, (ii) scale our Kazaa subscriber base to a level where the monthly revenue generated from our subscriber base exceeds subscriber acquisition costs, net of expenses required to operate Kazaa, (iii) continue to generate revenue from our legacy subscription products without billing or service disruption, (iv) eliminate or reduce operating and overhead expenditures to a level more in line with our revenue, (v) improve utilization of the Kazaa digital music service and improve LTVs of subscribers to that service, and (vi) acquire profitable subscribers to the Kazaa digital music service at cost effective rates, (vii) grow our search marketing agency revenue base through the addition of new customers or expansion of business with existing customers and, (viii) expand margins in our search marketing agency and on our affiliate platform.\u00a0\u00a0While we address these operating matters, we must continue to meet expected near-term obligations, including normal course operating cash requirements and costs associated with developing and operating the Kazaa digital music service, as well as funding overhead and the working capital needs of our other businesses.\u00a0\u00a0If we are not able to obtain sufficient funds through a financing, or if we experience adverse outcomes with respect to our operational forecasts, our financial position, results of operations, cash flows and liquidity will continue to be materially adversely affected. See Item 1A\u2014\u201cRisk Factors\u201d included in this Annual Report on Form 10-K regarding additional risks we face with respect to these matters.In the near term, we are focused on: (i) raising debt or equity capital to fund our immediate cash needs and to finance our longer term growth to further develop the Kazaa business and grow our subscriber base, and (ii) pursuing various means to minimize operating costs and increase cash. We cannot provide assurance that we will be able to realize the cost reductions in our operations, or that we can obtain additional cash through asset sales or the issuance of equity. If we are unsuccessful in our efforts we will be required to further reduce our operations, including further reductions of our employee base, or we may be required to cease certain or all of our operations in order to offset the lack of available funding.Critical Accounting Policies and EstimatesPrinciples of ConsolidationThe consolidated financial statements include the accounts of all majority and wholly-owned subsidiaries and significant intercompany balances and transactions have been eliminated.The equity method is used to account for investments in entities in which we have an ownership of less than 50% and have significant influence over the operating and financial policies of the affiliate.Use of EstimatesThe preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue and expenses as well as the disclosure of contingent assets and liabilities. Management continually evaluates its estimates and judgments including those related to allowances for doubtful accounts, useful lives of property, plant and equipment and intangible assets, fair value of stock options granted, forfeiture rate of equity based compensation grants, probable losses associated with pre-acquisition contingencies, income taxes and other contingencies. Management bases its estimates and judgments on historical experience and other factors that are believed to be reasonable in the circumstances. Actual results may differ from those estimates. Macroeconomic conditions may directly, or indirectly through our business partners and vendors, impact our financial performance and available resources. Such conditions may, in turn, impact the aforementioned estimates and assumptions. Management has discussed the development, selection and disclosure of these estimates and assumptions with the Audit Committee of the Board of Directors.\u00a0Accounts Receivable and Related AllowancesThe Company maintains allowances for doubtful accounts for estimated losses which may result from the inability of its customers to make required payments. The Company bases\u00a0its allowances on the likelihood of recoverability of accounts receivable by customer, based on past experience,\u00a0the age of the accounts receivable balance, the credit quality of the Company\u2019s customers, and, taking into account current collection and economic trends. If specific customer circumstances change or industry trends worsen beyond the Company\u2019s estimates, the Company would be required to increase its allowances for doubtful accounts. Alternatively, if trends improve beyond the Company\u2019s estimates, the Company would be required to decrease its allowance for doubtful accounts. The Company\u2019s estimates are reviewed periodically, and adjustments are reflected through bad debt expense in the period they become known. Changes in the Company\u2019s bad debt experience can materially affect its results of operations.The Company also makes estimates for refunds and provides for these probable uncollectible amounts through a reduction of recorded revenues in the period for which the sale occurs, based on analyses of historical trends as well as an evaluation of the impact of current and projected economic conditions.The Company effectuates its subscription revenues through a carrier or distributors who are paid a transaction fee for their services.\u00a0\u00a0Due to the payment terms of the carriers requiring in excess of 60 days from the date of billing or sale, at its sole discretion, the Company can elect to use trade discounts in order to facilitate quicker payment. This discount or fee allows for payments of approximately 80% of the prior month\u2019s billings 15 to 20 days after the end of the month. The Company records revenue net of that fee, if incurred, which is 3.5% to 5% of the associated revenue.Goodwill and Intangible AssetsGoodwill represents the excess of cost over fair value of net assets of businesses acquired. In accordance with ASC 350 formerly Statement of Financial Accounting Standards No.\u00a0142 (\u201cSFAS\u00a0142\u201d) \u201cGoodwill and Other Intangible Assets\u201d, the value assigned to goodwill and indefinite lived intangible assets is not amortized to expense, but rather it is evaluated at least on an annual basis to determine if there is a potential impairment. If the fair value of the reporting unit is less than its carrying value, an impairment loss is recorded to the extent that the implied fair value of the reporting unit goodwill is less than the carrying value. If the fair value of an indefinite lived intangible is less than its carrying amount, an impairment loss is recorded. Fair value is determined based on discounted cash flows, market multiples or appraised values as appropriate. Discounted cash flow analysis requires assumptions about the timing and amount of future cash inflows and outflows, risk, the cost of capital, and terminal values. Each of these factors can significantly affect the value of the intangible asset. The estimates of future cash flows, based on reasonable and supportable assumptions and projections, require management\u2019s judgment. Any changes in key assumptions about the Company\u2019s businesses and their prospects, or changes in market conditions, could result in an impairment charge. Some of the more significant estimates and assumptions inherent in the intangible asset valuation process include: the timing and amount of projected future cash flows; the discount rate selected to measure the risks inherent in the future cash flows; and the assessment of the asset\u2019s life cycle and the competitive trends impacting the asset, including consideration of any technical, legal or regulatory trends.The Company has determined that there was an impairment of the carrying value of\u00a0goodwill for the fiscal year ended December 31, 2009, and non-amortizable intangible assets in each of the fiscal years ended December 31, 2010 and 2009 as a result of completing annual impairment analysis for such periods. In performing the related valuation analysis the company used various valuation methodologies including probability weighted discounted cash flows, comparable transaction analysis, and market capitalization and comparable company multiple comparison. The results of this review and impact of the impairment are more fully described in Note 6 to the Consolidated Financial Statements \u2013 \u201cGoodwill and Intangible Assets\u201d.Intangible assets subject to amortization primarily consist of customer lists, trade names and trademarks, and restrictive covenants that were acquired. \u00a0The intangible asset values assigned to the identified assets for each acquisition were generally determined based upon the expected discounted aggregate cash flows to be derived over the estimated useful life. The intangible assets are amortized in a manner that reflects the pattern of the projected net cash inflows to the Company that are expected to occur, or when such pattern does not exist, using the straight-line basis over their respected estimated useful lives. The Company reviews the recoverability of its finite-lived intangible assets for recoverability whenever events or circumstances indicate that the carrying amount of an asset may not be recoverable.The Company has determined that there was an impairment of intangible assets during the fourth quarters of 2010 and 2009.\u00a0\u00a0The results of this assessment are more fully described in Note 6 of the Company\u2019s Financial Statement \u2013 \u201cGoodwill and Intangible Assets.\u201dStock-Based CompensationThe Company records stock based compensation in accordance with ASC 718 formerly Financial Accounting Standard Board Statement of Financial Accounting Standards No. 123 (revised 2004). In estimating the grant date fair value of stock option awards and performance based restricted stock, we use the Black Scholes option pricing model where appropriate. The key assumptions for this models to derive fair value include expected term, rate of risk free returns and volatility. If different assumptions and estimates were used, the amounts charged to compensation expense would be different.Revenue RecognitionIn accordance with ASC 605 and SEC Accounting Bulletin 104, the Company monetizes a portion of its user activities through subscription based sources by providing on-going monthly access to and usage of premium products and services. In general, customers are billed at standard rates, during the month, and revenues are recognized upon receipt of information confirming an arrangement in that same month. The Company estimates a provision for refunds and credits which is recorded as a reduction to revenues. In determining the estimate for refunds and credits, the Company relies upon historical data, contract information and other factors. The estimated provision for refunds can vary from actual results.The Company effectuates its subscription revenues through a carrier or distributors who are paid a transaction fee for their services. In accordance with ASC 605 formerly Emerging Issues Task Force (\u201cEITF\u201d No 99-19) \u201cReporting Revenues Gross as Principal Versus Net as an Agent\u201d, the Company recognizes as revenues the net amount received from the carrier or distributor, net of their fee.The Company monetizes a portion of its user activities through transactional based services generated primarily from (a) fees earned, primarily on a Cost Per Click basis, from search syndication services; (b) fees earned for the Company's search engine marketing (\"SEM\") services; and (c) other fees for marketing services including data and list management services, which can be either periodic or transactional. Commission fee revenue is recognized in the period that the Company's advertiser customer generates a sale or other agreed-upon action on the Company's affiliate marketing networks or as a result of the Company's SEM services, provided that no significant Company obligations remain, collection of the resulting receivable is reasonably assured, and the fees are fixed or determinable. All transaction services revenues are recognized on a gross basis in accordance with the provisions of\u00a0ASC\u00a0605-45, due to the fact that the Company is the primary obligor and bears all credit risk to its customer, and publisher expenses that are directly related to a revenue-generating event are recorded as a component of 3rd part Media Cost.Income TaxesThe Company uses the asset and liability method of financial accounting and reporting for income taxes required by ASC 740 formerly Statement of Financial Accounting Standards No.\u00a0109 (\u201cSFAS 109\u201d), \u201cAccounting for Income Taxes\u201d. Under ASC 740, deferred income taxes reflect the tax impact of temporary differences between the amount of assets and liabilities recognized for financial reporting purposes and the amounts recognized for tax purposes.We maintain valuation allowances where it is more likely than not that all or a portion of\u00a0a deferred tax asset will not be realized.Under ASC 740-10-25 the Company classifies interest expense and penalties related to unrecognized tax benefits as income tax expense. ASC 740 clarifies the accounting for uncertainty in income taxes recognized in an enterprise\u2019s financial statements in accordance with ASC 740 and prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. The evaluation of a tax position in accordance with this Interpretation is a two-step process. The first step is recognition, in which the enterprise determines whether it is more likely than not that a tax position will be sustained upon examination, including resolution of any related appeals or litigation processes, based on the technical merits of the position. The second step is measurement. A tax position that meets the more-likely-than-not recognition threshold is measured to determine the amount of benefit to recognize in the financial statements.The Company and its subsidiaries file income tax returns in the U.S and Canada. The Company is subject to federal,\u00a0state and Canadian examinations. The statute of limitations for 2007 through 2009 in all jurisdictions (except California includes 2006 through 2009) remain open and income tax returns filed for such periods are subject to potential examination by tax authorities.Contractual Obligations and Off-Balance Sheet ArrangementsAt December 31, 2010, the Company did not have any relationships with unconsolidated entities or financial partnerships, such as entities often referred to as structured finance or special purpose entities, which would have been established for the purpose of facilitating off-balance sheet arrangements or other contractually narrow or limited purposes. As such, the Company is not exposed to any financing, liquidity, market or credit risk that could arise if it had engaged in such relationships.The following table shows the Company\u2019s future commitments for future minimum lease payments required under operating leases that have remaining non cancellable lease terms in excess of one year, future commitments under investment and marketing agreements and future commitments under employment agreements as of December 31, 2010:","markdown_table":"\n\n\n| | | (in\u00a0thousands) | | | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | | | | | | | | | Change | | | | Change | | |\n| | | For\u00a0the\u00a0Years\u00a0Ended\u00a0December\u00a031, | | | | | | | | Increase (Decrease) | | | | Increase (Decrease) | | |\n| | | 2010 | | | | 2009 | | | | $ | | | | | % | |\n| Operating Expenses | | | | | | | | | | | | | | | | |\n| Cost of Media \u2013 3rd party | | $ | 22,513 | | | $ | 43,313 | | | $ | (20,800 | ) | | | -48 | % |\n| Product and distribution | | | 20,193 | | | | 10,559 | | | | 9,634 | | | | 91 | % |\n| Selling and marketing | | | 4,038 | | | | 8,386 | | | | (4,348 | ) | | | -52 | % |\n| General, administrative and other operating | | | 9,083 | | | | 14,706 | | | | (5,623 | ) | | | -38 | % |\n| Depreciation and Amortization | | | 1,644 | | | | 3,698 | | | | (2,054 | ) | | | -56 | % |\n| Impairment of Goodwill and Intangible Assets | | | 4,850 | | | | 17,289 | | | | (12,439 | ) | | | -72 | % |\n| | | | | | | | | | | | | | | | | |\n| Total Operating Expenses | | $ | 62,321 | | | $ | 97,951 | | | $ | (35,630 | ) | | | -36 | % |\n\n\n","source":"PTIX\/10-K\/0001144204-11-020599"} {"title":"ITEM 7. MANAGEMENT\u2019S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS","text":"Subsequent to December 31, 2010, the Company entered into a surrender of lease agreement with its landlord for the former Traffix office located in Pearl River, New York.\u00a0\u00a0In consideration for the lease termination, the Company agreed to pay the landlord a cancellation fee of $0.2 million in the form of an unsecured note payable. The termination of this resulted in a reduction of 2011 operating lease payments of $0.3 million.\u00a0\u00a0The table above does not reflect any obligation relating to this lease.Recent Accounting PronouncementsAdopted in 2010In September\u00a02009, the FASB issued SFAS No.\u00a0167, \u201cAmendments to FASB Interpretation No.\u00a046(R)\u201d (\u201cSFAS No.\u00a0167\u201d) which has been superseded by the FASB Codification and included in ASC 810 to require an enterprise to perform an analysis to determine whether the enterprise\u2019s variable interest or interests give it a controlling financial interest in a variable interest entity. This analysis identifies the primary beneficiary of a variable interest entity as one with the power to direct the activities of a variable interest entity that most significantly impact the entity\u2019s economic performance and the obligation to absorb losses of the entity that could potentially be significant to the variable interest. These revisions to ASC 810 are effective as of January 1, 2010 and the adoption of these revisions to ASC 810 had no impact on our results of operations or financial position.Not Yet AdoptedIn October 2009, FASB approved for issuance Emerging Issues Task Force (EITF) issue 08-01, Revenue Arrangements with Multiple Deliverables which has been superseded by the FASB codification and included in ASC 605-25.\u00a0This statement provides principles for allocation of consideration among its multiple-elements, allowing more flexibility in identifying and accounting for separate deliverables under an arrangement. The EITF introduces an estimated selling price method for valuing the elements of a bundled arrangement if vendor-specific objective evidence or third-party evidence of selling price is not available, and significantly expands related disclosure requirements. This standard is effective on a prospective basis for revenue arrangements entered into or materially modified in fiscal years beginning on or after September\u00a015, 2010. Alternatively, adoption may be on a retrospective basis, and early application is permitted. The Company is currently evaluating the impact of adopting this pronouncement.In December 2010, the FASB issued ASU 2010-28, Intangibles - Goodwill and Other (Topic 350): When to Perform Step 2 of the Goodwill Impairment Test for Reporting Units with Zero or Negative Carrying Amounts (\u201cASU 2010-28\u201d). Upon adoption of ASU 2010-28, an entity with reporting units that have carrying amounts that are zero or negative is required to assess the likelihood of the reporting units\u2019 goodwill impairment. ASU 2010-28 is effective January 1, 2011 and we do not believe that the adoption of ASU 2010-28 will have a significant impact on our results of operations and financial position.","markdown_table":"\n\n\n| | | | | | | Less\u00a0than | | | | 1-3 | | | | 4-5 | | | | More\u00a0than | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | Total | | | | 1\u00a0year | | | | years | | | | years | | | | 5\u00a0years | | |\n| | | | | | | | | | | | | | | | | | | | | |\n| Operating leases | | $ | 7,287 | | | $ | 861 | | | $ | 1,822 | | | $ | 2,004 | | | $ | 2,600 | |\n| Employment agreements | | | 973 | | | | 535 | | | | 438 | | | | - | | | | - | |\n| | | | | | | | | | | | | | | | | | | | | |\n| | | $ | 8,260 | | | $ | 1,396 | | | $ | 2,260 | | | $ | 2,004 | | | $ | 2,600 | |\n\n\n","source":"PTIX\/10-K\/0001144204-11-020599"} {"title":"STRATEGIC\nINITIATIVES","text":"(1)\n\n\nAs\n described above, the Company currently aggregates revenues based on the\n type of user activity monetized. The company\u2019s objective is to optimize\n total revenues from the user experiences. Accordingly, this factor should\n be considered in evaluating the relative revenues generated from our\n Subscription and Transactional\nServices.\n\n\n\nRevenues\nincreased approximately by $76.9 million, or 208%, to $113.9 million for the\nyear ended December\u00a031, 2008, compared to $37.0 million for the year ended\nDecember 31, 2007. Subscription based revenue increased by approximately $7.2\nmillion, or 20%, to $44.2 million for the year ended December 31, 2008, compared\nto $37.0 million for the year ended December 31, 2007. The increase in\nsubscription service revenue was principally attributable to an increase in the\naverage number of billable subscribers added during the period and our purchase\nof Ringtone.com, coupled with our efforts to improve subscriber retention.\nAlthough we ended 2008 with approximately 501,000 subscribers as compared to\napproximately 840,000 subscribers at the end of 2007, during 2008 the average\nnumber of monthly billable subscribers was higher than in 2007 and the number of\nsubscribers increased disproportionally at the end of 2007. The number of\nsubscribers is largely, but not precisely, correlated to the periodic reported\nrevenues as a result of inter-period volatility and the circumstance that\nsubscribers are billed on a monthly basis.Transactional\nrevenues increased by $69.7 million or 100% in 2008. The increase is\nattributable to the service offerings acquired in connection with our\nacquisition of Traffix, Inc which took place in February 4, 2008.Operating\nExpenses","markdown_table":"\n\n\n\n\n\n\n\n| | | For the Year December 31 | | | | | | | | Change Inc.(Dec.) | | | | Change Inc.(Dec.) | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | 2008 | | | | 2007 | | | | $ | | | | | % | |\n| | | | | | | | | | | | | | | | | |\n| Subscription | | $ | 44,196 | | | $ | 36,982 | | | $ | 7,214 | | | | 20 | % |\n| Transactional | | $ | 69,688 | | | $ | - | | | $ | 69,688 | | | | 100 | % |\n| | | | | | | | | | | | | | | | | |\n| Total Revenues (1) | | $ | 113,884 | | | $ | 36,982 | | | $ | 76,902 | | | | 208 | % |\n\n\n\n\n\n\n\n","source":"PTIX\/10-K\/0001144204-09-016416"} {"title":"STRATEGIC\nINITIATIVES","text":"Cost\nof MediaCost of\nMedia increased by $45.5 million to $74.5 million in 2008 from $29 million in\n2007. For 2008, Cost of Media \u2013 3rd party\nincludes media purchased for monetization of both transactional and subscription\nrevenues. The increase was principally attributed to the media necessary to\nsource the revenue acquired with the acquisition of Traffix, Inc. which took\nplace February 4, 2008.Product and\nDistributionProduct\nand distribution increased by $6.6 million to $9.7 million for the year ended\nDecember 31, 2008 compared to $3.1 million for the year ended December 31, 2007.\nThe increase was principally attributed to the acquisition of Traffix, Inc.\nwhich took place February 4, 2008. Product and distribution expenses are costs\nnecessary to develop and maintain proprietary content, support and maintain our\nwebsites and user data, technology platforms which drives both transactional and\nsubscription based revenue. Included in product and distribution cost is stock\ncompensation expense of $6,593 and $288,443 for 2008 and 2007\nrespectively.Selling\nand marketingSelling\nand marketing expense increased by $8.4 million to $9.9 million in 2008 as\ncompared to $1.5 million for the year ended December 31, 2007. The increase is\nprimarily due to an increase in fixed and variable labor, principally attributed\nto the acquisition of Traffix, Inc. which took place February 4, 2008. In\naddition, the company incurred approximately $2.2 million of bad debt expense in\n2008 and none in 2007.General,\nAdministrative and Other OperatingGeneral\nand administrative expenses increased by approximately $8.7 million to $16.1\nmillion for the year ended December 31, 2008 compared to $7.4 million for the\nyear ended December, 31, 2007. The increase is primarily due to an increase in\nlabor and related costs necessary to support core operations, professional and\nconsulting fees, facilities and related costs principally attributable to the\ngrowth the company experienced as of result of the acquisition of Traffix, Inc.\nManagement has taken action to achieve approximately $4.0 million of\nefficiencies resulting from the acquisition of Traffix, however the Company\ncontinues to make appropriate and modest investments in labor, facilities,\ntechnology infrastructure, and utilization of third party professional service\nproviders to support its continued growth, business development and corporate\ngovernance initiatives. Included in general and administrative expense is stock\ncompensation expense of $1.3 million and $828,045 for 2008 and 2007\nrespectively.Depreciation\nand amortizationDepreciation\nand amortization expense increased $4.5 million to $5.9 million for the year\nended December 31, 2008 compared to $1.3 million for the year ended December 31,\n2007 principally as the result of the amortization of intangible assets and\ndepreciation of fixed assets acquired in connection with the acquisition of the\nTraffix, Inc. and Ringtone.com.Impairment\nof GoodwillIn\nconnection with its annual goodwill impairment testing for the year ended\nDecember 31, 2008, the Company determined there was impairment and recorded a\nnon-cash charge of $114.8 million. The goodwill impairment, the majority of\nwhich is not deductible for income tax purposes, is primarily due to our\ndeclining market price and reduced valuation multiples. Such negative factors\nare reflected in our stock price and market capitalization.Income\n(Loss) from OperationsOperating\nloss increased to approximately $117.0 million for the year ended December 31,\n2008, compared to an operating loss of $5.5 million for the year ended December\n31, 2007. This increase was principally attributable to the $114.8 million\ncharge for the impairment of goodwill taken during the fourth quarter of 2008.\nExcluding the charge for impairment, the operating loss for the year ended\nDecember 31, 2008 decreased $3.2 million to ($2.3) million compared to an\noperating loss of ($5.5) million for the year ended December 31, 2007.\nManagement has taken action to gain approximately $4.0 million of efficiencies\nresulting from the acquisition of Traffix, however the Company continues to make\nappropriate and modest investments in labor, facilities, technology\ninfrastructure, and utilization of 3rd party\nprofessional service providers to support its continued growth, business\ndevelopment and corporate governance initiatives.Interest\nincome and dividendsInterest\nand dividend income increased $284,000 to $748,000 for the year ended December\n31, 2008, compared to $464,000 for the year ended December 31, 2007. The\nincrease is primarily due to interest income earned on higher cash balances\nmaintained throughout 2008, offset by lower rates, and interest and dividends\nearned on marketable securities.Interest\nexpenseInterest\nexpense increased $125,000 to $147,000 for the year ended December 31, 2008,\ncompared to $22,000 for the year ended December 31, 2007. The increase is\nprimarily attributable to interest expense of $90,000 on the note payable\nassociated with the purchase of the assets of Ringtone .com.Other\nIncome (Expense)Other\nexpense increased $141,000 to $153,000 for the year ended December 31, 2008,\ncompared to $12,000 for the year ended December 31, 2007. The increase is\nprimarily attributable to loss on the sale of marketable securities of\n$174,000.Income\nTaxesIncome\ntax benefit for the year ended December 31, 2008 was $852,000 and reflects an\neffective tax rate of 0.73%, which was computed taking into consideration the\nnon-deductible impairment charge noted above,\u00a0the effects of the merger\nwith Traffix, Inc. which occurred on February 4, 2008,\u00a0 and includes the\nresult of changes in the weighted average statutory rate attributable to the\naddition of certain local jurisdictions resulting from the merger, and certain\nadjustments realized in connection with the finalization of tax\nreturns.Minority\ninterestMinority\ninterest represents the income allocable to the non-controlling interests and\nnet income attributable to the shareholders of the Company for its interest in\nMECC. Minority interest for the year ended December 31, 2008 was $24,000\ncompared to ($283,000) for the year ended December 31, 2007.Net\nLossNet loss\nincreased by $111.6 million to $115.8 million for the year ended December 31,\n2008 as compared to a net loss of $4.1 million for the year ended December 31,\n2007. The increase is as described above.Liquidity\nand Capital ResourcesThe\nCompany continually projects anticipated cash requirements, which may include\nshare repurchases, business combinations, capital expenditures, principal and\ninterest payments on its outstanding and future indebtedness, and working\ncapital requirements. Funding requirements have been financed through business\ncombinations, cash flow from operations, issuance of\u00a0preferred stock,\noption exercises and issuance of long-term debt. As of December 31, 2008, the\nCompany had cash and cash equivalents of approximately $20.4 million, marketable\nsecurities of approximately $4.2\nmillion (including Auction Rated Securities of $4.0 million that was redeemed\nand converted to cash at par plus interest in January 2009) and a working\ncapital balance of approximately $23.7 million. The Company generated\napproximately $4.4 million from operations for the year ended December 31, 2008\nand expects to generate cash flows from operating activities prospectively,\nwhich, contingent on prospective operating performance, may require reductions\nin discretionary variable costs and other realignments to permanently reduce\nfixed operating costs.In\nconjunction with the Company\u2019s objective of enhancing shareholder value, the\nCompany\u2019s Board of Directors authorized a share repurchase program. Under this\nshare repurchase program, the Company purchased 1,908,926 shares of the\nCompany\u2019s common stock for an aggregate price of approximately $4.05 million\nduring the Fiscal 2008.The\nCompany believes that its existing cash and cash equivalents and anticipated\ncash flows from our operating activities will be sufficient to fund minimum\nworking capital and capital expenditure needs for at least the next twelve\nmonths. The extent of the Company\u2019s future capital requirements will depend on\nmany factors, including its results of operations. If the Company\u2019s cash flows\nfrom operations is less than anticipated or its working capital requirements or\ncapital expenditures are greater than expectations, or if the Company expands\nits business by acquiring or investing in additional products or technologies,\nit may need to secure additional debt or equity financing. The Company is\ncontinually evaluating various financing strategies to be used to expand its\nbusiness and fund future growth. There can be no assurance that additional debt\nor equity financing will be available on acceptable terms, it at all. The\npotential inability to obtain additional debt or equity financing, if required,\ncould have a material adverse effect on the Company\u2019s operations.In\nconnection with its investments as further described in footnote 14, the Company\nis obligated to fund investments totaling approximately $1.6 million in 2009.\nFurthermore, management anticipates the risk adjusted return is sufficiently in\nexcess of the contributed capital obligations, as of this date.\u00a0\u00a0There\nis however, no guarantee of the anticipated returns. In addition, management has\ntaken considerable actions to secure its interest in achieving such a\nreturn.Significant\nEstimates and Accounting PoliciesPrinciples of\nConsolidationThe\nconsolidated financial statements include the accounts of all majority and\nwholly-owned subsidiaries and significant intercompany balances and transactions\nhave been eliminated.The\nequity method is used to account for investments in entities in which we have an\nownership of less than 50% and have significant influence over the operating and\nfinancial policies of the affiliate. For investments in entities for which the\ncompany has a less than 50 percent ownership interest, but has certain\nparticipatory rights, the investee is consolidated.Use\nof EstimatesThe\npreparation of financial statements in conformity with generally accepted\naccounting principles requires management to make estimates and assumptions that\naffect the reported amounts of assets, liabilities, revenue and expenses as well\nas the disclosure of contingent assets and liabilities. Management continually\nevaluates its estimates and judgments including those related to allowances for\ndoubtful accounts and the associated allowances for returns and chargebacks,\nuseful lives of property, plant and equipment and intangible assets, fair value\nof stock options granted, forfeiture rate of equity based compensation grants,\nprobable losses associated with pre-acquisition contingencies, income taxes and\nother contingencies. Management bases its estimates and judgments on historical\nexperience and other factors that are believed to be reasonable in the\ncircumstances. Actual results may differ from those estimates. Macroeconomic\nconditions may directly, or indirectly through our business partners and\nvendors, impact our financial performance and available resources. Such\nconditions may, in turn, impact the aforementioned estimates and\nassumptions.\u00a0Accounts\nReceivable and Related Allowances\nThe\nCompany maintains allowances for doubtful accounts for estimated losses which\nmay result from the inability of its customers to make required payments. The\nCompany bases\u00a0its allowances on the likelihood of recoverability of\naccounts receivable by customer, based on past experience,\u00a0the age of the\naccounts receivable balance, the credit quality of the Company\u2019s customers, and,\ntaking into account current collection trends. If specific customer\ncircumstances change or industry trends worsen beyond the Company\u2019s estimates,\nthe Company would be required to increase its allowances for doubtful accounts.\nAlternatively, if trends improve beyond the Company\u2019s estimates, the Company\nwould be required to decrease its allowance for doubtful accounts. The Company\u2019s\nestimates are reviewed periodically, and adjustments are reflected through bad\ndebt expense in the period they become known. Changes in the Company\u2019s bad debt\nexperience can materially affect its results of operations.\n\u00a0\nThe\nCompany also makes estimates for refunds, chargebacks or credits, and provides\nfor these probable uncollectible amounts through a deferral and reduction of\nrecorded revenues in the period for which the sale occurs based on analyses of\nprevious rates and trends.Due to\nthe payment terms of the carriers requiring in excess of 60 days from the date\nof billing or sale, at its sole discretion, the Company can elect to use trade\ndiscounts in order to facilitate quicker payment. This discount or fee allows\nfor payments of approximately 80% of the prior month\u2019s billings 15 to 20 days\nafter the end of the month. The Company records revenue net of that fee, if\nincurred, which is 3.5% to 5% of the associated revenue.\nGoodwill\nand Intangible Assets\n\u00a0\n\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0Goodwill\nrepresents the excess of cost over fair value of net assets of businesses\nacquired. In accordance with Statement of Financial Accounting Standards\nNo.\u00a0142 (\u201cSFAS\u00a0142\u201d) \u201cGoodwill and Other Intangible Assets\u201d, the value\nassigned to goodwill and indefinite lived intangible assets is not amortized to\nexpense, but rather it is evaluated at least on an annual basis to determine if\nthere is a potential impairment. If the fair value of the reporting unit is less\nthan its carrying value, an impairment loss is recorded to the extent that the\nimplied fair value of the reporting unit goodwill is less than the carrying\nvalue. If the fair value of an indefinite lived intangible is less than its\ncarrying amount, an impairment loss is recorded. Fair value is determined based\non discounted cash flows, market multiples or appraised values as appropriate.\nDiscounted cash flow analysis requires assumptions about the timing and amount\nof future cash inflows and outflows, risk, the cost of capital, and terminal\nvalues. Each of these factors can significantly affect the value of the\nintangible asset. The estimates of future cash flows, based on reasonable and\nsupportable assumptions and projections, require management\u2019s judgment. Any\nchanges in key assumptions about the Company\u2019s businesses and their prospects,\nor changes in market conditions, could result in an impairment charge. Some of\nthe more significant estimates and assumptions inherent in the intangible asset\nvaluation process include: the timing and amount of projected future cash flows;\nthe discount rate selected to measure the risks inherent in the future cash\nflows; and the assessment of the asset\u2019s life cycle and the competitive trends\nimpacting the asset, including consideration of any technical, legal or\nregulatory trends.The\nCompany has determined that there was an impairment of goodwill as a result of\ncompleting its annual impairment analysis as of December\u00a031, 2008. In\nperforming the related valuation analysis the company used various valuation\nmethodologies including probability weighted discounted cash flows, comparable\ntransaction analysis, and market capitalization and comparable company multiple\ncomparison. The results of this review and impact of the impairment are more\nfully described in Note\u00a06\u00a0- \u201cGoodwill and Intangible\nAssets\u201d.Intangible\nassets subject to amortization primarily consist of customer lists, trade names\nand trademarks, and restrictive covenants that were acquired. \u00a0The\nintangible asset values assigned to the identified assets for each acquisition\nwere generally determined based upon the expected discounted aggregate cash\nflows to be derived over the estimated useful life. The method of amortizing the\nintangible asset values reflects, based upon the Company\u2019s historical\nexperience, an accelerated rate of attrition in the subscriber database based\nover the expected life of the underlying subscriber database after considering\nturnover.\u00a0\u00a0Accordingly, the Company amortizes the value assigned to\nsubscriber database based on the actual depletion of the acquired subscriber\ndatabase. The Company reviews the recoverability of its finite-lived intangible\nassets for recoverability whenever events or circumstances indicated that the\ncarrying amount of an asset may not be recoverable. Recoverability is assessed\nby comparison to associated undiscounted cash flows.Stock-Based\nCompensation\nThe\nCompany records stock based compensation in accordance with Financial Accounting\nStandard Board Statement of Financial Accounting Standards No. 123 (revised\n2004). In estimating the grant date fair value at stock option awards, we use\ncertain assumptions and estimates to derive fair value, such as expected term,\nrate of risk free returns and volatility. If different assumptions and estimates\nwere used, the amounts charged to compensation expense would be\ndifferent.\n\nRevenue\nRecognitionThe\nCompany monetizes a portion of its user activities through subscription based\nsources by providing on-going monthly access to and usage of premium products\nand services.\u00a0\u00a0In general, customers are billed at standard rates, at\nthe beginning of the month, and revenues are recognized upon receipt of\ninformation confirming an arrangement. The Company estimates a provision for\nrefunds and credits which is recorded as a reduction to revenues. In determining\nthe estimate for refunds and credits, the Company relies upon historical data,\ncontract information and other factors. The estimated provision for refunds can\nvary from actual results.The\nCompany effectuates this type of revenues through a carrier or distributors who\nare paid a transaction fee for their services.\u00a0\u00a0In accordance with\nEmerging Issues Task Force (\u201cEITF\u201d No 99-19) \u201cReporting Revenues Gross as\nPrincipal Versus Net as an Agent\u201d, the Company recognizes as revenues the net\namount received from the carrier or distributor, net of their\nfee.\u00a0\u00a0Revenues are deferred if the probability of collection is not\nreasonably assured.The\nCompany monetizes a portion of its user activities through transactional based\nservices generated primarily from (a) fees earned, primarily on a CPC basis,\nfrom search syndication services; (b) commission fees earned for the Company's\nsearch engine marketing (\"SEM\") services; (c) commission fees earned from\nmarketing service arrangements associated with our affiliate marketing partners;\nand (d) other fees for marketing services including data and list management\nservices, which can be either periodic or transactional. Commission fee revenue\nis recognized in the period that the Company's advertiser customer generates a\nsale or other agreed-upon action on the Company's affiliate marketing networks\nor as a result of the Company's SEM services, provided that no significant\nCompany obligations remain, collection of the resulting receivable is reasonably\nassured, and the fees are fixed or determinable. All transaction services\nrevenues are recognized on a gross basis in accordance with the provisions of\nEITF\u00a099-19, due to the fact that the Company is the primary obligor to its\ncustomer, and publisher expenses that are directly related to a\nrevenue-generating event are recorded as a component of 3rd part Media\nCost.Income\nTaxesThe\nCompany uses the asset and liability method of financial accounting and\nreporting for income taxes required by Statement of Financial Accounting\nStandards No.\u00a0109 (\u201cSFAS 109\u201d), \u201cAccounting for Income Taxes\u201d. Under SFAS\n109, deferred income taxes reflect the tax impact of temporary differences\nbetween the amount of assets and liabilities recognized for financial reporting\npurposes and the amounts recognized for tax purposes.Effective\nJanuary\u00a01, 2007, the Company adopted FIN No.\u00a048, \u201cAccounting for\nUncertainty in Income Taxes\u201d which resulted in no material adjustment in the\nliability for unrecognized tax benefits. The Company classifies interest expense\nand penalties related to unrecognized tax benefits as income tax expense. FIN 48\nclarifies the accounting for uncertainty in income taxes recognized in an\nenterprise\u2019s financial statements in accordance with SFAS No.\u00a0109 and\nprescribes a recognition threshold and measurement attribute for the financial\nstatement recognition and measurement of a tax position taken or expected to be\ntaken in a tax return. The evaluation of a tax position in accordance with this\nInterpretation is a two-step process. The first step is recognition, in which\nthe enterprise determines whether it is more likely than not that a tax position\nwill be sustained upon examination, including resolution of any related appeals\nor litigation processes, based on the technical merits of the position. The\nsecond step is measurement. A tax position that meets the more-likely-than-not\nrecognition threshold is measured to determine the amount of benefit to\nrecognize in the financial statements.The\nCompany and its subsidiaries file income tax returns in the U.S and Canada. The\nCompany is subject to U.S., Australian (prior years filing) and Canadian federal\nand state examinations. The statute of limitations for 2007 and 2008 in all\njurisdictions remains open and are subject to examination by tax\nauthorities.Contractual\nObligations and Off-Balance Sheet ArrangementsAt\nDecember 31, 2008, the Company did not have any relationships with\nunconsolidated entities or financial partnerships, such as entities often\nreferred to as structured finance or special purpose entities, which would have\nbeen established for the purpose of facilitating off-balance sheet arrangements\nor other contractually narrow or limited purposes. As such, the Company is not\nexposed to any financing, liquidity, market or credit risk that could arise if\nit had engaged in such relationships.The\nfollowing table shows the Company\u2019s future commitments for future minimum lease\npayments required under operating leases that have remaining non cancellable\nlease terms in excess of one year, future commitments under investment and\nmarketing agreements, future commitments under employment agreements, and note\nand interest payable as of December 31, 2008:","markdown_table":"\n\n\n\n\n\n\n\n\n\n\n\n| | | For the Year December 31, | | | | | | | | Change Inc.(Dec.) | | | | Change Inc.(Dec.) | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | 2008 | | | | 2007 | | | | $ | | | | % | | |\n| | | | | | | | | | | | | | | | | |\n| Operating Expenses | | | | | | | | | | | | | | | | |\n| Cost of Media \u2013 3rd party | | $ | 74,541 | | | $ | 29,054 | | | | 45,487 | | | | 157 | % |\n| Product and distribution | | | 9,749 | | | | 3,149 | | | | 6,600 | | | | 210 | % |\n| Selling and marketing | | | 9,974 | | | | 1,521 | | | | 8,453 | | | | 556 | % |\n| General and administrative and other operating | | | 16,060 | | | | 7,408 | | | | 8,652 | | | | 117 | % |\n| Depreciation and Amortization | | | 5,867 | | | | 1,349 | | | | 4,518 | | | | 335 | % |\n| Impairment of goodwill | | | 114,783 | | | | - | | | | 114,783 | | | | 100 | % |\n| | | | | | | | | | | | | | | | | |\n| Total Operating Expenses | | $ | 230,974 | | | $ | 42,481 | | | $ | 188,493 | | | | 444 | % |\n\n\n\n\n\n\n\n\n\n\n\n","source":"PTIX\/10-K\/0001144204-09-016416"} {"title":"STRATEGIC\nINITIATIVES","text":"In\ncertain situations, the Company does have minimum fee obligations assuming the\ncounterparty performs the required level of services. We feel that the level of\nbusiness activity under normal and ordinary circumstances exceeds the minimum\nthresholds. Therefore, the amounts are not included in the table\nabove.Recent\nAccounting PronouncementsIn\nJune\u00a02008, the FASB issued FASB Staff Position No.\u00a0EITF 03-6-1,\n\u201cDetermining Whether Instruments Granted in Share-Based Payment Transactions Are\nParticipating Securities.\u201d EITF 03-6-1 gives guidance as to the circumstances\nwhen unvested share-based payment awards should be included in the computation\nof EPS. EITF 03-6-1 is effective for fiscal years beginning after\nDecember\u00a015, 2008. We are currently assessing the impact of EITF 03-6-1 on\nour consolidated financial statements.In May\n2008, the FASB issued Statement of Financial Accounting Standards No.\u00a0162\n(\"SFAS\u00a0162\"), The Hierarchy of Generally Accepted Accounting\nPrinciples. This\nstatement identifies the sources of accounting principles and the framework for\nselecting the principles used in preparation of financial statements of\nnongovernmental entities that are presented in conformity with U.S.\u00a0GAAP.\nThis statement is effective November\u00a015, 2008. The Company will adopt\nSFAS\u00a0162 as required, and its adoption is not expected to have an impact on\nthe consolidated financial statements.In\nApril\u00a02008, the FASB issued FASB Staff Position No.\u00a0FSP 142-3,\n\u201cDetermining the Useful Life of Intangible Assets\u201d FSP 142-3 amends the factors\nto be considered in determining the useful life of intangible assets. Its intent\nis to improve the consistency between the useful life of an intangible asset and\nthe period of expected cash flows used to measure its fair value. FSP 142-3 is\neffective for fiscal years beginning after December\u00a015, 2008. We are\ncurrently assessing the impact of FSP 142-3 on our consolidated financial\nstatements.In March\n2008, the FASB issued SFAS No. 161, \u201cDisclosure about Derivative Instruments and\nHedging Activities,\u201d an amendment of FASB Statement No. 133. SFAS No. 161\nchanges the disclosure requirements for derivative instruments and hedging\nactivities. Entities are required to provide enhanced disclosures about (a) how\nand why an entity uses derivative instruments, (b) how derivative instruments\nand related hedged items are accounted for under Statement No. 133 and its\nrelated interpretations and (c) how derivative instruments and related hedged\nitems affect an entity\u2019s financial position, financial performance and cash\nflows. SFAS No. 161 is effective for financial statements issued for fiscal\nyears and interim periods beginning after November 15, 2008, with early\napplication encouraged. The Company is currently evaluating the impact SFAS No.\n161 may have its consolidated financial statements.In\nDecember 2007, the FASB issued SFAS No. 160, \u201cNoncontrolling Interests in\nConsolidated Financial Statements,\u201d which we refer to as SFAS No. 160. SFAS No.\n160 establishes requirements for ownership interests in subsidiaries held by\nparties other than us (minority interests) be clearly identified and disclosed\nin the consolidated statement of financial position within equity, but separate\nfrom the parent's equity. Any changes in the parent's ownership interests are\nrequired to be accounted for in a consistent manner as equity transactions and\nany noncontrolling equity investments in deconsolidated subsidiaries must be\nmeasured initially at fair value. SFAS No. 160 is effective, on a prospective\nbasis, for fiscal years beginning after December 15, 2008; however, presentation\nand disclosure requirements must be retrospectively applied to comparative\nfinancial statements. The Company will adopt SFAS No. 160 in our fiscal year\nending December 31, 2009. However, the Company is currently evaluating the\nimpact of SFAS No. 160 may have its consolidated financial\nstatements.On\nFebruary 12, 2008, the FASB issued FASB Staff Position (\u201cFSP\u201d) SFAS No. 157-2,\n\u201cEffective Date of SFAS No. 157,\u201d which defers the effective date of SFAS 157\nfor nonfinancial assets and liabilities, except for items that are recognized or\ndisclosed at fair value in the financial statements on a recurring basis. This\nFSP delayed the implementation of SFAS 157 for the Company\u2019s accounting of\ngoodwill, acquired intangibles, and other nonfinancial assets and liabilities\nthat are measured at the lower of cost or market until January 1,\n2009.In\nDecember 2007, the FASB issued SFAS No. 141R, \u201cBusiness Combinations\u201d (\u201cSFAS\n141R\u201d). SFAS 141R establishes the principles and requirements for how an\nacquirer: (i) recognizes and measures in its financial statements the\nidentifiable assets acquired, the liabilities assumed and any non-controlling\ninterest in the acquiree; (ii) recognizes and measures the goodwill acquired in\nthe business combination or a gain from a bargain purchase; and (iii) determines\nwhat information to disclose to enable users of the financial statements to\nevaluate the nature and financial effects of the business combination. SFAS 141R\nis to be applied prospectively to business combinations consummated on or after\nthe beginning of the first annual reporting period on or after December 15,\n2008, with early adoption prohibited. We are currently evaluating the impact\nSFAS 141R will have on adoption on our accounting for future acquisitions.\nPreviously, any release of valuation allowances for certain deferred tax assets\nwould serve to reduce goodwill, whereas under the new standard any release of\nthe valuation allowance related to acquisitions currently or in prior periods\nwill serve to reduce our income tax provision in the period in which the reserve\nis released. Additionally, under SFAS 141R transaction-related expenses, which\nwere previously capitalized, will be expensed as incurred.In\nFebruary 2007, FASB issued SFAS No. 159, The Fair Value Option for Financial\nAssets and Financial Liabilities (\u201cSFAS 159\u201d), which gives companies the option\nto measure eligible financial assets, financial liabilities and firm commitments\nat fair value (i.e., the fair value option), on an instrument-by-instrument\nbasis, that are otherwise not permitted to be accounted for at fair value under\nother accounting standards. The election to use the fair value option is\navailable when an entity first recognizes a financial asset or liability or upon\nentering into a firm commitment. Subsequent changes in fair value must be\nrecorded in earnings. SFAS 159 is effective for financial statements issued for\nfiscal year beginning after November 15, 2007. The Company elected not to adopt\nthe provisions of SFAS 159 for its financial instruments that are not required\nto be measured at fair value.AcquisitionsOn\nFebruary 4, 2008, New Motion completed its merger with Traffix, Inc.\n(\u201cTraffix\u201d); a performance based online marketing company, pursuant to a merger\nagreement entered into by the companies on September 26, 2007. As a result of\nthe closing of the transaction, Traffix became a wholly owned subsidiary of New\nMotion. Immediately following the consummation of the merger, Traffix\nstockholders owned approximately 45% of the capital stock of New Motion, on a\nfully-diluted basis. Each issued and outstanding share of Traffix common stock\nwas converted into the right to receive approximately 0.676 shares of New Motion\ncommon stock based on the capitalization of both companies on the closing date\nof the merger. Effective the date of the close of the merger, New Motion\ncommenced trading on The NASDAQ Global Market under the symbol\n\u201cNWMO.\u201dOn June\n30, 2008, New Motion entered into an Asset Purchase Agreement with Ringtone.com,\nLLC, a Minnesota limited liability company and W3i Holdings LLC, a Minnesota\nlimited liability company and the sole member of Ringtone.com. In consideration\nfor the assets, the Company at the closing paid to Ringtone.com $7 million in\ncash. In addition, the Company delivered to Ringtone.com a convertible\npromissory note (the \u201cNote\u201d) in the aggregate principal amount of $1.75 million,\nwhich accrues interest at a rate of 10% per annum (provided that from and after\nan event of default, the Note will bear interest at a rate of 15% per\nannum).See Note\n4 to the consolidated\u00a0financial statements for a more detailed description\nof the Traffix and Ringtone.com acquisitions.Pro Forma Financial\nDataAs more\nfully described in Note 4 to the consolidated financial statements, New Motion\nacquired all of the outstanding common shares of Traffix in accordance with the\nmerger agreement as well as certain assets and liabilities of Ringtone.com, LLC\nin accordance with the asset purchase agreement. The following unaudited pro\nforma results of operations are based on the historical statements of operations\nof New Motion,\u00a0\u00a0Traffix and Ringtone.com, LLC, after giving effect to\nthe acquisition of Traffix by New Motion, using the purchase method of\naccounting and applying the assumptions and adjustments described in the related\ndiscussion below.The pro\nforma combined statement of operations for the year ended December 31, 2008 is\npresented as if the acquisitions of Traffix and Ringtone.com had occurred on\nJanuary 1, 2008. You should read this information in conjunction with the\naccompanying notes to the consolidated financial statements included\nherewith.The pro\nforma information presented is for illustrative purposes only and is not\nnecessarily indicative of the financial position or results of operations that\nwould have been realized if the acquisitions had been completed on the dates\nindicated, nor is it indicative of future operating results or financial\nposition.Financial\nstatements of New Motion issued after the acquisitions reflects only the\noperations of Traffix and Ringtone.com after the acquisitions and have not been\nrestated retroactively to reflect the historical financial position or results\nof operations of Traffix and Ringtone.com.\nTraffix\nand Ringtone results of operations are derived from the unaudited management\naccounts of Traffix and Ringtone for the period from January 1, 2008 to February\n3, 2008 and the period from January 1, 2008 to June 30, 2008,\nrespectively.","markdown_table":"\n\n\n\n\n\n\n| | | Operating Leases | | | | Employment Agreements | | | | Investments\u00a0& Marketing Advances | | | | Note\u00a0and Interest payable | | | | Total Obligations | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| 2009 | | $ | 1,502 | | | $ | 1,333 | | | $ | 1,570 | | | $ | 1,925 | | | $ | 6,330 | |\n| 2010 | | | 1,246 | | | | 1,250 | | | | - | | | | - | | | $ | 2,496 | |\n| 2011 | | | 1,184 | | | | 271 | | | | - | | | | - | | | $ | 1,455 | |\n| 2012 and thereafter | | | 5,912 | | | | - | | | | - | | | | - | | | $ | 5,912 | |\n| | | $ | 9,844 | | | $ | 2,854 | | | $ | 1,570 | | | $ | 1,925 | | | $ | 16,193 | |\n\n\n\n\n\n\n","source":"PTIX\/10-K\/0001144204-09-016416"} {"title":"UNAUDITED\nPRO FORMA RESULTS OF OPERATIONS","text":"Pro\nForma AdjustmentsThe\nfollowing pro forma adjustments are included in the unaudited pro forma\nconsolidated statement of operations:","markdown_table":"\n\n\n\n\n| | | New\u00a0Motion | | | | Traffix | | | | Acquisition Adjustments | | | | Total Traffix | | | | Ringtone | | | | Acquisition Adjustments | | | | Total Ringtone | | | | Combined Pro Forma | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Net\u00a0revenue-Subscription | | $ | 44,196 | | | | | | | | | | | | | | | $ | 7,278 | | | $ | (310 | )(g) | | $ | 6,968 | | | $ | 51,164 | |\n| Net\u00a0revenue-Transactional | | | 69,688 | | | | 10,637 | | | | (3,068 | )(a) | | | 7,569 | | | | | | | | - | | | | - | | | | 77,257 | |\n| TOTAL REVENUE | | | 113,884 | | | | 10,637 | | | | (3,068 | ) | | | 7,569 | | | | 7,278 | | | | (310 | ) | | | 6,968 | | | | 128,421 | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| EXPENSES | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Cost of revenues-third party | | | 74,541 | | | | 7,441 | | | | (310 | )(b) | | | 7,131 | | | | 5,675 | | | | (1,107 | )(h) | | | 4,568 | | | | 86,240 | |\n| Product and\u00a0\u00a0distribution | | | 9,749 | | | | | | | | - | | | | - | | | | | | | | - | | | | - | | | | 9,749 | |\n| Selling and\u00a0marketing | | | 9,974 | | | | 266 | | | | (1,961 | )(c) | | | (1,695 | ) | | | | | | | - | | | | - | | | | 8,279 | |\n| General and\u00a0administrative | | | 16,060 | | | | 1,596 | | | | (560 | )(d) | | | 1,036 | | | | 669 | | | | - | | | | 669 | | | | 17,765 | |\n| Depreciation and\u00a0amortization | | | 5,867 | | | | 96 | | | | 275 | (e) | | | 371 | | | | 54 | | | | 14 | (e) | | | 68 | | | | 6,306 | |\n| Impairment of goodwill | | | 114,783 | | | | - | | | | - | | | | - | | | | - | | | | - | | | | - | | | | 114,783 | |\n| | | | 230,974 | | | | 9,399 | | | | (2,556 | ) | | | 6,843 | | | | 6,398 | | | | (1,093 | ) | | | 5,305 | | | | 243,122 | |\n| (LOSS) FROM OPERATIONS | | | (117,090 | ) | | | 1,238 | | | | (512 | ) | | | 726 | | | | 880 | | | | 783 | | | | 1,663 | | | | (114,701 | ) |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| OTHER EXPENSE (INCOME) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Interest income and\u00a0dividends | | | (748 | ) | | | | | | | - | | | | - | | | | - | | | | - | | | | - | | | | (748 | ) |\n| Interest expense | | | 147 | | | | | | | | - | | | | - | | | | - | | | | - | | | | - | | | | 147 | |\n| Other income\/expenses | | | 153 | | | | | | | | 28 | | | | 28 | | | | - | | | | - | | | | - | | | | 181 | |\n| (LOSS) INCOME BEFORE PROVISION FOR INCOME TAXES | | $ | (116,642 | ) | | $ | 1,238 | | | $ | (540 | ) | | $ | 698 | | | $ | 880 | | | $ | 783 | | | $ | 1,663 | | | $ | (114,281 | ) |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| INCOME TAXES | | | (852 | ) | | | 551 | | | | (551 | )(f) | | | - | | | | - | | | | - | | | | - | | | | (852 | ) |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | - | |\n| (LOSS) INCOME BEFORE MINORITY INTEREST | | | (115,790 | ) | | | 687 | | | | 11 | | | | 698 | | | | 880 | | | | 783 | | | | 1,663 | | | | (113,429 | ) |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| MINORITY INTEREST, NET OF PROVISION\u00a0FOR INCOME | | | (24 | ) | | | | | | | - | | | | - | | | | - | | | | - | | | | - | | | | (24 | ) |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | - | |\n| NET INCOME | | $ | (115,766 | ) | | $ | 687 | | | $ | 11 | | | $ | 698 | | | $ | 880 | | | $ | 783 | | | $ | 1,663 | | | $ | (113,405 | ) |\n\n\n\n\n","source":"PTIX\/10-K\/0001144204-09-016416"} {"title":"44","text":"Plan\nof OperationsBusiness\nOverviewThe\nCompany is in its developmental stage, with encouraging but not conclusive evidence that its lead drug candidate, PT00014, may\nbe effective as an anti-anxiety and\/or anti-depression drug. It is focused on confirming the efficacy of this drug candidate,\nalong with performing the other preclinical steps needed to progress along the pathway to bring this drug candidate into human\nclinical trials and eventually, to the global market to provide a new pharmaceutical for patients suffering from anxiety or treatment-resistant\ndepression.We\nanticipate $4,225,000 in capital expenditures in FY 2021 to implement our current plan of operations in connection with the development\nof PT00114.If\nwe are able to successfully develop our drug, PT00114, and obtain FDA approval, we could then begin marketing and selling it in\nthe United States and generate revenue. FDA approval to begin commercial sales is the singular gating item that will allow us\nto begin generating sales revenue in the U.S., so it will have an enormous impact on our business plan and our financial condition.\nIt is anticipated that the sale of our drug will allow the Company to generate enough sales revenue to support all of our operations\nand to generate a profit. However, given the stage of development, even if FDA Approval is obtained, we do not anticipate generating\nany revenue from sales prior to 2024.Development\nMilestones (upcoming developmental milestones)Upcoming\ndevelopment milestones include confirming efficacy of our lead drug candidate in an animal model in a CRO, conducting toxicology\ntesting in two animal species, and filing an IND application to begin human clinical trials.","markdown_table":"\n\n| | | Payments due by period | | | | | | | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| Contractual obligations | | Total | | | | Less than 1 year | | | | 1-3 years | | | | 3-5 years | | | | More than 5 years | | |\n| Long-Term PIK convertible notes payable | | $ | 1,597,500 | | | $ | - | | | $ | - | | | $ | 1,597,500 | | | $ | - | |\n| Long-Term PIK convertible notes payable\u2013 Related Party | | $ | 400,000 | | | $ | - | | | $ | - | | | $ | 400,000 | | | $ | - | |\n| Total | | $ | 1,997,500 | | | $ | - | | | $ | - | | | $ | 1,997,500 | | | $ | - | |\n\n","source":"PTIX\/10-K\/0001493152-21-006756"} {"title":"23","text":"*This\nexpenditure may depend on a successful capital raising event. We do not currently have any commitments for such a capital raising\nevent.If\nwe are able to successfully develop our drug, PT00114, and obtain FDA approval, we could then begin marketing and selling it in\nthe United States and generate revenue. FDA approval to begin commercial sales is the singular gating item that will allow us\nto begin generating sales revenue in the U.S., so it will have an enormous impact on our business plan and our financial condition.\nIt is anticipated that the sale of our drug will allow the Company to generate enough sales revenue to support all of our operations\nand to generate a profit. However, given the stage of development, even if FDA Approval is obtained, it is not anticipated prior\nto 2023.Development\nMilestones (upcoming developmental milestones)Upcoming\ndevelopment milestones include confirming efficacy of our lead drug candidate in an animal model in a clinical research organization\n(CRO), conducting toxicology testing in two animal species, and filing an Investigational New Drug (IND) application to begin\nhuman clinical trials.","markdown_table":"\n\n| | | Estimated Cost | | |\n| --- | --- | --- | --- | --- |\n| 2Q 2019 | | | | |\n| Final Dosing work for Phase I | | $ | 55,000 | |\n| Final Safety and Toxicology Animal studies | | $ | 850,000 | \\* |\n| | | | | |\n| 3Q 2019 | | | | |\n| Complete Stability and Formulation | | $ | 85,000 | |\n| IND application write-up and filing | | $ | 120,000 | |\n| | | | | |\n| 4Q 2019 | | | | |\n| Site selection, patient enrollment | | $ | 850,000 | \\* |\n| | | | | |\n| 1H 2020 | | | | |\n| Human Safety Data generated from Phase I trial | | $ | 450,000 | |\n| | | | | |\n| 2H 2020 | | | | |\n| Human Efficacy Data generated from Phase II trial | | $ | 600,000 | |\n\n","source":"PTIX\/10-K\/0001493152-19-004288"} {"title":"24","text":"Off\nBalance Sheet ArrangementsWe\nhave no material off-balance sheet arrangements that are likely to have a current or future effect on our financial condition,\nchanges in financial condition, revenues or expenses, results of operations, liquidity, capital resources, or capital expenditures.Critical\naccounting policies and estimatesOur\ndiscussion and analysis of financial condition and results of operations are based upon our consolidated financial statements,\nwhich have been prepared in accordance with accounting principles generally accepted in the United States of America (\u201cGAAP\u201d).\nThe notes to the consolidated financial statements contained in this Annual Report describe our significant accounting policies\nused in the preparation of the consolidated financial statements. The preparation of these financial statements requires us to\nmake estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets\nand liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting\nperiods. Actual results could differ from those estimates. We continually evaluate our critical accounting policies and estimates.We\nbelieve the critical accounting policies listed below reflect significant judgments, estimates and assumptions used in the preparation\nof our consolidated financial statements.Foreign\nCurrency Translation and Transactions. The assets and liabilities of our foreign subsidiary PTI Canada are translated into\nU.S. dollars from the functional currency using the exchange rate in effect at the balance sheets date. Additionally, the accounts\non the statements of operations are translated using exchange rates approximating average rates prevailing during the years. Equity\naccounts are translated at historical exchange rates. Translation adjustments that arise from translating its financial statements\nfrom the local currency to the U.S. dollar are accumulated and reflected as a separate component of stockholders\u2019 equity\n(deficit). The current year effects of the transaction adjustments are included on the statement of operations as a realized gain\n(loss) on foreign transaction exchange.","markdown_table":"\n\n| Basic Science of TCAP-1 | | $ | 60,000 | |\n| --- | --- | --- | --- | --- |\n| Efficacy Studies | | $ | 1,050,000 | |\n| Toxicology Studies | | $ | 850,000 | |\n| Stability and Formulation | | $ | 85,000 | |\n| Custom antibodies as an alternative to ELISA | | $ | None | |\n| Tagged antibodies | | $ | 104,000 | |\n| Antibody purification | | $ | 24,000 | |\n| Clinical consultants | | $ | 30,000 | |\n| Medical Writing and IND application compilation | | $ | 79,000 | |\n| Technical Infrastructure | | $ | 11,000 | |\n| Total R&D not including personnel | | $ | 2,293,000 | |\n\n","source":"PTIX\/10-K\/0001493152-19-004288"} {"title":"Comparison of Fiscal Years Ended December\u00a031, 2018 and 2017","text":"The $14.5 million decrease in research and development expense during the year ended December\u00a031, 2018 as compared to the year ended December\u00a031, 2017 principally reflects a $7.2 million decrease in costs related to the VTL-308 clinical trial due to completion of enrollment in the first quarter of 2018. There were 97 subjects enrolled in the VTL-308 clinical trial in the twelve months ended December 31, 2017, while there were 19 subjects enrolled in the twelve months ended December 31, 2018 due to the completion of enrollment. In addition, upon the release of results from the VTL-308 clinical trial in September 2018, we ceased substantially all development efforts related to the ELAD System. As a result, research and development expense also reflects a $1.7 million reduction in salaries and wages, $1.4 million reduction in estimated incentive compensation costs and a $1.3 million net reversal of stock-based compensation in the 2018 period, all reflecting that our VTL-308 clinical trial did not successfully reach its primary or secondary survival endpoints and a related reduction in staff. Manufacturing supplies, travel and entertainment, outside marketing efforts and consulting also all decreased primarily as a result of the completion of the VTL-308 clinical trial by $918,000, $697,000, $498,000 and $225,000, respectively. Depreciation expense also decreased by $279,000 in 2018 as compared to 2017, in part due to the impairment loss recorded in 2018.The $0.3 million increase in general and administrative expense during the year ended December 31, 2018 as compared to the year ended December 31, 2017 reflects an increase of $786,000 in outside services, primarily due to strategic marketing efforts in anticipation of the potential commercialization of ELAD, and increases in patent and other legal and securities-related costs of $882,000 including costs for the filing of a shelf registration statement on Form S-3 in the second quarter of 2018 and the subsequent write-off of deferred offering costs as a result of our inability to complete a follow-on offering considering the VTL-308 clinical trial results. These increased costs were largely offset by a $1.5 million decrease in compensation-related costs driven by a $862,000 reduction in stock-based compensation for the reversal of previously recognized expense related to performance-based stock options and a $502,000 reduction in estimated incentive compensation costs both reflecting that our VTL-308 clinical trial did not successfully reach its primary or secondary survival endpoints.As previously reported, we ceased substantially all of our development efforts related to the ELAD System in September 2018. This resulted in a substantial change in the expected use of our long-lived assets and a significant decrease in the benefits expected to be realized from these assets. Accordingly, we recognized an impairment charge of $1.2 million on our property and equipment reflecting the difference in the carrying value of such property and equipment and its estimated fair value, and severance costs of $2.4 million for the related reduction in staff, in the consolidated statement of operations for the year ended December\u00a031, 2018.In conjunction with our review of strategic alternatives and our decision to cease the further development of ELAD, we have significantly reduced our projected monthly cash usage entering into 2019. In addition, we are exploring options to reduce the amount of space we lease to further reduce expenses. The reduction in staff in September 2018 and the cancellation of stock options in January 2019 has also reduced and should reduce reported stock-based compensation in 2019. However, we expect our expenditures will change materially to the extent we enter into any strategic transactions, such as the Transaction with Immunic. For example, the Transaction would be expected to trigger the accelerated vesting of restricted stock unit awards and payments to our officers under severance and control agreements increasing costs. The timing and amount of our actual expenditures will be based on many factors, including, but not limited to, future research and development efforts including such costs incurred by Immunic assuming completion of the Transaction, and any other strategic options that we pursue.","markdown_table":"\n\n| | | | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | | | | | | | | | | | | | |\n| | Year\u00a0Ended December 31, | | | | | | | | Change | | | | | |\n| | 2018 | | | | 2017 | | | | $ | | | | % | |\n| Operating expenses: | | | | | | | | | | | | | | |\n| Research and development | $ | 24,825 | | | $ | 39,341 | | | $ | (14,516 | ) | | (37 | )% |\n| General and administrative | 13,585 | | | | 13,314 | | | | 271 | | | | 2 | % |\n| Severance Costs | 2,395 | | | | \u2014 | | | | 2,395 | | | | 100 | % |\n| Impairment Loss | 1,219 | | | | \u2014 | | | | 1,219 | | | | 100 | % |\n| Total operating expenses | $ | 42,024 | | | $ | 52,655 | | | $ | (10,631 | ) | | (20 | )% |\n\n","source":"IMUX\/10-K\/0001280776-19-000025"} {"title":"Comparison of Fiscal Years Ended December\u00a031, 2017 and 2016","text":"The $9.3 million increase in research and development expense during the year ended December\u00a031, 2017 as compared to the year ended December\u00a031, 2016 principally reflects an $8.0 million increase in costs related to the VTL-308 and prior clinical trials, primarily in higher costs for subjects, sites, manufacturing, enrollment support activities and consulting. As enrollment started in the second quarter of 2016, 35 subjects were enrolled in the VTI-308 clinical trial in the year ended December 31, 2016, while 97 subjects were enrolled during the year ended December 31, 2017. Costs also increased by $1.2 million for activities to support a potential biologics license application, or BLA, submission in the future.The $2.1 million increase in general and administrative expense during the year ended December 31, 2017 as compared to the year ended December 31, 2016 was largely the result of a $1.9 million increase in compensation-related costs. In December 2017, our chief executive officer transitioned from being an employee to a consultant. As a result of the related transition and consulting agreements, we recorded $525,000 in severance costs and $674,000 in stock-based compensation related to stock option modifications. In total, stock-based compensation increased by $1.2 million in 2017 as compared to 2016 principally due to the stock option modifications and an increase in the number of options outstanding.","markdown_table":"\n\n| | | | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | | | | | | | | | | | | | |\n| | Year\u00a0Ended December 31, | | | | | | | | Change | | | | | |\n| | 2017 | | | | 2016 | | | | $ | | | | % | |\n| Operating expenses: | | | | | | | | | | | | | | |\n| Research and development | $ | 39,341 | | | $ | 30,046 | | | $ | 9,295 | | | 31 | % |\n| General and administrative | 13,314 | | | | 11,220 | | | | 2,094 | | | | 19 | % |\n| Total operating expenses | $ | 52,655 | | | $ | 41,266 | | | $ | 11,389 | | | 28 | % |\n\n","source":"IMUX\/10-K\/0001280776-19-000025"} {"title":"Comparison of Fiscal Years Ended December\u00a031, 2015 and 2014","text":"Research and development expense increased by $0.3 million during the year ended December\u00a031, 2015 as compared to the year ended December\u00a031, 2014. The higher research and development expenses were primarily attributable to increases of $3.1 million in third-party consulting and other service fees, $1.8 million in salaries, stock-based compensation and other compensation-related costs and $1.3 million in facilities costs and additional overhead allocations and costs, substantially offset by a reduction of $5.9 million in clinical trial and related costs.The increased third-party consulting and service fees are principally attributable to fees for clinical trial monitoring, for data management services, for analytical services in preparation for the evaluation of our VTI-208 clinical results and for activities to support a potential BLA filing. Higher salary and other compensation-related costs are principally due to increases in average headcount (i)\u00a0in research to support mechanism of action and BLA activities, (ii)\u00a0in manufacturing to support BLA activities, and (iii)\u00a0for clinical trials as we moved certain third-party CRO activities in house and to support data management. These compensation related costs also included $486,000 for severance primarily related to a reduction in workforce following the termination of our VTI-210 and VTI-212 clinical trials and most of our BLA activities, and an increase of $381,000 for non-cash stock-based compensation costs, including costs for the extension of the post-termination option exercise period in conjunction with the workforce reduction.The decrease in clinical trial and related costs reflects the completion of enrollment in the VTI-208 clinical trial in January 2015, the termination of the VTI-210 and VTI-212 clinical trials in September 2015 and the transfer of certain CRO activities to company personnel in the year ended December\u00a031, 2015 as compared to the year ended December\u00a031, 2014. This decrease in clinical costs was also due to the change in our estimated clinical accrual, reducing our clinical costs by $750,000 in the year ended December\u00a031, 2015. Costs of manufacturing materials and supplies also decreased by $448,000 due to the completion of enrollment in the VTI-208 clinical trial and the termination of the VTI-210 and VTI-212 clinical trials.The $1.5 million increase in general and administrative expense during the year ended December\u00a031, 2015 as compared to the year ended December\u00a031, 2014 was primarily attributable to a $1.8 million increase in salaries and wages and other compensation-related expenses principally due to higher stock-based compensation costs and increased average headcount to support our operations. These compensation-related costs included an increase of $1.1 million for non-cash stock-based compensation costs, including costs for the extension of the post-termination option exercise period and an increase of $115,000 for severance costs related to the reduction in workforce for the year ended December\u00a031, 2015. In addition, our insurance and consulting costs increased by $213,000 and $136,000, respectively, in the year ended December\u00a031, 2015 as compared to the year ended December\u00a031, 2014, primarily reflecting higher costs associated with being a public company following our IPO in April 2014. These increases were partially offset by a $595,000 decrease in costs primarily due to a higher allocation of overhead to research and development.We expect our research and development costs to decline in 2016 relative to 2015 due to the anticipated timing of patient enrollment in the VTL-308 clinical trial during 2016, the reduction in workforce in late 2015 and a reduction in BLA-related activities. We expect general and administrative costs to increase in 2016 relative to 2015 primarily due to legal costs that we expect to incur related to the lawsuits which are more fully described in Note 4, \"Commitments and Contingencies,\" in the notes to the consolidated financial statements.","markdown_table":"\n\n| | | | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | | | | | | | | | | | | | |\n| | Year\u00a0EndedDecember 31, | | | | | | | | Change | | | | | |\n| | 2015 | | | | 2014 | | | | $ | | | | % | |\n| Operating expenses: | | | | | | | | | | | | | | |\n| Research and development | $ | 39,773 | | | $ | 39,479 | | | $ | 294 | | | 1 | % |\n| General and administrative | 12,347 | | | | 10,863 | | | | 1,484 | | | | 14 | % |\n| Total operating expenses | $ | 52,120 | | | $ | 50,342 | | | $ | 1,778 | | | 4 | % |\n\n","source":"IMUX\/10-K\/0001628280-16-012388"} {"title":"Comparison of Fiscal Years Ended December\u00a031, 2014 and 2013","text":"The $17.7 million increase in research and development expense during the year ended December\u00a031, 2014, as compared to the year ended December\u00a031, 2013 was primarily associated with an increase in our phase 3 clinical trial activities for VTI-208 reflecting increases in the number of participating clinical sites and in the number of subjects enrolled. The higher costs were principally attributable to increases of $4.4 million in fees paid to clinical sites and related costs; $5.1 million in salaries and wages and other compensation related costs due to increased headcount, including a $1.1 million increase in stock-based compensation; $4.6 million in consulting and professional service fees; $1.6 million in manufacturing supplies and related costs; $714,000 in travel and conference expenses; and $1.3 million in facilities related costs, which includes depreciation, computer and equipment costs, utilities and lease expenses.The $1.2 million increase in general and administrative expense during the year ended December\u00a031, 2014, as compared to the year ended December\u00a031, 2013 was principally attributable to a $1.3 million increase in salaries and wages and other compensation related expenses due to increased headcount to support our operations, including a $453,000 increase in stock-based compensation, and higher insurance costs of $547,000 related to corporate insurance coverage increases. Such increases are due in part to support becoming a publicly-traded company in the second quarter of 2014. These increases were partially offset by a $640,000 reduction in recruiting costs in 2014 as compared to 2013.Other income (expense) primarily reflects the $2.6 million recognized as other income for the re-measurement of future purchase rights liabilities for the year ended December\u00a031, 2014, as all remaining purchase rights liabilities outstanding at December\u00a031, 2013 were exercised or terminated in conjunction with the completion of our IPO in April 2014. Other expense of $1.3 million for the year ended December\u00a031, 2013 reflects the re-measurement of future purchase rights liabilities during the period.","markdown_table":"\n\n| | | | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | | | | | | | | | | | | | |\n| | Year\u00a0EndedDecember 31, | | | | | | | | Change | | | | | |\n| | 2014 | | | | 2013 | | | | $ | | | | % | |\n| Operating expenses: | | | | | | | | | | | | | | |\n| Research and development | $ | 39,479 | | | $ | 21,787 | | | $ | 17,692 | | | 81 | % |\n| General and administrative | 10,863 | | | | 9,615 | | | | 1,248 | | | | 13 | % |\n| Total operating expenses | $ | 50,342 | | | $ | 31,402 | | | $ | 18,940 | | | 60 | % |\n\n","source":"IMUX\/10-K\/0001628280-16-012388"} {"title":"Contractual Obligations","text":"As of December\u00a031, 2015, our purchase obligations include existing purchase commitments for future minimum payments of $282,000 with a vendor for raw materials that will be used in manufacturing on an as needed basis. During the years ended December\u00a031, 2015, 2014 and 2013, we purchased $1.2 million, $1.2 million and $724,000, respectively, of materials from this vendor. Our purchase obligations also include a purchase order with a vendor for a component of the ELAD device that will be manufactured and delivered on an agreed upon schedule during 2016 for a future payment of $225,000. During the years ended December\u00a031, 2015, 2014 and 2013, we purchased $97,000, $105,000 and $131,000 of components from this vendor. Additionally, our purchase obligations include a purchase order with a vendor that will be installing an upgrade to our manufacturing facility with an agreed upon payment during 2016 of $114,000. We have not made any purchases from this vendor during the years ended December\u00a031, 2015, 2014 and 2013.","markdown_table":"\n\n| | | | | | | | | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | | | | | | | | | | | | | | | | | | |\n| | Payments Due by Period | | | | | | | | | | | | | | | | | | |\n| | Total | | | | Less\u00a0Than1 Year | | | | 2-3Years | | | | 3-5Years | | | | More\u00a0Than5 Years | | |\n| | (In thousands) | | | | | | | | | | | | | | | | | | |\n| Operating lease obligations | $ | 1,380 | | | $ | 889 | | | $ | 491 | | | $ | \u2014 | | | $ | \u2014 | |\n| Purchase obligations | 621 | | | | 621 | | | | \u2014 | | | | \u2014 | | | | \u2014 | | |\n| Total contractual obligations | $ | 2,001 | | | $ | 1,510 | | | $ | 491 | | | $ | \u2014 | | | $ | \u2014 | |\n\n","source":"IMUX\/10-K\/0001628280-16-012388"} {"title":"Comparison of Fiscal Years Ended December\u00a031, 2016 and 2015","text":"Research and development expense decreased by $9.7 million during the year ended December\u00a031, 2016 as compared to the year ended December\u00a031, 2015. The reduction in research and development expenses resulted from an $8.3 million decrease in clinical trial and related consulting, manufacturing and outside service costs. We opened 38 sites during the year ended December\u00a031, 2016 and enrolled 35 subjects in the VTL-308 clinical trial. Higher costs in the year ended December\u00a031, 2015 reflected costs associated with locking the database for and analysis of the VTI-208 clinical trial, and costs associated with the opening of 42 sites and the enrollment of 38 subjects in the VTI-208, VTI-210 and VTI-212 clinical trials. In addition, research and development-related salaries and related compensation costs decreased by $1.3 million in the year ended December\u00a031, 2016, primarily as a result of the reduction in staff and the recording of related severance costs in the third quarter of 2015.The $1.1 million decrease in general and administrative expense during the year ended December\u00a031, 2016 as compared to the year ended December\u00a031, 2015 was primarily the result of $503,000, $348,000 and $177,000 of lower salaries, for consulting and outside services and for travel costs, respectively, in part reflecting reductions in costs in conjunction with the reduction in staff completed in the fourth quarter of 2015. The decrease was also driven by a $250,000 reduction in audit and accounting fees and costs associated with being a public company and a $170,000 reduction in insurance costs. These decreases were partially offset by increased stock-based compensation of $640,000, primarily due to performance-based stock options that were granted in the fourth quarter of 2015. In addition, legal expenses increased by $223,000 in 2016, principally reflecting costs associated with securities litigation that was dismissed in 2016. We expect our research and development costs to increase significantly in 2017 relative to 2016 primarily due to the anticipated higher subject enrollment in the VTL-308 clinical trial during 2017 and due to increased activity related to a possible BLA filing. We expect general and administrative costs to increase slightly in 2017 as compared to 2016.","markdown_table":"\n\n| | | | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | | | | | | | | | | | | | |\n| | Year\u00a0EndedDecember 31, | | | | | | | | Change | | | | | |\n| | 2016 | | | | 2015 | | | | $ | | | | % | |\n| Operating expenses: | | | | | | | | | | | | | | |\n| Research and development | $ | 30,046 | | | $ | 39,773 | | | $ | (9,727 | ) | | (24 | )% |\n| General and administrative | 11,220 | | | | 12,347 | | | | (1,127 | | ) | | (9 | )% |\n| Total operating expenses | $ | 41,266 | | | $ | 52,120 | | | $ | (10,854 | ) | | (21 | )% |\n\n","source":"IMUX\/10-K\/0001280776-17-000010"} {"title":"Comparison of Fiscal Years Ended December\u00a031, 2015 and 2014","text":"Research and development expense increased by $0.3 million during the year ended December\u00a031, 2015 as compared to the year ended December\u00a031, 2014. The higher research and development expenses were primarily attributable to increases of $3.1 million in third-party consulting and other service fees, $1.8 million in salaries, stock-based compensation and other compensation-related costs and $1.3 million in facilities costs and additional overhead allocations and costs, substantially offset by a reduction of $5.9 million in clinical trial and related costs.The increased third-party consulting and service fees are principally attributable to fees for clinical trial monitoring, for data management services, for analytical services in preparation for the evaluation of our VTI-208 clinical results and for activities to support a potential BLA filing. Higher salary and other compensation-related costs are principally due to increases in average headcount (i)\u00a0in research to support mechanism of action and BLA activities, (ii)\u00a0in manufacturing to support BLA activities, and (iii)\u00a0for clinical trials as we moved certain third-party CRO activities in house and to support data management. These compensation related costs also included $486,000 for severance primarily related to a reduction in workforce following the termination of our VTI-210 and VTI-212 clinical trials and most of our BLA activities, and an increase of $381,000 for non-cash stock-based compensation costs, including costs for the extension of the post-termination option exercise period in conjunction with the workforce reduction.The decrease in clinical trial and related costs reflects the completion of enrollment in the VTI-208 clinical trial in January 2015, the termination of the VTI-210 and VTI-212 clinical trials in September 2015 and the transfer of certain CRO activities to company personnel in the year ended December\u00a031, 2015 as compared to the year ended December\u00a031, 2014. This decrease in clinical costs was also due to the change in our estimated clinical accrual, reducing our clinical costs by $750,000 in the year ended December\u00a031, 2015. Costs of manufacturing materials and supplies also decreased by $448,000 due to the completion of enrollment in the VTI-208 clinical trial and the termination of the VTI-210 and VTI-212 clinical trials.The $1.5 million increase in general and administrative expense during the year ended December\u00a031, 2015 as compared to the year ended December\u00a031, 2014 was primarily attributable to a $1.8 million increase in salaries and wages and other compensation-related expenses principally due to higher stock-based compensation costs and increased average headcount to support our operations. These compensation-related costs included an increase of $1.1 million for non-cash stock-based compensation costs, including costs for the extension of the post-termination option exercise period and an increase of $115,000 for severance costs related to the reduction in workforce for the year ended December\u00a031, 2015. In addition, our insurance and consulting costs increased by $213,000 and $136,000, respectively, in the year ended December\u00a031, 2015 as compared to the year ended December\u00a031, 2014, primarily reflecting higher costs associated with being a public company following our IPO in April 2014. These increases were partially offset by a $595,000 decrease in costs primarily due to a higher allocation of overhead to research and development.","markdown_table":"\n\n| | | | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | | | | | | | | | | | | | |\n| | Year\u00a0EndedDecember 31, | | | | | | | | Change | | | | | |\n| | 2015 | | | | 2014 | | | | $ | | | | % | |\n| Operating expenses: | | | | | | | | | | | | | | |\n| Research and development | $ | 39,773 | | | $ | 39,479 | | | $ | 294 | | | 1 | % |\n| General and administrative | 12,347 | | | | 10,863 | | | | 1,484 | | | | 14 | % |\n| Total operating expenses | $ | 52,120 | | | $ | 50,342 | | | $ | 1,778 | | | 4 | % |\n\n","source":"IMUX\/10-K\/0001280776-17-000010"} {"title":"Contractual Obligations","text":"As of December\u00a031, 2016, our purchase obligations include existing purchase commitments of $167,000 with a vendor for raw materials that will be used in manufacturing on an as needed basis. During the years ended December\u00a031, 2016, 2015 and 2014, we purchased $943,000, $1.2 million and $1.2 million, respectively, of materials from this vendor. Our purchase obligations also include a purchase commitment of $119,000 with a vendor for a component used in our clinical trials that will be manufactured and delivered on an as agreed upon schedule during 2017. During the years ended December\u00a031, 2016, 2015 and 2014, we purchased $118,000, $335,000 and $574,000, respectively, of materials from this vendor. In the course of normal business operations, we also enter into agreements with contract service providers and others. We can elect to discontinue the work under these contracts and purchase orders with notice.","markdown_table":"\n\n| | | | | | | | | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | | | | | | | | | | | | | | | | | | |\n| | Payments Due by Period | | | | | | | | | | | | | | | | | | |\n| | Total | | | | Less\u00a0Than1 Year | | | | 1-3Years | | | | 3-5Years | | | | More\u00a0Than5 Years | | |\n| | (In thousands) | | | | | | | | | | | | | | | | | | |\n| Operating lease obligations | $ | 1,461 | | | $ | 771 | | | $ | 690 | | | $ | \u2014 | | | $ | \u2014 | |\n| Purchase obligations | 286 | | | | 286 | | | | \u2014 | | | | \u2014 | | | | \u2014 | | |\n| Total contractual obligations | $ | 1,747 | | | $ | 1,057 | | | $ | 690 | | | $ | \u2014 | | | $ | \u2014 | |\n\n","source":"IMUX\/10-K\/0001280776-17-000010"} {"title":"Item\u00a06.\u00a0Selected Financial Data.","text":"The $17.7 million increase in research and development expense during the year ended December\u00a031, 2014,\nas compared to the year ended December\u00a031, 2013 was primarily associated with an increase in our Phase 3 clinical trial activities for VTI-208 reflecting increases in the number of participating clinical sites and in the number of subjects\nenrolled. The higher costs were principally attributable to increases of $4.4 million in fees paid to clinical sites and related costs; $5.1 million in salaries and wages and other compensation related costs due to increased headcount, including a\n$1.1 million increase in stock-based compensation; $4.6 million in consulting and professional service fees; $1.6 million in manufacturing supplies and related costs; $714,000 in travel and conference expenses; and $1.3 million in facilities related\ncosts, which includes depreciation, computer and equipment costs, utilities and lease expenses. The $1.2 million increase in general and\nadministrative expense during the year ended December\u00a031, 2014, as compared to the year ended December\u00a031, 2013 was principally attributable to a $1.3 million increase in salaries and wages and other compensation related expenses due to\nincreased headcount to support our operations, including a $453,000 increase in stock-based compensation, and higher insurance costs of $547,000 related to corporate insurance coverage increases. Such increases are due in part to support becoming a\npublicly-traded company in the second quarter of 2014. These increases were partially offset by a $640,000 reduction in recruiting costs in 2014 as compared to 2013. Other income (expense) primarily reflects the $2.6 million recognized as other income for the re-measurement of future purchase rights\nliabilities for the year ended December\u00a031, 2014, as all remaining purchase rights liabilities outstanding at December\u00a031, 2013 were exercised or terminated in conjunction with the completion of our IPO in April 2014. Other expense of $1.3\nmillion for the year ended December\u00a031, 2013 reflects the re-measurement of future purchase rights liabilities during the period. Comparison of Fiscal Years Ended December\u00a031, 2013 and 2012 The following table summarizes our operating expenses for the years ended December\u00a031, 2013 and 2012 (dollars in thousands):","markdown_table":"\n\n| | | | | | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | **Year\u00a0EndedDecember 31,** | | | | | | | | **Change** | | | | | | |\n| | | **2014** | | | | **2013** | | | | **$** | | | | **%** | | |\n| Operating expenses: | | | | | | | | | | | | | | | | |\n| Research and development | | $ | 39,479 | | | $ | 21,787 | | | $ | 17,692 | | | | 81 | % |\n| General and administrative | | | 10,863 | | | | 9,615 | | | | 1,248 | | | | 13 | % |\n| | | | | | | | | | | | | | | | | |\n| Total operating expenses | | $ | 50,342 | | | $ | 31,402 | | | $ | 18,940 | | | | 60 | % |\n| | | | | | | | | | | | | | | | | |\n\n","source":"IMUX\/10-K\/0001193125-15-098980"} {"title":"Item\u00a06.\u00a0Selected Financial Data.","text":"The $16.7 million increase in research and development expense during the year ended December\u00a031, 2013,\nas compared to the year ended December\u00a031, 2012, was principally associated with an increase in our Phase 3 clinical trial activities for VTI-208. The higher costs were primarily attributable to increases of $6.7 million in fees paid to CROs,\nclinical sites, and other related costs, primarily due to subject enrollment that commenced in March 2013; $4.5 million in salaries and wages, stock-based compensation, and other compensation related costs due to increased headcount; $2.5 million in\nmanufacturing supplies and related costs; $1.7 million in consulting fees related to professional services; $0.7 million in travel costs to support our clinical trial activities; and $0.4 million of allocated facilities costs attributable to\nadditional clinical office space in 2013. The $5.1 million increase in general and administrative expense during the year ended\nDecember\u00a031, 2013, as compared to the year ended December\u00a031, 2012, was primarily attributable to increases of $2.1 million in salaries and wages, stock-based compensation, and other compensation related expenses due to increased headcount\nto support our operations; $1.0 million in consulting fees primarily related to professional services for accounting, marketing and information technology consultants; $0.7 million in expenses related to executive and board member recruitment; and\n$0.5 million in facilities related to additional office space in 2013. The $413,000 decrease in interest expense for 2013, as compared to\n2012, was attributable to no outstanding convertible notes or loans during 2013. Our convertible notes were converted into shares of our senior preferred stock in September 2012 and our term loan was repaid in October 2012. The $180,000 decrease in revaluation of preferred stock warrant liabilities was attributable to the final valuation adjustment of our\npreferred stock warrant liabilities in 2012, as these warrants were converted to common stock warrants in connection with the junior preferred stock offering in February 2012. The $1.3 million recognized for the re-measurement of future purchase rights liabilities for the year ended December\u00a031, 2013 was the\nresult of an increase in the estimated fair value of future purchase rights liabilities associated with our senior preferred stock financings and an increase during 2013 in the number of shares available under such rights from December\u00a031, 2012\nto December\u00a031, 2013. The increase in the estimated fair value of the future purchase rights was primarily the result of an increase to our enterprise value offset in part by an increase in the number of shares of senior preferred stock\noutstanding as of December\u00a031, 2013 as compared to the prior year. Liquidity and Capital Resources Overview We have\nincurred losses since inception and negative cash flows from operating activities for the years ended December\u00a031, 2014, 2013 and 2012. As of December\u00a031, 2014, we had an accumulated deficit of $150.8 million. We anticipate that we will\ncontinue to incur net losses for the foreseeable future as we continue the development and potential commercialization of our ELAD System and incur additional costs associated with being a public company. In particular, we expect that our research\nand development and general and administrative expenses will continue to increase and, as a result, we will need additional capital to fund our operations, which we may seek to obtain through a combination of equity offerings, debt financings,\ngovernment or other third-party financing, marketing and distribution arrangements and other collaborations, strategic alliances and licensing arrangements. To date, we have financed our operations through preferred equity financings, our initial public offering completed in April 2014 and our\nfollow-on public offering completed in October 2014. In January and February 2014, we raised an aggregate of $18.2 million in private placements through the issuance and sale of 2,296,016 shares of senior preferred stock at a price of $8.00 per\nshare. In April 2014, we completed our initial public offering selling 4,500,000 shares of our common stock and, in May 2014, the underwriters exercised their option to purchase an additional 675,000 shares of our common stock, at $12.00 per share.\nIn total, we received net proceeds of $57.8 million after underwriters\u0092 discounts and commissions and before transaction-related costs of $5.8\u00a0million. In October 2014, we completed a follow-on public offering selling 2,000,000 shares of\nour common stock and, in November 2014, the underwriters exercised a portion of their option and purchased an additional 50,000 shares of our common stock, at $17.50 per share. In total, we received net proceeds of $33.4 million after\nunderwriters\u0092 discounts and commissions and before transaction-related costs of $511,000. As of December\u00a031, 2014, we had cash\nand cash equivalents of approximately $102.2 million. Cash in excess of immediate requirements is invested in accordance with our investment policy, primarily with an intent to maximize liquidity and preserve capital. As of December\u00a031, 2014,\nsuch balances were held in cash and money market funds. Cash Flows The following table shows a summary of our cash flows for each of the three years ended December\u00a031, 2014, 2013, and 2012 (in thousands):","markdown_table":"\n\n| | | | | | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | **Year\u00a0EndedDecember 31,** | | | | | | | | **Change** | | | | | | |\n| | | **2013** | | | | **2012** | | | | **$** | | | | **%** | | |\n| Operating expenses: | | | | | | | | | | | | | | | | |\n| Research and development | | $ | 21,787 | | | $ | 5,097 | | | $ | 16,690 | | | | 327 | % |\n| General and administrative | | | 9,615 | | | | 4,483 | | | | 5,132 | | | | 114 | % |\n| | | | | | | | | | | | | | | | | |\n| Total operating expenses | | $ | 31,402 | | | $ | 9,580 | | | $ | 21,822 | | | | 228 | % |\n| | | | | | | | | | | | | | | | | |\n\n","source":"IMUX\/10-K\/0001193125-15-098980"} {"title":"Item\u00a06.\u00a0Selected Financial Data.","text":"Net cash used in operating activities During the year ended December\u00a031, 2014, operating activities used $40.8 million of cash. The use of cash was primarily related to our net\nloss of $47.7\u00a0million adjusted for non-cash income of $2.6 million related to the re-measurement of future purchase rights liabilities, non-cash charges of $1.1 million and $2.5 million for depreciation and stock-based compensation,\nrespectively, and $5.8\u00a0million of net changes in our operating assets and liabilities. Net cash provided by changes in our operating assets and liabilities during the year ended December\u00a031, 2014 consisted primarily of an increase of $5.5\nmillion in accounts payable and accrued liabilities, reflecting an increase in clinical activities, related research and development expenditures and the timing of payments made by us to vendors since the beginning of the year. The decrease of\n$279,000 in other current assets and prepaid expenses was attributable to a reduction in prepaid clinical costs of $737,000 related to the utilization of prepayments to our CROs, offset by an increase of $329,000 in prepaid expenses primarily\nattributable to payments on corporate insurance policies. During the year ended December\u00a031, 2013, operating activities used $28.6\nmillion of cash. The use of cash primarily related to our net loss of $32.7\u00a0million, partially offset by $3.0\u00a0million of non-cash charges related to the re-measurement of future purchase rights, depreciation, deferred rent, and stock-based\ncompensation and $1.0\u00a0million of net changes in our operating assets and liabilities. Net cash provided by changes in our operating assets and liabilities during the year ended December\u00a031, 2013 consisted primarily of an increase of\n$2.2\u00a0million in accounts payable and accrued liabilities, reflecting an increase in clinical activities and the timing of payments made by us to vendors, partially offset by an increase in prepaid clinical costs of $841,000, an increase in\nlease deposits of $198,000, and an increase of $102,000 related to other assets. During the year ended December\u00a031, 2012, operating\nactivities used $9.2 million of cash. The use of cash during 2012 primarily related to our net loss of $6.7 million, adjusted for $3.1 million in non-cash income related to the re-measurement of future purchase rights, $473,000 of net changes in our\noperating assets and liabilities, and adjustments to our net loss of $180,000 due to the non-cash revaluation of the preferred stock warrant liabilities, partially offset by $1.2 million of non-cash charges related to depreciation, interest, and\nstock-based compensation. Changes in our operating assets and liabilities consisted primarily of a decrease of $231,000 in accounts payable and accrued liabilities, due primarily to the timing of payments made by us to vendors, and an increase in\nprepaid expenses of $242,000 due primarily to increases in prepaid clinical costs of $54,000. Net cash (used in) provided by investing\nactivities During the year ended December\u00a031, 2014, investing activities used $2.0 million of cash, primarily related to $1.4\nmillion in purchases of capital equipment for manufacturing and clinical operations and a net increase of $631,000 in restricted cash requirements. The net increase in our restricted cash is primarily related to an increase in our clinical trial\nobligations of $917,000, which was offset by $288,000 related to the elimination of certain restrictions associated with an agreement we entered into with certain investors in February 2012 related to the sale of junior preferred stock. During the year ended December\u00a031, 2013, investing activities provided $11.9 million of cash, primarily related to sales of short-term\ninvestments of $17.0 million, partially offset by $3.0 million of purchases of short-term investments, as well as $1.5 million in purchases of capital equipment and a $608,000 increase in restricted cash requirements primarily related to our\nclinical trial obligations and lease arrangements. During the year ended December\u00a031, 2012, investing activities used $14.6 million\nof cash due to the purchase of $14.0 million in short-term investments, capital equipment purchases of $261,000, and an increase in restricted cash requirements of $355,000 associated with clinical trial obligations and potential corporate wind-down\nand employee related expenses. Net cash provided by financing activities During the year ended December\u00a031, 2014, financing activities provided $106.9 million of cash, which included net proceeds after\nunderwriters\u0092 discounts and commissions, as applicable, and offering costs paid in 2014 of $55.0 million from our IPO, $32.9 million from our follow-on offering and $18.2 million from the sale of senior redeemable convertible preferred stock.\nIn addition to these equity offerings, we received proceeds of $852,000 related to the exercise of options during 2014. During the year ended December\u00a031, 2013, financing activities provided $50.4 million of\ncash, compared to $27.5 million during the year ended December\u00a031, 2012. The increase in cash provided by financing activities during 2013 primarily related to the sale of additional senior preferred stock for $53.2 million, net of offering\ncosts. These increases were partially offset by deferred financing costs of $3.1 million related to our IPO, which was not completed until April 2014. Our 2012 financing activities included the sale of senior preferred stock for $21.1 million, net of offering costs, and proceeds of $6.9\nmillion from a loan that was converted to senior preferred stock during 2012. These financings were partially offset by principal payments of $533,000 on our term loan, which was repaid in October 2012. To date, we have not generated any revenues from product sales, and we do not have any approved products. We do not know when, or if, we will\ngenerate any revenue from product sales. We do not expect to generate significant revenue from product sales unless and until we obtain regulatory approval of and commercialize the ELAD System. Even assuming no commercialization costs, we anticipate\nthat we will continue to incur losses for the foreseeable future, and we expect the losses to increase over the next year as we continue the development of, and seek regulatory approvals for, our ELAD System. We are subject to all of the risks\nincident in the development of new therapeutic products, and we may encounter unforeseen expenses, difficulties, complications, delays and other unknown factors that may adversely affect our business. We anticipate that we will need substantial\nadditional funding in connection with our continuing operations. Based on our current business plan, we believe that our existing cash\nand cash equivalents as of December\u00a031, 2014 will be sufficient to fund our operations into the third quarter of 2016, assuming we do not begin building any significant commercial infrastructure during the period. Under this plan, our existing\ncash and cash equivalents will be sufficient to fund development through the completion of enrollment and receipt of topline results from our VTI-208 Phase\u00a03 clinical trial; however, we believe we will need additional funds to complete\nenrollment in both our VTI-210 Phase\u00a03 clinical trial and our VTI-212 Phase\u00a02 clinical trial. This is a change from our prior projections of the fourth quarter of 2016 reflecting higher expected costs, principally related to preparations\nfor a potential filing of a biologics license application, or BLA. However, if the VTI-208 clinical trial has good results and we proceed to file the BLA and to prepare for market launch, we anticipate increasing our cash burn and raising additional\nfunds. A decision to build commercial infrastructure will be based on a variety of factors, most importantly the outcome of our clinical trials. If the VTI-208 clinical trial results do not support the filing of a BLA, we expect to focus on\nconserving cash in order to enable completion of the VTI-210 clinical trial. The amount and timing of our actual expenditures also depend on numerous factors, including the rate of subject enrollment in our clinical trials, filing requirements with\nvarious regulatory agencies, and any unforeseen cash needs. Our forecast of the period of time through which our financial resources will\nbe adequate to support our operations is a forward-looking statement that involves risks and uncertainties, and actual results could vary materially. Our future capital requirements are difficult to forecast and will depend on many factors,\nincluding, but not limited to: \u0095 the scope, progress, results and costs of research and development and clinical trials related to\nthe ELAD System or any future product candidates; \u0095 the cost and timing of scaling up and validating the manufacturing process for\nthe ELAD System or any other product candidates for commercialization; \u0095 the cost and timing of commercialization activities,\nincluding reimbursement, marketing, sales and distribution costs, both before and after product approval (if any); \u0095 our ability to\nestablish new collaborations, licensing or other arrangements and the financial terms of such agreements; \u0095 the number and\ncharacteristics of any future product candidates we pursue; \u0095 the costs involved with being a public company; \u0095 the costs involved in preparing, filing, prosecuting, maintaining, defending and enforcing patents, including litigation costs and the\noutcome of such litigation; and \u0095 the timing, receipt and amount of sales of, or royalties on the ELAD System and any future product\ncandidates. \u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0Until such time, if ever, as we can generate substantial product revenues, we expect to\nfinance our cash needs through a combination of stock offerings, debt financings, collaborations and licensing arrangements. In any event, we do not expect to achieve revenue from product sales prior to the use of the net proceeds from our recently\ncompleted initial public offering and follow-on public offering. We do not have any committed external source of funds. Additional funds may not be available on acceptable terms, if at all. To the extent that we raise additional capital through the\nsale of equity securities, the ownership interest of our stockholders will be diluted and may be on terms that are not favorable to us or our stockholders. Debt financing, if available, may involve covenants restricting our operations or our ability\nto incur additional debt or other terms that are not favorable to us or our stockholders. If we raise additional funds through collaborations and licensing arrangements with third parties, which we have no prior experience in, we may have to\nrelinquish some rights to our technologies or our products, or grant licenses on terms that are not favorable to us. If we are unable to raise adequate funds, we may have to liquidate some or all of our assets, or delay, reduce the scope or\neliminate some or all of our development programs. We may have also have to delay development or commercialization of our products or license to third parties the rights to commercialize products or technology that we would otherwise seek to\ncommercialize. Any of these factors could harm our operating results. Off-Balance Sheet Arrangements We did not have during the periods presented, and we do not currently have, any off-balance sheet arrangements, as defined in\nItem\u00a0303(a)(4) of Regulation S-K. Contractual Obligations Some of our most significant clinical trial expenditures are to investigative sites and to CROs. The agreements are cancellable by either party\nat any time upon written notice and do not have any cancellation penalties, but do obligate us to reimburse the providers for any time or costs incurred through the date of termination. These items are not included in the table below. We lease\noffice and manufacturing space in San Diego, California. The following table summarizes our contractual obligations at December\u00a031, 2014 and the effect such obligations are expected to have on our cash flow in future periods:","markdown_table":"\n\n| | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | **2014** | | | | **2013** | | | | **2012** | | |\n| Cash (used in) provided by: | | | | | | | | | | | | |\n| Operating activities | | $ | (40,825 | ) | | $ | (28,648 | ) | | $ | (9,244 | ) |\n| Investing activities | | | (2,040 | ) | | | 11,909 | | | | (14,588 | ) |\n| Financing activities | | | 106,918 | | | | 50,445 | | | | 27,501 | |\n\n","source":"IMUX\/10-K\/0001193125-15-098980"} {"title":"Item\u00a06.\u00a0Selected Financial Data.","text":"As of December\u00a031, 2014, our purchase obligations include existing purchase commitments for future\nminimum payments of $391,000 with a vendor for raw materials that will be manufactured and utilized on an as needed basis. During the years ended December\u00a031, 2014, 2013 and 2012, we purchased $1.2 million, $724,000 and $462,000, respectively,\nof materials from this vendor. Our purchase obligations also include a purchase order with a vendor for cartridges that will be manufactured and delivered on an agreed upon schedule during 2015 for a future payment of $367,000. During the years\nended December 31, 2014 and 2013, we purchased $1.2 million and $439,000 of materials from this vendor. During the year ended 2012, we purchased no material from this vendor. If we cancel any future shipment, we would be required to pay 50% of the\nscheduled invoice amount for that shipment. Recent Accounting Pronouncements In August 2014, the Financial Accounting Standards Board, or FASB, issued Accounting Standards Update, or ASU, No.\u00a02014-15,\n\u0093Presentation of Financial Statements \u0097 Going Concern (Subtopic 205-40): Disclosure of Uncertainties about an Entity\u0092s Ability to Continue as a Going Concern,\u0094 or ASU 2014-15. ASU 2014-15 will require management to assess,\nat each annual and interim reporting period, the entity\u0092s ability to continue as a going concern. The amendments in ASU 2014-15 do not have any application to an entity\u0092s financial statements, but only to disclosure in the related notes.\nASU 2014-15 is effective for annual periods ending after December\u00a015, 2016 and early application is permitted.\u00a0We intend to apply ASU 2014-15 beginning with the first quarter of fiscal year 2016. In June 2014, the FASB issued ASU No.\u00a02014-10, \u0093Development Stage Entities (Topic 915) \u0097 Elimination of Certain Financial\nReporting Requirements, Including an Amendment to Variable Interest Entities Guidance in Topic 810, Consolidation,\u0094 or ASU 2014-10, which eliminates the concept of a development stage entity in its entirety from current accounting guidance\nand provides for certain amendments to the consolidation guidance in Topic 810 in the Accounting Standards Codification, or ASC. Prior to the issuance of this guidance, we were considered a development stage entity and as a result we included\ncertain inception-to-date disclosures in our financial statements. The guidance related to the elimination of the concept of a development stage entity is effective for public companies for annual reporting periods beginning after December\u00a015,\n2014, and interim periods therein. The amendment of the consolidation guidance in Topic 810 is effective for public companies for annual reporting periods beginning after December\u00a015, 2015. Early adoption of the new standard is permitted. We\nadopted ASU No.\u00a02014-10 during the quarter ended June\u00a030, 2014. As such, all inception-to-date disclosures have not been included in our consolidated financial statements.JOBS Act In April 2012, the Jumpstart Our Business Startups Act, or the JOBS Act, was enacted. Section\u00a0107 of the JOBS Act provides that an\nemerging growth company can take advantage of the extended transition period provided in Section\u00a07(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. Thus, an emerging growth company can delay the adoption of\ncertain accounting standards until those standards would otherwise apply to private companies. We have irrevocably elected not to avail ourselves of this extended transition period and, as a result, we will adopt new or revised accounting standards\non the relevant dates on which adoption of such standards is required for other companies.","markdown_table":"\n\n| | | | | | | | | | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | **Payments Due by Period** | | | | | | | | | | | | | | | | | | |\n| | | **Total** | | | | **Less\u00a0Than1 Year** | | | | **2-3Years** | | | | **3-5Years** | | | | **More\u00a0Than5 Years** | | |\n| | | (In thousands) | | | | | | | | | | | | | | | | | | |\n| Operating lease obligations | | $ | 2,200 | | | $ | 856 | | | $ | 1,344 | | | $ | \u0097 | | | $ | \u0097 | |\n| Purchase obligations | | | 758 | | | | 758 | | | | \u0097 | | | | \u0097 | | | | \u0097 | |\n| | | | | | | | | | | | | | | | | | | | | |\n| Total contractual obligations | | $ | 2,958 | | | $ | 1,614 | | | $ | 1,344 | | | $ | \u0097 | | | $ | \u0097 | |\n| | | | | | | | | | | | | | | | | | | | | |\n\n","source":"IMUX\/10-K\/0001193125-15-098980"} {"title":"Comparison of Fiscal Years Ended December\u00a031, 2017 and 2016","text":"The $9.3 million increase in research and development expense during the year ended December\u00a031, 2017 as compared to the year ended December\u00a031, 2016 principally reflects an $8.0 million increase in costs related to the VTL-308 and prior clinical trials, primarily in higher costs for subjects, sites, manufacturing, enrollment support activities and consulting. As enrollment started in the second quarter of 2016, 35 subjects were enrolled in the VTI-308 clinical trial in the year ended December 31, 2016, while 97 subjects were enrolled during the year ended December 31, 2017. Costs also increased by $1.2 million for activities to support a potential biologics license application, or BLA, submission in the future. The $2.1 million increase in general and administrative expense during the year ended December 31, 2017 as compared to the year ended December 31, 2016 was largely the result of a $1.9 million increase in compensation-related costs. In December 2017, our chief executive officer transitioned from being an employee to a consultant. As a result of the related transition and consulting agreements, we recorded $525,000 in severance costs and $674,000 in stock-based compensation related to stock option modifications. In total, stock-based compensation increased by $1.2 million in 2017 as compared to 2016 principally due to the stock option modifications and an increase in the number of options outstanding.We expect to continue to incur significant research and development costs to complete enrollment in the VTL-308 clinical trial and in support of BLA activities. We also expect general and administrative costs to remain relatively constant in 2018 compared to 2017 except for increases in stock-based compensation and costs associated with hiring a new chief executive officer in January 2018. In addition, with successful topline results from our VTL-308 clinical trial, we would expect to increase our research and development costs to support a BLA submission and our general and administrative costs as we begin to prepare for the potential commercialization of the ELAD System.","markdown_table":"\n\n| | | | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | | | | | | | | | | | | | |\n| | Year\u00a0EndedDecember 31, | | | | | | | | Change | | | | | |\n| | 2017 | | | | 2016 | | | | $ | | | | % | |\n| Operating expenses: | | | | | | | | | | | | | | |\n| Research and development | $ | 39,341 | | | $ | 30,046 | | | $ | 9,295 | | | 31 | % |\n| General and administrative | 13,314 | | | | 11,220 | | | | 2,094 | | | | 19 | % |\n| Total operating expenses | $ | 52,655 | | | $ | 41,266 | | | $ | 11,389 | | | 28 | % |\n\n","source":"IMUX\/10-K\/0001280776-18-000013"} {"title":"Comparison of Fiscal Years Ended December\u00a031, 2016 and 2015","text":"Research and development expense decreased by $9.7 million during the year ended December\u00a031, 2016 as compared to the year ended December\u00a031, 2015. The reduction in research and development expenses resulted from an $8.3 million decrease in clinical trial and related consulting, manufacturing and outside service costs. We opened 38 sites during the year ended December\u00a031, 2016 and enrolled 35 subjects in the VTL-308 clinical trial. Higher costs in the year ended December\u00a031, 2015 reflected costs associated with locking the database for and analysis of the VTI-208 clinical trial, and costs associated with the opening of 42 sites and the enrollment of 38 subjects in the VTI-208, VTI-210 and VTI-212 clinical trials. In addition, research and development-related salaries and related compensation costs decreased by $1.3 million in the year ended December\u00a031, 2016, primarily as a result of the reduction in staff and the recording of related severance costs in the third quarter of 2015.The $1.1 million decrease in general and administrative expense during the year ended December\u00a031, 2016 as compared to the year ended December\u00a031, 2015 was primarily the result of $503,000, $348,000 and $177,000 of lower salaries, for consulting and outside services and for travel costs, respectively, in part reflecting reductions in costs in conjunction with the reduction in staff completed in the fourth quarter of 2015. The decrease was also driven by a $250,000 reduction in audit and accounting fees and costs associated with being a public company and a $170,000 reduction in insurance costs. These decreases were partially offset by increased stock-based compensation of $640,000, primarily due to performance-based stock options that were granted in the fourth quarter of 2015. In addition, legal expenses increased by $223,000 in 2016, principally reflecting costs associated with securities litigation that was dismissed in 2016.","markdown_table":"\n\n| | | | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | | | | | | | | | | | | | |\n| | Year\u00a0EndedDecember 31, | | | | | | | | Change | | | | | |\n| | 2016 | | | | 2015 | | | | $ | | | | % | |\n| Operating expenses: | | | | | | | | | | | | | | |\n| Research and development | $ | 30,046 | | | $ | 39,773 | | | $ | (9,727 | ) | | (24 | )% |\n| General and administrative | 11,220 | | | | 12,347 | | | | (1,127 | | ) | | (9 | )% |\n| Total operating expenses | $ | 41,266 | | | $ | 52,120 | | | $ | (10,854 | ) | | (21 | )% |\n\n","source":"IMUX\/10-K\/0001280776-18-000013"} {"title":"Contractual Obligations","text":"As of December\u00a031, 2017, our purchase obligations include existing purchase commitments of $288,000 with a vendor for raw materials that will be used in manufacturing on an as needed basis. During the years ended December\u00a031, 2017, 2016 and 2015, we purchased $1.1 million, $943,000 and $1.2 million, respectively, of materials from this vendor. Our purchase obligations also include a purchase commitment of $143,000 with a vendor for a component used in our clinical trials that will be manufactured and delivered on an as agreed upon schedule during 2018. During the years ended December\u00a031, 2017, 2016 and 2015, we purchased $228,000, $139,000 and $106,000, respectively, of materials from this vendor. In the course of normal business operations, we also enter into agreements with contract service providers and others. We can elect to discontinue the work under these contracts and purchase orders with notice.","markdown_table":"\n\n| | | | | | | | | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | | | | | | | | | | | | | | | | | | |\n| | Payments Due by Period | | | | | | | | | | | | | | | | | | |\n| | Total | | | | Less\u00a0Than1 Year | | | | 1-3Years | | | | 3-5Years | | | | More\u00a0Than5 Years | | |\n| | (In thousands) | | | | | | | | | | | | | | | | | | |\n| Operating lease obligations | $ | 2,584 | | | $ | 1,073 | | | $ | 856 | | | $ | 655 | | | $ | \u2014 | |\n| Purchase obligations | 431 | | | | 431 | | | | \u2014 | | | | \u2014 | | | | \u2014 | | |\n| Total contractual obligations | $ | 3,015 | | | $ | 1,504 | | | $ | 856 | | | $ | 655 | | | $ | \u2014 | |\n\n","source":"IMUX\/10-K\/0001280776-18-000013"} {"title":"Comparison of Fiscal Years Ended December\u00a031, 2020 and 2019","text":"Research and development expenses increased by $16.1 million during the twelve months ended December 31, 2020, as compared to the twelve months ended December 31, 2019. The increase reflects (i) a $9.6 million increase in external development costs for IMU-838 related to the Phase 2 clinical trial in patients with COVID-19 since the trial was started in 2020, (ii) a $5.0 million increase in license fees, drug supply and Phase 1 costs related to IMU-856 since these trials have ramped up in 2020, (iii) a $2.1 million increase in drug supply, Phase 1 and preclinical costs related to IMU-935 since these trials have ramped up in 2020, (iv) a $1.5 million increase in personnel expenses, (v) a $0.7 million increase in drug supply costs related to IMU-838, and (vi) a $0.7 million increase for a bioequivalence study related to IMU-838. The increases were partially offset by (i) a $2.0 million decrease related to the Phase 2 clinical trial of IMU-838 in patients with RRMS as the clinical trial came to an end in 2020, and (ii) a $1.5 million decrease in costs related to a Phase 2 clinical trial in patients with Crohn\u2019s disease. General and administrative expenses decreased by $4.2 million during the twelve months ended December 31, 2020, as compared to the twelve months ended December 31, 2019. The decrease is primarily due to (i) $5.1 million lower stock compensation expense as a result of non-recurring costs recorded in 2019 related to the Transaction, (ii) $0.9 million of decreased legal, accounting and consultancy costs, and (iii) a $0.7 million decrease in travel costs due to worldwide travel restrictions in connection with the COVID-19 pandemic. The decrease was partially offset by (i) a $2.2 million increase in personnel expenses, and (ii) $0.3 million of increased costs across numerous categories.Total other income increased by $2.9 million during the twelve months ended December 31, 2020, as compared to the twelve months ended December 31, 2019. The increase is primarily attributable to (i) a $2.5 million foreign exchange gain on a $68.0 million intercompany loan between Immunic, Inc. and Immunic AG, and (ii) a $0.9 million increase in research and development tax incentives for clinical trials in Australia as a result of increased spending on clinical trials in Australia. This increase was partially offset by (i) the $0.4 million difference between the face value and fair value of the promissory note collected in full in September 2019 in connection with the sale of ELAD Assets, offset by the $0.1 million write-off of the investment in VTL China included in the ELAD Assets sale, and (ii) a $0.2 million decrease of recognized income attributable to reimbursements of research and development expenses in connection with the Daiichi Sankyo Agreement.","markdown_table":"\n\n| | | | | | | | | | | | | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | | Years\u00a0Ended December 31, | | | | | | | | | | | | Change | | | | | | | | |\n| | | | 2020 | | | | | | 2019 | | | | | | $ | | | | | | % | | |\n| Operating expenses: | | | | | | | | | | | | | | | | | | | | | | | |\n| Research and development | | | 38,637 | | | | | | 22,512 | | | | | | 16,125 | | | | | | 72 | | % |\n| General and administrative | | | 10,334 | | | | | | 14,520 | | | | | | (4,186) | | | | | | (29) | | % |\n| Total operating expenses | | | 48,971 | | | | | | 37,032 | | | | | | 11,939 | | | | | | 32 | | % |\n| Loss from operations | | | (48,971) | | | | | | (37,032) | | | | | | (11,939) | | | | | | 32 | | % |\n| Total other income | | | 4,954 | | | | | | 2,099 | | | | | | 2,855 | | | | | | 136 | | % |\n| Net loss | | | (44,017) | | | | | | (34,933) | | | | | | (9,084) | | | | | | 26 | | % |\n\n","source":"IMUX\/10-K\/0001280776-21-000009"} {"title":"Other Commitments and Obligations","text":"The purchase obligations above represent non-cancelable contractual obligations under certain agreements related to our development programs IMU-838, IMU-935 and IMU-856.","markdown_table":"\n\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | | Payments Due by Period | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | | | Total | | | | | | Less\u00a0Than1 Year | | | | | | 1-3Years | | | | | | 3-5Years | | | | | | More\u00a0Than5 Years | | |\n| | | | (In thousands) | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Operating lease obligations | | | $ | 1,080 | | | | | $ | 348 | | | | | $ | 670 | | | | | $ | 62 | | | | | $ | \u2014 | |\n| Purchase obligations | | | 1,234 | | | | | | 1,234 | | | | | | \u2014 | | | | | | \u2014 | | | | | | \u2014 | | |\n| Total contractual obligations | | | $ | 2,314 | | | | | $ | 1,582 | | | | | $ | 670 | | | | | $ | 62 | | | | | $ | \u2014 | |\n\n","source":"IMUX\/10-K\/0001280776-21-000009"} {"title":"Acquisitions","text":"(1)\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 The purchase price for this hotel included the issuance of 412,174 Common Units in our Operating Partnership valued at the time of issuance at $3.7 million.(2)\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 The amounts reflect actual total renovation costs.(3)\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 The amounts reflect actual-to-date and estimated remaining costs to complete.The purchase price and renovation costs are funded by mortgage debt, advances on our senior unsecured revolving line of credit facility, cash and the issuance of Operating Partnership Common Units described in footnote 1 to the table above.\u00a0 Additional information about the mortgage debt financing is provided below in \u0093Outstanding Indebtedness \u0097 Mortgage Loans.\u0094Of the total renovation costs detailed in the table above, $26.2 million have been incurred as of December\u00a031, 2014.\u00a0 There is no assurance that our actual renovation costs will not exceed our estimates.","markdown_table":"\n\n| **Date\u00a0Acquired** | | **Franchise\/Brand** | | **Location** | | **Guestrooms\u00a0as\u00a0of December\u00a031,\u00a02014** | | **Purchase Price** | | | **Renovation Cost** | | | **Cost\u00a0per\u00a0Key** | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | | | | | | | | | | | | | | | |\n| ***2014:*** | | | | | | | | | | | | | | | | |\n| January\u00a09 | | Hilton Garden Inn | | Houston (Galleria), TX | | 182 | | $ | 37,500 | | $ | 3,400 | (3) | $ | 225,000 | |\n| January\u00a010 | | Hampton Inn | | Santa Barbara (Goleta), CA | | 101 | | 27,900 | | (1) | 2,100 | | (3) | 297,000 | | |\n| January\u00a024 | | Four Points by Sheraton | | San Francisco, CA | | 101 | | 21,250 | | | 1,400 | | (3) | 224,000 | | |\n| March\u00a014 | | DoubleTree by Hilton | | San Francisco, CA | | 210 | | 39,060 | | | 4,500 | | (3) | 207,000 | | |\n| August\u00a015 | | Hilton Garden Inn | | Houston (Energy Corridor), TX | | 190 | | 36,000 | | | 3,200 | | (3) | 206,000 | | |\n| September\u00a09 | | Hampton Inn\u00a0& Suites | | Austin, TX | | 209 | | 53,000 | | | 2,400 | | (3) | 265,000 | | |\n| | | | | | | | | | | | | | | | | |\n| *Total for the year ended December\u00a031, 2014* | | | | *6 hotel properties* | | 993 | | $ | 214,710 | | $ | 17,000 | | $ | 233,000 | |\n| | | | | | | | | | | | | | | | | |\n| ***2013:*** | | | | | | | | | | | | | | | | |\n| January\u00a022 | | Hyatt Place | | Chicago (Hoffman Estates),\u00a0IL | | 126 | | $ | 9,230 | | $ | 1,400 | (3) | $ | 84,000 | |\n| January\u00a022 | | Hyatt Place | | Orlando (Convention), FL | | 150 | | 12,252 | | | 1,900 | | (2) | 94,000 | | |\n| January\u00a022 | | Hyatt Place | | Orlando (Universal), FL | | 150 | | 11,843 | | | 1,900 | | (2) | 92,000 | | |\n| February\u00a011 | | IHG \/ Holiday Inn Express\u00a0& Suites | | San Francisco, CA | | 252 | | 60,500 | | | 4,200 | | (2) | 257,000 | | |\n| March\u00a011 | | SpringHill Suites by Marriott | | New Orleans, LA | | 208 | | 33,095 | | | \u0097 | | (2) | 159,000 | | |\n| March\u00a011 | | Courtyard by Marriott | | New Orleans (Convention), LA | | 202 | | 30,827 | | | 2,400 | | (2) | 164,000 | | |\n| March\u00a011 | | Courtyard by Marriott | | New Orleans (French Quarter), LA | | 140 | | 25,683 | | | 100 | | (2) | 184,000 | | |\n| March\u00a011 | | Courtyard by Marriott | | New Orleans (Metairie), LA | | 153 | | 23,539 | | | 2,500 | | (2) | 170,000 | | |\n| March\u00a011 | | Residence Inn by Marriott | | New Orleans (Metairie), LA | | 120 | | 19,890 | | | \u0097 | | (2) | 166,000 | | |\n| April\u00a030 | | Hilton Garden Inn | | Greenville, SC | | 120 | | 15,250 | | | 100 | | (2) | 128,000 | | |\n| May\u00a021 | | IHG \/ Holiday Inn Express\u00a0& Suites | | Minneapolis (Minnetonka), MN | | 93 | | 6,900 | | | 1,600 | | (2) | 91,000 | | |\n| May\u00a021 | | Hilton Garden Inn | | Minneapolis (Eden Prairie), MN | | 97 | | 10,200 | | | 2,300 | | (2) | 129,000 | | |\n| May\u00a023 | | Fairfield Inn\u00a0& Suites by Marriott | | Louisville, KY | | 135 | | 25,023 | | | 2,500 | | (3) | 204,000 | | |\n| May\u00a023 | | SpringHill Suites by Marriott | | Louisville, KY | | 198 | | 39,138 | | | 3,600 | | (3) | 216,000 | | |\n| May\u00a023 | | Courtyard by Marriott | | Indianapolis,\u00a0IN | | 297 | | 58,634 | | | \u0097 | | (2) | 197,000 | | |\n| May\u00a023 | | SpringHill Suites by Marriott | | Indianapolis,\u00a0IN | | 156 | | 30,205 | | | \u0097 | | (2) | 194,000 | | |\n| October\u00a01 | | Hampton Inn\u00a0& Suites | | Ventura (Camarillo), CA | | 116 | | 15,750 | | | 3,000 | | (3) | 162,000 | | |\n| October\u00a08 | | Hampton Inn\u00a0& Suites | | San Diego (Poway), CA | | 108 | | 15,150 | | | 300 | | (3) | 143,000 | | |\n| December\u00a031 | | Hyatt Place | | Minneapolis, MN | | 213 | | 32,506 | | | \u0097 | | (2) | 153,000 | | |\n| | | | | | | | | | | | | | | | | |\n| *Total for the year ended December\u00a031, 2013* | | | | *19 hotel properties* | | 3,034 | | $ | 475,615 | | $ | 27,800 | | $ | 166,000 | |\n\n","source":"INN\/10-K\/0001104659-15-015814"} {"title":"33","text":"(1)\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 The sale of these hotel properties included the assignment of the related ground leases.(2)\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 The sale of this property included three adjacent land parcels totaling 5.64 acres.(3)\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 We provided seller financing in the form of mortgage loans on these sales totaling $2.4 million.\u00a0 These mortgage loans mature in the first quarter of 2015.","markdown_table":"\n\n| **Disposition Date** | | **Franchise\/Brand** | | **Location** | | **Gross\u00a0Sales Price** | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | | | | | | | |\n| ***2014:*** | | | | | | | | |\n| January\u00a017 | | AmericInn Hotel\u00a0& Suites and Aspen Hotel\u00a0& Suites | | Fort Smith, AR | | $ | 3,080 | (1) |\n| September\u00a09 | | Hampton Inn | | Fort Smith, AR | | 8,800 | | (1) |\n| October\u00a021 | | Country Inn\u00a0& Suites and adjacent land parcels | | San Antonio, TX | | 7,900 | | (2) |\n| Total 2014 | | | | | | $ | 19,780 | |\n| | | | | | | | | |\n| ***2013:*** | | | | | | | | |\n| January\u00a015 | | AmericInn Hotel\u00a0& Suites | | Golden, CO | | $ | 2,600 | |\n| February\u00a015 | | Hampton Inn | | Denver, CO | | 5,500 | | |\n| February\u00a027 | | Land parcel | | Jacksonville, FL | | 1,900 | | |\n| May\u00a01 | | Holiday Inn and Holiday Inn Express | | Boise,\u00a0ID | | 12,600 | | |\n| May\u00a030 | | Courtyard by Marriott | | Memphis, TN | | 4,225 | | |\n| August\u00a08 | | SpringHill Suites | | Lithia Springs, GA | | 2,400 | | |\n| August\u00a021 | | Land parcel | | Missoula, MT | | 750 | | |\n| August\u00a029 | | Fairfield Inn | | Lewisville, TX | | 1,960 | | |\n| September\u00a030 | | Fairfield Inn | | Lakewood, CO | | 2,800 | | |\n| October\u00a030 | | Fairfield Inn | | Emporia, KS | | 1,650 | | (3) |\n| November\u00a01 | | SpringHill Suites | | Little Rock, AR | | 4,500 | | |\n| November\u00a01 | | Land parcel | | El Paso, TX | | 2,400 | | |\n| November\u00a08 | | Fairfield Inn and AmericInn Hotel\u00a0& Suites | | Salina, KS | | 3,000 | | |\n| November\u00a012 | | Hampton Inn, Fairfield Inn and land parcel | | Boise,\u00a0ID | | 8,090 | | |\n| November\u00a018 | | Land parcel | | Houston, TX | | 2,500 | | |\n| December\u00a019 | | Holiday Inn Express | | Emporia, KS | | 1,775 | | (3) |\n| Total 2013 | | | | | | $ | 58,650 | |\n\n","source":"INN\/10-K\/0001104659-15-015814"} {"title":"34","text":"(1)\u00a0Includes Common Units in Summit Hotel OP, LP, the Company\u0092s operating partnership, held by limited partners (other than us and our subsidiaries) because the Common Units are redeemable for cash or, at our election, shares of our common stock.During the year ended December\u00a031, 2014, FFO increased by $29.7 million, or 61%, over the prior year primarily due to an increase in revenues of $104.5 million during the year ended December\u00a031, 2014 in comparison with the prior year, which resulted in an increase in net income for the year ended December\u00a031, 2014 of $15.0 million over the prior year.\u00a0 The increase in revenues was the result of increases in Occupancy and ADR as discussed below under \u0093Results of Operations.\u0094","markdown_table":"\n\n| | | **2014** | | | **2013** | | | **2012** | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | | | | | | | | | |\n| Net income (loss) | | $ | 20,923 | | $ | 5,897 | | $ | (2,270 | ) |\n| Preferred dividends | | (16,588 | | ) | (14,590 | | ) | (4,625 | | ) |\n| Depreciation and amortization | | 65,325 | | | 53,144 | | | 34,871 | | |\n| Loss on impairment of assets | | 9,247 | | | 9,044 | | | 2,965 | | |\n| Gain on disposal of assets | | (446 | | ) | (4,308 | | ) | (2,811 | | ) |\n| Noncontrolling interest in joint venture | | (1 | | ) | (316 | | ) | \u0097 | | |\n| Adjustments related to joint venture | | (204 | | ) | (315 | | ) | \u0097 | | |\n| Funds from operations | | $ | 78,256 | | $ | 48,556 | | $ | 28,130 | |\n| FFO per common share\/unit | | $ | 0.90 | | $ | 0.66 | | $ | 0.69 | |\n| | | | | | | | | | | |\n| Weighted average diluted common shares\/units (1) | | 86,590 | | | 73,241 | | | 40,912 | | |\n\n","source":"INN\/10-K\/0001104659-15-015814"} {"title":"Earnings Before Interest, Taxes, Depreciation and Amortization","text":"During the year ended December\u00a031, 2014, EBITDA increased by $30.0 million, or 36%, over the prior year primarily due to an increase in net income before depreciation and amortization of $27.2 million during the year ended December\u00a031, 2014 in comparison with the prior year.\u00a0 The increase in net income before depreciation and amortization was primarily driven by an increase in revenues of $104.5 million during the year ended December\u00a031, 2014 in comparison with the prior year.\u00a0 The increase in revenues was the result of increases in Occupancy and ADR as discussed below under \u0093Results of Operations.\u0094","markdown_table":"\n\n| | | **2014** | | | **2013** | | | **2012** | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | | | | | | | | | |\n| Net income (loss) | | $ | 20,923 | | $ | 5,897 | | $ | (2,270 | ) |\n| Depreciation and amortization | | 65,325 | | | 53,144 | | | 34,871 | | |\n| Interest expense | | 26,968 | | | 20,311 | | | 15,764 | | |\n| Interest income | | (690 | | ) | (83 | | ) | (35 | | ) |\n| Income tax expense (benefit) | | 718 | | | 4,357 | | | (1,289 | | ) |\n| Noncontrolling interest in joint venture | | (1 | | ) | (316 | | ) | \u0097 | | |\n| Adjustments related to joint venture | | (204 | | ) | (315 | | ) | \u0097 | | |\n| EBITDA | | $ | 113,039 | | $ | 82,995 | | $ | 47,041 | |\n\n","source":"INN\/10-K\/0001104659-15-015814"} {"title":"Comparison of 2014 to 2013","text":"The total portfolio information above includes revenues and expenses from the six hotels we acquired in 2014 (the \u00932014 Acquired Hotels\u0094) and the 19 hotel properties we acquired in 2013 (the \u00932013 Acquired Hotels\u0094) from the date of acquisition through December\u00a031, 2014, and operating information (occupancy, ADR, and RevPAR) for the period each hotel was owned.\u00a0Accordingly, the information does not reflect a full twelve months of operations in 2014 for the 2014 Acquired Hotels or a full twelve months of operations in 2013 for the 2013 Acquired Hotels. The combined 2014 Acquired Hotels and 2013 Acquired Hotels are referred to as the \u00932014\/2013 Acquired Hotels.\u0094Revenues.\u00a0Total revenues increased $104.5 million, or 35.0%, to $403.5 million in 2014, compared with $299.0 million in 2013. The growth was due to a $21.1 million increase in same-store revenues and an $83.7 million increase in revenues at the 2014\/2013 Acquired Hotels.The same-store revenue increase of 9.6%, to $240.6 million in 2014 compared with $219.5 million in 2013, was due to a 220 basis point increase in occupancy in 2014 compared with 2013, and a 6.4% increase in ADR in 2014 compared with 2013. The increases in occupancy and ADR resulted in a 9.7% increase in same-store RevPAR to $84.42 in 2014 compared with $76.98 in 2013. These increases were due to the improving economy, our strong revenue and asset management programs, hotel industry fundamentals and renovations made at our hotel properties.","markdown_table":"\n\n| | | **2014** | | | | | | **2013** | | | | | | **Dollar\u00a0Change** | | | | | | **Percentage\u00a0Change** | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | **Total\u00a0Portfolio** | | | **Same-Store Portfolio** | | | **Total\u00a0Portfolio** | | | **Same-Store Portfolio** | | | **Total\u00a0Portfolio** | | | **Same-Store Portfolio** | | | **Total\u00a0Portfolio** | | **Same-Store Portfolio** | |\n| | | **(90\u00a0hotels)** | | | **(65\u00a0hotels)** | | | **(85\u00a0hotels)** | | | **(65\u00a0hotels)** | | | **(90\/85\u00a0hotels)** | | | **(65\u00a0hotels)** | | | **(90\/85\u00a0hotels)** | | **(65\u00a0hotels)** | |\n| | | | | | | | | | | | | | | | | | | | | | | | |\n| Total revenues | | $ | 403,466 | | $ | 240,627 | | $ | 298,958 | | $ | 219,489 | | $ | 104,508 | | $ | 21,138 | | 35.0 | % | 9.6 | % |\n| Hotel operating expenses | | $ | 261,497 | | $ | 159,034 | | $ | 198,342 | | $ | 147,298 | | $ | 63,155 | | $ | 11,736 | | 31.8 | % | 8.0 | % |\n| Occupancy | | 75.7 | | % | 75.4 | | % | 73.4 | | % | 73.2 | | % | n\/a | | | n\/a | | | 3.1 | % | 3.1 | % |\n| ADR | | $ | 122.52 | | $ | 111.94 | | $ | 110.37 | | $ | 105.22 | | $ | 12.15 | | $ | 6.72 | | 11.0 | % | 6.4 | % |\n| RevPAR | | $ | 92.71 | | $ | 84.42 | | $ | 81.03 | | $ | 76.98 | | $ | 11.68 | | $ | 7.44 | | 14.4 | % | 9.7 | % |\n\n","source":"INN\/10-K\/0001104659-15-015814"} {"title":"37","text":"Depreciation and Amortization. Depreciation and amortization expense increased $14.1 million, or 27.6%, to $65.3 million in 2014 compared with 2013, primarily due to depreciation associated with the 2014\/2013 Acquired Hotels and increased amortization of capitalized renovation costs at existing hotel properties.\u00a0The 2014 depreciation and amortization expense includes $63.3 million of fixed asset depreciation, $1.5 million of financing costs amortization, and $0.5 million of franchise fees amortization.\u00a0The 2013 depreciation and amortization expense includes $48.9 million of fixed asset depreciation, $1.9 million of financing costs amortization, and $0.4 million of franchise fees amortization.Corporate General and Administrative.\u00a0Corporate general and administrative expenses increased by $7.0 million, or 53.4%, to $19.9 million in 2014 compared with 2013. The increase is primarily due to an increase in equity-based compensation of $1.4 million, an increase in salaries and bonus expense of $2.7 million and increased professional fees of $2.6 million related to internal controls improvements and other matters.Other Income\/Expense.\u00a0Other expense, net increased $4.3 million, or 19.6%, in 2014 compared with 2013 primarily due to an increase in interest expense due to higher average debt outstanding.\u00a0 This increase was slightly offset by a reduction in debt transaction costs and an increase in interest income.Income Tax Expense\/Benefit. Our total income tax expense (related to continuing operations and discontinued operations) in 2014 of $0.7 million consists of Alternative Minimum Tax (Federal) of $0.1 million and state taxes of $0.6 million.\u00a0 Included in state taxes are franchise taxes due in Texas of $0.4 million, which are based on gross receipts, and taxes due in other states of $0.2 million.\u00a0 Net operating losses of $6.6 million have been used in the current year to reduce our tax expense.\u00a0 Our total income tax expense (related to continuing operations and discontinued operations) in 2013 of $4.4 million is primarily due to our establishment of a valuation allowance related to net operating losses (\u0093NOLs\u0094) incurred by our TRS in 2011, 2012 and 2013.","markdown_table":"\n\n| | | | | | | | | **Percentage** | | **Percentage\u00a0of\u00a0Revenue** | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | **2014** | | | **2013** | | | **Change** | | **2014** | | **2013** | |\n| | | | | | | | | | | | | | |\n| Rooms expense | | $ | 62,752 | | $ | 59,781 | | 5.0 | % | 26.1 | % | 27.2 | % |\n| Other direct expense | | 33,193 | | | 29,620 | | | 12.1 | % | 13.8 | % | 13.5 | % |\n| Other indirect expense | | 63,089 | | | 57,897 | | | 9.0 | % | 26.2 | % | 26.4 | % |\n| Total hotel operating expenses | | $ | 159,034 | | $ | 147,298 | | 8.0 | % | 66.1 | % | 67.1 | % |\n\n","source":"INN\/10-K\/0001104659-15-015814"} {"title":"Comparison of 2013 to 2012","text":"The total portfolio information above includes revenues and expenses from the 2013 Acquired Hotels and the 19 hotel properties we acquired in 2012 (the \u00932012 Acquired Hotels\u0094) from the date of acquisition through December\u00a031, 2013, and operating information (occupancy, ADR, and RevPAR) for the period each hotel was owned.\u00a0Accordingly, the information does not reflect a full","markdown_table":"\n\n| | | **2013** | | | | | | **2012** | | | | | | **Percentage\u00a0Change** | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | **Total\u00a0 Portfolio (85\u00a0hotels)** | | | **Same-Store Portfolio (47\u00a0hotels)** | | | **Total Portfolio (66\u00a0hotels)** | | | **Same-Store Portfolio (47\u00a0hotels)** | | | **Total\u00a0Portfolio (85\/66\u00a0hotels)** | | **Same-Store Portfolio (47\u00a0hotels)** | |\n| Total revenues | | $ | 298,958 | | $ | 146,078 | | $ | 161,700 | | $ | 136,775 | | 84.9 | % | 6.8 | % |\n| Hotel operating expenses | | $ | 198,342 | | $ | 99,329 | | $ | 110,442 | | $ | 93,855 | | 79.6 | % | 5.8 | % |\n| Occupancy | | 73.4 | | % | 72.3 | | % | 70.9 | | % | 70.9 | | % | 2.5 | % | 1.4 | % |\n| ADR | | $ | 110.37 | | $ | 102.03 | | $ | 98.52 | | $ | 97.26 | | 12.0 | % | 4.9 | % |\n| RevPAR | | $ | 81.03 | | $ | 73.79 | | $ | 69.88 | | $ | 68.98 | | 16.0 | % | 7.0 | % |\n\n","source":"INN\/10-K\/0001104659-15-015814"} {"title":"38","text":"Depreciation and Amortization. Depreciation and amortization expense increased $20.5 million, or 67.0%, to $51.2 million in 2013 compared with 2012, primarily due to renovations at existing hotel properties and depreciation associated with the 2013\/2012 Acquired Hotels.\u00a0The 2013 depreciation and amortization expense includes $48.9 million of fixed asset depreciation, $1.9 million of financing costs amortization, and $0.4 million of franchise fees amortization.\u00a0The 2012 depreciation and amortization expense includes $28.0 million of fixed asset depreciation, $2.3 million of financing costs amortization, and $0.4 million of franchise fees amortization.Corporate General and Administrative.\u00a0Corporate general and administrative expenses increased by $3.4 million, or 35.1%, to $12.9 million in 2013 compared with 2012. The increase is primarily due to an increase in equity-based compensation of $0.9 million, costs related to the development of corporate functions that did not exist prior to our IPO of $0.9 million, and costs related to the move of our corporate headquarters from Sioux Falls, SD, to Austin, TX of $0.6 million.Other Income\/Expense.\u00a0Our other income\/expense increased $6.7 million, or 44.8%, in 2013 compared with 2012.\u00a0 The major component of other income\/expense is interest expense, and the increase is primarily due to interest expense on new debt related to our 2013\/2012 Acquisition Hotels.Income Tax Expense\/Benefit. Our total income tax expense (in continuing operations and discontinued operations) in 2013 of $4.4 million is primarily due to our establishment of a valuation allowance related to net operating losses (\u0093NOLs\u0094) incurred at our TRS in 2011, 2012 and 2013. As a result of consecutive loss years we determined that it is more likely than not that we will not be able to recognize our NOLs before they expire. Our total income tax benefit (in continuing operations and discontinued operations) in 2012 of $1.3 million was the result of NOLs at our TRS. \u00a0The net operating losses were primarily the result of the disruption at the several hotel properties rebranded in 2011.","markdown_table":"\n\n| | | | | | | | | **Percentage** | | **Percentage\u00a0of\u00a0Revenue** | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | **2013** | | | **2012** | | | **Change** | | **2013** | | **2012** | |\n| Rooms expense | | $ | 39,762 | | $ | 38,316 | | 3.8 | % | 27.2 | % | 28.0 | % |\n| Other direct expense | | 19,698 | | | 17,757 | | | 10.9 | % | 13.5 | % | 13.0 | % |\n| Other indirect expense | | 39,281 | | | 37,183 | | | 5.6 | % | 26.9 | % | 27.2 | % |\n| Other expense | | 588 | | | 599 | | | (1.8 | )% | 0.4 | % | 0.4 | % |\n| Total hotel operating expenses | | $ | 99,329 | | $ | 93,855 | | 5.8 | % | 68.0 | % | 68.6 | % |\n\n","source":"INN\/10-K\/0001104659-15-015814"} {"title":"40","text":"(1)\u00a0\u00a0\u00a0 The interest rates at December\u00a031, 2014 above give effect to our use of interest rate derivatives, where applicable.(2)\u00a0\u00a0\u00a0 We entered into an interest rate derivative to effectively produce a fixed interest rate, however, the interest rate spread\u00a0 over LIBOR may change based upon our Leverage Ratio, as defined in the credit facility documents.(3)\u00a0\u00a0\u00a0 An interest rate derivative instrument effectively converts 85% of this loan to a fixed rate.","markdown_table":"\n\n| **Lender** | | **Interest\u00a0Rate\u00a0(1)** | | **Amortization Period\u00a0(Years)** | | **Maturity\u00a0Date** | | **Number\u00a0of\u00a0Properties Encumbered** | | **Principal Amount Outstanding** | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | | | | | | | | | | | |\n| ***Senior Unsecured Credit Facility*** | | | | | | | | | | | | |\n| | | | | | | | | | | | | |\n| Deutsche Bank AG New York Branch | | | | | | | | | | | | |\n| $225 Million Revolver | | 2.07% Variable | | n\/a | | October\u00a010, 2017 | | n\/a | | $ | 125,000 | |\n| $75 Million Term Loan | | 3.94% Fixed (2) | | n\/a | | October\u00a010, 2018 | | n\/a | | 75,000 | | |\n| | | | | | | | | | | | | |\n| Total Senior Unsecured Credit Facility | | | | | | | | | | 200,000 | | |\n| | | | | | | | | | | | | |\n| ***Mortgage Loans*** | | | | | | | | | | | | |\n| | | | | | | | | | | | | |\n| ING Life Insurance and Annuity | | 6.10% Fixed | | 20 | | March\u00a01, 2019 | | 14 | | 62,327 | | |\n| | | 4.55% Fixed | | 25 | | March\u00a01, 2019 | | (cross-collateralized with other ING loan) | | 32,995 | | |\n| KeyBank National Association | | 4.46% Fixed | | 30 | | February\u00a01, 2023 | | 4 | | 28,489 | | |\n| | | 4.52% Fixed | | 30 | | April\u00a01, 2023 | | 3 | | 22,061 | | |\n| | | 4.30% Fixed | | 30 | | April\u00a01, 2023 | | 3 | | 21,403 | | |\n| | | 4.95% Fixed | | 30 | | August\u00a01, 2023 | | 2 | | 37,939 | | |\n| Bank of America Commercial Mortgage | | 6.41% Fixed | | 25 | | September\u00a01, 2017 | | 1 | | 8,157 | | |\n| Merrill Lynch Mortgage Lending Inc. | | 6.38% Fixed | | 30 | | August\u00a01, 2016 | | 1 | | 5,151 | | |\n| GE Capital Financial Inc. | | 5.39% Fixed | | 25 | | April\u00a01, 2020 | | 1 | | 9,300 | | |\n| | | 5.39% Fixed | | 25 | | April\u00a01, 2020 | | 1 | | 5,007 | | |\n| MetaBank | | 4.25% Fixed | | 20 | | August\u00a01, 2018 | | 1 | | 7,104 | | |\n| Bank of Cascades | | 2.17% Variable | | 25 | | December\u00a019, 2024 | | 1 | | 9,800 | | |\n| | | 4.30% Fixed | | 25 | | December\u00a019, 2024 | | (cross-collateralized with other Bank of Cascades note) | | 9,800 | | |\n| Goldman Sachs | | 5.67% Fixed | | 25 | | July\u00a06, 2016 | | 2 | | 13,787 | | |\n| Compass Bank | | 4.57% Fixed (3) | | 20 | | May\u00a017, 2018 | | 1 | | 12,505 | | |\n| | | 2.57% Variable | | 25 | | May\u00a06, 2020 | | 3 | | 24,637 | | |\n| General Electric Capital Corp. | | 5.39% Fixed | | 25 | | April\u00a01, 2020 | | 1 | | 5,266 | | |\n| | | 5.39% Fixed | | 25 | | April\u00a01, 2020 | | 1 | | 6,167 | | |\n| | | 4.82% Fixed | | 20 | | April\u00a01, 2018 | | 1 | | 7,213 | | |\n| | | 5.03% Fixed | | 25 | | March\u00a01, 2019 | | 1 | | 9,775 | | |\n| AIG | | 6.11% Fixed | | 20 | | January\u00a01, 2016 | | 1 | | 12,938 | | |\n| Greenwich Capital Financial Products,\u00a0Inc. | | 6.20% Fixed | | 30 | | January\u00a06, 2016 | | 1 | | 22,711 | | |\n| Wells Fargo Bank, National Association | | 5.53% Fixed | | 25 | | October\u00a01, 2015 | | 1 | | 3,523 | | |\n| | | 5.57% Fixed | | 25 | | January\u00a01, 2016 | | 1 | | 6,038 | | |\n| U.S. Bank, NA | | 6.22% Fixed | | 30 | | November\u00a01, 2016 | | 1 | | 17,536 | | |\n| | | 6.13% Fixed | | 25 | | November\u00a011, 2021 | | 1 | | 11,819 | | |\n| | | 5.98% Fixed | | 30 | | March\u00a08, 2016 | | 1 | | 13,085 | | |\n| Total Mortgage Loans | | | | | | | | 49 | | 426,533 | | |\n| | | | | | | | | | | | | |\n| Total Debt | | | | | | | | 49 | | $ | 626,533 | |\n\n","source":"INN\/10-K\/0001104659-15-015814"} {"title":"Contractual Obligations","text":"(1)\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 Amounts shown include amortization of principal, maturities, and estimated interest payments.\u00a0Interest payments on our variable rate debt have been estimated using the interest rates in effect at December\u00a031, 2014, after giving effect to our interest rate swaps.(2)\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 Primarily ground leases and corporate office leases.(3)\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 This amount represents purchase orders and executed contracts for renovation projects at our hotel properties.(4)\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 This represents the remaining amounts to be advanced under a note funding obligation carrying an interest rate of 10.0% per annum paid monthly, an initial maturity date of May\u00a013, 2017 with an option to extend the maturity date until May\u00a013, 2018.We have entered into a purchase agreement with a hotel property developer to acquire a Hampton Inn\u00a0& Suites in downtown Minneapolis, MN for $38.7 million, which price includes change orders to date. The purchase is subject to certain conditions, including the completion of construction of the hotel in accordance with agreed upon architectural and engineering designs, receipt of a Hampton Inn\u00a0& Suites franchise, and receipt of a certificate of occupancy. Therefore, there is no assurance that the acquisition will be completed. In January\u00a02014, we issued a standby letter of credit for $13.1 million in support of this purchase agreement. This letter of credit was issued under our senior unsecured credit facility.\u00a0 We anticipate acquiring this hotel property in the first\u00a0half of 2015.","markdown_table":"\n\n| | | **Payments\u00a0Due\u00a0By\u00a0Period** | | | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | **Total** | | | **Less\u00a0than\u00a0One Year** | | | **One\u00a0to\u00a0Three \u00a0Years** | | | **Four\u00a0to\u00a0Five Years** | | | **More\u00a0than Five\u00a0Years** | | |\n| | | | | | | | | | | | | | | | | |\n| Debt obligations (1) | | $ | 779,782 | | $ | 41,530 | | $ | 282,547 | | $ | 150,471 | | $ | 305,234 | |\n| Operating lease obligations (2) | | 54,681 | | | 841 | | | 1,728 | | | 1,452 | | | 50,660 | | |\n| Purchase obligations (3) | | 7,086 | | | 7,086 | | | \u0097 | | | \u0097 | | | \u0097 | | |\n| Other long-term liabilities (4) | | 2,634 | | | 2,634 | | | \u0097 | | | \u0097 | | | \u0097 | | |\n| Total | | $ | 844,183 | | $ | 52,091 | | $ | 284,275 | | $ | 151,923 | | $ | 355,894 | |\n\n","source":"INN\/10-K\/0001104659-15-015814"} {"title":"LHFS","text":"The decrease in the carrying amount attributable to covered\nloans was due to the receipt of cash from the FDIC and the negative accretion due to the credit loss improvement partially reduced\nby the offset to the provision for covered loans. The change in the carrying amount attributable to covered securities was due\nto the offsets to the accretion of the discount and the amount of the increase in fair value of covered securities. The change\nin the carrying amount attributable to the aggregate loss calculation is primarily due to accretion of the expected payment, which\nis included in the \u201cAccretion due to credit loss improvement\u201d below. The fair values were based upon a discounted cash\nflow methodology that was consistent with the acquisition date methodology. The fair value attributable to covered loans and the\naggregate loss calculation changes over time due to the receipt of cash from the FDIC, updated credit loss assumptions and the\npassage of time. The fair value attributable to covered securities was based upon the timing and amount that would be payable to\nthe FDIC should they settle at the current fair value at the conclusion of the loss share agreement.The following table provides information related to the income\nstatement impact of covered loans and securities and the FDIC loss sharing asset recognized in the Colonial acquisition. The table\nexcludes all amounts related to other assets acquired and liabilities assumed in the acquisition.","markdown_table":"\n\n| Table 6 | | | | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| FDIC Loss Share Receivable | | | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | | |\n| | | | | December 31, | | | | | | | | | | | |\n| | | | | 2012 | | | | | | 2011 | | | | | |\n| | | | | Carrying Amount | | | Fair Value | | | Carrying Amount | | | Fair Value | | |\n| | | | | (Dollars in millions) | | | | | | | | | | | |\n| | Covered loans | | | $ | 1,107 | | $ | 751 | | $ | 1,532 | | $ | 1,351 | |\n| | Covered securities | | | | (553) | | | (502) | | | (396) | | | (354) | |\n| | Aggregate loss calculation | | | | (75) | | | (100) | | | (36) | | | (87) | |\n| | | FDIC loss share receivable | | $ | 479 | | $ | 149 | | $ | 1,100 | | $ | 910 | |\n\n","source":"TFC\/10-K\/0000092230-13-000023"} {"title":"LHFS","text":"Interest income for 2012 on covered loans and securities\nacquired in the Colonial acquisition decreased $284 million compared to 2011, primarily due to lower average covered loan balances.\nThe yield on covered loans for 2012 was 18.91% compared to 19.15% in 2011. At December 31, 2012, the accretable yield balance on\ncovered loans was $881 million. Accretable yield represents the excess of expected future cash flows above the current net carrying\namount of loans and will be recognized in income over the remaining life of the covered loans. Field: Page; Sequence: 37; Value: 2 During 2012, BB&T reduced the accretable yield balance\non covered loans by $72 million primarily due to changes in the expected lives of the underlying loans. During 2011, BB&T reclassified\n$379 million from the nonaccretable balance to accretable yield on covered loans. This reclassification was primarily the result\nof increased cash flow estimates resulting from improved loss expectations. These adjustments are recognized on a prospective basis\nover the remaining lives of the loan pools.The provision for covered loans was $13 million in 2012,\na decrease of $58 million compared to 2011. This decrease resulted from the quarterly reassessment process.FDIC loss share income, net was $29 million worse than 2011\nprimarily due to a lower offset to the provision for covered loans.Interest income for 2011 on covered loans and securities\nacquired in the Colonial acquisition increased $146 million compared to 2010, which was offset by a decrease in FDIC loss share\nincome. The majority of the increase is related to loans and reflects higher expected cash flows based on the quarterly cash flow\nreassessment process. The yield on covered loans for 2011 was 19.15% compared to 13.22% in 2010. At December 31, 2011, the accretable\nyield balance on these loans was $1.7 billion. Accretable yield represents the excess of future cash flows above the current net\ncarrying amount of loans and will be recognized into income over the remaining life of the covered and acquired loans. The increase\nin interest income on securities compared to the prior year was primarily a result of security duration adjustments in the prior\nyear, which is offset in FDIC loss share income.During 2011 and 2010, BB&T reclassified $379 million\nand $1.2 billion, respectively, from the nonaccretable balance to accretable yield on covered loans. These reclassifications were\nprimarily the result of increased cash flow estimates resulting from improved loss expectations. These amounts are recognized as\nprospective yield adjustments and result in increased interest income over the remaining lives of the loan pools.The provision for covered loans was $71 million in 2011,\na decrease of $73 million compared to 2010. The provision expenses recorded during 2011 and 2010 resulted from the quarterly reassessment\nprocess, which showed decreases in expected cash flows in certain loan pools that were partially offset by recoveries in other\npreviously impaired loan pools.FDIC loss share income, net decreased $173 million compared\nto 2010 primarily due to the impact of cash flow reassessments that generated additional interest income and a reduction of amounts\ndue from the FDIC as a result of decreased loss projections on covered loans.FTE Net Interest Income and Rate \/ Volume AnalysisThe following table sets forth the major components of net\ninterest income and the related yields and rates for 2012, 2011 and 2010, as well as the variances between the periods caused by\nchanges in interest rates versus changes in volumes. Changes attributable to the mix of assets and liabilities have been allocated\nproportionally between the changes due to rate and the changes due to volume. Field: Page; Sequence: 38; Value: 2","markdown_table":"\n\n| Table 7 | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| Revenue, Net of Provision, Impact from Covered Assets | | | | | | | | | | | | |\n| | | | | | | | | | | | | |\n| | | | | Years Ended December 31, | | | | | | | | |\n| | | | | 2012 | | | 2011 | | | 2010 | | |\n| | | | | (Dollars in millions) | | | | | | | | |\n| | Interest income-covered loans | | | $ | 765 | | $ | 1,053 | | $ | 933 | |\n| | Interest income-covered securities | | | | 172 | | | 168 | | | 142 | |\n| | | Total interest income | | | 937 | | | 1,221 | | | 1,075 | |\n| | Provision for covered loans | | | | (13) | | | (71) | | | (144) | |\n| | OTTI for covered securities | | | | (4) | | | \u2015 | | | \u2015 | |\n| | FDIC loss share income, net | | | | (318) | | | (289) | | | (116) | |\n| | | Adjusted net revenue | | $ | 602 | | $ | 861 | | $ | 815 | |\n| | | | | | | | | | | | | |\n| | FDIC loss share income, net: | | | | | | | | | | | |\n| | | Offset to provision for covered loans | | $ | 11 | | $ | 57 | | $ | 115 | |\n| | | Accretion due to credit loss improvement | | | (271) | | | (297) | | | (203) | |\n| | | Offset to OTTI for covered securities | | | 3 | | | \u2015 | | | \u2015 | |\n| | | Accretion for securities | | | (61) | | | (49) | | | (28) | |\n| | | | Total | $ | (318) | | $ | (289) | | $ | (116) | |\n\n","source":"TFC\/10-K\/0000092230-13-000023"} {"title":"LHFS","text":"Field: Page; Sequence: 39; Value: 2 Provision for Credit LossesThe provision for credit losses recorded by BB&T in 2012\nwas $1.1 billion, a decrease of $133 million, or 11.2%, compared to the prior year. Included in the provision for credit losses\nduring 2012 was $13 million related to covered loans. The decrease in the provision for credit losses during 2012 compared to 2011\nwas primarily due to improving credit trends and outlook, as net charge-offs in 2012 decreased 22.0% compared to the prior year.\nImproving credit conditions also resulted in an increase in the ratio of the ALLL to net charge-offs, which increased to 1.56 for\n2012, compared to 1.36 for 2011.Net charge-offs were 1.14% of average loans and leases (or\n1.15% excluding covered loans) for 2012 compared to 1.57% of average loans and leases (or 1.59% excluding covered loans) during\n2011. Net charge-offs for 2011 included $87 million related to the transfer and sale of residential mortgage loans in the second\nquarter. Excluding the charge-off related to this transfer, net charge-offs were 1.50% of average loans and leases for 2011. The\nlargest decreases in the provision for credit losses for 2012 were in the residential mortgage and CRE - ADC portfolios.The provision for credit losses recorded by BB&T in 2011\nwas $1.2 billion compared with $2.6 billion in 2010, which represents a decrease of 54.9% during 2011. Included in the provision\nfor credit losses during 2011 was $71 million related to covered loans. The provision for credit losses recorded for covered loans\nreflects lower expected cash flows on certain loan pools compared to the original estimates. Approximately 80% of this provision\nfor credit losses is offset through a credit to noninterest income based on the provisions of the FDIC loss sharing agreements.\nThe decrease in the provision for credit losses during 2011 compared to 2010 was primarily due to improving credit trends and outlook,\nas net charge-offs in 2011 decreased 34.3% compared to 2010.Net charge-offs were 1.57% of average loans and leases (or\n1.59% excluding covered loans) for 2011 compared to 2.41% of average loans and leases (or 2.59% excluding covered loans) during\n2010. Net charge-offs for 2011 included $87 million related to the transfer and sale of residential mortgage loans in the second\nquarter. This compares to $605 million of net charge-offs recorded in 2010 related to commercial and residential mortgage loans\nthat were transferred to the held for sale portfolio. Excluding these items, net charge-offs were 1.50% and 1.97% of average loans\nand leases for 2011 and 2010, respectively. The largest decreases in the provision for credit losses for 2011 were in the commercial\nand residential mortgage portfolios.Noninterest Income Noninterest income is a significant contributor to BB&T\u2019s\nfinancial results. Noninterest income includes insurance income, service charges on deposit accounts, mortgage banking income,\ninvestment banking and brokerage fees and commissions, trust and investment advisory revenues, gains and losses on securities transactions,\nand commissions and fees derived from other activities. Management continues to focus on diversifying its sources of revenue to\nfurther reduce BB&T\u2019s reliance on traditional spread-based interest income, as fee-based activities are a relatively\nstable revenue source during periods of changing interest rates. Field: Page; Sequence: 40; Value: 2","markdown_table":"\n\n| Table 8 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| FTE Net Interest Income and Rate \/ Volume Analysis (1) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Years Ended December 31, 2012, 2011 and 2010 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 2012 vs. 2011 | | | | | | | | | 2011 vs. 2010 | | | | | | | |\n| | | | | | | Average Balances | | | | | | | | | Yield\/Rate | | | | | | | | | Income\/Expense | | | | | | | | | Increase | | | Change due to | | | | | | Increase | | | Change due to | | | | |\n| | | | | | | 2012 | | | 2011 | | | 2010 | | | 2012 | | | 2011 | | | 2010 | | | 2012 | | | 2011 | | | 2010 | | | (Decrease) | | | Rate | | | Volume | | | (Decrease) | | | Rate | | | Volume | |\n| | | | | | | (Dollars in millions) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Assets | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Total securities, at amortized cost: (2) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | GSEs | | | | | $ | 1,601 | | $ | 288 | | $ | 568 | | 1.64 | % | | 1.52 | % | | 3.67 | % | | $ | 26 | | $ | 4 | | $ | 21 | | $ | 22 | | $ | \u2015 | | $ | 22 | | $ | (17) | | $ | (9) | | $ | (8) |\n| | RMBS issued by GSE | | | | | | 30,848 | | | 25,305 | | | 22,310 | | 2.02 | | | 1.86 | | | 3.24 | | | | 624 | | | 472 | | | 723 | | | 152 | | | 43 | | | 109 | | | (251) | | | (338) | | | 87 |\n| | States and political subdivisions | | | | | | 1,851 | | | 1,895 | | | 2,047 | | 5.83 | | | 5.72 | | | 5.49 | | | | 108 | | | 109 | | | 112 | | | (1) | | | 2 | | | (3) | | | (3) | | | 5 | | | (8) |\n| | Non-agency RMBS | | | | | | 346 | | | 528 | | | 1,174 | | 5.76 | | | 6.72 | | | 5.87 | | | | 20 | | | 35 | | | 69 | | | (15) | | | (5) | | | (10) | | | (34) | | | 9 | | | (43) |\n| | Other securities | | | | | | 505 | | | 658 | | | 313 | | 1.65 | | | 1.55 | | | 2.16 | | | | 8 | | | 10 | | | 7 | | | (2) | | | 1 | | | (3) | | | 3 | | | (2) | | | 5 |\n| | Covered securities | | | | | | 1,183 | | | 1,249 | | | 1,198 | | 14.53 | | | 13.46 | | | 11.84 | | | | 172 | | | 168 | | | 142 | | | 4 | | | 13 | | | (9) | | | 26 | | | 20 | | | 6 |\n| | | Total securities | | | | | 36,334 | | | 29,923 | | | 27,610 | | 2.64 | | | 2.67 | | | 3.89 | | | | 958 | | | 798 | | | 1,074 | | | 160 | | | 54 | | | 106 | | | (276) | | | (315) | | | 39 |\n| Other earning assets (3) | | | | | | | 3,359 | | | 3,207 | | | 2,933 | | 0.91 | | | 0.62 | | | 0.55 | | | | 31 | | | 20 | | | 17 | | | 11 | | | 10 | | | 1 | | | 3 | | | 1 | | | 2 |\n| Loans and leases, net of unearned income: (4)(5) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | Commercial: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | | Commercial and industrial | | | | | 36,966 | | | 34,153 | | | 32,028 | | 3.96 | | | 4.23 | | | 4.45 | | | | 1,464 | | | 1,446 | | | 1,427 | | | 18 | | | (96) | | | 114 | | | 19 | | | (72) | | | 91 |\n| | | CRE-other | | | | | 10,779 | | | 11,139 | | | 12,056 | | 3.81 | | | 3.81 | | | 3.87 | | | | 411 | | | 425 | | | 465 | | | (14) | | | \u2015 | | | (14) | | | (40) | | | (7) | | | (33) |\n| | | CRE-residential ADC | | | | | 1,665 | | | 2,769 | | | 4,693 | | 3.76 | | | 3.51 | | | 3.64 | | | | 63 | | | 97 | | | 171 | | | (34) | | | 7 | | | (41) | | | (74) | | | (6) | | | (68) |\n| | Direct retail lending | | | | | | 15,270 | | | 13,850 | | | 14,033 | | 4.87 | | | 5.22 | | | 5.36 | | | | 744 | | | 722 | | | 751 | | | 22 | | | (50) | | | 72 | | | (29) | | | (19) | | | (10) |\n| | Sales finance | | | | | | 7,680 | | | 7,202 | | | 6,766 | | 3.97 | | | 4.88 | | | 5.87 | | | | 305 | | | 352 | | | 397 | | | (47) | | | (69) | | | 22 | | | (45) | | | (69) | | | 24 |\n| | Revolving credit | | | | | | 2,217 | | | 2,106 | | | 2,032 | | 8.41 | | | 8.77 | | | 8.74 | | | | 186 | | | 185 | | | 178 | | | 1 | | | (8) | | | 9 | | | 7 | | | 1 | | | 6 |\n| | Residential mortgage | | | | | | 22,623 | | | 18,782 | | | 15,965 | | 4.37 | | | 4.80 | | | 5.38 | | | | 989 | | | 902 | | | 859 | | | 87 | | | (86) | | | 173 | | | 43 | | | (99) | | | 142 |\n| | Other lending subsidiaries | | | | | | 9,525 | | | 8,280 | | | 7,778 | | 11.04 | | | 11.51 | | | 11.46 | | | | 1,051 | | | 953 | | | 892 | | | 98 | | | (40) | | | 138 | | | 61 | | | 4 | | | 57 |\n| | | Total loans and leases held for investment (excluding covered loans) | | | | | 106,725 | | | 98,281 | | | 95,351 | | 4.88 | | | 5.17 | | | 5.39 | | | | 5,213 | | | 5,082 | | | 5,140 | | | 131 | | | (342) | | | 473 | | | (58) | | | (267) | | | 209 |\n| | Covered loans | | | | | | 4,045 | | | 5,498 | | | 7,059 | | 18.91 | | | 19.15 | | | 13.22 | | | | 765 | | | 1,053 | | | 933 | | | (288) | | | (13) | | | (275) | | | 120 | | | 357 | | | (237) |\n| | | Total loans and leases held for investment | | | | | 110,770 | | | 103,779 | | | 102,410 | | 5.40 | | | 5.91 | | | 5.93 | | | | 5,978 | | | 6,135 | | | 6,073 | | | (157) | | | (355) | | | 198 | | | 62 | | | 90 | | | (28) |\n| | LHFS | | | | | | 2,963 | | | 2,183 | | | 2,377 | | 3.42 | | | 3.75 | | | 3.80 | | | | 101 | | | 82 | | | 90 | | | 19 | | | (8) | | | 27 | | | (8) | | | (1) | | | (7) |\n| | | Total loans and leases | | | | | 113,733 | | | 105,962 | | | 104,787 | | 5.35 | | | 5.87 | | | 5.88 | | | | 6,079 | | | 6,217 | | | 6,163 | | | (138) | | | (363) | | | 225 | | | 54 | | | 89 | | | (35) |\n| | | Total earning assets | | | | | 153,426 | | | 139,092 | | | 135,330 | | 4.61 | | | 5.06 | | | 5.36 | | | | 7,068 | | | 7,035 | | | 7,254 | | | 33 | | | (299) | | | 332 | | | (219) | | | (225) | | | 6 |\n| | | Nonearning assets | | | | | 24,676 | | | 23,874 | | | 24,328 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | | | Total assets | | | $ | 178,102 | | $ | 162,966 | | $ | 159,658 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Liabilities and Shareholders\u2019 Equity | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Interest-bearing deposits: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | Interest-checking | | | | | $ | 19,904 | | $ | 18,614 | | $ | 16,477 | | 0.12 | | | 0.16 | | | 0.17 | | | | 25 | | | 30 | | | 29 | | | (5) | | | (7) | | | 2 | | | 1 | | | (2) | | | 3 |\n| | Money market and savings | | | | | | 46,927 | | | 41,287 | | | 34,942 | | 0.18 | | | 0.31 | | | 0.50 | | | | 85 | | | 129 | | | 175 | | | (44) | | | (60) | | | 16 | | | (46) | | | (74) | | | 28 |\n| | Certificates and other time deposits | | | | | | 31,647 | | | 28,825 | | | 33,699 | | 1.01 | | | 1.57 | | | 2.12 | | | | 319 | | | 453 | | | 715 | | | (134) | | | (175) | | | 41 | | | (262) | | | (168) | | | (94) |\n| | Foreign office deposits - interest-bearing | | | | | | 214 | | | 647 | | | 1,913 | | 0.11 | | | (0.37) | | | (0.11) | | | | \u2015 | | | (2) | | | (2) | | | 2 | | | 1 | | | 1 | | | \u2015 | | | (2) | | | 2 |\n| | | Total interest-bearing deposits | | | | | 98,692 | | | 89,373 | | | 87,031 | | 0.43 | | | 0.68 | | | 1.05 | | | | 429 | | | 610 | | | 917 | | | (181) | | | (241) | | | 60 | | | (307) | | | (246) | | | (61) |\n| Federal funds purchased, securities sold under repurchase agreements and | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | short-term borrowed funds | | | | | | 3,408 | | | 5,189 | | | 9,022 | | 0.26 | | | 0.27 | | | 0.28 | | | | 9 | | | 14 | | | 26 | | | (5) | | | (1) | | | (4) | | | (12) | | | (1) | | | (11) |\n| Long-term debt | | | | | | | 20,651 | | | 22,257 | | | 21,653 | | 3.02 | | | 3.40 | | | 3.96 | | | | 624 | | | 757 | | | 856 | | | (133) | | | (81) | | | (52) | | | (99) | | | (122) | | | 23 |\n| | | Total interest-bearing liabilities | | | | | 122,751 | | | 116,819 | | | 117,706 | | 0.86 | | | 1.18 | | | 1.53 | | | | 1,062 | | | 1,381 | | | 1,799 | | | (319) | | | (323) | | | 4 | | | (418) | | | (369) | | | (49) |\n| | | Noninterest-bearing deposits | | | | | 28,925 | | | 22,945 | | | 19,742 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | | Other liabilities | | | | | 6,949 | | | 5,935 | | | 5,324 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | | Shareholders\u2019 equity | | | | | 19,477 | | | 17,267 | | | 16,886 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | | | Total liabilities and shareholders\u2019 equity | | | $ | 178,102 | | $ | 162,966 | | $ | 159,658 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Average interest rate spread | | | | | | | | | | | | | | | 3.75 | % | | 3.88 | % | | 3.83 | % | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| NIM\/ net interest income | | | | | | | | | | | | | | | 3.91 | % | | 4.06 | % | | 4.03 | % | | $ | 6,006 | | $ | 5,654 | | $ | 5,455 | | $ | 352 | | $ | 24 | | $ | 328 | | $ | 199 | | $ | 144 | | $ | 55 |\n| Taxable-equivalent adjustment | | | | | | | | | | | | | | | | | | | | | | | | $ | 149 | | $ | 147 | | $ | 135 | | | | | | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| (1) | Yields are stated on a taxable equivalent basis assuming tax rates in effect for the periods presented. | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| (2) | Total securities include securities available for sale and securities held to maturity. | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| (3) | Includes Federal funds sold, securities purchased under resale agreements or similar arrangements, interest-bearing deposits with banks, trading securities, FHLB stock and other earning assets. | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| (4) | Loan fees, which are not material for any of the periods shown, have been included for rate calculation purposes. | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| (5) | Nonaccrual loans have been included in the average balances. | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n\n","source":"TFC\/10-K\/0000092230-13-000023"} {"title":"LHFS","text":"Noninterest income was $3.8 billion for 2012, up 22.7% compared\nto 2011. This increase was driven by record income generated by BB&T\u2019s insurance, mortgage banking and investment banking\nand brokerage lines of business. In addition, bankcard fees and merchant discounts and other income increased compared to the prior\nyear. These increases were partially offset by lower checkcard fees, a decrease in income related to the FDIC loss share receivable\nand a reduction in net securities income. The major categories of noninterest income and fluctuations in these amounts are discussed\nin the following paragraphs. These fluctuations include the impact of acquisitions.Income from BB&T\u2019s insurance agency\/brokerage operations\nwas the largest source of noninterest income in 2012. Insurance income was up 30.2% compared to 2011, primarily due to the acquisition\nof Crump Insurance on April 2, 2012, which added approximately $234 million in revenues during 2012. The remainder of the increase\nin insurance income is attributable to the impact of other acquisitions that closed during the fourth quarter of 2011 and firming\nmarket conditions.Mortgage banking income\ntotaled $840 million in 2012 compared to $436 million in 2011. The increase in mortgage banking income was primarily due to an\nincrease in residential mortgage production revenues totaling $378 million, which was driven by higher gains on residential mortgage\nproduction and sales. Included in mortgage banking income for 2012 is a negative valuation adjustment of $32 million related to\nchanges in assumptions for residential MSRs that are carried at fair value. Approximately $22 million of the decline in the valuation\nof the residential MSRs was due to a revision in the servicing cost assumption based on an expectation of higher costs that continue\nto impact the industry. The remainder of the net decrease is primarily due to the impact of an increase in OAS assumption changes\npartially offset by prepayment speed changes, which are reflective of the current MSR market. This decrease was more than offset\nby gains of $128 million from derivative financial instruments used to manage the economic risk. Service charges on deposit accounts, which totaled $566 million\nin 2012, represent BB&T\u2019s third largest category of noninterest revenue. Service charge revenues were essentially flat\ncompared to the prior year, reflecting the impact of pricing changes for routine services related to retail and commercial transaction\ndeposit products, such as monthly maintenance fees and commercial transaction deposit products, implemented in 2011 that were designed\nto offset a reduction in service charges that occurred in 2010 as a result of a change in overdraft policies.Investment banking and brokerage fees and commissions increased\n$32 million, or 9.6%, compared to 2011. This increase was largely driven by a higher level of investment banking activities and\nhigher brokerage fees and commissions. Checkcard fees decreased $86 million, or 31.7%, due to the Durbin Amendment to the Dodd-Frank\nAct, which was implemented on October 1, 2011 and limited the rate banks could assess for debit card transactions. Bankcard fees\nand merchant discounts increased $32 million in 2012, primarily the result of higher volumes for both retail and commercial bankcard\nactivities.FDIC loss share income reflects accretion of the FDIC receivable\ndue to credit loss improvement (including expense associated with the aggregate loss calculation) and accretion related to covered\nsecurities, partially reduced by the offset to Field: Page; Sequence: 41; Value: 2 the provision for covered loans. Covered loans have experienced better performance\nthan originally anticipated, which has resulted in the recognition of additional interest income on a level yield basis over the\nexpected life of the corresponding loans. A significant portion of this increase in interest income is offset by a reduction in\nnoninterest income recorded in FDIC loss share income. For 2012, noninterest income was reduced by $271 million related to improvement\nin loan performance, compared to a reduction of $297 million in 2011. These decreases in income were partially offset by increases\nof $11 million and $57 million, respectively, which reflected 80% of the provision for credit losses recorded on covered loans\nfor 2012 and 2011.BB&T recognized $12 million in net securities losses\nduring 2012, compared to $62 million of net securities gains in 2011. The net securities losses during 2012 included $9 million\nof OTTI charges and $3 million of net losses realized from securities sales. The net securities gains during 2011 included $174\nmillion of net gains realized from securities sales and $112 million of OTTI charges. The OTTI charges recognized during 2011 were\ndue to weaker actual and forecasted collateral performance for non-agency RMBS. Refer to the \u201cAnalysis of Financial Condition\n\u2013 Investment Activities\u201d section for a detailed discussion of strategies executed during the years presented.Other income increased $105 million in 2012 compared to 2011,\nprimarily due to $149 million of losses and write-downs recorded in 2011 related to the sale of commercial NPLs. This increase\nwas partially offset by $42 million of increased write-downs on affordable housing investments in 2012 due to revised estimates\nand processes used to value these investments.Noninterest income was $3.1 billion for 2011, down 21.3%\ncompared to 2010. The decline in noninterest revenue was due to fewer securities gains, lower income related to the FDIC loss share\nreceivable, lower service charges on deposit accounts and lower mortgage banking revenues, while bankcard fees and merchant discounts\nand trust and investment advisory revenues grew compared to the prior year. The major categories of noninterest income and fluctuations\nin these amounts are discussed in the following paragraphs. These fluctuations include the impact of acquisitions.Insurance income was up slightly in 2011 compared to 2010,\nas pricing for premiums remained soft throughout the year.Service charges on deposit accounts totaled $563 million\nin 2011, a decline of $55 million, or 8.9%, compared to 2010. The decrease in 2011 was largely a result of a decline in overdraft\nfees as a result of mid-2010 changes to BB&T\u2019s overdraft policies that were partially in response to new regulation.\nIn 2011, management implemented pricing changes for routine services related to retail and commercial transaction deposit products,\nsuch as monthly maintenance fees and check enclosure fees, which partially offset the reduction in overdraft fees.Mortgage banking income\ntotaled $436 million in 2011 compared to $521 million in 2010, a decrease of $85 million. This decrease was primarily due to a\ndecline of $97 million in residential mortgage production revenues due to lower volumes and pricing in 2011 and the decision in\nthe third quarter of 2010 to retain a portion of 10 to 15 year mortgage production. This decline was partially offset by higher\nservicing revenues as a result of growth in the servicing portfolio and higher revenues from commercial mortgage banking revenues.\nIncluded in mortgage banking income for 2011 is a negative valuation adjustment of $341 million related to changes in assumptions\nfor residential MSRs that are carried at fair value. This was more than offset by gains of $394 million from derivative financial\ninstruments used to manage the economic risk. Approximately $284 million of the decline in the valuation of the residential MSRs\nwas due to increases in the prepayment speed assumption as a result of a decrease in interest rates. During 2011, management also\nrevised its servicing cost assumption based on changes to regulations and industry standards that impact the mortgage servicing\nindustry. The change in the servicing cost assumption resulted in a decline of approximately $30 million in the valuation of the\nmortgage servicing asset.Investment banking and brokerage fees and commissions decreased\n$19 million, or 5.4%, compared to 2010. This decrease was largely due to weaker market conditions during the year and a record\nfourth quarter in 2010.Checkcard fees decreased slightly in 2011 compared to 2010,\ndue to the Durbin Amendment to the Dodd-Frank Act. The decrease resulting from the implementation was more than offset by higher\nvolumes during the year.Bankcard fees and merchant discounts increased $27 million\nin 2011. The increased bankcard fees were the result of higher volumes for both retail and commercial bankcard activities.Trust and investment advisory revenues are based on the types\nof services provided as well as the overall value of the assets managed, which is affected by stock market conditions. In 2011,\ntrust and investment advisory revenues increased $14 million, or 8.8%, due to improved market conditions. Field: Page; Sequence: 42; Value: 2 FDIC loss share income reflects the offset to the provision\nfor covered loans, accretion of the FDIC receivable due to credit loss improvement and accretion related to covered securities.\nDuring 2011 and 2010, covered loans experienced better performance than originally anticipated resulting in additional interest\nincome. A significant portion of the increases in interest income for 2011 and 2010 was offset by reductions in noninterest income.\nFor 2011 and 2010, noninterest income was reduced by $297 million and $203 million, respectively, related to improvement in loan\nperformance. These decreases in income were partially offset by increases of $57 million and $115 million, respectively, which\nreflected 80% of the provision for credit losses recorded on covered loans for 2011 and 2010.BB&T recognized $62 million in net securities gains during\n2011. The net securities gains during 2011 included $174 million of net gains realized from securities sales and $112 million of\nOTTI charges. The OTTI charges recognized during 2011 are due to weaker actual and forecasted collateral performance for non-agency\nRMBS. BB&T recognized $554 million in net securities gains during 2010. The net securities gains recognized in 2010 included\n$585 million of net gains realized from securities sales and $31 million of losses as a result of OTTI charges. The large decrease\nin securities gains during 2011 compared to 2010 reflects the results of the balance sheet deleveraging strategy that was executed\nduring the second quarter of 2010 and the de-risking of the investment portfolio that began during the third quarter of 2010 and\nwas completed in the fourth quarter. Refer to the \u201cAnalysis of Financial Condition \u2013 Investment Activities\u201d section\nfor a detailed discussion of strategies executed during the years presented.Other income decreased $60 million in 2011 compared to 2010,\nprimarily due to losses and write-downs on commercial loans that were transferred to the LHFS portfolio in 2010 in connection with\nmanagement\u2019s NPL disposition strategy. There was a total of $149 million of losses and write-downs recorded in 2011 compared\nto $90 million in 2010.Noninterest Expense The following table provides a breakdown of BB&T\u2019s\nnoninterest expense:","markdown_table":"\n\n| The following table provides a breakdown of BB&T\u2019s noninterest income: | | | | | | | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | | | | | | | | | | | | | | | | | |\n| Table 9 | | | | | | | | | | | | | | | | | | |\n| Noninterest Income | | | | | | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | % Change | | | | | |\n| | | | | | | | | | | | | | 2012 | | | 2011 | | |\n| | | | | Years Ended December 31, | | | | | | | | | v. | | | v. | | |\n| | | | | 2012 | | | 2011 | | | 2010 | | | 2011 | | | 2010 | | |\n| | | | | (Dollars in millions) | | | | | | | | | | | | | | |\n| | Insurance income | | | $ | 1,359 | | $ | 1,044 | | $ | 1,041 | | 30.2 | % | | 0.3 | % | |\n| | Mortgage banking income | | | | 840 | | | 436 | | | 521 | | 92.7 | | | (16.3) | | |\n| | Service charges on deposits | | | | 566 | | | 563 | | | 618 | | 0.5 | | | (8.9) | | |\n| | Investment banking and brokerage fees and commissions | | | | 365 | | | 333 | | | 352 | | 9.6 | | | (5.4) | | |\n| | Bankcard fees and merchant discounts | | | | 236 | | | 204 | | | 177 | | 15.7 | | | 15.3 | | |\n| | Checkcard fees | | | | 185 | | | 271 | | | 274 | | (31.7) | | | (1.1) | | |\n| | Trust and investment advisory revenues | | | | 184 | | | 173 | | | 159 | | 6.4 | | | 8.8 | | |\n| | Income from bank-owned life insurance | | | | 116 | | | 122 | | | 123 | | (4.9) | | | (0.8) | | |\n| | FDIC loss share income, net | | | | (318) | | | (289) | | | (116) | | 10.0 | | | 149.1 | | |\n| | Securities gains (losses), net | | | | (12) | | | 62 | | | 554 | | (119.4) | | | (88.8) | | |\n| | Other income | | | | 299 | | | 194 | | | 254 | | 54.1 | | | (23.6) | | |\n| | | Total noninterest income | | $ | 3,820 | | $ | 3,113 | | $ | 3,957 | | 22.7 | | | (21.3) | | |\n\n","source":"TFC\/10-K\/0000092230-13-000023"} {"title":"LHFS","text":"Personnel expense is the largest component of noninterest\nexpense and includes salaries, wages and incentives, as well as pension and other employee benefit costs. Total personnel expense\nincreased 14.6% during 2012, primarily the result of the Crump Insurance and BankAtlantic acquisitions during 2012. Other factors\ncontributing to this increase include normal salary increases, higher production-related incentives and commissions and other performance\nincentives, and higher pension expense related to certain changes in actuarial assumptions. Additional disclosures relating to\nBB&T\u2019s benefit plans can be found in Note 14 \u201cBenefit Plans\u201d in the \u201cNotes to Consolidated Financial\nStatements.\u201dOccupancy and equipment expense increased $34 million, or\n5.5%, compared to 2011 primarily due to the acquisitions of Crump Insurance and BankAtlantic.Loan-related expense totaled $283 million, an increase of\n$56 million compared to the prior year. This increase was primarily the result of higher investor-owned loan expense and provisions\nfor higher mortgage repurchase reserves. Field: Page; Sequence: 43; Value: 2 Foreclosed property expenses include the gain or loss on\nsale of foreclosed property, valuation adjustments resulting from updated appraisals, and the ongoing expense of maintaining foreclosed\nproperties. Foreclosed property expense decreased $536 million, or 66.8% in 2012, primarily reflecting the impact of a more aggressive\napproach to reducing the inventory of foreclosed property that was undertaken in the fourth quarter of 2011.Regulatory charges decreased $53 million in 2012 due to improved\ncredit quality, which led to lower deposit insurance premiums.Merger-related and restructuring charges increased $52 million\ncompared to the prior year as a result of the Crump Insurance and BankAtlantic acquisitions.Other expense increased $62 million compared to 2011, primarily\nthe result of higher advertising expenses, an increase in depreciation expense related to assets under operating leases to customers\ndriven by growth in BB&T\u2019s equipment financing business, higher operating charge-offs in 2012 and increased referral\nfee expense. The remaining noninterest expenses increased a net $13 million, or 3.3%, compared to 2011. Refer to Table 10 for additional\ndetail on fluctuations in other categories of noninterest expense.Management currently expects that total noninterest expense\nshould decline in the range of 1% to 2% in 2013 compared with 2012, largely driven by lower credit-related expenses.Personnel expense increased $111 million, or 4.2%, during\n2011 compared to 2010. This increase included an additional $90 million for salaries and wages due to customary salary increases\nand higher incentive expense resulting from improved performance and production-related businesses. The increase also included\nhigher pension and employee benefits expense of $21 million.Foreclosed property expense totaled $802 million in 2011,\nan increase of $55 million compared to 2010. This increase was largely due to an increase of $78 million for losses and write-downs,\npartially offset by a decrease of $23 million for maintenance and repair costs. Included in the losses and write-downs for 2011\nwas a $220 million liquidity valuation adjustment in the fourth quarter related to management\u2019s decision to implement a more\naggressive shorter period disposition strategy for foreclosed properties. The carrying value of BB&T\u2019s inventory of foreclosed\nproperty decreased $723 million, or 57.4%, during 2011. This decline reflects management\u2019s more aggressive efforts to liquidate\nproperties and fewer inflows.Loan-related expense totaled $227 million, an increase of\n$26 million compared to 2010. This increase includes a $12 million increase for losses related to repurchase reserves on BB&T\u2019s\ninvestor owned servicing portfolio.The remaining noninterest expenses decreased a net $60 million,\nor 2.8%, compared to 2010. This decrease includes lower merger-related and restructuring charges, as 2010 included charges related\nto the Colonial acquisition and systems conversion. In addition, amortization of intangibles declined by $23 million, as intangibles\nare amortized on an accelerated basis. Noninterest expense for 2011 also includes a $16 million loss from the sale of leveraged\nleases and an $11 million charge for an increase to the indemnification reserve related to the 2008 sale of Visa stock. These increases\nwere partially offset by $19 million in lower advertising and other marketing expenses.Merger-Related and Restructuring Charges BB&T recorded certain merger-related and restructuring\ncharges during the years 2012, 2011 and 2010. These charges are reflected in BB&T\u2019s Consolidated Statements of Income\nas a category of noninterest expense.Merger-related and restructuring expenses or credits include:\nseverance and personnel-related costs or credits, which typically occur in corporate support and data processing functions; occupancy\nand equipment charges or credits, which relate to costs or gains associated with lease terminations, obsolete equipment write-offs,\nand the sale of duplicate facilities and equipment; and other merger-related and restructuring charges or credits, which include\nexpenses necessary to convert and combine the acquired branches and operations of merged companies, direct media advertising related\nto the acquisitions, asset and supply inventory write-offs, investment banking advisory fees and other similar charges.At December 31, 2012 and 2011, there were $11 million and\n$20 million, respectively, of merger-related and restructuring accruals. Merger-related and restructuring accruals are established\nwhen the costs are incurred or once all requirements for a plan to dispose of certain business functions have been approved by\nmanagement. In general, a major portion of accrued costs are utilized in conjunction with or immediately following the systems\nconversion, when most of the duplicate positions are eliminated and the terminated employees begin to receive severance. Other\naccruals are utilized over time based on the sale, closing or disposal of duplicate facilities or equipment or the expiration of\nlease contracts. Merger and restructuring Field: Page; Sequence: 44; Value: 2 accruals are re-evaluated periodically and adjusted\nas necessary. The remaining accruals at December 31, 2012 are generally expected to be utilized during 2013, unless they relate\nto specific contracts that expire in later years.Provision for Income Taxes BB&T\u2019s provision for income taxes totaled $764\nmillion, $296 million and $115 million for 2012, 2011 and 2010, respectively. BB&T\u2019s effective tax rates for the years\nended 2012, 2011 and 2010 were 27.4%, 18.2% and 11.9%, respectively. The increases in the effective tax rate for 2012 compared\nto 2011, and 2011 compared to 2010, reflect higher levels of pre-tax earnings relative to permanent income tax differences.BB&T has extended credit to and invested in the obligations\nof states and municipalities and their agencies, and has made other investments and loans that produce tax-exempt income. The income\ngenerated from these investments, together with certain other transactions that have favorable tax treatment, have reduced BB&T\u2019s\noverall effective tax rate from the statutory rate in all periods presented.Management currently expects the effective tax rate in the\nfirst quarter of 2013 to be similar to the effective tax rate in the fourth quarter of 2012.","markdown_table":"\n\n| Table 10 | | | | | | | | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| Noninterest Expense | | | | | | | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | % Change | | | | | |\n| | | | | | | | | | | | | | | 2012 | | | 2011 | | |\n| | | | | | Years Ended December 31, | | | | | | | | | v. | | | v. | | |\n| | | | | | 2012 | | | 2011 | | | 2010 | | | 2011 | | | 2010 | | |\n| | | | | | (Dollars in millions) | | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | | | | | | |\n| | Personnel expense | | | | $ | 3,125 | | $ | 2,727 | | $ | 2,616 | | 14.6 | % | | 4.2 | % | |\n| | Occupancy and equipment expense | | | | | 650 | | | 616 | | | 608 | | 5.5 | | | 1.3 | | |\n| | Loan-related expense | | | | | 283 | | | 227 | | | 201 | | 24.7 | | | 12.9 | | |\n| | Foreclosed property expense | | | | | 266 | | | 802 | | | 747 | | (66.8) | | | 7.4 | | |\n| | Regulatory charges | | | | | 159 | | | 212 | | | 211 | | (25.0) | | | 0.5 | | |\n| | Professional services | | | | | 156 | | | 174 | | | 170 | | (10.3) | | | 2.4 | | |\n| | Software expense | | | | | 138 | | | 118 | | | 117 | | 16.9 | | | 0.9 | | |\n| | Amortization of intangibles | | | | | 110 | | | 99 | | | 122 | | 11.1 | | | (18.9) | | |\n| | Merger-related and restructuring charges, net | | | | | 68 | | | 16 | | | 69 | | NM | | | (76.8) | | |\n| | Other expense | | | | | 873 | | | 811 | | | 809 | | 7.6 | | | 0.2 | | |\n| | | Total noninterest expense | | | $ | 5,828 | | $ | 5,802 | | $ | 5,670 | | 0.4 | | | 2.3 | | |\n\n","source":"TFC\/10-K\/0000092230-13-000023"} {"title":"LHFS","text":"The total securities portfolio increased $2.3 billion, or\n6.4%, in 2012. This growth was primarily driven by purchases of investment securities in the fourth quarter of 2012 that were made\nin response to slowing loan growth forecasts.As of December 31, 2012, approximately 18.3% of the securities\nportfolio was variable rate. The effective duration of the securities portfolio was 2.8 years at December 31, 2012 compared to\n3.3 years at the end of 2011. The duration of the securities portfolio excludes equity securities, auction rate securities, and\ncertain covered non-agency RMBS. During the first quarter of 2011, BB&T reclassified approximately $8.3 billion from securities\navailable for sale to securities held to maturity. Management determined that it has both the positive intent and ability to hold\nthese securities to maturity. The reclassification of these securities was accounted for at fair value. Management transferred\nthese securities to mitigate Field: Page; Sequence: 50; Value: 2 possible negative impacts on its regulatory capital under the proposed Basel III capital guidelines.\nIn addition, management purchased additional securities into the held-to-maturity portfolio based on its intent at the date of\npurchase.RMBS issued by GSEs were 78.0% of the total securities portfolio\nat year-end 2012. As of December 31, 2012, the available-for-sale securities portfolio also includes $1.6 billion of securities\nthat were acquired from the FDIC as part of the Colonial acquisition. These securities are covered by FDIC loss sharing agreements\nand include $1.3 billion of non-agency RMBS and $326 million of municipal securities.During 2012, management sold $306 million of securities that\nproduced a realized loss of $3 million. In addition, BB&T recognized $9 million in charges for OTTI related to certain non-agency\nRMBS and covered securities. In 2011, primarily in connection with strengthening its liquidity under the proposed Basel III liquidity\nguidelines, management purchased a total of $13.4 billion of GNMA RMBS. Management also sold approximately $4.0 billion of securities\nduring 2011, which produced net securities gains of $174 million. In addition, BB&T recognized $112 million in charges for\nOTTI during 2011 related to BB&T\u2019s portfolio of non-agency RMBS. The OTTI charges were the result of weaker actual and\nforecasted collateral performance for non-agency RMBS.In 2010, management executed two major strategies to strengthen\nthe balance sheet. In the second quarter of 2010, management executed a deleveraging strategy to better position BB&T\u2019s\nbalance sheet for a rising rate environment and achieve a better mix of earning assets. In connection with this strategy, management\nreduced the balance sheet by approximately $8 billion through the sale of securities. During the third and fourth quarters of 2010,\nmanagement executed a strategy to further de-risk the available-for-sale securities portfolio. The de-risking strategy was aimed\nat further reducing the duration of the securities portfolio and reducing the risk of charges to OCI in a rising rate environment.\nAlso to further protect against the risk of a rising rate environment, management replaced a portion of the securities sold with\nfloating-rate securities. In addition, management sold approximately $400 million of non-agency RMBS to reduce the potential for\nfuture credit losses. These strategies were the primary driver in generating net securities gains during 2010. Primarily in connection\nwith these strategies, BB&T sold a total of $31.3 billion in available-for-sale securities during 2010, which produced net\nsecurities gains of $585 million. In addition, BB&T recognized $31 million in charges for OTTI related to BB&T\u2019s\nportfolio of non-agency RMBS.","markdown_table":"\n\n| Table 11 | | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| Composition of Securities Portfolio | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | |\n| | | | | | December 31, | | | | | | | | |\n| | | | | | 2012 | | | 2011 | | | 2010 | | |\n| | | | | | (Dollars in millions) | | | | | | | | |\n| | Securities available for sale (at fair value): | | | | | | | | | | | | |\n| | | GSE securities | | | $ | 290 | | $ | 306 | | $ | 103 | |\n| | | RMBS issued by GSE | | | | 20,930 | | | 18,132 | | | 18,344 | |\n| | | States and political subdivisions | | | | 2,011 | | | 1,923 | | | 1,909 | |\n| | | Non-agency RMBS | | | | 312 | | | 368 | | | 515 | |\n| | | Other securities | | | | 3 | | | 7 | | | 759 | |\n| | | Covered securities | | | | 1,591 | | | 1,577 | | | 1,539 | |\n| | Total securities available for sale | | | | | 25,137 | | | 22,313 | | | 23,169 | |\n| | | | | | | | | | | | | | |\n| | Securities held to maturity (at amortized cost): | | | | | | | | | | | | |\n| | | GSE securities | | | | 3,808 | | | 500 | | | \u2015 | |\n| | | RMBS issued by GSE | | | | 9,273 | | | 13,028 | | | \u2015 | |\n| | | States and political subdivisions | | | | 34 | | | 35 | | | \u2015 | |\n| | | Other securities | | | | 479 | | | 531 | | | \u2015 | |\n| | Total securities held to maturity | | | | | 13,594 | | | 14,094 | | | \u2015 | |\n| | Total securities | | | | $ | 38,731 | | $ | 36,407 | | $ | 23,169 | |\n\n","source":"TFC\/10-K\/0000092230-13-000023"} {"title":"LHFS","text":"Lending Activities The primary goal of the BB&T lending function is to help\nclients achieve their financial goals by providing quality loan products that are fair to the client and profitable to the Company.\nManagement believes that this purpose can best be accomplished by building strong, profitable client relationships over time, with\nBB&T becoming an important contributor to the prosperity and well-being of its clients. In addition to the importance placed\non client knowledge and continuous involvement with clients, BB&T\u2019s lending process incorporates the standards of a consistent\ncompany-wide credit culture and an in-depth local market knowledge. Furthermore, the Company employs strict underwriting criteria\ngoverning the degree of assumed risk and the diversity of the loan portfolio in terms of type, industry and geographical concentration.\nIn Field: Page; Sequence: 52; Value: 2 this context, BB&T strives to meet the credit needs of businesses and consumers in its markets while pursuing a balanced\nstrategy of loan profitability, loan growth and loan quality.The following table summarizes BB&T\u2019s loan portfolio\nbased on the regulatory classification of the portfolio, which focuses on the underlying loan collateral, and differs from internal\nclassifications presented herein that focus on the primary purpose of the loan. Covered loans are included in their respective\ncategories.","markdown_table":"\n\n| Table 12 | | | | | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| Securities | | | | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | | | |\n| | | | | | December 31, 2012 | | | | | | | | | | | |\n| | | | | | Available for Sale | | | | | | Held to Maturity | | | | | |\n| | | | | | | | | Weighted | | | | | | Weighted | | |\n| | | | | | Fair Value | | | Average Yield (1) | | | Amortized Cost | | | Average Yield (1) | | |\n| | | | | | (Dollars in millions) | | | | | | | | | | | |\n| | GSE securities: | | | | | | | | | | | | | | | |\n| | | Within one year | | | $ | 188 | | 0.24 | % | | $ | \u2015 | | \u2015 | % | |\n| | | One to five years | | | | 102 | | 0.23 | | | | \u2015 | | \u2015 | | |\n| | | Five to ten years | | | | \u2015 | | \u2015 | | | | 3,600 | | 2.00 | | |\n| | | After ten years | | | | \u2015 | | \u2015 | | | | 208 | | 1.22 | | |\n| | | | Total | | | 290 | | 0.24 | | | | 3,808 | | 1.96 | | |\n| | | | | | | | | | | | | | | | | |\n| | RMBS issued by GSE: (2) | | | | | | | | | | | | | | | |\n| | | One to five years | | | | 6 | | 5.59 | | | | \u2015 | | \u2015 | | |\n| | | Five to ten years | | | | 144 | | 2.62 | | | | \u2015 | | \u2015 | | |\n| | | After ten years | | | | 20,780 | | 2.14 | | | | 9,273 | | 2.13 | | |\n| | | | Total | | | 20,930 | | 2.14 | | | | 9,273 | | 2.13 | | |\n| | | | | | | | | | | | | | | | | |\n| | Obligations of states and political subdivisions: (3) | | | | | | | | | | | | | | | |\n| | | One to five years | | | | 23 | | 6.91 | | | | \u2015 | | \u2015 | | |\n| | | Five to ten years | | | | 209 | | 6.15 | | | | 1 | | 1.74 | | |\n| | | After ten years | | | | 1,779 | | 6.50 | | | | 33 | | 5.22 | | |\n| | | | Total | | | 2,011 | | 6.47 | | | | 34 | | 5.14 | | |\n| | | | | | | | | | | | | | | | | |\n| | Non-agency RMBS: (2) | | | | | | | | | | | | | | | |\n| | | After ten years | | | | 312 | | 5.93 | | | | \u2015 | | \u2015 | | |\n| | | | Total | | | 312 | | 5.93 | | | | \u2015 | | \u2015 | | |\n| | | | | | | | | | | | | | | | | |\n| | Other securities: | | | | | | | | | | | | | | | |\n| | | Within one year | | | | 2 | | \u2015 | | | | \u2015 | | \u2015 | | |\n| | | One to five years | | | | 1 | | 1.29 | | | | \u2015 | | \u2015 | | |\n| | | Five to ten years | | | | \u2015 | | \u2015 | | | | 72 | | 1.37 | | |\n| | | After ten years | | | | \u2015 | | \u2015 | | | | 407 | | 1.46 | | |\n| | | | Total | | | 3 | | 0.37 | | | | 479 | | 1.45 | | |\n| | | | | | | | | | | | | | | | | |\n| | Covered securities: | | | | | | | | | | | | | | | |\n| | | One to five years | | | | 2 | | 4.51 | | | | \u2015 | | \u2015 | | |\n| | | Five to ten years | | | | 324 | | 3.81 | | | | \u2015 | | \u2015 | | |\n| | | After ten years | | | | 1,265 | | 16.26 | | | | \u2015 | | \u2015 | | |\n| | | | Total | | | 1,591 | | 13.71 | | | | \u2015 | | \u2015 | | |\n| | | | | Total securities | $ | 25,137 | | 3.25 | | | $ | 13,594 | | 2.06 | | |\n| | | | | | | | | | | | | | | | | |\n| (1) | Yields are calculated on a taxable-equivalent basis using the statutory federal income tax rate of 35%.\u00a0 Yields for available-for-sale securities are calculated based on the amortized cost of the securities. | | | | | | | | | | | | | | | |\n| (2) | For purposes of the maturity table, RMBS, which are not due at a single maturity date, have been included in maturity groupings based on the contractual maturity.\u00a0 The expected life of RMBS 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. | | | | | | | | | | | | | | | |\n| (3) | Weighted-average yield excludes the effect of pay-fixed swaps hedging municipal securities. | | | | | | | | | | | | | | | |\n\n","source":"TFC\/10-K\/0000092230-13-000023"} {"title":"LHFS","text":"The following table is based upon the regulatory classification\nof loans and reflects the scheduled maturities of commercial, financial and agricultural loans, as well as real estate construction\nloans:","markdown_table":"\n\n| Table 13 | | | | | | | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| Composition of Loan and Lease Portfolio | | | | | | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | | | | | |\n| | | | | December 31, | | | | | | | | | | | | | | |\n| | | | | 2012 | | | 2011 | | | 2010 | | | 2009 | | | 2008 | | |\n| | | | | (Dollars in millions) | | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | | | | | |\n| | Commercial, financial and agricultural loans | | | $ | 23,863 | | $ | 21,452 | | $ | 20,490 | | $ | 19,076 | | $ | 17,489 | |\n| | Lease receivables | | | | 1,114 | | | 1,067 | | | 1,158 | | | 1,092 | | | 1,315 | |\n| | Real estate-construction and land development loans | | | | 5,900 | | | 7,714 | | | 10,969 | | | 15,353 | | | 18,012 | |\n| | Real estate-mortgage loans | | | | 65,760 | | | 60,821 | | | 57,418 | | | 55,671 | | | 48,719 | |\n| | Consumer loans | | | | 17,966 | | | 16,415 | | | 13,532 | | | 12,464 | | | 11,710 | |\n| | | Total loans and leases held for investment | | | 114,603 | | | 107,469 | | | 103,567 | | | 103,656 | | | 97,245 | |\n| | LHFS | | | | 3,761 | | | 3,736 | | | 3,697 | | | 2,551 | | | 1,424 | |\n| | | Total loans and leases | | $ | 118,364 | | $ | 111,205 | | $ | 107,264 | | $ | 106,207 | | $ | 98,669 | |\n\n","source":"TFC\/10-K\/0000092230-13-000023"} {"title":"LHFS","text":"Scheduled repayments are reported in the maturity category\nin which the payment is due. Determinations of maturities are based upon contract terms. BB&T\u2019s credit policy typically\ndoes not permit automatic renewal of loans. At the scheduled maturity date (including balloon payment date), the customer generally\nmust request a new loan to replace the matured loan and execute either a new note or note modification with rate, terms and conditions\nnegotiated at that time. Field: Page; Sequence: 53; Value: 2 BB&T\u2019s loan portfolio is approximately 50% commercial\nand 50% retail by design, and is divided into six major categories\u2014commercial, direct retail, sales finance, revolving credit,\nresidential mortgage and other lending subsidiaries. In addition, BB&T has a portfolio of loans that were acquired in the\nColonial acquisition that are covered by FDIC loss sharing agreements. BB&T lends to a diverse customer base that is substantially\nlocated within the Company\u2019s primary market area. At the same time, the loan portfolio is geographically dispersed throughout\nBB&T\u2019s branch network to mitigate concentration risk arising from local and regional economic downturns. Refer to the\n\u201cRisk Management\u201d section herein for a discussion of each of the loan portfolios and the credit risk management policies\nused to manage the portfolios.The following table presents BB&T\u2019s total loan\nportfolio based upon BB&T\u2019s lines of business, as discussed herein, rather than upon regulatory reporting classifications:","markdown_table":"\n\n| Table 14 | | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| Selected Loan Maturities and Interest Sensitivity | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | |\n| | | | | | December 31, 2012 | | | | | | | | |\n| | | | | | Commercial, | | | Real Estate: | | | | | |\n| | | | | | Financial | | | Construction | | | | | |\n| | | | | | and | | | and Land | | | | | |\n| | | | | | Agricultural | | | Development | | | | | |\n| | | | | | Loans | | | Loans | | | Total | | |\n| | | | | | (Dollars in millions) | | | | | | | | |\n| | Fixed Rate: | | | | | | | | | | | | |\n| | | 1 year or less (1) | | | $ | 2,688 | | $ | 233 | | $ | 2,921 | |\n| | | 1-5 years | | | | 2,699 | | | 772 | | | 3,471 | |\n| | | After 5 years | | | | 3,793 | | | 1,074 | | | 4,867 | |\n| | | | Total | | | 9,180 | | | 2,079 | | | 11,259 | |\n| | Variable Rate: | | | | | | | | | | | | |\n| | | 1 year or less (1) | | | | 3,508 | | | 1,395 | | | 4,903 | |\n| | | 1-5 years | | | | 8,935 | | | 1,959 | | | 10,894 | |\n| | | After 5 years | | | | 2,240 | | | 467 | | | 2,707 | |\n| | | | Total | | | 14,683 | | | 3,821 | | | 18,504 | |\n| | | | | Total loans and leases (2) | $ | 23,863 | | $ | 5,900 | | $ | 29,763 | |\n| | | | | | | | | | | | | | |\n| (1) | Includes loans due on demand. | | | | | | | | | | | | |\n| (2) | The above table excludes: | | | | | | | | | (Dollars in millions) | | | |\n| | (i) | consumer loans | | | | | | | | | $ | 17,966 | |\n| | (ii) | real estate mortgage loans | | | | | | | | | | 65,760 | |\n| | (iii) | LHFS | | | | | | | | | | 3,761 | |\n| | (iv) | lease receivables | | | | | | | | | | 1,114 | |\n| | | Total | | | | | | | | | $ | 88,601 | |\n\n","source":"TFC\/10-K\/0000092230-13-000023"} {"title":"LHFS","text":"BB&T\u2019s lending portfolio reflected broad-based\ngrowth throughout 2012 with notable increases in the commercial and industrial, direct retail and residential mortgage lending\nportfolios. Total loans were $118.4 billion at year-end 2012, up $7.2 billion, or 6.4%, compared to the balance at year-end 2011.\nCovered loans decreased $1.6 billion, or 32.3%, during 2012.The following table presents BB&T\u2019s average loans\nfor the years ended December 31, 2012 and 2011, segregated by major category: Field: Page; Sequence: 54; Value: 2","markdown_table":"\n\n| **Table 15** | | | | | | | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| Composition of Loan and Lease Portfolio Based on Lines of Business | | | | | | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | | | | | |\n| | | | | December 31, | | | | | | | | | | | | | | |\n| | | | | 2012 | | | 2011 | | | 2010 | | | 2009 | | | 2008 | | |\n| | | | | (Dollars in millions) | | | | | | | | | | | | | | |\n| | Commercial | | | $ | 51,017 | | $ | 49,165 | | $ | 48,886 | | $ | 49,820 | | $ | 50,480 | |\n| | Direct retail lending | | | | 15,817 | | | 14,506 | | | 13,807 | | | 14,406 | | | 15,454 | |\n| | Sales finance | | | | 7,736 | | | 7,401 | | | 7,050 | | | 6,290 | | | 6,354 | |\n| | Revolving credit | | | | 2,330 | | | 2,212 | | | 2,127 | | | 2,016 | | | 1,777 | |\n| | Residential mortgage | | | | 24,272 | | | 20,581 | | | 17,550 | | | 15,435 | | | 17,091 | |\n| | Other lending subsidiaries | | | | 10,137 | | | 8,737 | | | 7,953 | | | 7,670 | | | 6,089 | |\n| | | Total loans and leases held for investment | | | | | | | | | | | | | | | | |\n| | | | (excluding covered loans) | | 111,309 | | | 102,602 | | | 97,373 | | | 95,637 | | | 97,245 | |\n| | Covered | | | | 3,294 | | | 4,867 | | | 6,194 | | | 8,019 | | | \u2015 | |\n| | | Total loans and leases held for investment | | | 114,603 | | | 107,469 | | | 103,567 | | | 103,656 | | | 97,245 | |\n| | LHFS | | | | 3,761 | | | 3,736 | | | 3,697 | | | 2,551 | | | 1,424 | |\n| | | Total loans and leases | | $ | 118,364 | | $ | 111,205 | | $ | 107,264 | | $ | 106,207 | | $ | 98,669 | |\n\n","source":"TFC\/10-K\/0000092230-13-000023"} {"title":"LHFS","text":"Average total loans were $113.7 billion for 2012, up $7.8\nbillion compared to the prior year. Average commercial and industrial loans increased $2.8 billion, or 8.2%, in 2012 as compared\nto 2011. The increase in the commercial and industrial portfolio was driven by investments in corporate banking in key national\nmarkets and the expansion of vertical lending teams focused on targeted industries. Average CRE \u2013 other loans for 2012 decreased\n$360 million, or 3.2%, compared to 2011. The average CRE \u2013 residential ADC portfolio declined $1.1 billion, or 39.9%, compared\nto the average balance for 2011, as management continued to reduce exposure to higher risk real estate lending.Average direct retail loans increased 10.3% during 2012,\nprimarily due to increased demand for home equity loans and an increase in non-real estate loans generated through the wealth and\nsmall business lending channels. This growth was partially offset by continued runoff of the residential lot\/land component of\nthis portfolio as management has continued to reduce exposures to these types of loans. Average sales finance loans and average\nrevolving credit reflected 2012 growth rates of 6.6% and 5.3%, respectively. BB&T concentrates its efforts on the highest quality\nborrowers in both of these product markets. The growth in average sales finance loans was primarily driven by an increase in prime\nautomobile lending, which reflects increased momentum in the new and used automobile markets during 2012.Average residential mortgage loans increased $3.8 billion,\nor 20.5%, compared to 2011. The increase in residential mortgage loans was driven by a previous strategy that resulted in a higher\nportion of 10 to 15 year mortgage production being retained in the held for investment loan portfolio. During the second quarter\nof 2012, this strategy was modified such that the majority of future loan production is directed to the held for sale portfolio.\nAs a result, management expects slower growth in the residential mortgage loan portfolio during 2013.Average loans held by BB&T\u2019s other lending subsidiaries\nincreased $1.2 billion, or 15.0%, compared to 2011. The growth in this portfolio was primarily in small ticket finance, equipment\nleasing and nonprime automobile financing.Asset QualityThe following discussion excludes assets covered by FDIC\nloss sharing agreements that provide for reimbursement to BB&T for the majority of losses incurred on those assets. Covered\nloans, which are considered performing due to the application of the accretion method of accounting, were $3.3 billion at December\n31, 2012 and $4.9 billion in the prior year. Covered foreclosed property totaled $254 million and $378 million at December 31,\n2012 and 2011, respectively.NPAs, which include foreclosed real estate, repossessions\nand nonaccrual loans, totaled $1.5 billion at December 31, 2012, compared to $2.5 billion at December 31, 2011. The decline in\nNPAs of $914 million was driven by a decrease of $492 million in NPLs and $422 million in foreclosed property. The decline in NPLs\nwas broad-based, reflecting decreases in most loan portfolios, including a 34.5% decrease in commercial NPLs. The decline in foreclosed\nproperty reflects a more Field: Page; Sequence: 55; Value: 2 aggressive approach to reducing the inventory of foreclosed property that was implemented during the fourth\nquarter of 2011. The current inventory of foreclosed real estate as of December 31, 2012 includes land and lots, totaling $35 million\nthat have been held for approximately 15 months on average. The remaining foreclosed real estate of $72 million, which is primarily\nsingle family residential and commercial real estate, had an average holding period of seven months. NPAs as a percentage of loans\nand leases plus foreclosed property were 1.33% at December 31, 2012 compared with 2.29% at December 31, 2011.Management expects NPAs to improve at a modest pace during\nthe first quarter of 2013, assuming no significant economic deterioration during the quarter.The following table presents the changes in NPAs during 2012\nand 2011.","markdown_table":"\n\n| **Table 16** | | | | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| Composition of Average Loans and Leases | | | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | | |\n| | | | | Years Ended December 31, | | | | | | | | | | | |\n| | | | | 2012 | | | | | | 2011 | | | | | |\n| | | | | Balance | | | % of total | | | Balance | | | % of total | | |\n| | | | | | (Dollars in millions) | | | | | | | | | | |\n| | Commercial: | | | | | | | | | | | | | | |\n| | | Commercial and industrial | | $ | 36,966 | | 32.4 | % | | $ | 34,153 | | 32.2 | % | |\n| | | CRE - other | | | 10,779 | | 9.5 | | | | 11,139 | | 10.5 | | |\n| | | CRE - residential ADC | | | 1,665 | | 1.5 | | | | 2,769 | | 2.6 | | |\n| | Direct retail lending | | | | 15,270 | | 13.4 | | | | 13,850 | | 13.1 | | |\n| | Sales finance | | | | 7,680 | | 6.8 | | | | 7,202 | | 6.8 | | |\n| | Revolving credit | | | | 2,217 | | 1.9 | | | | 2,106 | | 2.0 | | |\n| | Residential mortgage | | | | 22,623 | | 19.9 | | | | 18,782 | | 17.7 | | |\n| | Other lending subsidiaries | | | | 9,525 | | 8.4 | | | | 8,280 | | 7.8 | | |\n| | | Total average loans and leases held for | | | | | | | | | | | | | |\n| | | | investment (excluding covered loans) | | 106,725 | | 93.8 | | | | 98,281 | | 92.7 | | |\n| | Covered | | | | 4,045 | | 3.6 | | | | 5,498 | | 5.2 | | |\n| | | Total average loans and leases held | | | | | | | | | | | | | |\n| | | | for investment | | 110,770 | | 97.4 | | | | 103,779 | | 97.9 | | |\n| | LHFS | | | | 2,963 | | 2.6 | | | | 2,183 | | 2.1 | | |\n| | | Total average loans and leases | | $ | 113,733 | | 100.0 | % | | $ | 105,962 | | 100.0 | % | |\n\n","source":"TFC\/10-K\/0000092230-13-000023"} {"title":"LHFS","text":"Tables 18 and 19 summarize asset quality information for\nthe past five years. As more fully described below, this information has been adjusted to exclude past due loans that are subject\nto FDIC loss sharing agreements and certain mortgage loans guaranteed by the government:\n\u00b7In accordance with regulatory reporting standards, covered loans that are contractually past due\nare reported as past due and still accruing based on the number of days past due. However, given the significant amount of acquired\nloans that are past due but still accruing due to the application of the accretion method, BB&T has concluded that it is appropriate\nto adjust Table 18 to exclude covered loans in summarizing total loans 90 days or more past due and still accruing and total loans\n30-89 days past due and still accruing.\n\u00b7BB&T has also concluded that the inclusion of covered loans in certain asset quality ratios\nsummarized in Table 19 including \u201cLoans 30-89 days past due and still accruing as a percentage of total loans and leases,\u201d\n\u201cLoans 90 days or more past due and still accruing as a percentage of total loans and leases,\u201d \u201cNonperforming\nloans and leases as a percentage of total loans and leases\u201d and certain other asset quality ratios that reflect NPAs in the\nnumerator or denominator (or both) results in significant distortion to these ratios. In addition, because loan level charge-offs\nrelated to the acquired loans are not recognized in the financial statements until the cumulative amounts exceed the original loss\nprojections on a pool basis, the net charge-off ratio for the acquired loans is not consistent with the net charge-off ratio for\nother loan portfolios. The inclusion of these loans in the asset quality ratios described above could result in a lack of comparability\nacross quarters or years, and could negatively impact comparability with other portfolios that were not impacted by acquisition\naccounting. BB&T believes that the presentation of asset quality measures excluding covered loans and related amounts from\nboth the numerator and denominator provides better perspective into underlying trends related to the quality of its loan portfolio.\nAccordingly, the asset quality measures in Table 19 present asset quality information both on a consolidated basis as well as excluding\nthe covered assets and related amounts.\n\u00b7In addition, BB&T has excluded mortgage loans that are guaranteed by the government, primarily\nFHA\/VA loans, from the asset quality metrics and ratios reflected on Tables 18 and 19, as these loans are recoverable through various\ngovernment guarantees. In addition, BB&T has recorded on the balance sheet Field: Page; Sequence: 56; Value: 2 \n\u00a0\ncertain amounts related to delinquent GNMA loans\nserviced for others that BB&T has the option, but not the obligation, to repurchase and has effectively regained control. These\namounts are also excluded from asset quality metrics as reimbursement of insured amounts is proceeding in accordance with investor\nguidelines. The amount of government guaranteed mortgage loans and GNMA loans serviced for others that have been excluded are noted\nin the footnotes to Table 18.\n\n\u00a0\nTable 18\n\u00a0\n\n\u00a0\nAsset Quality\n\u00a0\n\n\u00a0\n(Excluding Covered Assets)\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\nDecember 31,\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n2012\n\u00a0\n2011\n\u00a0\n2010\n\u00a0\n2009\n\u00a0\n2008\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n(Dollars in millions)\n\u00a0\n\n\u00a0\nNonaccrual loans and leases:\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\n\u00a0\n\u00a0\nCommercial\n$\n886\u00a0\n\u00a0\n\u00a0\n$\n1,352\u00a0\n\u00a0\n\u00a0\n$\n1,426\u00a0\n\u00a0\n\u00a0\n$\n1,651\u00a0\n\u00a0\n\u00a0\n$\n845\u00a0\n\u00a0\n\n\u00a0\n\u00a0\nDirect retail lending\n\u00a0\n132\u00a0\n\u00a0\n\u00a0\n\u00a0\n142\u00a0\n\u00a0\n\u00a0\n\u00a0\n191\u00a0\n\u00a0\n\u00a0\n\u00a0\n197\u00a0\n\u00a0\n\u00a0\n\u00a0\n89\u00a0\n\u00a0\n\n\u00a0\n\u00a0\nSales finance loans\n\u00a0\n7\u00a0\n\u00a0\n\u00a0\n\u00a0\n7\u00a0\n\u00a0\n\u00a0\n\u00a0\n6\u00a0\n\u00a0\n\u00a0\n\u00a0\n7\u00a0\n\u00a0\n\u00a0\n\u00a0\n7\u00a0\n\u00a0\n\n\u00a0\n\u00a0\nResidential mortgage loans (1)\n\u00a0\n269\u00a0\n\u00a0\n\u00a0\n\u00a0\n308\u00a0\n\u00a0\n\u00a0\n\u00a0\n466\u00a0\n\u00a0\n\u00a0\n\u00a0\n707\u00a0\n\u00a0\n\u00a0\n\u00a0\n358\u00a0\n\u00a0\n\n\u00a0\n\u00a0\nOther lending subsidiaries\n\u00a0\n86\u00a0\n\u00a0\n\u00a0\n\u00a0\n63\u00a0\n\u00a0\n\u00a0\n\u00a0\n60\u00a0\n\u00a0\n\u00a0\n\u00a0\n96\u00a0\n\u00a0\n\u00a0\n\u00a0\n97\u00a0\n\u00a0\n\n\u00a0\nTotal nonaccrual loans and leases held for investment\n\u00a0\n1,380\u00a0\n\u00a0\n\u00a0\n\u00a0\n1,872\u00a0\n\u00a0\n\u00a0\n\u00a0\n2,149\u00a0\n\u00a0\n\u00a0\n\u00a0\n2,658\u00a0\n\u00a0\n\u00a0\n\u00a0\n1,396\u00a0\n\u00a0\n\n\u00a0\n\u00a0\nNonaccrual LHFS\n\u00a0\n\u00a0\u2015\n\u00a0\n\u00a0\n\u00a0\n\u00a0\u2015\n\u00a0\n\u00a0\n\u00a0\n521\u00a0\n\u00a0\n\u00a0\n\u00a0\n5\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\u2015\n\u00a0\n\n\u00a0\nTotal nonaccrual loans and leases\n\u00a0\n1,380\u00a0\n\u00a0\n\u00a0\n\u00a0\n1,872\u00a0\n\u00a0\n\u00a0\n\u00a0\n2,670\u00a0\n\u00a0\n\u00a0\n\u00a0\n2,663\u00a0\n\u00a0\n\u00a0\n\u00a0\n1,396\u00a0\n\u00a0\n\n\u00a0\n\u00a0\nForeclosed real estate (2)\n\u00a0\n107\u00a0\n\u00a0\n\u00a0\n\u00a0\n536\u00a0\n\u00a0\n\u00a0\n\u00a0\n1,259\u00a0\n\u00a0\n\u00a0\n\u00a0\n1,451\u00a0\n\u00a0\n\u00a0\n\u00a0\n538\u00a0\n\u00a0\n\n\u00a0\n\u00a0\nOther foreclosed property\n\u00a0\n49\u00a0\n\u00a0\n\u00a0\n\u00a0\n42\u00a0\n\u00a0\n\u00a0\n\u00a0\n42\u00a0\n\u00a0\n\u00a0\n\u00a0\n58\u00a0\n\u00a0\n\u00a0\n\u00a0\n79\u00a0\n\u00a0\n\n\u00a0\nTotal NPAs (1)(2)\n$\n1,536\u00a0\n\u00a0\n\u00a0\n$\n2,450\u00a0\n\u00a0\n\u00a0\n$\n3,971\u00a0\n\u00a0\n\u00a0\n$\n4,172\u00a0\n\u00a0\n\u00a0\n$\n2,013\u00a0\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\n\u00a0\nLoans 90 days or more past due and still accruing:\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\n\u00a0\n\u00a0\nCommercial\n$\n1\u00a0\n\u00a0\n\u00a0\n$\n2\u00a0\n\u00a0\n\u00a0\n$\n20\u00a0\n\u00a0\n\u00a0\n$\n7\u00a0\n\u00a0\n\u00a0\n$\n86\u00a0\n\u00a0\n\n\u00a0\n\u00a0\nDirect retail lending\n\u00a0\n38\u00a0\n\u00a0\n\u00a0\n\u00a0\n56\u00a0\n\u00a0\n\u00a0\n\u00a0\n79\u00a0\n\u00a0\n\u00a0\n\u00a0\n87\u00a0\n\u00a0\n\u00a0\n\u00a0\n117\u00a0\n\u00a0\n\n\u00a0\n\u00a0\nSales finance loans\n\u00a0\n10\u00a0\n\u00a0\n\u00a0\n\u00a0\n18\u00a0\n\u00a0\n\u00a0\n\u00a0\n27\u00a0\n\u00a0\n\u00a0\n\u00a0\n30\u00a0\n\u00a0\n\u00a0\n\u00a0\n26\u00a0\n\u00a0\n\n\u00a0\n\u00a0\nRevolving credit loans\n\u00a0\n16\u00a0\n\u00a0\n\u00a0\n\u00a0\n17\u00a0\n\u00a0\n\u00a0\n\u00a0\n20\u00a0\n\u00a0\n\u00a0\n\u00a0\n25\u00a0\n\u00a0\n\u00a0\n\u00a0\n23\u00a0\n\u00a0\n\n\u00a0\n\u00a0\nResidential mortgage loans (3)(4)\n\u00a0\n92\u00a0\n\u00a0\n\u00a0\n\u00a0\n104\u00a0\n\u00a0\n\u00a0\n\u00a0\n143\u00a0\n\u00a0\n\u00a0\n\u00a0\n150\u00a0\n\u00a0\n\u00a0\n\u00a0\n158\u00a0\n\u00a0\n\n\u00a0\n\u00a0\nOther lending subsidiaries\n\u00a0\n10\u00a0\n\u00a0\n\u00a0\n\u00a0\n5\u00a0\n\u00a0\n\u00a0\n\u00a0\n6\u00a0\n\u00a0\n\u00a0\n\u00a0\n12\u00a0\n\u00a0\n\u00a0\n\u00a0\n14\u00a0\n\u00a0\n\n\u00a0\nTotal loans 90 days or more past due and still\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\n\u00a0\n\u00a0\naccruing (3)(4)(5)\n$\n167\u00a0\n\u00a0\n\u00a0\n$\n202\u00a0\n\u00a0\n\u00a0\n$\n295\u00a0\n\u00a0\n\u00a0\n$\n311\u00a0\n\u00a0\n\u00a0\n$\n424\u00a0\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\n\u00a0\nLoans 30-89 days past due:\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\n\u00a0\n\u00a0\nCommercial\n$\n56\u00a0\n\u00a0\n\u00a0\n$\n121\u00a0\n\u00a0\n\u00a0\n$\n315\u00a0\n\u00a0\n\u00a0\n$\n377\u00a0\n\u00a0\n\u00a0\n$\n594\u00a0\n\u00a0\n\n\u00a0\n\u00a0\nDirect retail lending\n\u00a0\n145\u00a0\n\u00a0\n\u00a0\n\u00a0\n162\u00a0\n\u00a0\n\u00a0\n\u00a0\n190\u00a0\n\u00a0\n\u00a0\n\u00a0\n222\u00a0\n\u00a0\n\u00a0\n\u00a0\n270\u00a0\n\u00a0\n\n\u00a0\n\u00a0\nSales finance loans\n\u00a0\n56\u00a0\n\u00a0\n\u00a0\n\u00a0\n75\u00a0\n\u00a0\n\u00a0\n\u00a0\n95\u00a0\n\u00a0\n\u00a0\n\u00a0\n126\u00a0\n\u00a0\n\u00a0\n\u00a0\n146\u00a0\n\u00a0\n\n\u00a0\n\u00a0\nRevolving credit loans\n\u00a0\n23\u00a0\n\u00a0\n\u00a0\n\u00a0\n22\u00a0\n\u00a0\n\u00a0\n\u00a0\n28\u00a0\n\u00a0\n\u00a0\n\u00a0\n32\u00a0\n\u00a0\n\u00a0\n\u00a0\n34\u00a0\n\u00a0\n\n\u00a0\n\u00a0\nResidential mortgage loans (6)(7)\n\u00a0\n498\u00a0\n\u00a0\n\u00a0\n\u00a0\n479\u00a0\n\u00a0\n\u00a0\n\u00a0\n532\u00a0\n\u00a0\n\u00a0\n\u00a0\n600\u00a0\n\u00a0\n\u00a0\n\u00a0\n665\u00a0\n\u00a0\n\n\u00a0\n\u00a0\nOther lending subsidiaries\n\u00a0\n290\u00a0\n\u00a0\n\u00a0\n\u00a0\n273\u00a0\n\u00a0\n\u00a0\n\u00a0\n248\u00a0\n\u00a0\n\u00a0\n\u00a0\n306\u00a0\n\u00a0\n\u00a0\n\u00a0\n313\u00a0\n\u00a0\n\n\u00a0\nTotal loans 30 - 89 days past due (6)(7)(8)\n$\n1,068\u00a0\n\u00a0\n\u00a0\n$\n1,132\u00a0\n\u00a0\n\u00a0\n$\n1,408\u00a0\n\u00a0\n\u00a0\n$\n1,663\u00a0\n\u00a0\n\u00a0\n$\n2,022\u00a0\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\n(1)Excludes nonaccrual mortgage loans that are government guaranteed totaling $55 million and $17 million as of 2009 and 2008,\nrespectively. BB&T revised its nonaccrual policy related to FHA\/VA guaranteed loans during 2010. The change in policy resulted\nin a decrease in nonaccrual mortgage loans and an increase in mortgage loans 90 days past due and still accruing of approximately\n$79 million.\n(2)Excludes covered foreclosed real estate totaling $254 million, $378 million, $313 million and $160 million at December 31,\n2012, 2011, 2010 and 2009, respectively.\n(3)Excludes mortgage loans guaranteed by GNMA that are 90 days or more past due totaling $517 million, $426 million, $425 million,\n$337 million and $74 million at December 31, 2012, 2011, 2010, 2009 and 2008, respectively.\n(4)Excludes mortgage loans past due 90 days or more that are government guaranteed totaling $254 million, $206 million, $153 million,\n$8 million and $7 million at December 31, 2012, 2011, 2010, 2009 and 2008, respectively. Includes past due mortgage LHFS.\n(5)Excludes covered loans past due 90 days or more totaling $442 million, $736 million, $1.1 billion and $1.4 billion at December\n31, 2012, 2011, 2010 and 2009, respectively.\n(6)Excludes mortgage loans guaranteed by GNMA that are past due 30-89 days totaling $5 million, $7 million, $7 million, $10 million\nand $12 million at December 31, 2012, 2011, 2010, 2009 and 2008, respectively. Field: Page; Sequence: 57; Value: 2 (7)Excludes mortgage loans past due 30-89 days that are government guaranteed totaling $96 million, $91 million, $83 million,\n$23 million and $25 million at December 31, 2012, 2011, 2010, 2009 and 2008, respectively. Includes past due mortgage LHFS.\n(8)Excludes covered loans past due 30-89 days totaling $135 million, $222 million, $363 million and $391 million at December 31,\n2012, 2011, 2010 and 2009, respectively.Loans 90 days or more past due and still accruing\ninterest, excluding government guaranteed loans and covered loans, totaled $167 million at December 31, 2012, compared with $202\nmillion at year-end 2011, a decline of 17.3%. Loans 30-89 days past due, excluding government guaranteed loans and covered loans,\ntotaled $1.1 billion at December 31, 2012, which was a decline of $64 million, or 5.7% compared to year-end 2011. Excluding government\nguaranteed loans and covered loans, BB&T\u2019s past due asset quality metrics are essentially at normalized levels.","markdown_table":"\n\n| Table 17 | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| Rollforward of NPAs | | | | | | | | | | | | |\n| | | | | | | | | | | | | |\n| | | | | | | | Years Ended December 31, | | | | | |\n| | | | | | | | 2012 | | | 2011 | | |\n| | | | | | | | (Dollars in millions) | | | | | |\n| | Balance at beginning of year | | | | | | $ | 2,450 | | $ | 3,971 | |\n| | | New NPAs | | | | | | 2,449 | | | 3,216 | |\n| | | Advances and principal increases | | | | | | 161 | | | 120 | |\n| | | Disposals of foreclosed property | | | | | | (737) | | | (1,062) | |\n| | | Loan sales (1) | | | | | | (754) | | | (1,139) | |\n| | | Charge-offs and losses | | | | | | (1,002) | | | (1,719) | |\n| | | Payments | | | | | | (669) | | | (634) | |\n| | | Transfers to performing status | | | | | | (392) | | | (303) | |\n| | | Other, net | | | | | | 30 | | | \u2015 | |\n| | Balance at end of year | | | | | | $ | 1,536 | | $ | 2,450 | |\n| | | | | | | | | | | | | |\n| (1) | Includes charge-offs and losses recorded upon sale of $219 million and $241 million for the years ended December 31, 2012 and 2011, respectively. | | | | | | | | | | | |\n\n","source":"TFC\/10-K\/0000092230-13-000023"} {"title":"LHFS","text":"(1)Excludes mortgage loans guaranteed by GNMA. Refer to the footnotes of preceding table for related amounts.\n(2)Excludes mortgage loans guaranteed by the government. Refer to the footnotes of preceding table for related amounts.\n(3)Net charge-offs for 2011 and 2010 include $695 million and $236 million, respectively, related to BB&T\u2019s NPA disposition\nstrategy. In connection with this strategy, approximately $271 million and $1.9 billion of problem loans Field: Page; Sequence: 58; Value: 2 \n\u00a0\n\u00a0were transferred from\nloans held for investment to LHFS in 2011 and 2010, respectively. The disposition of all such loans was complete as of December\n31, 2011.\n(4)These asset quality ratios have been adjusted to remove the impact of covered loans and covered foreclosed property. Appropriate\nadjustments to the numerator and denominator have been reflected in the calculation of these ratios.BB&T\u2019s potential problem loans include loans on nonaccrual\nstatus or past due as disclosed in Table 18. In addition, for its commercial portfolio segment, loans that are rated special mention\nor substandard performing are closely monitored by management as potential problem loans. Refer to Note 4 \u201cAllowance for\nCredit Losses\u201d in the \u201cNotes to Consolidated Financial Statements\u201d herein for additional disclosures related\nto these potential problem loans.TDRs generally occur when a borrower is experiencing, or\nis expected to experience, financial difficulties in the near-term. As a result, BB&T will work with the borrower to prevent\nfurther difficulties, and ultimately to improve the likelihood of recovery on the loan. To facilitate this process, a concessionary\nmodification that would not otherwise be considered may be granted resulting in classification of the loan as a TDR. Refer to Note\n1 \u201cSummary of Significant Accounting Policies\u201d in the \u201cNotes to Consolidated Financial Statements\u201d for\nadditional policy information regarding TDRs.BB&T\u2019s performing TDRs, excluding government guaranteed\nmortgage loans, totaled $1.3 billion at December 31, 2012, an increase of $218 million, or 19.7%, compared with December 31, 2011.\nThis increase was attributable to guidance issued by a national bank regulatory agency during 2012 that requires certain loans,\nwhich have been discharged in bankruptcy and not reaffirmed by the borrower, to be accounted for as a TDR and possibly as nonperforming,\nregardless of their actual payment history and expected performance. BB&T\u2019s primary regulators have not formalized how\nthis guidance will be applied to the entities that it regulates. However, based on a preliminary interpretation of this guidance,\nBB&T classified $226 million of performing loans across all loan portfolios as TDRs during the fourth quarter of 2012. Approximately\n77% of these loans have been current for two years or more and approximately 92% are less than 60 days past due. As a result, BB&T\nconcluded that it has a reasonable expectation of collection of principal and interest and therefore has classified these TDRs\nas performing. BB&T\u2019s exposure to the expected collateral shortfall has been considered in the ALLL recorded at December\n31, 2012.In addition, BB&T classified approximately $44 million\nof loans already on nonaccrual status as TDRs as a result of regulatory guidance described above. The classification of these loans\nas TDRs had an insignificant impact on the allowance as these loans had been previously charged down to their estimated collateral\nvalue less costs to sell.The following table provides a summary of performing TDR\nactivity during the years ended December 31, 2012 and 2011.","markdown_table":"\n\n| Table 19 | | | | | | | | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| Asset Quality Ratios | | | | | | | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | | | | | |\n| | | | | As Of \/ For The Years Ended December 31, | | | | | | | | | | | | | | |\n| | | | | 2012 | | | 2011 | | | 2010 | | | 2009 | | | 2008 | | |\n| Asset Quality Ratios (including amounts related to | | | | | | | | | | | | | | | | | | |\n| | covered loans and covered foreclosed property): | | | | | | | | | | | | | | | | | |\n| | Loans 30 - 89 days past due and still accruing as a | | | | | | | | | | | | | | | | | |\n| | | percentage of total loans and leases (1)(2) | | 1.02 | % | | 1.22 | % | | 1.65 | % | | 1.93 | % | | 2.05 | % | |\n| | Loans 90 days or more past due and still accruing as a | | | | | | | | | | | | | | | | | |\n| | | percentage of total loans and leases (1)(2) | | 0.52 | | | 0.84 | | | 1.34 | | | 1.60 | | | 0.43 | | |\n| | Nonperforming loans and leases as a percentage of total | | | | | | | | | | | | | | | | | |\n| | | loans and leases | | 1.17 | | | 1.68 | | | 2.49 | | | 2.51 | | | 1.42 | | |\n| | NPAs as a percentage of: | | | | | | | | | | | | | | | | | |\n| | | Total assets | | 0.97 | | | 1.62 | | | 2.73 | | | 2.61 | | | 1.32 | | |\n| | | Loans and leases plus foreclosed property | | 1.51 | | | 2.52 | | | 3.94 | | | 4.02 | | | 2.03 | | |\n| | Net charge-offs as a percentage of average loans | | | | | | | | | | | | | | | | | |\n| | | and leases (3) | | 1.14 | | | 1.57 | | | 2.41 | | | 1.74 | | | 0.89 | | |\n| | ALLL as a percentage of loans and leases | | | | | | | | | | | | | | | | | |\n| | | held for investment | | 1.76 | | | 2.10 | | | 2.62 | | | 2.51 | | | 1.62 | | |\n| | Ratio of ALLL to: | | | | | | | | | | | | | | | | | |\n| | | Net charge-offs (3) | | 1.56 | x | | 1.36 | x | | 1.07 | x | | 1.47 | x | | 1.85 | x | |\n| | | Nonperforming loans and leases held for investment | | 1.46 | | | 1.21 | | | 1.26 | | | 0.98 | | | 1.13 | | |\n| | | | | | | | | | | | | | | | | | | |\n| Asset Quality Ratios (excluding amounts related to | | | | | | | | | | | | | | | | | | |\n| | covered loans and covered foreclosed property): (4) | | | | | | | | | | | | | | | | | |\n| | Loans 30 - 89 days past due and still accruing as a | | | | | | | | | | | | | | | | | |\n| | | percentage of total loans and leases (1)(2) | | 0.93 | % | | 1.06 | % | | 1.39 | % | | 1.69 | % | | 2.05 | % | |\n| | Loans 90 days or more past due and still accruing as a | | | | | | | | | | | | | | | | | |\n| | | percentage of total loans and leases (1)(2) | | 0.15 | | | 0.19 | | | 0.29 | | | 0.32 | | | 0.43 | | |\n| | Nonperforming loans and leases as a percentage of total | | | | | | | | | | | | | | | | | |\n| | | loans and leases | | 1.20 | | | 1.76 | | | 2.64 | | | 2.71 | | | 1.42 | | |\n| | NPAs as a percentage of: | | | | | | | | | | | | | | | | | |\n| | | Total assets | | 0.85 | | | 1.45 | | | 2.64 | | | 2.65 | | | 1.32 | | |\n| | | Loans and leases plus foreclosed property | | 1.33 | | | 2.29 | | | 3.88 | | | 4.18 | | | 2.03 | | |\n| | Net charge-offs as a percentage of average loans | | | | | | | | | | | | | | | | | |\n| | | and leases (3) | | 1.15 | | | 1.59 | | | 2.59 | | | 1.79 | | | 0.89 | | |\n| | ALLL as a percentage of | | | | | | | | | | | | | | | | | |\n| | | loans and leases held for investment | | 1.70 | | | 2.05 | | | 2.63 | | | 2.72 | | | 1.62 | | |\n| | Ratio of ALLL to: | | | | | | | | | | | | | | | | | |\n| | | Net charge-offs (3) | | 1.50 | x | | 1.32 | x | | 1.01 | x | | 1.47 | x | | 1.85 | x | |\n| | | Nonperforming loans and leases held for investment | | 1.37 | | | 1.13 | | | 1.19 | | | 0.98 | | | 1.13 | | |\n| | | | | | | | | | | | | | | | | | | |\n\n","source":"TFC\/10-K\/0000092230-13-000023"} {"title":"LHFS","text":"Payments and payoffs represent cash received from borrowers\nin connection with scheduled principal payments, prepayments and payoffs of amounts outstanding. Transfers to nonperforming TDRs\nrepresent loans that no longer meet the requirements necessary to reflect the loan in accruing status and as a result are subsequently\nclassified as a nonperforming TDR.TDRs may be removed due to the passage of time if they: (1)\ndid not include a forgiveness of principal or interest, (2) have performed in accordance with the modified terms (generally a minimum\nof six months), (3) were reported as a TDR over a year end reporting period, and (4) reflected an interest rate on the modified\nloan that was no less than a market rate at the date of modification. These loans were previously considered TDRs as a result of\nstructural concessions such as extended interest-only terms or an amortization period that did not otherwise conform to normal\nunderwriting guidelines. Field: Page; Sequence: 59; Value: 2 In addition, certain transactions may be removed from classification\nas a TDR as a result of a subsequent non-concessionary re-modification. Non-concessionary re-modifications represent TDRs that\ndid not contain concessionary terms at the date of a subsequent renewal\/modification and there was a reasonable expectation that\nthe borrower would continue to comply with the terms of the loan subsequent to the date of the re-modification. A re-modification\nmay be considered for such a re-classification if the loan has not had a forgiveness of principal or interest and the modified\nterms qualify as more than minor such that the re-modified loan is considered a new loan. Alternatively, such loans may be considered\nfor reclassification in years subsequent to the date of the re-modification based on the passage of time as described in the preceding\nparagraph.In connection with consumer loan TDRs, a NPL will be returned\nto accruing status when current as to principal and interest and upon a sustained historical repayment performance (generally a\nminimum of six months).The following table provides further details regarding the\npayment status of TDRs outstanding at December 31, 2012:\n\n\u00a0\nTable 21\n\u00a0\n\n\u00a0\nTroubled Debt Restructurings\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0December 31, 2012\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\nPast Due\n\u00a0\nPast Due\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\nCurrent Status\n\u00a0\n30-89 Days (1)\n\u00a0\n90 Days Or More (1)\n\u00a0\nTotal\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n(Dollars in millions)\n\u00a0\n\n\u00a0\nPerforming TDRs:\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\n\u00a0\n\u00a0\nCommercial loans:\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\nCommercial and industrial\n$\n76\u00a0\n\u00a0\n98.7\u00a0\n%\n\u00a0\n$\n1\u00a0\n\u00a0\n1.3\u00a0\n%\n\u00a0\n$\n\u00a0\u2015\n\u00a0\n\u00a0\u2015\n%\n\u00a0\n$\n77\u00a0\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\nCRE - other\n\u00a0\n67\u00a0\n\u00a0\n100.0\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\u2015\n\u00a0\n\u00a0\u2015\n\u00a0\n\u00a0\n\u00a0\n\u00a0\u2015\n\u00a0\n\u00a0\u2015\n\u00a0\n\u00a0\n\u00a0\n67\u00a0\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\nCRE - residential ADC\n\u00a0\n21\u00a0\n\u00a0\n100.0\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\u2015\n\u00a0\n\u00a0\u2015\n\u00a0\n\u00a0\n\u00a0\n\u00a0\u2015\n\u00a0\n\u00a0\u2015\n\u00a0\n\u00a0\n\u00a0\n21\u00a0\n\u00a0\n\n\u00a0\n\u00a0\nDirect retail lending\n\u00a0\n183\u00a0\n\u00a0\n92.9\u00a0\n\u00a0\n\u00a0\n\u00a0\n12\u00a0\n\u00a0\n6.1\u00a0\n\u00a0\n\u00a0\n\u00a0\n2\u00a0\n\u00a0\n1.0\u00a0\n\u00a0\n\u00a0\n\u00a0\n197\u00a0\n\u00a0\n\n\u00a0\n\u00a0\nSales finance\n\u00a0\n16\u00a0\n\u00a0\n84.2\u00a0\n\u00a0\n\u00a0\n\u00a0\n2\u00a0\n\u00a0\n10.5\u00a0\n\u00a0\n\u00a0\n\u00a0\n1\u00a0\n\u00a0\n5.3\u00a0\n\u00a0\n\u00a0\n\u00a0\n19\u00a0\n\u00a0\n\n\u00a0\n\u00a0\nRevolving credit\n\u00a0\n45\u00a0\n\u00a0\n80.4\u00a0\n\u00a0\n\u00a0\n\u00a0\n5\u00a0\n\u00a0\n8.9\u00a0\n\u00a0\n\u00a0\n\u00a0\n6\u00a0\n\u00a0\n10.7\u00a0\n\u00a0\n\u00a0\n\u00a0\n56\u00a0\n\u00a0\n\n\u00a0\n\u00a0\nResidential mortgage (2)\n\u00a0\n643\u00a0\n\u00a0\n83.6\u00a0\n\u00a0\n\u00a0\n\u00a0\n106\u00a0\n\u00a0\n13.8\u00a0\n\u00a0\n\u00a0\n\u00a0\n20\u00a0\n\u00a0\n2.6\u00a0\n\u00a0\n\u00a0\n\u00a0\n769\u00a0\n\u00a0\n\n\u00a0\n\u00a0\nOther lending subsidiaries\n\u00a0\n104\u00a0\n\u00a0\n86.0\u00a0\n\u00a0\n\u00a0\n\u00a0\n17\u00a0\n\u00a0\n14.0\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\u2015\n\u00a0\n\u00a0\u2015\n\u00a0\n\u00a0\n\u00a0\n121\u00a0\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\nTotal performing TDRs (2)\n\u00a0\n1,155\u00a0\n\u00a0\n87.0\u00a0\n\u00a0\n\u00a0\n\u00a0\n143\u00a0\n\u00a0\n10.8\u00a0\n\u00a0\n\u00a0\n\u00a0\n29\u00a0\n\u00a0\n2.2\u00a0\n\u00a0\n\u00a0\n\u00a0\n1,327\u00a0\n\u00a0\n\n\u00a0\nNonperforming TDRs (3)\n\u00a0\n60\u00a0\n\u00a0\n25.0\u00a0\n\u00a0\n\u00a0\n\u00a0\n24\u00a0\n\u00a0\n10.0\u00a0\n\u00a0\n\u00a0\n\u00a0\n156\u00a0\n\u00a0\n65.0\u00a0\n\u00a0\n\u00a0\n\u00a0\n240\u00a0\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\nTotal TDRs (2)\n$\n1,215\u00a0\n\u00a0\n77.5\u00a0\n\u00a0\n\u00a0\n$\n167\u00a0\n\u00a0\n10.7\u00a0\n\u00a0\n\u00a0\n$\n185\u00a0\n\u00a0\n11.8\u00a0\n\u00a0\n\u00a0\n$\n1,567\u00a0\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\n(1)Past due performing TDRs are included in past due disclosures.\n(2)Excludes mortgage TDRs that are government guaranteed totaling $315 million.\n(3)Nonperforming TDRs are included in nonaccrual loan disclosures.","markdown_table":"\n\n| Table 20 | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| Rollforward of Performing TDRs | | | | | | | | | | | | |\n| | | | | | | | | | | | | |\n| | | | | | | | Years Ended December 31, | | | | | |\n| | | | | | | | | 2012 | | | 2011 | |\n| | | | | | | | (Dollars in millions) | | | | | |\n| | Balance at beginning of year | | | | | | $ | 1,109 | | $ | 1,476 | |\n| | | Inflows | | | | | | 417 | | | 395 | |\n| | | Change in regulatory guidance | | | | | | 226 | | | \u2015 | |\n| | | Payments and payoffs | | | | | | (187) | | | (334) | |\n| | | Chargeoffs | | | | | | (36) | | | (43) | |\n| | | Transfers from (to) nonperforming TDRs, net | | | | | | (50) | | | (206) | |\n| | | Removal due to the passage of time | | | | | | (109) | | | (105) | |\n| | | Non-concessionary re-modifications | | | | | | (43) | | | (74) | |\n| | Balance at end of year | | | | | | $ | 1,327 | | $ | 1,109 | |\n\n","source":"TFC\/10-K\/0000092230-13-000023"} {"title":"ACL","text":"Information related to BB&T\u2019s ALLL for the last\nfive years is presented in the following table. Field: Page; Sequence: 61; Value: 2","markdown_table":"\n\n| Table 22 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| Allocation of ALLL by Category | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | | | | December 31, | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | | | | 2012 | | | | | | 2011 | | | | | | 2010 | | | | | | 2009 | | | | | | 2008 | | | | |\n| | | | | | | | % Loans | | | | | | % Loans | | | | | | % Loans | | | | | | % Loans | | | | | | % Loans | |\n| | | | | | | | in each | | | | | | in each | | | | | | in each | | | | | | in each | | | | | | in each | |\n| | | | | Amount | | | category | | | Amount | | | category | | | Amount | | | category | | | Amount | | | category | | | Amount | | | category | |\n| | | | | (Dollars in millions) | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Balances at end of period applicable to: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | Commercial | | | $ | 774 | | 44.5 | % | | $ | 1,053 | | 45.7 | % | | $ | 1,536 | | 47.1 | % | | $ | 1,574 | | 48.2 | % | | $ | 912 | | 51.9 | % |\n| | Direct retail lending | | | | 300 | | 13.8 | | | | 232 | | 13.5 | | | | 246 | | 13.3 | | | | 297 | | 13.8 | | | | 124 | | 15.9 | |\n| | Sales finance | | | | 29 | | 6.8 | | | | 38 | | 6.9 | | | | 47 | | 6.8 | | | | 77 | | 6.1 | | | | 55 | | 6.5 | |\n| | Revolving credit | | | | 102 | | 2.0 | | | | 112 | | 2.1 | | | | 109 | | 2.1 | | | | 127 | | 1.9 | | | | 94 | | 1.8 | |\n| | Residential mortgage | | | | 328 | | 21.2 | | | | 365 | | 19.2 | | | | 298 | | 17.0 | | | | 131 | | 14.9 | | | | 91 | | 17.6 | |\n| | Other lending subsidiaries | | | | 277 | | 8.8 | | | | 197 | | 8.1 | | | | 198 | | 7.7 | | | | 264 | | 7.4 | | | | 238 | | 6.3 | |\n| | Covered | | | | 128 | | 2.9 | | | | 149 | | 4.5 | | | | 144 | | 6.0 | | | | \u2015 | | 7.7 | | | | \u2015 | | \u2015 | |\n| | Unallocated | | | | 80 | | \u2015 | | | | 110 | | \u2015 | | | | 130 | | \u2015 | | | | 130 | | \u2015 | | | | 60 | | \u2015 | |\n| | | Total ALLL | | | 2,018 | | 100.0 | % | | | 2,256 | | 100.0 | % | | | 2,708 | | 100.0 | % | | | 2,600 | | 100.0 | % | | | 1,574 | | 100.0 | % |\n| | | RUFC | | | 30 | | | | | | 29 | | | | | | 47 | | | | | | 72 | | | | | | 33 | | | |\n| | | Total ACL | | $ | 2,048 | | | | | $ | 2,285 | | | | | $ | 2,755 | | | | | $ | 2,672 | | | | | $ | 1,607 | | | |\n\n","source":"TFC\/10-K\/0000092230-13-000023"} {"title":"ACL","text":"Funding Activities Deposits are the primary source of funds for lending and\ninvesting activities. Scheduled payments, as well as prepayments, and maturities from portfolios of loans and investment securities\nalso provide a stable source of funds. FHLB advances, other secured borrowings, Federal funds purchased and other short-term borrowed\nfunds, as well as longer-term debt issued through the capital markets, all provide supplemental liquidity sources. BB&T\u2019s\nfunding activities are monitored and governed through BB&T\u2019s overall asset\/liability management process, which is further\ndiscussed in the \u201cMarket Risk Management\u201d section in \u201cManagement\u2019s Discussion and Analysis of Financial\nCondition and Results of Operations\u201d herein. Following is a brief description of the various sources of funds used by BB&T.Deposits Deposits are attracted principally from clients within BB&T\u2019s\nbranch network through the offering of a broad selection of deposit instruments to individuals and businesses, including noninterest-bearing\nchecking accounts, interest-bearing checking accounts, savings accounts, money market deposit accounts, CDs and individual retirement\naccounts. Deposit account terms vary with respect to the minimum balance required, the time period the funds must remain on deposit\nand service charge schedules. Interest rates paid on specific deposit types are determined based on (i)\u00a0the interest rates\noffered by competitors, (ii)\u00a0the anticipated amount and timing of funding needs, (iii)\u00a0the availability and cost of alternative\nsources of funding, and (iv)\u00a0anticipated future economic conditions and interest rates. Deposits are attractive sources of\nfunding because of their Field: Page; Sequence: 62; Value: 2 stability and relative cost. Deposits are regarded as an important part of the overall client relationship\nand provide opportunities to cross-sell other BB&T services.Total deposits at December\u00a031, 2012, were $133.1 billion,\nan increase of $8.1 billion, or 6.5%, compared to year-end 2011. Noninterest-bearing deposits totaled $32.5 billion at December\n31, 2012, an increase of $6.8 billion, or 26.4%, from December 31, 2011. The increase in noninterest-bearing deposits was broad\nbased in nature, with increases in deposits from personal, business and public funds clients. Interest checking and money market\nand savings accounts increased $3.7 billion, or 5.6% compared to the prior year, while certificates and other time deposits declined\n$2.3 billion, or 6.7%, during that same time period. For the year ended December\u00a031, 2012, total deposits averaged $127.6\nbillion, an increase of $15.3 billion, or 13.6%, compared to 2011. Management currently expects more modest deposit growth in the\nfirst quarter of 2013.The following table presents BB&T\u2019s average deposits\nfor the years ended December\u00a031, 2012 and 2011, segregated by major category:","markdown_table":"\n\n| Table 23 | | | | | | | | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| Analysis of ACL | | | | | | | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | | | | | | |\n| | | | | | December 31, | | | | | | | | | | | | | | |\n| | | | | | 2012 | | | 2011 | | | 2010 | | | 2009 | | | 2008 | | |\n| | | | | | | **(Dollars in millions)** | | | | | | | | | | | | | |\n| | Beginning balance | | | | $ | 2,285 | | $ | 2,755 | | $ | 2,672 | | $ | 1,607 | | $ | 1,015 | |\n| | Provision for credit losses (excluding covered loans) | | | | | 1,044 | | | 1,119 | | | 2,494 | | | 2,811 | | | 1,445 | |\n| | Provision for covered loans | | | | | 13 | | | 71 | | | 144 | | | \u2015 | | | \u2015 | |\n| | | Charge-offs: | | | | | | | | | | | | | | | | | |\n| | | | Commercial (1) | | | (732) | | | (898) | | | (1,508) | | | (720) | | | (276) | |\n| | | | Direct retail lending | | | (224) | | | (276) | | | (338) | | | (349) | | | (156) | |\n| | | | Sales finance | | | (26) | | | (32) | | | (48) | | | (72) | | | (59) | |\n| | | | Revolving credit | | | (81) | | | (95) | | | (118) | | | (127) | | | (79) | |\n| | | | Residential mortgage (2) | | | (136) | | | (269) | | | (394) | | | (280) | | | (96) | |\n| | | | Other lending subsidiaries | | | (225) | | | (190) | | | (252) | | | (314) | | | (251) | |\n| | | | Covered loans | | | (34) | | | (66) | | | \u2015 | | | \u2015 | | | \u2015 | |\n| | | | | Total charge-offs (1)(2) | | (1,458) | | | (1,826) | | | (2,658) | | | (1,862) | | | (917) | |\n| | | | | | | | | | | | | | | | | | | | |\n| | | Recoveries: | | | | | | | | | | | | | | | | | |\n| | | | Commercial | | | 71 | | | 71 | | | 37 | | | 21 | | | 16 | |\n| | | | Direct retail lending | | | 36 | | | 37 | | | 33 | | | 19 | | | 12 | |\n| | | | Sales finance | | | 10 | | | 9 | | | 9 | | | 9 | | | 7 | |\n| | | | Revolving credit | | | 18 | | | 19 | | | 16 | | | 12 | | | 11 | |\n| | | | Residential mortgage | | | 3 | | | 5 | | | 4 | | | 5 | | | 1 | |\n| | | | Other lending subsidiaries | | | 26 | | | 25 | | | 31 | | | 23 | | | 19 | |\n| | | | | Total recoveries | | 164 | | | 166 | | | 130 | | | 89 | | | 66 | |\n| | Net charge-offs (1)(2) | | | | | (1,294) | | | (1,660) | | | (2,528) | | | (1,773) | | | (851) | |\n| | Other changes, net | | | | | \u2015 | | | \u2015 | | | (27) | | | 27 | | | (2) | |\n| | Ending balance | | | | $ | 2,048 | | $ | 2,285 | | $ | 2,755 | | $ | 2,672 | | $ | 1,607 | |\n| | | | | | | | | | | | | | | | | | | | |\n| | ALLL (excluding covered loans) | | | | $ | 1,890 | | $ | 2,107 | | $ | 2,564 | | $ | 2,600 | | $ | 1,574 | |\n| | Allowance for covered loans | | | | | 128 | | | 149 | | | 144 | | | \u2015 | | | \u2015 | |\n| | RUFC | | | | | 30 | | | 29 | | | 47 | | | 72 | | | 33 | |\n| | | Total ACL | | | $ | 2,048 | | $ | 2,285 | | $ | 2,755 | | $ | 2,672 | | $ | 1,607 | |\n| | | | | | | | | | | | | | | | | | | | |\n| (1) | Includes charge-offs of $464 million in commercial loans and leases during 2010 in connection with BB&T's NPL disposition strategy. | | | | | | | | | | | | | | | | | | |\n| (2) | Includes charge-offs of $87 million and $141 million in residential mortgage loans during 2011 and 2010, respectively, in connection with BB&T's NPL disposition strategy. | | | | | | | | | | | | | | | | | | |\n\n","source":"TFC\/10-K\/0000092230-13-000023"} {"title":"ACL","text":"The overall mix of deposits improved during 2012, with average\nnoninterest-bearing deposits representing 22.7% of average total deposits during 2012, compared to 20.4% during 2011. Deposit mix\nwas also positively impacted by certificates and other time deposits, which represented 24.8% of average total deposits during\n2012, down from 25.7% of average total deposits during 2011. The average cost of interest-bearing deposits was 0.43% for 2012,\ncompared to 0.68% in the prior year. Management expects that deposit costs will continue to trend downward in 2013.The following table provides information regarding the scheduled\nmaturities of time deposits that are $100,000 and greater at December\u00a031, 2012:","markdown_table":"\n\n| Table 24 | | | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| Composition of Average Deposits | | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | |\n| | | | Years Ended December 31, | | | | | | | | | | | |\n| | | | 2012 | | | | | | 2011 | | | | | |\n| | | | Balance | | | % of total | | | Balance | | | % of total | | |\n| | | | (Dollars in millions) | | | | | | | | | | | |\n| | Noninterest-bearing deposits | | $ | 28,925 | | 22.7 | % | | $ | 22,945 | | 20.4 | % | |\n| | Interest checking | | | 19,904 | | 15.6 | | | | 18,614 | | 16.6 | | |\n| | Money market and savings | | | 46,927 | | 36.7 | | | | 41,287 | | 36.7 | | |\n| | Certificates and other time deposits | | | 31,647 | | 24.8 | | | | 28,825 | | 25.7 | | |\n| | Foreign office deposits - interest-bearing | | | 214 | | 0.2 | | | | 647 | | 0.6 | | |\n| | | Total average deposits | $ | 127,617 | | 100.0 | % | | $ | 112,318 | | 100.0 | % | |\n\n","source":"TFC\/10-K\/0000092230-13-000023"} {"title":"ACL","text":"Short-term Borrowings BB&T also uses\nvarious types of short-term borrowings in meeting funding needs. While deposits remain the primary source for funding loan\noriginations, management uses short-term borrowings as a supplementary funding source for loan growth and other balance sheet\nmanagement purposes. Short-term borrowings were 1.9% of total funding on average in 2012 as compared to 3.2% in 2011. See\nNote 8 \u201cFederal Funds Purchased, Securities Sold Under Agreements to Repurchase and Short-Term Borrowed Funds\u201d in\nthe \u201cNotes to Consolidated Financial Statements\u201d herein for further disclosure. The types of short-term\nborrowings that have been, or may be, used by the Company include Federal funds purchased, securities sold under repurchase\nagreements, master notes, commercial paper, U.S. Treasury tax and loan deposit notes and short-term bank notes. All of\nBB&T\u2019s securities sold under repurchase agreements are reflected as collateralized borrowings on the balance sheet.\nShort-term borrowings at the end of 2012 were $2.9 billion, a decrease of $702 million, or 19.7%, compared to year- Field: Page; Sequence: 63; Value: 2 end 2011.\nAverage short-term borrowings totaled $3.4 billion during 2012 compared to $5.2 billion last year, a decrease of 34.3%. The\ndecline in the balances during 2012 primarily reflects the strong deposit growth described previously.The following table summarizes certain pertinent information\nfor the past three years with respect to BB&T\u2019s short-term borrowings:","markdown_table":"\n\n| | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| Table 25 | | | | | | | | | | | |\n| Scheduled Maturities of Time Deposits $100,000 and Greater | | | | | | | | | | | |\n| | | | | | | | | | | | |\n| | | | | | | | | | December 31, 2012 | | |\n| | | | | | | | | | (Dollars in millions) | | |\n| | Three months or less | | | | | | | | $ | 7,675 | |\n| | Over three through six months | | | | | | | | | 4,163 | |\n| | Over six through twelve months | | | | | | | | | 3,054 | |\n| | Over twelve months | | | | | | | | | 4,436 | |\n| | | Total | | | | | | | $ | 19,328 | |\n\n","source":"TFC\/10-K\/0000092230-13-000023"} {"title":"ACL","text":"Long-term Debt BB&T uses long-term debt to provide both funding and,\nto a lesser extent, regulatory capital. During 2012, long-term debt represented 11.6% of average total funding, compared to 13.7%\nduring 2011. At December 31, 2012, long-term debt totaled $19.1 billion, a decrease of $2.7 billion compared to year-end 2011.\nThe average cost of long-term debt was 3.02% in 2012, compared to 3.40% in 2011. See Note 10 \u201cLong-Term Debt\u201d in the\n\u201cNotes to Consolidated Financial Statements\u201d herein for further disclosure.BB&T\u2019s long-term debt consists primarily of FHLB\nadvances, which represented 47.1% of total outstanding long-term debt at December\u00a031, 2012; senior notes of BB&T, which\nrepresented 31.6% of the year-end balance; subordinated notes of BB&T, which represented 11.3% of the year-end balance; and\nsubordinated notes of Branch Bank, which represented 6.4% of total outstanding long-term debt at December\u00a031, 2012. FHLB advances\nare cost-effective long-term funding sources that provide BB&T with the flexibility to structure the debt in a manner that\naids in the management of interest rate risk and liquidity.The decrease in long-term\ndebt reflects the redemption of $3.3 billion of junior subordinated debt and the maturity of $1.0 billion in senior debt. The redemption\nof the junior subordinated debt was initiated based on the early redemption provisions of the related trust preferred securities\ndue to the fact that they will no longer qualify for Tier 1 capital treatment. These decreases in long-term\ndebt were partially offset by the issuance of $2.3 billion of senior and subordinated notes with interest rates ranging from 1.45%\nto 3.95%. Shareholders\u2019 Equity Shareholders\u2019 equity totaled $21.2 billion at December\u00a031,\n2012, an increase of $3.7 billion, or 21.4%, from year-end 2011. BB&T\u2019s book value per common share at December\u00a031,\n2012 was $27.21, compared to $24.98 at December\u00a031, 2011.The increase in shareholders\u2019 equity during 2012 includes\n$2.1 billion in net proceeds from the issuance of Tier 1 qualifying non-cumulative perpetual preferred stock. See Note 11 \u201cShareholders\u2019\nEquity\u201d in the \u201cNotes to Consolidated Financial Statements\u201d herein for further disclosure. In addition, shareholders\u2019\nequity increased $1.4 billion due to BB&T\u2019s earnings available to common shareholders retained after dividends declared,\nand $113 million as a result of the issuance of additional shares and other transactions in connection with BB&T\u2019s equity-based\ncompensation plans, 401(k) plan and dividend reinvestment plan. Accumulated other comprehensive income increased $154 million.\nThe increase in accumulated other comprehensive income was primarily due to a $335 million after-tax increase in the value of the\navailable for sale securities Field: Page; Sequence: 64; Value: 2 portfolio, partially offset by declines of $111 million related to pensions and other post-retirement\nbenefit plans and $61 million related to an increase in amounts attributable to the FDIC under loss share agreements.BB&T\u2019s tangible book value per common share at\nDecember\u00a031, 2012 was $17.52 compared to $16.73 at December\u00a031, 2011. As of December\u00a031, 2012, measures of tangible\ncapital were not required by the regulators and, therefore, were considered non-GAAP measures. Refer to the section titled \u201cCapital\u201d\nherein for a discussion of how BB&T calculates and uses these measures in the evaluation of the Company.Risk Management In the normal course of business BB&T encounters inherent\nrisk in its business activities. Risk is managed on a decentralized basis with risk decisions made as closely as possible to where\nthe source of risk occurs. Centrally, risk oversight is managed at the corporate level through oversight, policies and reporting.\nThe principal types of inherent risk include regulatory, credit, liquidity, market, operational, reputation and strategic risks.Regulatory risk Regulatory risk is the risk to earnings, capital, or reputation\narising from violations of, or nonconformance with current and changing laws, regulations, supervisory guidance, regulatory expectations,\nor the rules, standards, or codes of conduct of self regulatory organizations.Credit risk Credit risk is the risk to earnings or capital arising from\nthe default, inability or unwillingness of a borrower, obligor, or counterparty to meet the terms of any financial obligation with\nBB&T or otherwise perform as agreed. Credit risk exists in all activities where success depends on the performance of a borrower,\nobligor, or counterparty. Credit risk arises when BB&T funds are extended, committed, invested, or otherwise exposed through\nactual or implied contractual agreements, whether on or off the balance sheet. Credit risk also occurs when the credit quality\nof an issuer whose securities or other instruments the bank holds deteriorates.BB&T has established the following general practices\nto manage credit risk:\n\u00b7limiting the amount of credit that individual lenders may extend to a borrower;\n\u00b7establishing a process for credit approval accountability;\n\u00b7careful initial underwriting and analysis of borrower, transaction, market and collateral risks;\n\u00b7ongoing servicing and monitoring of individual loans and lending relationships;\n\u00b7continuous monitoring of the portfolio, market dynamics and the economy; and\n\u00b7periodically reevaluating the bank\u2019s strategy and overall exposure as economic, market and other relevant conditions\nchange.The following discussion presents the principal types of\nlending conducted by BB&T and describes the underwriting procedures and overall risk management of BB&T\u2019s lending\nfunction.Underwriting Approach Recognizing that the loan portfolio is a primary source of\nprofitability and risk, proper loan underwriting is critical to BB&T\u2019s long-term financial success. BB&T\u2019s\nunderwriting approach is designed to define acceptable combinations of specific risk-mitigating features that ensure credit relationships\nconform to BB&T\u2019s risk philosophy. Provided below is a summary of the most significant underwriting criteria used to\nevaluate new loans and loan renewals:\n\u00b7Cash flow and debt service coverage\u2014cash flow adequacy is a necessary condition of creditworthiness, meaning that\nloans must either be clearly supported by a borrower\u2019s cash flow or, if not, must be justified by secondary repayment sources.\n\u00b7Secondary sources of repayment\u2014alternative repayment funds are a significant risk-mitigating factor as long as\nthey are liquid, can be easily accessed and provide adequate resources to supplement the primary cash flow source. Field: Page; Sequence: 65; Value: 2 \u00b7Value of any underlying collateral\u2014loans are generally secured by the asset being financed. Because an analysis\nof the primary and secondary sources of repayment is the most important factor, collateral, unless it is liquid, does not justify\nloans that cannot be serviced by the borrower\u2019s normal cash flows.\n\u00b7Overall creditworthiness of the customer, taking into account the customer\u2019s relationships, both past and current,\nwith BB&T and other lenders\u2014BB&T\u2019s success depends on building lasting and mutually beneficial relationships\nwith clients, which involves assessing their financial position and background.\n\u00b7Level of equity invested in the transaction\u2014in general, borrowers are required to contribute or invest a portion\nof their own funds prior to any loan advances.Commercial Loan and Lease Portfolio The commercial loan and lease portfolio represents the largest\ncategory of the Company\u2019s total loan portfolio. BB&T\u2019s commercial lending program is generally targeted to serve\nsmall-to-middle market businesses with sales of $250 million or less. In addition, BB&T\u2019s Corporate Banking Group provides\nlending solutions to large corporate clients. Traditionally, lending to small and mid-sized businesses has been among BB&T\u2019s\nstrongest market segments.Commercial and small business loans are primarily originated\nthrough BB&T\u2019s Community Bank. In accordance with the Company\u2019s lending policy, each loan undergoes a detailed\nunderwriting process, which incorporates BB&T\u2019s underwriting approach, procedures and evaluations described above. Commercial\nloans are typically priced with an interest rate tied to market indices, such as the prime rate or LIBOR. Commercial loans are\nindividually monitored and reviewed for any possible deterioration in the ability of the client to repay the loan. Approximately\n90% of BB&T\u2019s commercial loans are secured by real estate, business equipment, inventories and other types of collateral.Direct Retail Loan Portfolio The direct retail loan portfolio primarily consists of a\nwide variety of loan products offered through BB&T\u2019s branch network. Various types of secured and unsecured loans are\nmarketed to qualifying existing clients and to other creditworthy candidates in BB&T\u2019s market area. The vast majority\nof direct retail loans are secured by first or second liens on residential real estate and include both closed-end home equity\nloans and revolving home equity lines of credit. Direct retail loans are subject to the same rigorous lending policies and procedures\nas described above for commercial loans and are underwritten with note amounts and credit limits that ensure consistency with the\nCompany\u2019s risk philosophy.Sales Finance Loan Portfolio The sales finance category primarily includes secured indirect\ninstallment loans to consumers for the purchase of new and used automobiles, boats and recreational vehicles. Such loans are originated\nthrough approved franchised and independent dealers throughout the BB&T market area. These loans are relatively homogenous\nand no single loan is individually significant in terms of its size and potential risk of loss. Sales finance loans are subject\nto the same rigorous lending policies and procedures as described above for commercial loans and are underwritten with note amounts\nand credit limits that ensure consistency with the Company\u2019s risk philosophy. In addition to its normal underwriting due\ndiligence, BB&T uses application systems and \u201cscoring systems\u201d to help underwrite and manage the credit risk in\nits sales finance portfolio. Also included in the sales finance category are commercial lines, serviced by the Dealer Finance Department,\nto finance dealer wholesale inventory (\u201cFloor Plan Lines\u201d) for resale to consumers. Floor Plan Lines are underwritten\nby commercial loan officers in compliance with the same rigorous lending policies described above for commercial loans. In addition,\nFloor Plan Lines are subject to intensive monitoring and oversight to ensure quality and to mitigate risk, including from fraud.Revolving Credit Loan Portfolio The revolving credit portfolio comprises the outstanding\nbalances on credit cards and BB&T\u2019s checking account overdraft protection product, Constant Credit. BB&T markets\ncredit cards to its existing banking client base and does not solicit cardholders through nationwide programs or other forms of\nmass marketing. Such balances are generally unsecured and actively managed.Residential Mortgage Loan Portfolio Branch Bank offers various types of fixed- and\nadjustable-rate loans for the purpose of constructing, purchasing or refinancing residential properties. BB&T primarily\noriginates conforming mortgage loans and higher quality jumbo and construction-to-permanent loans for owner-occupied\nproperties. Conforming loans are loans that are underwritten in accordance with the underwriting standards set forth by FNMA\nand FHLMC. They are generally collateralized by one-to- Field: Page; Sequence: 66; Value: 2 four-family residential real estate, typically have\nloan-to-collateral value ratios of 80% or less, and are made to borrowers in good credit standing. Additionally,\nBB&T\u2019s Direct Retail Lending group provides home equity loans that can increase the loan-to-collateral value to 90%\nor less for certain borrowers.Risks associated with the mortgage lending function include\ninterest rate risk, which is mitigated through the sale of a substantial portion of conforming fixed-rate loans in the secondary\nmortgage market and an effective MSR hedging process. Borrower risk is lessened through rigorous underwriting procedures and mortgage\ninsurance. The right to service the loans and receive servicing income is generally retained when conforming loans are sold. Management\nbelieves that the retention of mortgage servicing is a primary relationship driver in retail banking and a vital part of management\u2019s\nstrategy to establish profitable long-term customer relationships and offer high quality client service. BB&T also purchases\nresidential mortgage loans from correspondent originators. The loans purchased from third-party originators are subject to the\nsame underwriting and risk-management criteria as loans originated internally.Other Lending Subsidiaries Portfolio BB&T\u2019s other lending subsidiaries portfolio consists\nof loans originated through six LOBs that provide specialty finance alternatives to consumers and businesses including: dealer-based\nfinancing of equipment for small businesses and consumers, commercial equipment leasing and finance, direct and indirect consumer\nfinance, insurance premium finance, indirect nonprime automobile finance, and full-service commercial mortgage banking. BB&T\noffers these services to bank clients as well as nonbank clients within and outside BB&T\u2019s primary geographic market\narea.BB&T\u2019s other lending subsidiaries adhere to the\nsame overall underwriting approach as the commercial and consumer lending portfolio and also utilize automated credit scoring to\nassist with underwriting credit risk. The majority of these loans are relatively homogenous and no single loan is individually\nsignificant in terms of its size and potential risk of loss. The majority of the loans are secured by real estate, automobiles,\nequipment or unearned insurance premiums. As of December\u00a031, 2012, included in the other lending subsidiaries portfolio are\nloans to nonprime borrowers of approximately $3.6 billion, or 3.0% of the total BB&T loan and lease portfolio. Of these, approximately\n$262 million are residential real estate loans.Covered Loan Portfolio BB&T has $3.3 billion of loans covered by loss sharing\nagreements with the FDIC, which are primarily CRE and residential mortgage loans. Refer to Note 3 \u201cLoans and Leases\u201d\nin the \u201cNotes to Consolidated Financial Statements\u201d in this report for additional disclosures related to BB&T\u2019s\ncovered loans.Liquidity risk Liquidity risk is the risk to ongoing operations arising\nfrom the inability to accommodate liability maturities, deposit withdrawals, fund asset growth, or meet contractual obligations\nwhen they come due. For additional information concerning BB&T\u2019s management of liquidity risk, see the \u201cLiquidity\u201d\nsection of \u201cManagement\u2019s Discussion and Analysis\u201d herein.Market risk Market risk is the risk to earnings or capital arising from\nchanges in the market value of portfolios, securities, or other financial instruments due to changes in the level, volatility,\nor correlations among financial market rates or prices, including interest rates, foreign exchange rates, equity prices, or other\nrelevant rates or prices. For additional information concerning BB&T\u2019s management of market risk, see the \u201cMarket\nRisk Management\u201d section of \u201cManagement\u2019s Discussion and Analysis\u201d herein.Operational risk Operational risk is the risk to earnings or capital arising\nfrom inadequate or failed internal processes, people and systems or from external events. This definition includes legal risk,\nwhich is the risk of loss arising from defective transactions, litigation or claims made, or the failure to adequately protect\ncompany-owned assets.Reputation risk Reputation risk is the risk to earnings, capital, enterprise\nvalue, the BB&T brand, and public confidence arising from negative publicity or public opinion, whether real or perceived,\nregarding BB&T\u2019s business practices, products and services, transactions, or other activities undertaken by BB&T,\nits representatives, or its partners. Reputation risk may impact BB&T\u2019s clients, employees, communities or shareholders,\nand is often a residual risk that arises when other risks are not managed properly. Field: Page; Sequence: 67; Value: 2 Strategic risk Strategic risk is the risk to earnings, capital, enterprise\nvalue, and to the achievement of BB&T\u2019s Vision, Mission, Purpose, and business objectives that arises from BB&T\u2019s\nbusiness strategy, adverse business decisions, improper or ineffective implementation of decisions, or lack of responsiveness\nto changes in business environment. Strategic risk is a function of the compatibility of BB&T\u2019s strategic goals, the\nbusiness strategies developed to achieve those goals, the resources deployed against these goals, and the quality of implementation.Risk Governance The management of risk has always been an enterprise-wide\ninitiative at BB&T. It is part of BB&T\u2019s mission statement that risk is managed to optimize the long-term return\nto shareholders, while providing a safe and sound investment.The Chief Risk Officer leads the RMO, which designs, organizes\nand manages BB&T\u2019s risk framework. The management of risk begins at the business level through risk identification and\nmanagement programs. The RMO is responsible for ensuring effective risk management oversight, measurement, monitoring, reporting\nand consistency of controls.Market Risk ManagementThe effective management of market risk is essential to achieving\nBB&T\u2019s strategic financial objectives. As a financial institution, BB&T\u2019s most significant market risk exposure\nis interest rate risk in its balance sheet; however, market risk also includes product liquidity risk, price risk and volatility\nrisk in BB&T\u2019s lines of business. The primary objectives of market risk management are to minimize any adverse effect\nthat changes in market risk factors may have on net interest income, and to offset the risk of price changes for certain assets\nrecorded at fair value. Market Risk Management also performs the enterprise-wide IPV function.Interest Rate Market Risk (Other than Trading)BB&T actively manages market risk associated with asset\nand liability portfolios with a focus on the strategic pricing of asset and liability accounts and management of appropriate maturity\nmixes of assets and liabilities. The goal of these activities is the development of appropriate maturity and repricing opportunities\nin BB&T\u2019s portfolios of assets and liabilities that will produce reasonably consistent net interest income during periods\nof changing interest rates. These portfolios are analyzed for proper fixed-rate and variable-rate mixes under various interest\nrate scenarios.The asset\/liability management process is designed to achieve\nrelatively stable NIM and assure liquidity by coordinating the volumes, maturities or repricing opportunities of earning assets,\ndeposits and borrowed funds. Among other things, this process gives consideration to prepayment trends related to securities, loans\nand leases and certain deposits that have no stated maturity. Prepayment assumptions are developed using a combination of market\ndata and internal historical prepayment experience for residential mortgage-related loans and securities, and internal historical\nprepayment experience for client deposits with no stated maturity and loans that are not residential mortgage related. These assumptions\nare subject to monthly back-testing, and are adjusted as deemed necessary to reflect changes in interest rates relative to the\nreference rate of the underlying assets or liabilities. On a monthly basis, BB&T evaluates the accuracy of its interest rate\nforecast simulation model, which includes an evaluation of its prepayment assumptions, to ensure that all significant assumptions\ninherent in the model appropriately reflect changes in the interest rate environment and related trends in prepayment activity.\nIt is the responsibility of the MRLCC to determine and achieve the most appropriate volume and mix of earning assets and interest-bearing\nliabilities, as well as to ensure an adequate level of liquidity and capital, within the context of corporate performance goals.\nThe MRLCC also sets policy guidelines and establishes long-term strategies with respect to interest rate risk exposure and liquidity.\nThe MRLCC meets regularly to review BB&T\u2019s interest rate risk and liquidity positions in relation to present and prospective\nmarket and business conditions, and adopts funding and balance sheet management strategies that are intended to ensure that the\npotential impact on earnings and liquidity as a result of fluctuations in interest rates is within acceptable standards.BB&T uses derivatives primarily to manage economic risk\nrelated to securities, commercial loans, MSRs and mortgage banking operations, long-term debt and other funding sources. BB&T\nalso uses derivatives to facilitate transactions on behalf of its clients. As of December 31, 2012, BB&T had derivative financial\ninstruments outstanding with notional amounts totaling $73.3 billion, with a net fair value of $13 million. See Note 19 \u201cDerivative\nFinancial Instruments\u201d in the \u201cNotes to Consolidated Financial Statements\u201d herein for additional disclosures.The majority of BB&T\u2019s assets and liabilities are\nmonetary in nature and, therefore, differ greatly from most commercial and industrial companies that have significant investments\nin fixed assets or inventories. Fluctuations in interest rates and actions of the FRB to regulate the availability and cost of\ncredit have a greater effect on a financial institution\u2019s profitability than do Field: Page; Sequence: 68; Value: 2 the effects of higher costs for goods and\nservices. Through its balance sheet management function, which is monitored by the MRLCC, management believes that BB&T is\npositioned to respond to changing needs for liquidity, changes in interest rates and inflationary trends.Management uses the Simulation to measure the sensitivity\nof projected earnings to changes in interest rates. The Simulation model projects net interest income and interest rate risk for\na rolling two-year period of time. The Simulation takes into account the current contractual agreements that BB&T has made\nwith its customers on deposits, borrowings, loans, investments and commitments to enter into those transactions. Furthermore, the\nSimulation considers the impact of expected customer behavior. Management monitors BB&T\u2019s interest sensitivity by means\nof a model that incorporates current volumes, average rates earned and paid, and scheduled maturities and payments of asset and\nliability portfolios, together with multiple scenarios that include projected prepayments, repricing opportunities and anticipated\nvolume growth. Using this information, the model projects earnings based on projected portfolio balances under multiple interest\nrate scenarios. This level of detail is needed to simulate the effect that changes in interest rates and portfolio balances may\nhave on the earnings of BB&T. This method is subject to the accuracy of the assumptions that underlie the process, but management\nbelieves that it provides a better illustration of the sensitivity of earnings to changes in interest rates than other analyses\nsuch as static or dynamic gap. In addition to Simulation analysis, BB&T uses EVE analysis to focus on projected changes in\ncapital given potential changes in interest rates. This measure also allows BB&T to analyze interest rate risk that falls outside\nthe analysis window contained in the Simulation model. The EVE model is a discounted cash flow of the entire portfolio of BB&T\u2019s\nassets, liabilities, and derivatives instruments. The difference in the present value of assets minus the present value of liabilities\nis defined as the economic value of BB&T\u2019s equity.The asset\/liability management process requires a number\nof key assumptions. Management determines the most likely outlook for the economy and interest rates by analyzing external factors,\nincluding published economic projections and data, the effects of likely monetary and fiscal policies, as well as any enacted or\nprospective regulatory changes. BB&T\u2019s current and prospective liquidity position, current balance sheet volumes and\nprojected growth, accessibility of funds for short-term needs and capital maintenance are also considered. This data is combined\nwith various interest rate scenarios to provide management with the information necessary to analyze interest sensitivity and to\naid in the development of strategies to reach performance goals.The following table shows the effect that the indicated changes\nin interest rates would have on net interest income as projected for the next twelve months assuming a gradual change in interest\nrates as described below. Key assumptions in the preparation of the table include prepayment speeds of mortgage-related assets,\ncash flows and maturities of derivative financial instruments, loan volumes and pricing, deposit sensitivity, customer preferences\nand capital plans. The resulting change in net interest income reflects the level of sensitivity that interest-sensitive income\nhas in relation to changing interest rates.","markdown_table":"\n\n| Table 26 | | | | | | | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| Federal Funds Purchased, Securities Sold Under | | | | | | | | | | | | | | | | | | |\n| Agreements to Repurchase and Short-Term Borrowed Funds | | | | | | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | | | | | |\n| | | | | | | | As Of \/ For The Years Ended December 31, | | | | | | | | | | | |\n| | | | | | | | 2012 | | | | 2011 | | | | 2010 | | | |\n| | | | | | | | (Dollars in millions) | | | | | | | | | | | |\n| | Securities Sold Under Agreements to Repurchase: | | | | | | | | | | | | | | | | | |\n| | | Maximum outstanding at any month-end during the year | | | | | $ | 813 | | | $ | 1,176 | | | $ | 2,299 | | |\n| | | Balance outstanding at end of year | | | | | | 514 | | | | 619 | | | | 1,189 | | |\n| | | Average outstanding during the year | | | | | | 651 | | | | 956 | | | | 1,620 | | |\n| | | Average interest rate during the year | | | | | | 0.30 | % | | | 0.73 | % | | | 0.85 | % | |\n| | | Average interest rate at end of year | | | | | | 0.33 | | | | 0.31 | | | | 0.96 | | |\n| | | | | | | | | | | | | | | | | | | |\n| | Federal Funds Purchased and Short-Term Borrowed Funds: | | | | | | | | | | | | | | | | | |\n| | | Maximum outstanding at any month-end during the year | | | | | $ | 3,627 | | | $ | 9,350 | | | $ | 10,486 | | |\n| | | Balance outstanding at end of year | | | | | | 2,350 | | | | 2,947 | | | | 4,484 | | |\n| | | Average outstanding during the year | | | | | | 2,757 | | | | 4,233 | | | | 7,402 | | |\n| | | Average interest rate during the year | | | | | | 0.20 | % | | | 0.10 | % | | | 0.10 | % | |\n| | | Average interest rate at end of year | | | | | | 0.19 | | | | 0.17 | | | | 0.32 | | |\n\n","source":"TFC\/10-K\/0000092230-13-000023"} {"title":"ACL","text":"The MRLCC has established parameters related to interest\nsensitivity that prescribe a maximum negative impact on net interest income under different interest rate scenarios. In the event\nthe results of the Simulation model fall outside the established parameters, management will make recommendations to the MRLCC\non the most appropriate response given the current economic forecast. The following parameters and interest rate scenarios are\nconsidered BB&T\u2019s primary measures of interest rate risk:\n\u00b7Maximum negative impact on net interest income of 2% for the next\n12 months assuming a linear change in interest rates totaling 100 basis points over four months followed by a flat interest rate\nscenario for the remaining eight month period.\n\u00b7Maximum negative impact on net interest income of 4% for the next\n12 months assuming a linear change of 200 basis points over eight months followed by a flat interest rate scenario for the remaining\nfour month period. Field: Page; Sequence: 69; Value: 2 These \u201cinterest rate ramp\u201d limits are considered\nBB&T\u2019s primary measure of interest rate risk. If a rate change of 200 basis points cannot be modeled due to a low level\nof rates, a proportional limit applies. Management currently only models a negative 25 basis point decline because larger declines\nwould have resulted in a Federal funds rate of less than zero. In a situation such as this, the maximum negative impact on net\ninterest income is adjusted on a proportional basis. Regardless of the proportional limit, the negative risk exposure limit will\nbe the greater of 1% or the proportional limit.Management has also established a maximum negative impact\non net interest income of 4% for an immediate 100 basis points change in rates and 8% for an immediate 200 basis points change\nin rates. These \u201cinterest rate shock\u201d limits are designed to create an outer band of acceptable risk based upon a significant\nand immediate change in rates.Management must also consider how the balance sheet and interest\nrate risk position could be impacted by changes in balance sheet mix. Liquidity in the banking industry has been very strong during\nthe current economic downturn. Much of this liquidity increase has been due to a significant increase in noninterest-bearing demand\ndeposits. Consistent with the industry, Branch Bank has seen a significant increase in this funding source. The behavior of these\ndeposits is one of the most important assumptions used in determining the interest rate risk position of BB&T. A loss of these\ndeposits in the future would reduce the asset sensitivity of BB&T\u2019s balance sheet as the company increases interest-bearing\nfunds to offset the loss of this advantageous funding source.Beta represents the correlation between overall market interest\nrates and the rates paid by BB&T on interest-bearing deposits. BB&T applies an average beta of approximately 80% to its\nmanaged rate deposits for determining its interest rate sensitivity. Managed rate deposits are high beta, premium money market\nand interest checking accounts, which attract significant client funds when needed to support balance sheet growth. BB&T regularly\nconducts sensitivity on other key variables to determine the impact they could have on the interest rate risk position. This discipline\ninforms management judgment and allows BB&T to evaluate the likely impact on its balance sheet management strategies due to\na more extreme variation in a key assumption than expected.The following table shows the effect that the loss of demand\ndeposits and an associated increase in managed rate deposits would have on BB&T\u2019s interest-rate sensitivity position.\nFor purposes of this analysis, BB&T modeled the beta at 100%.","markdown_table":"\n\n| Table 27 | | | | | | | | | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| Interest Sensitivity Simulation Analysis | | | | | | | | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | | | | | | | |\n| | | | | Interest Rate Scenario | | | | | | | | | Annualized Hypothetical Percentage | | | | | | | |\n| | | | | Linear | | | Prime Rate | | | | | | | Change in Net Interest Income | | | | | | |\n| | | | | Change in | | | December 31, | | | | | | | December 31, | | | | | | |\n| | | | | Prime Rate | | | 2012 | | | 2011 | | | | 2012 | | | 2011 | | | |\n| | | | | 2.00 | % | | 5.25 | % | | 5.25 | % | | | 3.16 | % | | 3.92 | % | | |\n| | | | | 1.00 | | | 4.25 | | | 4.25 | | | | 2.04 | | | 2.27 | | | |\n| | | | | No Change | | | 3.25 | | | 3.25 | | | | \u2015 | | | \u2015 | | | |\n| | | | | (0.25) | | | 3.00 | | | 3.00 | | | | (0.13) | | | (0.55) | | | |\n\n","source":"TFC\/10-K\/0000092230-13-000023"} {"title":"ACL","text":"The following table shows the effect that the indicated changes\nin interest rates would have on EVE. Key assumptions in the preparation of the table include prepayment speeds of mortgage-related\nand other assets, cash flows and maturities of derivative financial instruments, loan volumes and pricing and deposit sensitivity.\nThe resulting change in the EVE reflects the level of sensitivity that EVE has in relation to changing interest rates. Field: Page; Sequence: 70; Value: 2","markdown_table":"\n\n| Table 28 | | | | | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| Deposit Mix Sensitivity Analysis | | | | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | | | |\n| | | | | | | | | | | | Results Assuming a Decrease in | | | | | |\n| | | | | Increase in | | | | Base Scenario | | | Noninterest Bearing Demand Deposits | | | | | |\n| | | | | Rates | | | | at December 31, 2012 (1) | | | $1 Billion | | | $5 Billion | | |\n| | | | | 2.00 | % | | | 3.16 | % | | 2.92 | % | | 1.94 | % | |\n| | | | | 1.00 | | | | 2.04 | | | 1.89 | | | 1.28 | | |\n| | | | | | | | | | | | | | | | | |\n| (1) | The base scenario is equal to the annualized hypothetical percentage change in net interest income at December 31, 2012 as presented in the preceding table. | | | | | | | | | | | | | | | |\n\n","source":"TFC\/10-K\/0000092230-13-000023"} {"title":"ACL","text":"Market Risk from Trading ActivitiesBB&T also manages market risk from trading activities\nwhich consists of acting as a financial intermediary to provide its customers access to derivatives, foreign exchange and securities\nmarkets. Trading market risk is managed through the use of statistical and non-statistical risk measures and limits, with overall\nfirm limits established through Board Policy. BB&T utilizes a historical VaR methodology to measure and aggregate risks across\nits covered trading lines of business. This methodology uses one year of historical data to estimate economic outcomes for a one-day\ntime horizon at a 99% confidence level.The average VaR for the year ended December 31, 2012 was\nless than $1 million. The maximum daily VaR was approximately $3 million, and the low daily VaR was less than $1 million during\nthe same period.LiquidityLiquidity represents BB&T\u2019s continuing ability\nto meet funding needs, primarily deposit withdrawals, timely repayment of borrowings and other liabilities, and funding of loan\ncommitments. In addition to the level of liquid assets, such as cash, cash equivalents and securities available for sale, many\nother factors affect the ability to meet liquidity needs, including access to a variety of funding sources, maintaining borrowing\ncapacity in national money markets, growing core deposits, the repayment of loans and the capability to securitize or package loans\nfor sale. BB&T monitors key liquidity metrics at both the Parent Company and Branch Bank.Parent CompanyThe purpose of the Parent Company is to serve as the capital\nfinancing vehicle for the operating subsidiaries. The assets of the Parent Company consist primarily of cash on deposit with Branch\nBank, equity investments in subsidiaries, advances to subsidiaries, accounts receivable from subsidiaries, and other miscellaneous\nassets. The principal obligations of the Parent Company are principal and interest payments on long-term debt. The main sources\nof funds for the Parent Company are dividends and management fees from subsidiaries, repayments of advances to subsidiaries, and\nproceeds from the issuance of long-term debt. The primary uses of funds by the Parent Company are for investments in subsidiaries,\nadvances to subsidiaries, dividend payments to common and preferred shareholders, retirement of common stock and interest and principal\npayments due on long-term debt.The primary source of funds used for Parent Company cash\nrequirements was dividends received from subsidiaries, which totaled $1.8 billion during 2012. In addition, the Parent Company\nissued $2.0 billion of senior notes and $300 million of subordinated notes during 2012, repaid $1.5 billion of maturing long-term\ndebt and redeemed all of its junior subordinated debt to unconsolidated trusts. Funds raised through master note agreements with\ncommercial clients are placed in a note receivable at Branch Bank primarily for its use in meeting short-term funding needs and,\nto a lesser extent, to support the short-term temporary cash needs of the Parent Company. At December 31, 2012 and 2011, master\nnote balances totaled $37 million and $296 million, respectively.The Parent Company had ten issues of senior notes outstanding\ntotaling $6.0 billion and four issues of subordinated notes outstanding totaling $2.2 billion at December 31, 2012.Liquidity at the Parent Company is more susceptible to market\ndisruptions. BB&T prudently manages cash levels at the Parent Company to cover a minimum of one year of projected contractual\ncash outflows which includes unfunded external commitments, debt service, preferred dividends and scheduled debt maturities without\nthe benefit of any new cash infusions. Generally, BB&T maintains a significant buffer above the projected one year of contractual\ncash outflows. In determining the buffer, BB&T considers cash for common dividends, unfunded commitments to affiliates, being\na source of strength to its banking subsidiaries, and being able to withstand sustained market disruptions which may limit access\nto the credit markets. Field: Page; Sequence: 71; Value: 2 As of December 31, 2012 and 2011, the Parent Company had 35 months and 23 months, respectively, of cash\non hand to satisfy projected contractual cash outflows as described above.Branch BankBranch Bank has several major sources of funding to meet\nits liquidity requirements, including access to capital markets through issuance of senior or subordinated bank notes and institutional\nCDs, access to the FHLB system, dealer repurchase agreements and repurchase agreements with commercial clients, access to the overnight\nand term Federal funds markets, use of a Cayman branch facility, access to retail brokered CDs and a borrower in custody program\nwith the FRB for the discount window. As of December 31, 2012, BB&T has approximately $53 billion of secured borrowing capacity,\nwhich represents approximately 290% of one year wholesale funding maturities.BB&T also monitors the ability to meet customer demand\nfor funds under both normal and stressed market conditions. In considering its liquidity position, management evaluates BB&T\u2019s\nfunding mix based on client core funding, client rate-sensitive funding and non-client rate-sensitive funding. In addition, management\nalso evaluates exposure to rate-sensitive funding sources that mature in one year or less. Management also measures liquidity needs\nagainst 30 days of stressed cash outflows for Branch Bank. To ensure a strong liquidity position, management maintains a liquid\nasset buffer of cash on hand and highly liquid unpledged securities. The Company has established a policy that the liquid asset\nbuffer would be a minimum of 5% of total assets, but intends to maintain the ratio well in excess of this level. As of December\n31, 2012, and December 31, 2011, BB&T\u2019s liquid asset buffer was 11.1% and 13.5%, respectively, of total assets.BB&T\u2019s and Branch Bank\u2019s ability to raise\nfunding at competitive prices is affected by the rating agencies\u2019 views of BB&T\u2019s and Branch Bank\u2019s credit\nquality, liquidity, capital and earnings. Management meets with the rating agencies on a routine basis to discuss the current outlook\nfor BB&T and Branch Bank. The ratings for BB&T and Branch Bank by the four major rating agencies are detailed in the table\nbelow.","markdown_table":"\n\n| Table 29 | | | | | | | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| EVE Simulation Analysis | | | | | | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | Hypothetical Percentage | | | | | |\n| | | | | | | | EVE\/Assets | | | | | | Change in EVE | | | | | |\n| | | | | Change in | | | December 31, | | | | | | December 31, | | | | | |\n| | | | | Rates | | | 2012 | | | 2011 | | | 2012 | | | 2011 | | |\n| | | | | 2.00 | % | | 7.5 | % | | 6.2 | % | | 16.6 | % | | 19.6 | % | |\n| | | | | 1.00 | | | 7.2 | | | 5.9 | | | 11.9 | | | 13.3 | | |\n| | | | | No Change | | | 6.5 | | | 5.2 | | | \u2015 | | | \u2015 | | |\n| | | | | (0.25) | | | 6.2 | | | 4.9 | | | (4.1) | | | (4.9) | | |\n\n","source":"TFC\/10-K\/0000092230-13-000023"} {"title":"ACL","text":"BB&T and Branch Bank have Contingency Funding Plans designed\nto ensure that liquidity sources are sufficient to meet their ongoing obligations and commitments, particularly in the event of\na liquidity contraction. These plans are designed to examine and quantify the organization\u2019s liquidity under various \u201cstress\u201d\nscenarios. Additionally, the plans provide a framework for management and other critical personnel to follow in the event of a\nliquidity contraction or in anticipation of such an event. The plans address authority for activation and decision making, liquidity\noptions and the responsibilities of key departments in the event of a liquidity contraction. The liquidity options available to\nmanagement could include seeking secured funding, asset sales, and under the most extreme scenarios, curtailing new loan originations.Management believes current sources of liquidity are adequate\nto meet BB&T\u2019s current requirements and plans for continued growth. See Note 5 \u201cPremises and Equipment,\u201d\nNote 10 \u201cLong-Term Debt\u201d and Note 15 \u201cCommitments and Contingencies\u201d Field: Page; Sequence: 72; Value: 2","markdown_table":"\n\n| Table 30 | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| Credit Ratings of BB&T Corporation and Branch Bank | | | | | | | | | | | | |\n| December 31, 2012 | | | | | | | | | | | | |\n| | | | | | | | | | | | | |\n| | | | | | S&P | | Moody's | | Fitch | | DBRS | |\n| | BB&T Corporation: | | | | | | | | | | | |\n| | | Commercial Paper | | | A-2 | | P-1 | | F1 | | R-1(low) | |\n| | | Issuer | | | A- | | A2 | | A+ | | A(high) | |\n| | | LT\/Senior debt | | | A- | | A2 | | A+ | | A(high) | |\n| | | Subordinated debt | | | BBB+ | | A3 | | A | | A | |\n| | | Subordinated shelf short term | | | A-2 | | N\/A | | F1 | | N\/A | |\n| | | | | | | | | | | | | |\n| | Branch Bank: | | | | | | | | | | | |\n| | | Bank financial strength | | | N\/A | | B- | | a+ | | N\/A | |\n| | | Long term deposits | | | A | | A1 | | AA- | | AA(low) | |\n| | | LT\/Senior unsecured bank notes | | | A | | A1 | | A+ | | AA(low) | |\n| | | Other long term senior obligations | | | A | | A1 | | A+ | | AA(low) | |\n| | | Other short term senior obligations | | | A-1 | | P-1 | | F1 | | R-1(middle) | |\n| | | Short term bank notes | | | A-1 | | P-1 | | F1 | | R-1(middle) | |\n| | | Short term deposits | | | A-1 | | P-1 | | F1+ | | R-1(middle) | |\n| | | Subordinated bank notes | | | A- | | A2 | | A | | A(high) | |\n| | | | | | | | | | | | | |\n| | Ratings Outlook: | | | | | | | | | | | |\n| | | Credit Trend | | | Stable | | Stable | | Stable | | Stable | |\n\n","source":"TFC\/10-K\/0000092230-13-000023"} {"title":"ACL","text":"BB&T\u2019s significant commitments include investments\nin affordable housing and historic building rehabilitation projects throughout its market area and private equity funds. Refer\nto Note 1 \u201cSummary of Significant Accounting Policies\u201d and to Note 15 \u201cCommitments and Contingencies\u201d in\nthe \u201cNotes to Consolidated Financial Statements\u201d for further discussion of these commitments.In addition, BB&T enters into derivative contracts to\nmanage various financial risks. A derivative is a financial instrument that derives its cash flows, and therefore its value, by\nreference to an underlying instrument, index or referenced interest rate. Derivative contracts are carried at fair value on the\nConsolidated Balance Sheets with the fair value representing the net present value of expected future cash receipts or payments\nbased on market interest rates as of the balance sheet date. Derivative contracts are written in amounts referred to as notional\namounts, which only provide the basis for calculating payments between counterparties and are not a measure of financial risk.\nTherefore, the derivative liabilities recorded on the balance sheet as of December 31, 2012 do not represent the amounts that may\nultimately be paid under these contracts. Further discussion of derivative instruments is included in Note 1 \u201cSummary of\nSignificant Accounting Policies\u201d and Note 19 \u201cDerivative Financial Instruments\u201d in the \u201cNotes to Consolidated\nFinancial Statements.\u201dIn the ordinary course of business, BB&T indemnifies\nits officers and directors to the fullest extent permitted by law against liabilities arising from litigation. BB&T also issues\nstandard representation and warranties in underwriting agreements, merger and acquisition agreements, loan sales, brokerage activities\nand other similar arrangements. Counterparties in many of these indemnifications provide similar indemnifications to BB&T.\nAlthough these agreements often do not specify limitations, BB&T does not believe that any payments related to these guarantees\nwould materially change the financial condition or results of operations of BB&T.BB&T holds public funds in certain states that do not\nrequire 100% collateralization on public fund bank deposits. In these states, should the failure of another public fund depository\ninstitution result in a loss for the public entity, the resulting shortfall would have to be absorbed on a pro-rata basis by the\nremaining financial institutions holding public funds in that state.As a member of the FHLB, BB&T is required to maintain\na minimum investment in capital stock. The board of directors of the FHLB can increase the minimum investment requirements in the\nevent it has concluded that additional capital is required to allow it to meet its own regulatory capital requirements. Any increase\nin the minimum investment requirements outside of Field: Page; Sequence: 73; Value: 2 specified ranges requires the approval of the Federal Housing Finance Agency.\nBecause the extent of any obligation to increase BB&T\u2019s investment in the FHLB depends entirely upon the occurrence of\na future event, potential future payments to the FHLB are not determinable.In the normal course of business, BB&T is also a party\nto financial instruments to meet the financing needs of clients and to mitigate exposure to interest rate risk. Such financial\ninstruments include commitments to extend credit and certain contractual agreements, including standby letters of credit and financial\nguarantee arrangements. Further discussion of these commitments is included in Note 15 \u201cCommitments and Contingencies\u201d\nin the \u201cNotes to Consolidated Financial Statements.\u201dBB&T\u2019s significant commitments and obligations\nare summarized in the accompanying table. Not all of the commitments presented in the table will be used, thus the actual cash\nrequirements are likely to be significantly less than the amounts reported.","markdown_table":"\n\n| Table 31 | | | | | | | | | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| Contractual Obligations and Other Commitments | | | | | | | | | | | | | | | | | | | | |\n| December 31, 2012 | | | | | | | | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | | | | | | | |\n| | | | | | | | | | Less than | | | 1 to 3 | | | 3 to 5 | | | After 5 | | |\n| | | | | | | Total | | | One Year | | | Years | | | Years | | | Years | | |\n| | | | | | | **(Dollars in millions)** | | | | | | | | | | | | | | |\n| | Long-term debt | | | | | $ | 18,825 | | $ | 1,655 | | $ | 3,046 | | $ | 6,318 | | $ | 7,806 | |\n| | Operating leases | | | | | | 1,430 | | | 197 | | | 345 | | | 275 | | | 613 | |\n| | Commitments to fund affordable housing investments | | | | | | 461 | | | 265 | | | 178 | | | 14 | | | 4 | |\n| | Private equity commitments (1) | | | | | | 129 | | | 39 | | | 68 | | | 20 | | | 2 | |\n| | Time deposits | | | | | | 31,624 | | | 21,130 | | | 7,795 | | | 2,698 | | | 1 | |\n| | Contractual interest payments (2) | | | | | | 4,385 | | | 827 | | | 1,287 | | | 871 | | | 1,400 | |\n| | | Total contractual cash obligations | | | | $ | 56,854 | | $ | 24,113 | | $ | 12,719 | | $ | 10,196 | | $ | 9,826 | |\n| | | | | | | | | | | | | | | | | | | | | |\n| (1) | Maturities are based on estimated payment dates. | | | | | | | | | | | | | | | | | | | |\n| (2) | Includes accrued interest and future contractual interest obligations.\u00a0 Variable rate payments are based upon the rate in effect at December 31, 2012. | | | | | | | | | | | | | | | | | | | |\n\n","source":"TFC\/10-K\/0000092230-13-000023"} {"title":"ACL","text":"Related Party Transactions The Company may extend credit to its officers and directors\nin the ordinary course of business. These loans are made under substantially the same terms as comparable third-party lending arrangements\nand are in compliance with applicable banking regulations.Capital The maintenance of appropriate levels of capital is a management\npriority and is monitored on a regular basis. BB&T\u2019s principal goals related to the maintenance of capital are to provide\nadequate capital to support BB&T\u2019s risk profile consistent with the Board-approved risk appetite, provide financial flexibility\nto support future growth and client needs, comply with relevant laws, regulations, and supervisory guidance, achieve optimal credit\nratings for BB&T and its subsidiaries and provide a competitive return to shareholders.Management regularly monitors the capital position of BB&T\non both a consolidated and bank level basis. Capital ratios are determined using operating forecasts and plans as well as stressed\nscenarios. In this regard, management\u2019s overriding policy is to maintain capital at levels that are in excess of the operating\ncapital guidelines, which are above the regulatory \u201cwell capitalized\u201d levels. Management has recently implemented stressed\ncapital ratio minimum guidelines to evaluate whether capital levels are sufficient to withstand the impact of plausible, severe\neconomic downturns or bank-specific events. The following table presents the minimum capital ratios:","markdown_table":"\n\n| Table 32 | | | | | | | | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| Summary of Significant Commitments | | | | | | | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | | | | December 31, 2012 | | |\n| | | | | | | | | | | | | | | | | | (Dollars in millions) | | |\n| | Lending commitments | | | | | | | | | | | | | | | | $ | 43,760 | |\n| | Letters of credit and financial guarantees written | | | | | | | | | | | | | | | | | 5,164 | |\n| | | Total significant commitments | | | | | | | | | | | | | | | $ | 48,924 | |\n\n","source":"TFC\/10-K\/0000092230-13-000023"} {"title":"ACL","text":"Payments of cash dividends to BB&T\u2019s shareholders\nand repurchases of common shares are the methods used to manage any excess capital generated. In addition, management closely monitors\nthe Parent Company\u2019s double leverage ratio (investments in subsidiaries as a percentage of shareholders\u2019 equity) with\nthe intention of maintaining the ratio below 125%. The active management of the subsidiaries\u2019 equity capital, as described\nabove, is the process used to manage this important driver of Parent Company liquidity and is a key element in the management of\nBB&T\u2019s capital position.The capital of BB&T\u2019s subsidiaries is regularly\nmonitored to determine if the levels that management believes are the most beneficial and efficient for their operations are maintained.\nManagement intends to maintain capital at Branch Bank at levels that will result in these subsidiaries being classified as \u201cwell-capitalized\u201d\nfor regulatory purposes. Secondarily, it is Field: Page; Sequence: 74; Value: 2 management\u2019s intent to maintain Branch Bank\u2019s capital at levels that result\nin regulatory risk-based capital ratios that are generally comparable with peers of similar size, complexity and risk profile.\nIf the capital levels of Branch Bank increase above these guidelines, excess capital may be transferred to the Parent Company,\nsubject to regulatory and other operating considerations, in the form of special dividend payments.While nonrecurring events or management decisions may result\nin the Company temporarily falling below its minimum guidelines for one or more of these ratios, it is management\u2019s intent\nthrough capital planning to return to these targeted minimums within a reasonable period of time. Such temporary decreases below\nthese minimums are not considered an infringement of BB&T\u2019s overall capital policy provided the Company and Branch Bank\nremain \u201cwell-capitalized.\u201dRisk-based capital ratios, which include Tier\n1 Capital, Total Capital and Tier 1 Common Equity, are calculated based on regulatory guidance related to the measurement\nof capital and risk-weighted assets. BB&T reevaluated its process related to calculating risk-weighted assets and\ndetermined that certain adjustments, primarily related to the presentation of certain unfunded lending commitments, were\nrequired in order to conform to regulatory guidance. These adjustments resulted in an increase to risk-weighted assets and a\ndecrease in BB&T\u2019s risk-based capital ratios under the Basel I regulatory guidance. These adjustments had a minimal\nimpact on BB&T\u2019s Basel III ratio as calculated based on the June 7, 2012 NPR.BB&T\u2019s Tier 1 common equity ratio was 9.3% at\nDecember 31, 2012. The acquisitions of Crump Insurance and BankAtlantic during the second and\nthird quarters of 2012, respectively, had a negative impact on regulatory capital, as a result of the intangible assets associated\nwith those acquisitions. This negative regulatory capital impact was offset by strong capital generation during 2012.BB&T regularly performs stress testing on its capital\nlevels and is required to periodically submit the company\u2019s capital plans to the banking regulators. Management\u2019s capital\ndeployment plan in order of preference is to focus on organic growth, dividends, strategic opportunities and share repurchases.","markdown_table":"\n\n| Table 33 | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- |\n| BB&T's Internal Capital Guidelines | | | | | | | |\n| | | Operating | | | Stressed | | |\n| | Tier 1 Capital Ratio | 9.5 | % | | 7.5 | % | |\n| | Total Capital Ratio | 11.5 | | | 9.5 | | |\n| | Tier 1 Leverage Capital Ratio | 6.5 | | | 5.0 | | |\n| | Tangible Capital Ratio | 5.5 | | | 4.0 | | |\n| | Tier 1 Common Equity Ratio | 8.0 | | | 6.0 | | |\n\n","source":"TFC\/10-K\/0000092230-13-000023"} {"title":"ACL","text":"(1)The Company has revised its calculation of risk-weighted assets and adjusted the applicable ratios.\n\n Field: Page; Sequence: 75; Value: 2","markdown_table":"\n\n| Table 34 | | | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| Capital Ratios (1) | | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | |\n| | | | | | | | December 31, | | | | | | | |\n| | | | | | | | 2012 | | | | 2011 | | | |\n| | | | | | | | (Dollars in millions, except per share data) | | | | | | | |\n| | Risk-based: | | | | | | | | | | | | | |\n| | | Tier 1 | | | | | | 11.0 | % | | | 12.0 | % | |\n| | | Total | | | | | | 13.9 | | | | 15.1 | | |\n| | Leverage capital | | | | | | | 8.2 | | | | 9.0 | | |\n| | | | | | | | | | | | | | | |\n| | Non-GAAP capital measures (2): | | | | | | | | | | | | | |\n| | | Tier 1 common equity as a percentage of tangible assets | | | | | | 6.9 | | | | 6.9 | | |\n| | | Tier 1 common equity as a percentage of risk-weighted assets (3) | | | | | | 9.3 | | | | 9.4 | | |\n| | | | | | | | | | | | | | | |\n| | Calculations of Tier 1 common equity and tangible assets and related measures: | | | | | | | | | | | | | |\n| | | Tier 1 equity | | | | | $ | 14,373 | | | $ | 14,913 | | |\n| | | Less: | | | | | | | | | | | | |\n| | | | Qualifying restricted core capital elements | | | | | 2,116 | | | | 3,250 | | |\n| | | Tier 1 common equity | | | | | $ | 12,257 | | | $ | 11,663 | | |\n| | | | | | | | | | | | | | | |\n| | | Total assets | | | | | $ | 183,872 | | | $ | 174,579 | | |\n| | | Less: | | | | | | | | | | | | |\n| | | | Intangible assets, net of deferred taxes | | | | | 7,273 | | | | 6,406 | | |\n| | | Plus: | | | | | | | | | | | | |\n| | | | Regulatory adjustments, net of deferred taxes | | | | | 212 | | | | 421 | | |\n| | | Tangible assets | | | | | $ | 176,811 | | | $ | 168,594 | | |\n| | | | | | | | | | | | | | | |\n| | | Total risk-weighted assets (3) | | | | | $ | 131,096 | | | $ | 124,507 | | |\n| | | | | | | | | | | | | | | |\n| | Tier 1 common equity | | | | | | $ | 12,257 | | | $ | 11,663 | | |\n| | Outstanding shares at end of period (in thousands) | | | | | | | 699,728 | | | | 697,143 | | |\n| | Tangible book value per common share | | | | | | $ | 17.52 | | | $ | 16.73 | | |\n| | | | | | | | | | | | | | | |\n\n","source":"TFC\/10-K\/0000092230-13-000023"} {"title":"ACL","text":"As of December 31, 2012, management currently estimates the\nTier 1 common ratio under the currently proposed U.S. Basel III standards to be 7.9%.\nThe proposed U.S. Basel III standards incorporate changes to the risk-weighting of loans secured by residential properties, requiring\nconsideration of loan-to-value ratios in determining risk-weighting. Management\u2019s estimate of the Tier 1 common ratio under\nthe proposed U.S. Basel III standards does not include any mitigation strategies to improve capital levels, which management believes\nwill have a significant positive impact on this measure. The following table presents the calculation of the Tier 1 common equity\nratio under the proposed Basel III guidelines.","markdown_table":"\n\n| (2) | Tier 1 common equity ratios are non-GAAP measures. BB&T uses the Tier 1 common equity definition used in the SCAP assessment to calculate these ratios. Management uses these measures to assess the quality of capital and believes that investors may find them useful in their analysis of the Company. These capital measures are not necessarily comparable to similar capital measures that may be presented by other companies. |\n| --- | --- |\n| (3) | Risk-weighted assets are determined based on regulatory capital requirements. |\n\n","source":"TFC\/10-K\/0000092230-13-000023"} {"title":"ACL","text":"Fourth Quarter ResultsConsolidated net income available to common shareholders\nfor the fourth quarter of 2012 totaling $506 million was up 29.4% compared to $391 million earned during the same period in 2011.\nOn a diluted per common share basis, earnings for the fourth quarter of 2012 were $0.71, up 29.1% compared to $0.55 for the same\nperiod in 2011. BB&T\u2019s results of operations for the fourth quarter of 2012 produced an annualized return on average\nassets of 1.20% and an annualized return on average common shareholders\u2019 equity of 10.51% compared to prior year ratios of\n0.93% and 8.76%, respectively.Total revenues were $2.5 billion for the fourth quarter of\n2012, up $122 million compared to the fourth quarter of 2011. The increase in total revenues included $24 million of higher taxable-equivalent\nnet interest income, which was primarily driven by a 21.4% decrease in funding costs from the same quarter of the prior year. NIM\nwas 3.84%, down 18 basis points compared to the fourth quarter of 2011, which reflects covered loan run-off and lower yields on\nnew loans and securities partially offset by lower funding costs. Noninterest income increased $98 million, primarily attributable\nto a $108 million increase in insurance income and a $96 million increase in mortgage banking income, offset by a $103 million\ndecrease in net securities gains.Noninterest expenses were $1.5 billion for the fourth quarter\nof 2012, a decrease of $130 million, or 8.0%, compared to the fourth quarter of 2011. The decrease in noninterest expenses was\nprimarily due to a $298 million decrease in foreclosed property expense, which was the result of losses and writedowns in the prior\nyear quarter when management implemented a more aggressive approach to reduce foreclosed real estate. This decrease was partially\noffset by a $144 million increase in personnel expense primarily due to the Crump Insurance and BankAtlantic acquisitions, increased\nproduction-related incentives and commissions and certain other increases in salaries and benefits. Field: Page; Sequence: 76; Value: 2 The provision for credit losses, excluding covered loans,\nfor the fourth quarter of 2012 totaled $256 million, compared to $223 million for fourth quarter of 2011. The increase in the\nprovision for credit losses reflects a smaller reserve release in the fourth quarter of 2012 than was recorded in the same quarter\nof the prior year. Net charge-offs, excluding covered loans, for the fourth quarter of 2012 were $85 million lower than the fourth\nquarter of 2011 reflecting improved credit quality. NPAs declined $914 million, or 37.3% compared to the fourth quarter of 2011.The provision for income taxes was $207 million for the fourth\nquarter of 2012 compared to $84 million for the fourth quarter of 2011. The effective tax rate for the fourth quarter of 2012 was\n27.4% compared to 17.4% for the prior year\u2019s fourth quarter. The increase in the effective tax rate was primarily due to\nhigher levels of pre-tax earnings relative to permanent tax differences in 2012 compared to 2011.The accompanying table, \u201cQuarterly Financial Summary\u2014Unaudited,\u201d\npresents condensed information relating to quarterly periods in the years ended December 31, 2012 and 2011.","markdown_table":"\n\n| Table 35 | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| Estimated Basel III Capital Ratio Under Proposed U.S. Rules (1) | | | | | | | | |\n| | | | | | | | | |\n| | | | | | December 31, 2012 | | | |\n| | | | | | | | | |\n| | | | | | (Dollars in millions) | | | |\n| | Tier 1 common equity under Basel I definition | | | | $ | 12,257 | | |\n| | Adjustments: | | | | | | | |\n| | | OCI related to AFS securities, defined benefit | | | | | | |\n| | | | pension and other postretirement employee benefit plans | | | (385) | | |\n| | | Other adjustments | | | | (9) | | |\n| | Estimated Tier 1 common equity under proposed Basel III definition | | | | $ | 11,863 | | |\n| | | | | | | | | |\n| | Estimated risk-weighted assets under proposed Basel III definition | | | | $ | 150,300 | | |\n| | Estimated Tier 1 common equity as a percentage of risk-weighted assets under proposed | | | | | | | |\n| | | Basel III definition | | | | 7.9 | % | |\n| | | | | | | | | |\n| | | | | | | | | |\n| (1) | The estimated Basel III capital ratio is a non-GAAP measure and reflects adjustments for the related elements as proposed by regulatory authorities, which are subject to change.\u00a0 BB&T management uses this measure to assess the quality of capital and believes that investors may find it useful in their analysis of the Company.\u00a0 This capital measure is not necessarily comparable to similar capital measures that may be presented by other companies. | | | | | | | |\n\n","source":"TFC\/10-K\/0000092230-13-000023"} {"title":"ACL","text":"Field: Page; Sequence: 77; Value: 2","markdown_table":"\n\n| Table 36 | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| Quarterly Financial Summary\u2015Unaudited | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | | | | 2012 | | | | | | | | | | | | 2011 | | | | | | | | | | |\n| | | | | Fourth | | | Third | | | Second | | | First | | | Fourth | | | Third | | | Second | | | First | |\n| | | | | Quarter | | | Quarter | | | Quarter | | | Quarter | | | Quarter | | | Quarter | | | Quarter | | | Quarter | |\n| | | | | **(Dollars in millions, except per share data)** | | | | | | | | | | | | | | | | | | | | | | |\n| Consolidated Summary of Operations: | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | Interest income | | | $ | 1,726 | | $ | 1,720 | | $ | 1,728 | | $ | 1,743 | | $ | 1,769 | | $ | 1,750 | | $ | 1,690 | | $ | 1,676 |\n| | Interest expense | | | | 250 | | | 237 | | | 266 | | | 307 | | | 317 | | | 334 | | | 336 | | | 391 |\n| | Provision for credit losses | | | | 252 | | | 244 | | | 273 | | | 288 | | | 272 | | | 250 | | | 328 | | | 340 |\n| | Securities gains (losses), net | | | | \u2015 | | | (1) | | | (2) | | | (9) | | | 103 | | | (39) | | | (2) | | | \u2015 |\n| | Other noninterest income | | | | 1,020 | | | 964 | | | 968 | | | 880 | | | 819 | | | 729 | | | 789 | | | 714 |\n| | Noninterest expense | | | | 1,488 | | | 1,529 | | | 1,426 | | | 1,385 | | | 1,618 | | | 1,417 | | | 1,395 | | | 1,372 |\n| | Provision for income taxes | | | | 207 | | | 177 | | | 191 | | | 189 | | | 84 | | | 68 | | | 91 | | | 53 |\n| | Net income | | | | 549 | | | 496 | | | 538 | | | 445 | | | 400 | | | 371 | | | 327 | | | 234 |\n| | Noncontrolling interest | | | | 13 | | | 2 | | | 20 | | | 14 | | | 9 | | | 5 | | | 20 | | | 9 |\n| | Preferred stock dividends | | | | 30 | | | 25 | | | 8 | | | \u2015 | | | \u2015 | | | \u2015 | | | \u2015 | | | \u2015 |\n| | Net income available to common | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | | shareholders | | $ | 506 | | $ | 469 | | $ | 510 | | $ | 431 | | $ | 391 | | $ | 366 | | $ | 307 | | $ | 225 |\n| | Basic earnings per common share | | | $ | 0.72 | | $ | 0.67 | | $ | 0.73 | | $ | 0.62 | | $ | 0.56 | | $ | 0.52 | | $ | 0.44 | | $ | 0.32 |\n| | Diluted earnings per common share | | | $ | 0.71 | | $ | 0.66 | | $ | 0.72 | | $ | 0.61 | | $ | 0.55 | | $ | 0.52 | | $ | 0.44 | | $ | 0.32 |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Selected Average Balances: | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | Assets | | | $ | 182,204 | | $ | 179,306 | | $ | 176,870 | | $ | 173,969 | | $ | 171,496 | | $ | 165,520 | | $ | 157,730 | | $ | 156,931 |\n| | Securities, at amortized cost | | | | 36,383 | | | 35,260 | | | 37,114 | | | 36,589 | | | 35,867 | | | 31,567 | | | 27,060 | | | 25,059 |\n| | Loans and leases (1) | | | | 117,103 | | | 115,609 | | | 111,760 | | | 110,403 | | | 108,523 | | | 105,658 | | | 104,341 | | | 105,294 |\n| | Total earning assets | | | | 156,863 | | | 153,918 | | | 152,385 | | | 150,494 | | | 147,364 | | | 141,259 | | | 134,235 | | | 133,331 |\n| | Deposits | | | | 131,762 | | | 128,695 | | | 125,348 | | | 124,606 | | | 121,925 | | | 115,056 | | | 106,466 | | | 105,614 |\n| | Federal funds purchased, securities | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | | sold under repurchase | | | | | | | | | | | | | | | | | | | | | | | | |\n| | | agreements and short-term debt | | | 3,340 | | | 3,478 | | | 3,362 | | | 3,452 | | | 3,727 | | | 4,307 | | | 5,486 | | | 7,286 |\n| | Long-term debt | | | | 18,689 | | | 19,682 | | | 22,544 | | | 21,720 | | | 21,689 | | | 22,347 | | | 23,114 | | | 21,879 |\n| | Total interest-bearing liabilities | | | | 121,942 | | | 121,865 | | | 123,611 | | | 123,605 | | | 122,125 | | | 118,340 | | | 112,915 | | | 113,789 |\n| | Shareholders' equity | | | | 21,188 | | | 20,125 | | | 18,737 | | | 17,829 | | | 17,755 | | | 17,551 | | | 17,072 | | | 16,673 |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| (1) | Loans and leases are net of unearned income and include LHFS. | | | | | | | | | | | | | | | | | | | | | | | | | |\n\n","source":"TFC\/10-K\/0000092230-13-000023"} {"title":"ACL","text":"Field: Page; Sequence: 97; Value: 2","markdown_table":"\n\n| Changes in the carrying amount and accretable yield for purchased impaired and nonimpaired covered loans accounted for under the accretion method were as follows: | | | | | | | | | | | | | | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | | | Year Ended December 31, 2012 | | | | | | | | | | | | Year Ended December 31, 2011 | | | | | | | | | | |\n| | | | Purchased Impaired | | | | | | Purchased\u00a0Nonimpaired | | | | | | Purchased Impaired | | | | | | Purchased\u00a0Nonimpaired | | | | |\n| | | | | | | Carrying | | | | | | Carrying | | | | | | Carrying | | | | | | Carrying | |\n| | | | Accretable | | | Amount | | | Accretable | | | Amount | | | Accretable | | | Amount | | | Accretable | | | Amount | |\n| | | | Yield | | | of Loans | | | Yield | | | of Loans | | | Yield | | | of Loans | | | Yield | | | of Loans | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | | | (Dollars in millions) | | | | | | | | | | | | | | | | | | | | | | |\n| Balance at beginning of period | | | $ | 520 | | $ | 2,123 | | $ | 1,193 | | $ | 2,744 | | $ | 833 | | $ | 2,855 | | $ | 1,549 | | $ | 3,339 |\n| | Accretion | | | (219) | | | 219 | | | (541) | | | 541 | | | (358) | | | 358 | | | (691) | | | 691 |\n| | Payments received, net | | | \u2015 | | | (942) | | | \u2015 | | | (1,391) | | | \u2015 | | | (1,090) | | | \u2015 | | | (1,286) |\n| | Other, net | | | (37) | | | \u2015 | | | (35) | | | \u2015 | | | 45 | | | \u2015 | | | 335 | | | \u2015 |\n| Balance at end of period | | | $ | 264 | | $ | 1,400 | | $ | 617 | | $ | 1,894 | | $ | 520 | | $ | 2,123 | | $ | 1,193 | | $ | 2,744 |\n| Outstanding unpaid principal balance | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | at end of period | | | | | $ | 2,047 | | | | | $ | 2,489 | | | | | $ | 3,269 | | | | | $ | 3,825 |\n\n","source":"TFC\/10-K\/0000092230-13-000023"} {"title":"ACL","text":"Commitments to lend additional funds to clients with loans\nclassified as TDRs were immaterial at December 31, 2012 and 2011. The gross additional interest income that would have been earned\nif the loans and leases classified as nonaccrual had performed in accordance with the original terms was approximately $70 million,\n$93 million and $131 million in 2012, 2011 and 2010, respectively. The gross additional interest income that would have been earned\nin 2012, 2011 and 2010 had performing TDRs performed in accordance with the original terms is immaterial.","markdown_table":"\n\n| The following table provides a summary of TDRs that continue to accrue interest and TDRs that have been placed in nonaccrual status: | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | | | | | | | | |\n| | | | | December 31, | | | | | |\n| | | | | 2012 | | | 2011 | | |\n| | | | | | | | | | |\n| | | | | (Dollars in millions) | | | | | |\n| | Performing TDRs: | | | | | | | | |\n| | | Commercial: | | | | | | | |\n| | | | Commercial and industrial | $ | 77 | | $ | 74 | |\n| | | | CRE - other | | 67 | | | 117 | |\n| | | | CRE - residential ADC | | 21 | | | 44 | |\n| | | Direct retail lending | | | 197 | | | 146 | |\n| | | Sales finance | | | 19 | | | 8 | |\n| | | Revolving credit | | | 56 | | | 62 | |\n| | | Residential mortgage (1)(2) | | | 769 | | | 608 | |\n| | | Other lending subsidiaries | | | 121 | | | 50 | |\n| | | | Total performing TDRs (1)(2) | | 1,327 | | | 1,109 | |\n| | Nonperforming TDRs (3) | | | | 240 | | | 280 | |\n| | | | Total TDRs (1)(2)(3)(4) | $ | 1,567 | | $ | 1,389 | |\n| | | | | | | | | | |\n| | | | | | | | | | |\n| (1) | Excludes mortgage TDRs held for investment that are government guaranteed totaling $313 million and $232 million at December 31, 2012 and 2011, respectively. | | | | | | | | |\n| (2) | Excludes mortgage TDRs held for sale that are government guaranteed totaling $2 million and $4 million at December 31, 2012 and 2011, respectively. | | | | | | | | |\n| (3) | Nonperforming TDRs are included in NPL disclosures. | | | | | | | | |\n| (4) | All TDRs are considered impaired.\u00a0 The ALLL attributable to these TDRs, excluding TDRs that are government guaranteed, totaled $281 million and $266 million at December 31, 2012 and 2011, respectively. | | | | | | | | |\n\n","source":"TFC\/10-K\/0000092230-13-000023"} {"title":"ACL","text":"Field: Page; Sequence: 98; Value: 2 NOTE 4. Allowance for Credit Losses\n\n\u00a0\n\u00a0\n\u00a0\n\u00a0\nBeginning\n\u00a0\nCharge-\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\nEnding\n\u00a0\n\n\u00a0\nYear Ended December 31, 2012\n\u00a0\nBalance\n\u00a0\nOffs\n\u00a0\nRecoveries\n\u00a0\nProvision\n\u00a0\nBalance\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n(Dollars in millions)\n\u00a0\n\n\u00a0\nCommercial:\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\n\u00a0\n\u00a0\nCommercial and industrial\n\u00a0\n$\n433\u00a0\n\u00a0\n$\n(337)\n\u00a0\n$\n17\u00a0\n\u00a0\n$\n357\u00a0\n\u00a0\n$\n470\u00a0\n\u00a0\n\n\u00a0\n\u00a0\nCRE - other\n\u00a0\n\u00a0\n334\u00a0\n\u00a0\n\u00a0\n(205)\n\u00a0\n\u00a0\n13\u00a0\n\u00a0\n\u00a0\n62\u00a0\n\u00a0\n\u00a0\n204\u00a0\n\u00a0\n\n\u00a0\n\u00a0\nCRE - residential ADC\n\u00a0\n\u00a0\n286\u00a0\n\u00a0\n\u00a0\n(190)\n\u00a0\n\u00a0\n41\u00a0\n\u00a0\n\u00a0\n(37)\n\u00a0\n\u00a0\n100\u00a0\n\u00a0\n\n\u00a0\n\u00a0\nOther lending subsidiaries\n\u00a0\n\u00a0\n11\u00a0\n\u00a0\n\u00a0\n(8)\n\u00a0\n\u00a0\n2\u00a0\n\u00a0\n\u00a0\n8\u00a0\n\u00a0\n\u00a0\n13\u00a0\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\n\u00a0\nRetail:\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\n\u00a0\n\u00a0\nDirect retail lending\n\u00a0\n\u00a0\n232\u00a0\n\u00a0\n\u00a0\n(224)\n\u00a0\n\u00a0\n36\u00a0\n\u00a0\n\u00a0\n256\u00a0\n\u00a0\n\u00a0\n300\u00a0\n\u00a0\n\n\u00a0\n\u00a0\nRevolving credit\n\u00a0\n\u00a0\n112\u00a0\n\u00a0\n\u00a0\n(81)\n\u00a0\n\u00a0\n18\u00a0\n\u00a0\n\u00a0\n53\u00a0\n\u00a0\n\u00a0\n102\u00a0\n\u00a0\n\n\u00a0\n\u00a0\nResidential mortgage\n\u00a0\n\u00a0\n365\u00a0\n\u00a0\n\u00a0\n(136)\n\u00a0\n\u00a0\n3\u00a0\n\u00a0\n\u00a0\n96\u00a0\n\u00a0\n\u00a0\n328\u00a0\n\u00a0\n\n\u00a0\n\u00a0\nSales finance\n\u00a0\n\u00a0\n38\u00a0\n\u00a0\n\u00a0\n(26)\n\u00a0\n\u00a0\n10\u00a0\n\u00a0\n\u00a0\n7\u00a0\n\u00a0\n\u00a0\n29\u00a0\n\u00a0\n\n\u00a0\n\u00a0\nOther lending subsidiaries\n\u00a0\n\u00a0\n186\u00a0\n\u00a0\n\u00a0\n(217)\n\u00a0\n\u00a0\n24\u00a0\n\u00a0\n\u00a0\n271\u00a0\n\u00a0\n\u00a0\n264\u00a0\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\n\u00a0\nCovered\n\u00a0\n\u00a0\n149\u00a0\n\u00a0\n\u00a0\n(34)\n\u00a0\n\u00a0\n\u00a0\u2015\n\u00a0\n\u00a0\n13\u00a0\n\u00a0\n\u00a0\n128\u00a0\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\n\u00a0\nUnallocated\n\u00a0\n\u00a0\n110\u00a0\n\u00a0\n\u00a0\n\u00a0\u2015\n\u00a0\n\u00a0\n\u00a0\u2015\n\u00a0\n\u00a0\n(30)\n\u00a0\n\u00a0\n80\u00a0\n\u00a0\n\n\u00a0\nALLL\n\u00a0\n\u00a0\n2,256\u00a0\n\u00a0\n\u00a0\n(1,458)\n\u00a0\n\u00a0\n164\u00a0\n\u00a0\n\u00a0\n1,056\u00a0\n\u00a0\n\u00a0\n2,018\u00a0\n\u00a0\n\n\u00a0\nRUFC\n\u00a0\n\u00a0\n29\u00a0\n\u00a0\n\u00a0\n\u00a0\u2015\n\u00a0\n\u00a0\n\u00a0\u2015\n\u00a0\n\u00a0\n1\u00a0\n\u00a0\n\u00a0\n30\u00a0\n\u00a0\n\n\u00a0\nACL\n\u00a0\n$\n2,285\u00a0\n\u00a0\n$\n(1,458)\n\u00a0\n$\n164\u00a0\n\u00a0\n$\n1,057\u00a0\n\u00a0\n$\n2,048\u00a0\n\u00a0\n\n\n\u00a0\n\u00a0\n\u00a0\n\u00a0\nBeginning\n\u00a0\nCharge-\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\nEnding\n\u00a0\n\n\u00a0\nYear Ended December 31, 2011\n\u00a0\nBalance\n\u00a0\nOffs\n\u00a0\nRecoveries\n\u00a0\nProvision\n\u00a0\nBalance\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n(Dollars in millions)\n\u00a0\n\n\u00a0\nCommercial:\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\n\u00a0\n\u00a0\nCommercial and industrial\n\u00a0\n$\n621\u00a0\n\u00a0\n$\n(323)\n\u00a0\n$\n28\u00a0\n\u00a0\n$\n107\u00a0\n\u00a0\n$\n433\u00a0\n\u00a0\n\n\u00a0\n\u00a0\nCRE - other\n\u00a0\n\u00a0\n446\u00a0\n\u00a0\n\u00a0\n(273)\n\u00a0\n\u00a0\n18\u00a0\n\u00a0\n\u00a0\n143\u00a0\n\u00a0\n\u00a0\n334\u00a0\n\u00a0\n\n\u00a0\n\u00a0\nCRE - residential ADC\n\u00a0\n\u00a0\n469\u00a0\n\u00a0\n\u00a0\n(302)\n\u00a0\n\u00a0\n25\u00a0\n\u00a0\n\u00a0\n94\u00a0\n\u00a0\n\u00a0\n286\u00a0\n\u00a0\n\n\u00a0\n\u00a0\nOther lending subsidiaries\n\u00a0\n\u00a0\n21\u00a0\n\u00a0\n\u00a0\n(9)\n\u00a0\n\u00a0\n3\u00a0\n\u00a0\n\u00a0\n(4)\n\u00a0\n\u00a0\n11\u00a0\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\n\u00a0\nRetail:\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\n\u00a0\n\u00a0\nDirect retail lending\n\u00a0\n\u00a0\n246\u00a0\n\u00a0\n\u00a0\n(276)\n\u00a0\n\u00a0\n37\u00a0\n\u00a0\n\u00a0\n225\u00a0\n\u00a0\n\u00a0\n232\u00a0\n\u00a0\n\n\u00a0\n\u00a0\nRevolving credit\n\u00a0\n\u00a0\n109\u00a0\n\u00a0\n\u00a0\n(95)\n\u00a0\n\u00a0\n19\u00a0\n\u00a0\n\u00a0\n79\u00a0\n\u00a0\n\u00a0\n112\u00a0\n\u00a0\n\n\u00a0\n\u00a0\nResidential mortgage\n\u00a0\n\u00a0\n298\u00a0\n\u00a0\n\u00a0\n(269)\n\u00a0\n\u00a0\n5\u00a0\n\u00a0\n\u00a0\n331\u00a0\n\u00a0\n\u00a0\n365\u00a0\n\u00a0\n\n\u00a0\n\u00a0\nSales finance\n\u00a0\n\u00a0\n47\u00a0\n\u00a0\n\u00a0\n(32)\n\u00a0\n\u00a0\n9\u00a0\n\u00a0\n\u00a0\n14\u00a0\n\u00a0\n\u00a0\n38\u00a0\n\u00a0\n\n\u00a0\n\u00a0\nOther lending subsidiaries\n\u00a0\n\u00a0\n177\u00a0\n\u00a0\n\u00a0\n(181)\n\u00a0\n\u00a0\n22\u00a0\n\u00a0\n\u00a0\n168\u00a0\n\u00a0\n\u00a0\n186\u00a0\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\n\u00a0\nCovered\n\u00a0\n\u00a0\n144\u00a0\n\u00a0\n\u00a0\n(66)\n\u00a0\n\u00a0\n\u00a0\u2015\n\u00a0\n\u00a0\n71\u00a0\n\u00a0\n\u00a0\n149\u00a0\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\n\u00a0\nUnallocated\n\u00a0\n\u00a0\n130\u00a0\n\u00a0\n\u00a0\n\u00a0\u2015\n\u00a0\n\u00a0\n\u00a0\u2015\n\u00a0\n\u00a0\n(20)\n\u00a0\n\u00a0\n110\u00a0\n\u00a0\n\n\u00a0\nALLL\n\u00a0\n\u00a0\n2,708\u00a0\n\u00a0\n\u00a0\n(1,826)\n\u00a0\n\u00a0\n166\u00a0\n\u00a0\n\u00a0\n1,208\u00a0\n\u00a0\n\u00a0\n2,256\u00a0\n\u00a0\n\n\u00a0\nRUFC\n\u00a0\n\u00a0\n47\u00a0\n\u00a0\n\u00a0\n\u00a0\u2015\n\u00a0\n\u00a0\n\u00a0\u2015\n\u00a0\n\u00a0\n(18)\n\u00a0\n\u00a0\n29\u00a0\n\u00a0\n\n\u00a0\nACL\n\u00a0\n$\n2,755\u00a0\n\u00a0\n$\n(1,826)\n\u00a0\n$\n166\u00a0\n\u00a0\n$\n1,190\u00a0\n\u00a0\n$\n2,285\u00a0\n\u00a0\n\n\n\u00a0\n\u00a0\n\u00a0\n\u00a0\nBeginning\n\u00a0\nCharge-\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\nEnding\n\u00a0\n\n\u00a0\nYear Ended December 31, 2010\n\u00a0\nBalance\n\u00a0\nOffs\n\u00a0\nRecoveries\n\u00a0\nProvision\n\u00a0\nOther\n\u00a0\nBalance\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n(Dollars in millions)\n\u00a0\n\n\u00a0\nALLL\n\u00a0\n$\n2,600\u00a0\n\u00a0\n$\n(2,658)\n\u00a0\n$\n130\u00a0\n\u00a0\n$\n2,663\u00a0\n\u00a0\n$\n(27)\n\u00a0\n$\n2,708\u00a0\n\u00a0\n\n\u00a0\nRUFC\n\u00a0\n\u00a0\n72\u00a0\n\u00a0\n\u00a0\n\u00a0\u2015\n\u00a0\n\u00a0\n\u00a0\u2015\n\u00a0\n\u00a0\n(25)\n\u00a0\n\u00a0\n\u00a0\u2015\n\u00a0\n\u00a0\n47\u00a0\n\u00a0\n\n\u00a0\nACL\n\u00a0\n$\n2,672\u00a0\n\u00a0\n$\n(2,658)\n\u00a0\n$\n130\u00a0\n\u00a0\n$\n2,638\u00a0\n\u00a0\n$\n(27)\n\u00a0\n$\n2,755\u00a0\n\u00a0\n Field: Page; Sequence: 99; Value: 2 \n\nThe following tables provide a breakdown of the ALLL and the recorded investment in loans based on the method for determining the allowance:\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\nALLL\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\nDecember 31, 2012\n\u00a0\nDecember 31, 2011\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\nIndividually\n\u00a0\nCollectively\n\u00a0\nIndividually\n\u00a0\nCollectively\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\nEvaluated\n\u00a0\nEvaluated\n\u00a0\nEvaluated\n\u00a0\nEvaluated\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\nfor\n\u00a0\nfor\n\u00a0\nfor\n\u00a0\nfor\n\u00a0\n\n\u00a0\n\n\u00a0\nImpairment\n\u00a0\nImpairment\n\u00a0\nImpairment\n\u00a0\nImpairment\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n(Dollars in millions)\n\u00a0\n\n\u00a0\nCommercial:\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\n\u00a0\n\u00a0\nCommercial and industrial\n\u00a0\n$\n73\u00a0\n\u00a0\n$\n397\u00a0\n\u00a0\n$\n77\u00a0\n\u00a0\n$\n356\u00a0\n\u00a0\n\n\u00a0\n\u00a0\nCRE - other\n\u00a0\n\u00a0\n36\u00a0\n\u00a0\n\u00a0\n168\u00a0\n\u00a0\n\u00a0\n69\u00a0\n\u00a0\n\u00a0\n265\u00a0\n\u00a0\n\n\u00a0\n\u00a0\nCRE - residential ADC\n\u00a0\n\u00a0\n21\u00a0\n\u00a0\n\u00a0\n79\u00a0\n\u00a0\n\u00a0\n50\u00a0\n\u00a0\n\u00a0\n236\u00a0\n\u00a0\n\n\u00a0\n\u00a0\nOther lending subsidiaries\n\u00a0\n\u00a0\n1\u00a0\n\u00a0\n\u00a0\n12\u00a0\n\u00a0\n\u00a0\n1\u00a0\n\u00a0\n\u00a0\n10\u00a0\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\n\u00a0\nRetail:\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\n\u00a0\n\u00a0\nDirect retail lending\n\u00a0\n\u00a0\n59\u00a0\n\u00a0\n\u00a0\n241\u00a0\n\u00a0\n\u00a0\n35\u00a0\n\u00a0\n\u00a0\n197\u00a0\n\u00a0\n\n\u00a0\n\u00a0\nRevolving credit\n\u00a0\n\u00a0\n24\u00a0\n\u00a0\n\u00a0\n78\u00a0\n\u00a0\n\u00a0\n27\u00a0\n\u00a0\n\u00a0\n85\u00a0\n\u00a0\n\n\u00a0\n\u00a0\nResidential mortgage\n\u00a0\n\u00a0\n130\u00a0\n\u00a0\n\u00a0\n198\u00a0\n\u00a0\n\u00a0\n152\u00a0\n\u00a0\n\u00a0\n213\u00a0\n\u00a0\n\n\u00a0\n\u00a0\nSales finance\n\u00a0\n\u00a0\n6\u00a0\n\u00a0\n\u00a0\n23\u00a0\n\u00a0\n\u00a0\n1\u00a0\n\u00a0\n\u00a0\n37\u00a0\n\u00a0\n\n\u00a0\n\u00a0\nOther lending subsidiaries\n\u00a0\n\u00a0\n61\u00a0\n\u00a0\n\u00a0\n203\u00a0\n\u00a0\n\u00a0\n20\u00a0\n\u00a0\n\u00a0\n166\u00a0\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\n\u00a0\nCovered\n\u00a0\n\u00a0\n\u00a0\u2015\n\u00a0\n\u00a0\n128\u00a0\n\u00a0\n\u00a0\n\u00a0\u2015\n\u00a0\n\u00a0\n149\u00a0\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\n\u00a0\nUnallocated\n\u00a0\n\u00a0\n\u00a0\u2015\n\u00a0\n\u00a0\n80\u00a0\n\u00a0\n\u00a0\n\u00a0\u2015\n\u00a0\n\u00a0\n110\u00a0\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\nTotal\n\u00a0\n$\n411\u00a0\n\u00a0\n$\n1,607\u00a0\n\u00a0\n$\n432\u00a0\n\u00a0\n$\n1,824\u00a0\n\u00a0\n\n\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\nLoans and Leases\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\nDecember 31, 2012\n\u00a0\nDecember 31, 2011\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\nIndividually\n\u00a0\nCollectively\n\u00a0\nIndividually\n\u00a0\nCollectively\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\nEvaluated\n\u00a0\nEvaluated\n\u00a0\nEvaluated\n\u00a0\nEvaluated\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\nfor\n\u00a0\nfor\n\u00a0\nfor\n\u00a0\nfor\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\nImpairment\n\u00a0\nImpairment\n\u00a0\nImpairment\n\u00a0\nImpairment\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n(Dollars in millions)\n\u00a0\n\n\u00a0\nCommercial:\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\n\u00a0\n\u00a0\nCommercial and industrial\n\u00a0\n$\n631\u00a0\n\u00a0\n$\n37,664\u00a0\n\u00a0\n$\n656\u00a0\n\u00a0\n$\n35,759\u00a0\n\u00a0\n\n\u00a0\n\u00a0\nCRE - other\n\u00a0\n\u00a0\n312\u00a0\n\u00a0\n\u00a0\n11,149\u00a0\n\u00a0\n\u00a0\n511\u00a0\n\u00a0\n\u00a0\n10,178\u00a0\n\u00a0\n\n\u00a0\n\u00a0\nCRE - residential ADC\n\u00a0\n\u00a0\n155\u00a0\n\u00a0\n\u00a0\n1,106\u00a0\n\u00a0\n\u00a0\n420\u00a0\n\u00a0\n\u00a0\n1,641\u00a0\n\u00a0\n\n\u00a0\n\u00a0\nOther lending subsidiaries\n\u00a0\n\u00a0\n3\u00a0\n\u00a0\n\u00a0\n4,135\u00a0\n\u00a0\n\u00a0\n5\u00a0\n\u00a0\n\u00a0\n3,621\u00a0\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\n\u00a0\nRetail:\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\n\u00a0\n\u00a0\nDirect retail lending\n\u00a0\n\u00a0\n235\u00a0\n\u00a0\n\u00a0\n15,582\u00a0\n\u00a0\n\u00a0\n165\u00a0\n\u00a0\n\u00a0\n14,341\u00a0\n\u00a0\n\n\u00a0\n\u00a0\nRevolving credit\n\u00a0\n\u00a0\n56\u00a0\n\u00a0\n\u00a0\n2,274\u00a0\n\u00a0\n\u00a0\n62\u00a0\n\u00a0\n\u00a0\n2,150\u00a0\n\u00a0\n\n\u00a0\n\u00a0\nResidential mortgage\n\u00a0\n\u00a0\n1,187\u00a0\n\u00a0\n\u00a0\n23,085\u00a0\n\u00a0\n\u00a0\n931\u00a0\n\u00a0\n\u00a0\n19,650\u00a0\n\u00a0\n\n\u00a0\n\u00a0\nSales finance\n\u00a0\n\u00a0\n22\u00a0\n\u00a0\n\u00a0\n7,714\u00a0\n\u00a0\n\u00a0\n10\u00a0\n\u00a0\n\u00a0\n7,391\u00a0\n\u00a0\n\n\u00a0\n\u00a0\nOther lending subsidiaries\n\u00a0\n\u00a0\n146\u00a0\n\u00a0\n\u00a0\n5,853\u00a0\n\u00a0\n\u00a0\n49\u00a0\n\u00a0\n\u00a0\n5,062\u00a0\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\n\u00a0\nCovered\n\u00a0\n\u00a0\n\u00a0\u2015\n\u00a0\n\u00a0\n3,294\u00a0\n\u00a0\n\u00a0\n\u00a0\u2015\n\u00a0\n\u00a0\n4,867\u00a0\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\nTotal\n\u00a0\n$\n2,747\u00a0\n\u00a0\n$\n111,856\u00a0\n\u00a0\n$\n2,809\u00a0\n\u00a0\n$\n104,660\u00a0\n\u00a0\nBB&T monitors the credit quality of its commercial portfolio\nsegment using internal risk ratings. These risk ratings are based on established regulatory guidance. Loans with a Pass rating\nrepresent those not considered a problem credit. Special mention loans are those that have a potential\nweakness deserving management\u2019s close attention. Substandard loans are those for which a well-defined weakness has been identified\nthat may put full collection of contractual cash flows at risk. Substandard loans are placed in nonaccrual status when BB&T\nbelieves it is no longer probable it will collect all contractual cash flows. BB&T assigns an internal risk rating at loan\norigination and reviews the relationship again on an annual basis or at any point management becomes aware of information affecting\nthe borrower\u2019s ability to fulfill their obligations. Field: Page; Sequence: 100; Value: 2 BB&T monitors the credit quality of its retail portfolio\nsegment based primarily on delinquency status, which is the primary factor considered in determining whether a retail loan should\nbe classified as nonaccrual.The following tables illustrate the credit quality indicators associated with loans and leases held for investment.\u00a0 Covered loans are excluded from this analysis because their related allowance is determined by loan pool performance.\n\n\n\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\nCRE -\n\u00a0\nOther\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\nCommercial\n\u00a0\n\u00a0\n\u00a0\nResidential\n\u00a0\nLending\n\u00a0\n\n\u00a0\nDecember 31, 2012\n\u00a0\n& Industrial\n\u00a0\nCRE - Other\n\u00a0\nADC\n\u00a0\nSubsidiaries\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n(Dollars in millions)\n\u00a0\n\n\u00a0\nCommercial:\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\n\u00a0\n\u00a0\nPass\n\u00a0\n$\n36,044\u00a0\n\u00a0\n$\n10,095\u00a0\n\u00a0\n$\n859\u00a0\n\u00a0\n$\n4,093\u00a0\n\u00a0\n\n\u00a0\n\u00a0\nSpecial mention\n\u00a0\n\u00a0\n274\u00a0\n\u00a0\n\u00a0\n120\u00a0\n\u00a0\n\u00a0\n41\u00a0\n\u00a0\n\u00a0\n13\u00a0\n\u00a0\n\n\u00a0\n\u00a0\nSubstandard - performing\n\u00a0\n\u00a0\n1,431\u00a0\n\u00a0\n\u00a0\n1,034\u00a0\n\u00a0\n\u00a0\n233\u00a0\n\u00a0\n\u00a0\n29\u00a0\n\u00a0\n\n\u00a0\n\u00a0\nNonperforming\n\u00a0\n\u00a0\n546\u00a0\n\u00a0\n\u00a0\n212\u00a0\n\u00a0\n\u00a0\n128\u00a0\n\u00a0\n\u00a0\n3\u00a0\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\nTotal\n\u00a0\n$\n38,295\u00a0\n\u00a0\n$\n11,461\u00a0\n\u00a0\n$\n1,261\u00a0\n\u00a0\n$\n4,138\u00a0\n\u00a0\n\n\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\nDirect Retail\n\u00a0\nRevolving\n\u00a0\nResidential\n\u00a0\nSales\n\u00a0\nOther Lending\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\nLending\n\u00a0\nCredit\n\u00a0\nMortgage\n\u00a0\nFinance\n\u00a0\nSubsidiaries\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n(Dollars in millions)\n\u00a0\n\n\u00a0\nRetail:\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\n\u00a0\n\u00a0\nPerforming\n\u00a0\n$\n15,685\u00a0\n\u00a0\n$\n2,330\u00a0\n\u00a0\n$\n24,003\u00a0\n\u00a0\n$\n7,729\u00a0\n\u00a0\n$\n5,916\u00a0\n\u00a0\n\n\u00a0\n\u00a0\nNonperforming\n\u00a0\n\u00a0\n132\u00a0\n\u00a0\n\u00a0\n\u00a0\u2015\n\u00a0\n\u00a0\n269\u00a0\n\u00a0\n\u00a0\n7\u00a0\n\u00a0\n\u00a0\n83\u00a0\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\nTotal\n\u00a0\n$\n15,817\u00a0\n\u00a0\n$\n2,330\u00a0\n\u00a0\n$\n24,272\u00a0\n\u00a0\n$\n7,736\u00a0\n\u00a0\n$\n5,999\u00a0\n\u00a0\n\n\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\nCRE -\n\u00a0\nOther\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\nCommercial\n\u00a0\n\u00a0\n\u00a0\nResidential\n\u00a0\nLending\n\u00a0\n\n\u00a0\nDecember 31, 2011\n\u00a0\n& Industrial\n\u00a0\nCRE - Other\n\u00a0\nADC\n\u00a0\nSubsidiaries\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n(Dollars in millions)\n\u00a0\n\n\u00a0\nCommercial:\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\n\u00a0\n\u00a0\nPass\n\u00a0\n$\n33,497\u00a0\n\u00a0\n$\n8,568\u00a0\n\u00a0\n$\n1,085\u00a0\n\u00a0\n$\n3,578\u00a0\n\u00a0\n\n\u00a0\n\u00a0\nSpecial mention\n\u00a0\n\u00a0\n488\u00a0\n\u00a0\n\u00a0\n234\u00a0\n\u00a0\n\u00a0\n60\u00a0\n\u00a0\n\u00a0\n5\u00a0\n\u00a0\n\n\u00a0\n\u00a0\nSubstandard - performing\n\u00a0\n\u00a0\n1,848\u00a0\n\u00a0\n\u00a0\n1,493\u00a0\n\u00a0\n\u00a0\n540\u00a0\n\u00a0\n\u00a0\n35\u00a0\n\u00a0\n\n\u00a0\n\u00a0\nNonperforming\n\u00a0\n\u00a0\n582\u00a0\n\u00a0\n\u00a0\n394\u00a0\n\u00a0\n\u00a0\n376\u00a0\n\u00a0\n\u00a0\n8\u00a0\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\nTotal \n\u00a0\n$\n36,415\u00a0\n\u00a0\n$\n10,689\u00a0\n\u00a0\n$\n2,061\u00a0\n\u00a0\n$\n3,626\u00a0\n\u00a0\n\n\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\nDirect Retail\n\u00a0\nRevolving\n\u00a0\nResidential\n\u00a0\nSales\n\u00a0\nOther Lending\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\nLending\n\u00a0\nCredit\n\u00a0\nMortgage\n\u00a0\nFinance\n\u00a0\nSubsidiaries\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n(Dollars in millions)\n\u00a0\n\n\u00a0\nRetail:\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\n\u00a0\n\u00a0\nPerforming\n\u00a0\n$\n14,364\u00a0\n\u00a0\n$\n2,212\u00a0\n\u00a0\n$\n20,273\u00a0\n\u00a0\n$\n7,394\u00a0\n\u00a0\n$\n5,056\u00a0\n\u00a0\n\n\u00a0\n\u00a0\nNonperforming\n\u00a0\n\u00a0\n142\u00a0\n\u00a0\n\u00a0\n\u00a0\u2015\n\u00a0\n\u00a0\n308\u00a0\n\u00a0\n\u00a0\n7\u00a0\n\u00a0\n\u00a0\n55\u00a0\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\nTotal\n\u00a0\n$\n14,506\u00a0\n\u00a0\n$\n2,212\u00a0\n\u00a0\n$\n20,581\u00a0\n\u00a0\n$\n7,401\u00a0\n\u00a0\n$\n5,111\u00a0\n\u00a0\n Field: Page; Sequence: 101; Value: 2 \n\nThe following tables represent aging analyses of BB&T's past due loans and leases held for investment.\u00a0 Covered loans have been excluded from this aging analysis because they are covered by FDIC loss sharing agreements, and their related allowance is determined by loan pool performance due to the application of the accretion method.\n\u00a0\n\n\u00a0\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\nAccruing Loans and Leases\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n90 Days Or\n\u00a0\nNonaccrual\n\u00a0\nTotal Loans And\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n30-89 Days\n\u00a0\nMore Past\n\u00a0\nLoans And\n\u00a0\nLeases, Excluding\n\u00a0\n\n\u00a0\nDecember 31, 2012\n\u00a0\nCurrent\n\u00a0\nPast Due\n\u00a0\nDue\n\u00a0\nLeases\n\u00a0\nCovered Loans\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n(Dollars in millions)\n\u00a0\n\n\u00a0\nCommercial:\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\n\u00a0\n\u00a0\nCommercial and industrial\n\u00a0\n$\n37,706\u00a0\n\u00a0\n$\n42\u00a0\n\u00a0\n$\n1\u00a0\n\u00a0\n$\n546\u00a0\n\u00a0\n$\n38,295\u00a0\n\u00a0\n\n\u00a0\n\u00a0\nCRE - other\n\u00a0\n\u00a0\n11,237\u00a0\n\u00a0\n\u00a0\n12\u00a0\n\u00a0\n\u00a0\n\u00a0\u2015\n\u00a0\n\u00a0\n212\u00a0\n\u00a0\n\u00a0\n11,461\u00a0\n\u00a0\n\n\u00a0\n\u00a0\nCRE - residential ADC\n\u00a0\n\u00a0\n1,131\u00a0\n\u00a0\n\u00a0\n2\u00a0\n\u00a0\n\u00a0\n\u00a0\u2015\n\u00a0\n\u00a0\n128\u00a0\n\u00a0\n\u00a0\n1,261\u00a0\n\u00a0\n\n\u00a0\n\u00a0\nOther lending subsidiaries\n\u00a0\n\u00a0\n4,106\u00a0\n\u00a0\n\u00a0\n20\u00a0\n\u00a0\n\u00a0\n9\u00a0\n\u00a0\n\u00a0\n3\u00a0\n\u00a0\n\u00a0\n4,138\u00a0\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\n\u00a0\nRetail:\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\n\u00a0\n\u00a0\nDirect retail lending\n\u00a0\n\u00a0\n15,502\u00a0\n\u00a0\n\u00a0\n145\u00a0\n\u00a0\n\u00a0\n38\u00a0\n\u00a0\n\u00a0\n132\u00a0\n\u00a0\n\u00a0\n15,817\u00a0\n\u00a0\n\n\u00a0\n\u00a0\nRevolving credit\n\u00a0\n\u00a0\n2,291\u00a0\n\u00a0\n\u00a0\n23\u00a0\n\u00a0\n\u00a0\n16\u00a0\n\u00a0\n\u00a0\n\u00a0\u2015\n\u00a0\n\u00a0\n2,330\u00a0\n\u00a0\n\n\u00a0\n\u00a0\nResidential mortgage (1)(2)\n\u00a0\n\u00a0\n22,555\u00a0\n\u00a0\n\u00a0\n582\u00a0\n\u00a0\n\u00a0\n344\u00a0\n\u00a0\n\u00a0\n269\u00a0\n\u00a0\n\u00a0\n23,750\u00a0\n\u00a0\n\n\u00a0\n\u00a0\nSales finance\n\u00a0\n\u00a0\n7,663\u00a0\n\u00a0\n\u00a0\n56\u00a0\n\u00a0\n\u00a0\n10\u00a0\n\u00a0\n\u00a0\n7\u00a0\n\u00a0\n\u00a0\n7,736\u00a0\n\u00a0\n\n\u00a0\n\u00a0\nOther lending subsidiaries\n\u00a0\n\u00a0\n5,645\u00a0\n\u00a0\n\u00a0\n270\u00a0\n\u00a0\n\u00a0\n1\u00a0\n\u00a0\n\u00a0\n83\u00a0\n\u00a0\n\u00a0\n5,999\u00a0\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\nTotal (1)(2)\n\u00a0\n$\n107,836\u00a0\n\u00a0\n$\n1,152\u00a0\n\u00a0\n$\n419\u00a0\n\u00a0\n$\n1,380\u00a0\n\u00a0\n$\n110,787","markdown_table":"\n\n| The following table provides a summary of BB&T\u2019s NPAs and loans 90 days or more past due and still accruing: | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | | | | | | | | |\n| | | | | December 31, | | | | | |\n| | | | | 2012 | | | 2011 | | |\n| | | | | | | | | | |\n| | | | | (Dollars in millions) | | | | | |\n| | | | | | | | | | |\n| | NPLs held for investment | | | $ | 1,380 | | $ | 1,872 | |\n| | Foreclosed real estate (1) | | | | 107 | | | 536 | |\n| | Other foreclosed property | | | | 49 | | | 42 | |\n| | | | Total NPAs (excluding covered assets) (1) | $ | 1,536 | | $ | 2,450 | |\n| | Loans 90 days or more past due and still accruing (excluding\u00a0covered\u00a0loans)\u00a0(2)(3)(4) | | | $ | 167 | | $ | 202 | |\n| | | | | | | | | | |\n| | | | | | | | | | |\n| (1) | Excludes covered foreclosed real estate totaling $254 million and $378 million as of December 31, 2012 and 2011, respectively. | | | | | | | | |\n| (2) | Excludes mortgage loans guaranteed by GNMA that BB&T has the right, but not the obligation, to repurchase totaling $517 million and $426 million as of December 31, 2012 and 2011, respectively. | | | | | | | | |\n| (3) | Excludes covered loans 90 days or more past due totaling $442 million and $736 million as of December 31, 2012 and 2011, respectively. | | | | | | | | |\n| (4) | Excludes mortgage loans 90 days or more past due that are government guaranteed totaling $254 million and $206 million as of December 31, 2012 and 2011, respectively. | | | | | | | | |\n\n","source":"TFC\/10-K\/0000092230-13-000023"} {"title":"ACL","text":"Field: Page; Sequence: 102; Value: 2 \n\nThe following tables set forth certain information regarding BB&T's impaired loans, excluding purchased impaired loans and LHFS, that were evaluated for specific reserves.\n\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\nUnpaid\n\u00a0\n\u00a0\n\u00a0\n\u00a0\nAverage\n\u00a0\nInterest\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\nRecorded\n\u00a0\nPrincipal\n\u00a0\nRelated\n\u00a0\nRecorded\n\u00a0\nIncome\n\u00a0\n\n\u00a0\nAs Of \/ For The Year Ended December 31, 2012\n\u00a0\nInvestment\n\u00a0\nBalance\n\u00a0\nAllowance\n\u00a0\nInvestment\n\u00a0\nRecognized\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n(Dollars in millions)\n\u00a0\n\n\u00a0\nWith No Related Allowance Recorded:\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\n\u00a0\n\u00a0\nCommercial:\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\nCommercial and industrial\n\u00a0\n$\n116\u00a0\n\u00a0\n$\n232\u00a0\n\u00a0\n$\n\u00a0\u2015\n\u00a0\n$\n117\u00a0\n\u00a0\n$\n\u00a0\u2015\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\nCRE - other\n\u00a0\n\u00a0\n60\u00a0\n\u00a0\n\u00a0\n108\u00a0\n\u00a0\n\u00a0\n\u00a0\u2015\n\u00a0\n\u00a0\n81\u00a0\n\u00a0\n\u00a0\n\u00a0\u2015\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\nCRE - residential ADC\n\u00a0\n\u00a0\n44\u00a0\n\u00a0\n\u00a0\n115\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n103\u00a0\n\u00a0\n\u00a0\n\u00a0\u2015\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\n\u00a0\n\u00a0\nRetail:\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\nDirect retail lending\n\u00a0\n\u00a0\n19\u00a0\n\u00a0\n\u00a0\n73\u00a0\n\u00a0\n\u00a0\n\u00a0\u2015\n\u00a0\n\u00a0\n19\u00a0\n\u00a0\n\u00a0\n1\u00a0\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\nResidential mortgage (1)\n\u00a0\n\u00a0\n120\u00a0\n\u00a0\n\u00a0\n201\u00a0\n\u00a0\n\u00a0\n\u00a0\u2015\n\u00a0\n\u00a0\n80\u00a0\n\u00a0\n\u00a0\n2\u00a0\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\nSales finance\n\u00a0\n\u00a0\n1\u00a0\n\u00a0\n\u00a0\n3\u00a0\n\u00a0\n\u00a0\n\u00a0\u2015\n\u00a0\n\u00a0\n1\u00a0\n\u00a0\n\u00a0\n\u00a0\u2015\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\nOther lending subsidiaries\n\u00a0\n\u00a0\n2\u00a0\n\u00a0\n\u00a0\n6\u00a0\n\u00a0\n\u00a0\n\u00a0\u2015\n\u00a0\n\u00a0\n3\u00a0\n\u00a0\n\u00a0\n\u00a0\u2015\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\n\u00a0\nWith An Allowance Recorded:\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\n\u00a0\n\u00a0\nCommercial:\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\nCommercial and industrial\n\u00a0\n\u00a0\n515\u00a0\n\u00a0\n\u00a0\n551\u00a0\n\u00a0\n\u00a0\n73\u00a0\n\u00a0\n\u00a0\n522\u00a0\n\u00a0\n\u00a0\n3\u00a0\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\nCRE - other\n\u00a0\n\u00a0\n252\u00a0\n\u00a0\n\u00a0\n255\u00a0\n\u00a0\n\u00a0\n36\u00a0\n\u00a0\n\u00a0\n319\u00a0\n\u00a0\n\u00a0\n5\u00a0\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\nCRE - residential ADC\n\u00a0\n\u00a0\n111\u00a0\n\u00a0\n\u00a0\n116\u00a0\n\u00a0\n\u00a0\n21\u00a0\n\u00a0\n\u00a0\n180\u00a0\n\u00a0\n\u00a0\n1\u00a0\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\nOther lending subsidiaries\n\u00a0\n\u00a0\n3\u00a0\n\u00a0\n\u00a0\n3\u00a0\n\u00a0\n\u00a0\n1\u00a0\n\u00a0\n\u00a0\n4\u00a0\n\u00a0\n\u00a0\n\u00a0\u2015\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\n\u00a0\n\u00a0\nRetail:\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\nDirect retail lending\n\u00a0\n\u00a0\n216\u00a0\n\u00a0\n\u00a0\n226\u00a0\n\u00a0\n\u00a0\n59\u00a0\n\u00a0\n\u00a0\n140\u00a0\n\u00a0\n\u00a0\n9\u00a0\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\nRevolving credit\n\u00a0\n\u00a0\n56\u00a0\n\u00a0\n\u00a0\n56\u00a0\n\u00a0\n\u00a0\n24\u00a0\n\u00a0\n\u00a0\n59\u00a0\n\u00a0\n\u00a0\n2\u00a0\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\nResidential mortgage (1)\n\u00a0\n\u00a0\n754\u00a0\n\u00a0\n\u00a0\n770\u00a0\n\u00a0\n\u00a0\n104\u00a0\n\u00a0\n\u00a0\n649\u00a0\n\u00a0\n\u00a0\n28\u00a0\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\nSales finance\n\u00a0\n\u00a0\n21\u00a0\n\u00a0\n\u00a0\n21\u00a0\n\u00a0\n\u00a0\n6\u00a0\n\u00a0\n\u00a0\n13\u00a0\n\u00a0\n\u00a0\n\u00a0\u2015\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\nOther lending subsidiaries\n\u00a0\n\u00a0\n144\u00a0\n\u00a0\n\u00a0\n146\u00a0\n\u00a0\n\u00a0\n61\u00a0\n\u00a0\n\u00a0\n66\u00a0\n\u00a0\n\u00a0\n2\u00a0\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\n\u00a0\nTotal (1)\n\u00a0\n$\n2,434\u00a0\n\u00a0\n$\n2,882\u00a0\n\u00a0\n$\n385\u00a0\n\u00a0\n$\n2,356\u00a0\n\u00a0\n$\n53\u00a0\n\u00a0\n Field: Page; Sequence: 103; Value: 2 \n\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\nUnpaid\n\u00a0\n\u00a0\n\u00a0\n\u00a0\nAverage\n\u00a0\nInterest\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\nRecorded\n\u00a0\nPrincipal\n\u00a0\nRelated\n\u00a0\nRecorded\n\u00a0\nIncome\n\u00a0\n\n\u00a0\nAs Of \/ For The Year Ended December 31, 2011\n\u00a0\nInvestment\n\u00a0\nBalance\n\u00a0\nAllowance\n\u00a0\nInvestment\n\u00a0\nRecognized\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n(Dollars in millions)\n\u00a0\n\n\u00a0\nWith No Related Allowance Recorded:\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\n\u00a0\n\u00a0\nCommercial:\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\nCommercial and industrial\n\u00a0\n$\n114\u00a0\n\u00a0\n$\n196\u00a0\n\u00a0\n$\n\u00a0\u2015\n\u00a0\n$\n153\u00a0\n\u00a0\n$\n\u00a0\u2015\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\nCRE - other\n\u00a0\n\u00a0\n102\u00a0\n\u00a0\n\u00a0\n163\u00a0\n\u00a0\n\u00a0\n\u00a0\u2015\n\u00a0\n\u00a0\n142\u00a0\n\u00a0\n\u00a0\n\u00a0\u2015\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\nCRE - residential ADC\n\u00a0\n\u00a0\n153\u00a0\n\u00a0\n\u00a0\n289\u00a0\n\u00a0\n\u00a0\n\u00a0\u2015\n\u00a0\n\u00a0\n187\u00a0\n\u00a0\n\u00a0\n\u00a0\u2015\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\n\u00a0\n\u00a0\nRetail:\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\nDirect retail lending\n\u00a0\n\u00a0\n19\u00a0\n\u00a0\n\u00a0\n74\u00a0\n\u00a0\n\u00a0\n\u00a0\u2015\n\u00a0\n\u00a0\n23\u00a0\n\u00a0\n\u00a0\n1\u00a0\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\nResidential mortgage (1)\n\u00a0\n\u00a0\n46\u00a0\n\u00a0\n\u00a0\n85\u00a0\n\u00a0\n\u00a0\n\u00a0\u2015\n\u00a0\n\u00a0\n31\u00a0\n\u00a0\n\u00a0\n1\u00a0\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\nSales finance\n\u00a0\n\u00a0\n1\u00a0\n\u00a0\n\u00a0\n1\u00a0\n\u00a0\n\u00a0\n\u00a0\u2015\n\u00a0\n\u00a0\n1\u00a0\n\u00a0\n\u00a0\n\u00a0\u2015\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\nOther lending subsidiaries\n\u00a0\n\u00a0\n2\u00a0\n\u00a0\n\u00a0\n4\u00a0\n\u00a0\n\u00a0\n\u00a0\u2015\n\u00a0\n\u00a0\n1\u00a0\n\u00a0\n\u00a0\n\u00a0\u2015\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\n\u00a0\nWith An Allowance Recorded:\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\n\u00a0\n\u00a0\nCommercial:\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\nCommercial and industrial\n\u00a0\n\u00a0\n542\u00a0\n\u00a0\n\u00a0\n552\u00a0\n\u00a0\n\u00a0\n77\u00a0\n\u00a0\n\u00a0\n482\u00a0\n\u00a0\n\u00a0\n4\u00a0\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\nCRE - other\n\u00a0\n\u00a0\n409\u00a0\n\u00a0\n\u00a0\n433\u00a0\n\u00a0\n\u00a0\n69\u00a0\n\u00a0\n\u00a0\n466\u00a0\n\u00a0\n\u00a0\n7\u00a0\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\nCRE - residential ADC\n\u00a0\n\u00a0\n267\u00a0\n\u00a0\n\u00a0\n298\u00a0\n\u00a0\n\u00a0\n50\u00a0\n\u00a0\n\u00a0\n360\u00a0\n\u00a0\n\u00a0\n4\u00a0\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\nOther lending subsidiaries\n\u00a0\n\u00a0\n5\u00a0\n\u00a0\n\u00a0\n5\u00a0\n\u00a0\n\u00a0\n1\u00a0\n\u00a0\n\u00a0\n4\u00a0\n\u00a0\n\u00a0\n\u00a0\u2015\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\n\u00a0\n\u00a0\nRetail:\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\nDirect retail lending\n\u00a0\n\u00a0\n146\u00a0\n\u00a0\n\u00a0\n153\u00a0\n\u00a0\n\u00a0\n35\u00a0\n\u00a0\n\u00a0\n148\u00a0\n\u00a0\n\u00a0\n9\u00a0\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\nRevolving credit\n\u00a0\n\u00a0\n62\u00a0\n\u00a0\n\u00a0\n61\u00a0\n\u00a0\n\u00a0\n27\u00a0\n\u00a0\n\u00a0\n62\u00a0\n\u00a0\n\u00a0\n3\u00a0\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\nResidential mortgage (1)\n\u00a0\n\u00a0\n653\u00a0\n\u00a0\n\u00a0\n674\u00a0\n\u00a0\n\u00a0\n125\u00a0\n\u00a0\n\u00a0\n627\u00a0\n\u00a0\n\u00a0\n28\u00a0\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\nSales finance\n\u00a0\n\u00a0\n9\u00a0\n\u00a0\n\u00a0\n10\u00a0\n\u00a0\n\u00a0\n1\u00a0\n\u00a0\n\u00a0\n6\u00a0\n\u00a0\n\u00a0\n\u00a0\u2015\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\nOther lending subsidiaries\n\u00a0\n\u00a0\n47\u00a0\n\u00a0\n\u00a0\n50\u00a0\n\u00a0\n\u00a0\n20\u00a0\n\u00a0\n\u00a0\n35\u00a0\n\u00a0\n\u00a0\n2\u00a0\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\n\u00a0\nTotal (1)\n\u00a0\n$\n2,577\u00a0\n\u00a0\n$\n3,048\u00a0\n\u00a0\n$\n405\u00a0\n\u00a0\n$\n2,728\u00a0\n\u00a0\n$\n59\u00a0\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\n(1)\nResidential mortgage loans exclude $313 million and $232 million in government guaranteed loans and related allowance of $26 million and $27 million as of December 31, 2012 and 2011, respectively.\n\u00a0\n Field: Page; Sequence: 104; Value: 2","markdown_table":"\n\n| | | | | | | Accruing Loans and Leases | | | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | | | | | | | | | | | 90 Days Or | | | Nonaccrual | | | Total Loans And | | |\n| | | | | | | | | | 30-89 Days | | | More Past | | | Loans And | | | Leases, Excluding | | |\n| | December 31, 2011 | | | | | Current | | | Past Due | | | Due | | | Leases | | | Covered Loans | | |\n| | | | | | | | | | | | | | | | | | | | | |\n| | | | | | | (Dollars in millions) | | | | | | | | | | | | | | |\n| | Commercial: | | | | | | | | | | | | | | | | | | | |\n| | | Commercial and industrial | | | | $ | 35,746 | | $ | 85 | | $ | 2 | | $ | 582 | | $ | 36,415 | |\n| | | CRE - other | | | | | 10,273 | | | 22 | | | \u2015 | | | 394 | | | 10,689 | |\n| | | CRE - residential ADC | | | | | 1,671 | | | 14 | | | \u2015 | | | 376 | | | 2,061 | |\n| | | Other lending subsidiaries | | | | | 3,589 | | | 25 | | | 4 | | | 8 | | | 3,626 | |\n| | | | | | | | | | | | | | | | | | | | | |\n| | Retail: | | | | | | | | | | | | | | | | | | | |\n| | | Direct retail lending | | | | | 14,146 | | | 162 | | | 56 | | | 142 | | | 14,506 | |\n| | | Revolving credit | | | | | 2,173 | | | 22 | | | 17 | | | \u2015 | | | 2,212 | |\n| | | Residential mortgage (1)(2) | | | | | 19,406 | | | 560 | | | 307 | | | 308 | | | 20,581 | |\n| | | Sales finance | | | | | 7,301 | | | 75 | | | 18 | | | 7 | | | 7,401 | |\n| | | Other lending subsidiaries | | | | | 4,807 | | | 248 | | | 1 | | | 55 | | | 5,111 | |\n| | | | Total (1)(2) | | | $ | 99,112 | | $ | 1,213 | | $ | 405 | | $ | 1,872 | | $ | 102,602 | |\n| | | | | | | | | | | | | | | | | | | | | |\n| (1) | Residential mortgage loans include $84 million and $81 million in government guaranteed loans 30-89 days past due, and $252 million and $203 million in government guaranteed loans 90 days or more past due as of December 31, 2012 and 2011, respectively. | | | | | | | | | | | | | | | | | | | |\n| (2) | Residential mortgage loans exclude $5 million and $7 million in loans guaranteed by GNMA that BB&T has the option, but not the obligation, to repurchase which are past due 30-89 days at December 31, 2012 and 2011, respectively.\u00a0 Residential mortgage loans exclude $517 million and $426 million in loans guaranteed by GNMA that BB&T has the option, but not the obligation, to repurchase, which are past due 90 days or more at December 31, 2012 and 2011, respectively. | | | | | | | | | | | | | | | | | | | |\n\n","source":"TFC\/10-K\/0000092230-13-000023"} {"title":"ACL","text":"During 2012, a national bank regulatory agency issued guidance\nthat requires certain loans that had been discharged in bankruptcy and not reaffirmed by the borrower to be accounted for as TDRs\nand possibly as nonperforming, regardless of their actual payment history and expected performance. As of December 31, 2012, the\nCompany\u2019s primary regulators had not reached a final decision on how this guidance may apply to its regulated entities.\nBB&T concluded that these loans should be classified as TDRs and these are included in \u201cOther\u201d in the above table.\nBB&T has also concluded there is a reasonable expectation of collection of principal and interest and has classified these\nloans as performing unless already classified as nonperforming.Charge-offs recorded at the modification date were $25 million\nand $47 million for the year ended December 31, 2012 and 2011, respectively. The forgiveness of principal or interest for TDRs\nrecorded during the year ended December 31, 2012 and 2011 was immaterial.The following table summarizes the pre-default balance for\nmodifications that experienced a payment default that had been classified as TDRs during the previous 12 months. BB&T defines\npayment default as movement of the TDR to nonaccrual status, foreclosure or charge-off, whichever occurs first.\n\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\nYears Ended December 31,\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n2012\u00a0\n\u00a0\n2011\u00a0\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n(Dollars in millions)\n\u00a0\n\n\u00a0\nCommercial:\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\n\u00a0\n\u00a0\nCommercial and industrial\n$\n8\u00a0\n\u00a0\n$\n39\u00a0\n\u00a0\n\n\u00a0\n\u00a0\nCRE - other\n\u00a0\n6\u00a0\n\u00a0\n\u00a0\n92\u00a0\n\u00a0\n\n\u00a0\n\u00a0\nCRE - residential ADC\n\u00a0\n14\u00a0\n\u00a0\n\u00a0\n80\u00a0\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\n\u00a0\nRetail:\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\n\u00a0\n\u00a0\nDirect retail lending\n\u00a0\n8\u00a0\n\u00a0\n\u00a0\n16\u00a0\n\u00a0\n\n\u00a0\n\u00a0\nRevolving credit\n\u00a0\n12\u00a0\n\u00a0\n\u00a0\n15\u00a0\n\u00a0\n\n\u00a0\n\u00a0\nResidential mortgage\n\u00a0\n36\u00a0\n\u00a0\n\u00a0\n31\u00a0\n\u00a0\n\n\u00a0\n\u00a0\nSales finance\n\u00a0\n\u2015\n\u00a0\n\u00a0\n2\u00a0\n\u00a0\n\n\u00a0\n\u00a0\nOther lending subsidiaries\n\u00a0\n12\u00a0\n\u00a0\n\u00a0\n5\u00a0\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\nIf a TDR subsequently defaults, BB&T evaluates the TDR for possible impairment.\u00a0 As a result, the related allowance may be increased or charge-offs may be taken to reduce the carrying value of the loan.\n Field: Page; Sequence: 105; Value: 2 NOTE 5. Premises and EquipmentA summary of premises and equipment is presented in the accompanying\ntable:\n\n\u00a0\n\u00a0\n\u00a0\n\u00a0\nEstimated\n\u00a0\nDecember 31,\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\n\u00a0\nUseful Life\n\u00a0\n2012\n\u00a0\n2011\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n(Years)\n\u00a0\n(Dollars in millions)\n\u00a0\n\n\u00a0\nLand and land improvements\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n$\n547\u00a0\n\u00a0\n$\n508\u00a0\n\u00a0\n\n\u00a0\nBuildings and building improvements\n\u00a040\u00a0\n\u00a0\n\u00a0\n1,235\u00a0\n\u00a0\n\u00a0\n1,220\u00a0\n\u00a0\n\n\u00a0\nFurniture and equipment\n5 - 10\u00a0\n\u00a0\n\u00a0\n1,141\u00a0\n\u00a0\n\u00a0\n1,132\u00a0\n\u00a0\n\n\u00a0\nLeasehold improvements\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n555\u00a0\n\u00a0\n\u00a0\n521\u00a0\n\u00a0\n\n\u00a0\nConstruction in progress\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n37\u00a0\n\u00a0\n\u00a0\n37\u00a0\n\u00a0\n\n\u00a0\nCapitalized leases on premises and equipment\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n59\u00a0\n\u00a0\n\u00a0\n52\u00a0\n\u00a0\n\n\u00a0\n\u00a0\nTotal\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n3,574\u00a0\n\u00a0\n\u00a0\n3,470\u00a0\n\u00a0\n\n\u00a0\nLess - accumulated depreciation and amortization\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n(1,686)\n\u00a0\n\u00a0\n(1,615)\n\u00a0\n\n\u00a0\n\u00a0\nNet premises and equipment\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n$\n1,888\u00a0\n\u00a0\n$\n1,855\u00a0\n\u00a0\nBB&T has noncancelable leases covering certain premises\nand equipment. Total rent expense applicable to operating leases was $215 million, $199 million and $188 million for 2012, 2011\nand 2010, respectively. Rental income from owned properties and subleases was $8 million, $7 million and $8 million for 2012, 2011\nand 2010, respectively. Future minimum lease payments for operating leases for the five years subsequent to 2012 are $197 million,\n$181 million, $164 million, $147 million and $128 million. The payments for 2018 and later years total $613 million.NOTE 6. Goodwill\nand Other Intangible Assets The changes in the carrying amounts of goodwill attributable\nto each of BB&T\u2019s operating segments are reflected in the table below. To date, there have been no goodwill impairments\nrecorded by BB&T.\n\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\nResidential\n\u00a0\nDealer\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\n\u00a0\nCommunity\n\u00a0\nMortgage\n\u00a0\nFinancial\n\u00a0\nSpecialized\n\u00a0\nInsurance\n\u00a0\nFinancial\n\u00a0\n\u00a0\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\n\u00a0\nBanking\n\u00a0\nBanking\n\u00a0\nServices\n\u00a0\nLending\n\u00a0\nServices\n\u00a0\nServices\n\u00a0\nTotal\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n(Dollars in millions)\n\u00a0\n\n\u00a0\nBalance, January 1, 2011\n$\n4,537\u00a0\n\u00a0\n$\n7\u00a0\n\u00a0\n$\n111\u00a0\n\u00a0\n$\n94\u00a0\n\u00a0\n$\n1,067\u00a0\n\u00a0\n$\n192\u00a0\n\u00a0\n$\n6,008\u00a0\n\u00a0\n\n\u00a0\n\u00a0\nAcquired goodwill, net\n\u00a0\n\u00a0\u2015\n\u00a0\n\u00a0\n\u00a0\u2015\n\u00a0\n\u00a0\n\u00a0\u2015\n\u00a0\n\u00a0\n\u00a0\u2015\n\u00a0\n\u00a0\n45\u00a0\n\u00a0\n\u00a0\n\u00a0\u2015\n\u00a0\n\u00a0\n45\u00a0\n\u00a0\n\n\u00a0\n\u00a0\nContingent consideration\n\u00a0\n\u00a0\u2015\n\u00a0\n\u00a0\n\u00a0\u2015\n\u00a0\n\u00a0\n\u00a0\u2015\n\u00a0\n\u00a0\n\u00a0\u2015\n\u00a0\n\u00a0\n20\u00a0\n\u00a0\n\u00a0\n\u00a0\u2015\n\u00a0\n\u00a0\n20\u00a0\n\u00a0\n\n\u00a0\n\u00a0\nOther adjustments\n\u00a0\n5\u00a0\n\u00a0\n\u00a0\n\u00a0\u2015\n\u00a0\n\u00a0\n\u00a0\u2015\n\u00a0\n\u00a0\n\u00a0\u2015\n\u00a0\n\u00a0\n\u00a0\u2015\n\u00a0\n\u00a0\n\u00a0\u2015\n\u00a0\n\u00a0\n5\u00a0\n\u00a0\n\n\u00a0\nBalance, December 31, 2011\n$\n4,542\u00a0\n\u00a0\n$\n7\u00a0\n\u00a0\n$\n111\u00a0\n\u00a0\n$\n94\u00a0\n\u00a0\n$\n1,132\u00a0\n\u00a0\n$\n192\u00a0\n\u00a0\n$\n6,078\u00a0\n\u00a0\n\n\u00a0\n\u00a0\nAcquired goodwill, net\n\u00a0\n358\u00a0\n\u00a0\n\u00a0\n\u00a0\u2015\n\u00a0\n\u00a0\n\u00a0\u2015\n\u00a0\n\u00a0\n5\u00a0\n\u00a0\n\u00a0\n358\u00a0\n\u00a0\n\u00a0\n\u00a0\u2015\n\u00a0\n\u00a0\n721\u00a0\n\u00a0\n\n\u00a0\n\u00a0\nContingent consideration\n\u00a0\n\u00a0\u2015\n\u00a0\n\u00a0\n\u00a0\u2015\n\u00a0\n\u00a0\n\u00a0\u2015\n\u00a0\n\u00a0\n\u00a0\u2015\n\u00a0\n\u00a0\n3\u00a0\n\u00a0\n\u00a0\n\u00a0\u2015\n\u00a0\n\u00a0\n3\u00a0\n\u00a0\n\n\u00a0\n\u00a0\nOther adjustments\n\u00a0\n\u00a0\u2015\n\u00a0\n\u00a0\n\u00a0\u2015\n\u00a0\n\u00a0\n\u00a0\u2015\n\u00a0\n\u00a0\n\u00a0\u2015\n\u00a0\n\u00a0\n2\u00a0\n\u00a0\n\u00a0\n\u00a0\u2015\n\u00a0\n\u00a0\n2\u00a0\n\u00a0\n\n\u00a0\nBalance, December 31, 2012\n$\n4,900\u00a0\n\u00a0\n$\n7\u00a0\n\u00a0\n$\n111\u00a0\n\u00a0\n$\n99\u00a0\n\u00a0\n$\n1,495\u00a0\n\u00a0\n$\n192\u00a0\n\u00a0\n$\n6,804","markdown_table":"\n\n| The following tables provide a summary of the primary reason current year loan modifications were classified as TDRs and their estimated impact on the ALLL: | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| |\n| | | | | | | | Years Ended December 31, | | | | | | | | | | | | | | | | | | | | |\n| | | | | | | | 2012 | | | | | | | | | | | | 2011 | | | | | | | | |\n| | | | | | | | Types of | | | | | | | | | | | | Types of | | | | | | | | |\n| | | | | | | | Modifications (1) | | | | | | | | | Impact To | | | Modifications (1) | | | | | | Impact To | | |\n| | | | | | | | Rate (2) | | | Structure | | | Other | | | ALLL | | | Rate (2) | | | Structure | | | ALLL | | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | | | | | | | (Dollars in millions) | | | | | | | | | | | | | | | | | | | | |\n| | Commercial: | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | | Commercial and industrial | | | | | $ | 37 | | $ | 63 | | $ | 14 | | $ | \u2015 | | $ | 29 | | $ | 68 | | $ | 5 | |\n| | | CRE - other | | | | | | 60 | | | 45 | | | 7 | | | \u2015 | | | 56 | | | 58 | | | 8 | |\n| | | CRE - residential ADC | | | | | | 41 | | | 34 | | | 3 | | | (1) | | | 29 | | | 47 | | | 10 | |\n| | | Other lending subsidiaries | | | | | | \u2015 | | | \u2015 | | | \u2015 | | | \u2015 | | | 1 | | | 1 | | | \u2015 | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | Retail: | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | | Direct retail lending | | | | | | 38 | | | 17 | | | 82 | | | 35 | | | 51 | | | 5 | | | 9 | |\n| | | Revolving credit | | | | | | 30 | | | \u2015 | | | \u2015 | | | 5 | | | 40 | | | \u2015 | | | 8 | |\n| | | Residential mortgage | | | | | | 106 | | | 88 | | | 135 | | | 22 | | | 142 | | | 35 | | | 17 | |\n| | | Sales finance | | | | | | 4 | | | \u2015 | | | 12 | | | 4 | | | 5 | | | 5 | | | 1 | |\n| | | Other lending subsidiaries | | | | | | 106 | | | 2 | | | 17 | | | 35 | | | 37 | | | 7 | | | 15 | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| (1) | Includes modifications made to existing TDRs, as well as new modifications that are considered TDRs.\u00a0 Balances represent the recorded investment as of the end of the period in which the modification was made. | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| (2) | Includes TDRs made with a below market interest rate that also includes a modification of loan structure. | | | | | | | | | | | | | | | | | | | | | | | | | | |\n\n","source":"TFC\/10-K\/0000092230-13-000023"} {"title":"ACL","text":"Field: Page; Sequence: 106; Value: 2 During 2012, BB&T acquired the life and property and casualty\ninsurance divisions of Crump Group Inc. The changes in Insurance Services goodwill and other identifiable intangibles were primarily\nthe result of this acquisition, although the final purchase accounting has not been completed.During 2012, BB&T completed the acquisition of Fort Lauderdale,\nFlorida-based BankAtlantic. BB&T acquired approximately $1.7 billion in loans and assumed approximately $3.5 billion in deposits.\nBB&T also assumed the seller\u2019s obligations with respect to outstanding trust preferred securities, with an aggregate\nprincipal balance of $285 million. In exchange for the assumption of these liabilities, BB&T received a 95% preferred interest\nin a newly established LLC, which holds a pool of loans and other net assets. BankAtlantic Bancorp also provided BB&T with\nan incremental $35 million guarantee to further assure BB&T\u2019s recovery of the $285 million. The LLC\u2019s assets will\nbe monetized over time and once BB&T has recovered $285 million in preference amount from the LLC plus a defined return, BB&T\u2019s\ninterest in the LLC will terminate. The net purchase price received, excluding cash held by BankAtlantic, was $45 million, which\nconsisted of net liabilities assumed less a deposit premium of $316 million. The changes in Community Banking goodwill and CDI\nwere primarily the result of this acquisition, although the final purchase accounting has not been completed.At December 31, 2012, the weighted-average remaining life\nof CDI and other identifiable intangibles was 7.9 years and 15.9 years, respectively. Estimated amortization expense of identifiable\nintangible assets for each for the next five years total $105 million, $89 million, $75 million, $65 million and $56 million.NOTE 7. Loan ServicingResidential Mortgage Banking Activities The following tables summarize residential mortgage banking\nactivities for the periods presented:","markdown_table":"\n\n| The following table presents the gross carrying amounts and accumulated amortization for BB&T\u2019s identifiable intangible assets subject to amortization: | | | | | | | | | | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | | | | | | | | | | | | | | | | | | | | |\n| | | | | December 31, 2012 | | | | | | | | | December 31, 2011 | | | | | | | | |\n| | | | | Gross | | | | | | Net | | | Gross | | | | | | Net | | |\n| | | | | Carrying | | | Accumulated | | | Carrying | | | Carrying | | | Accumulated | | | Carrying | | |\n| | | | | Amount | | | Amortization | | | Amount | | | Amount | | | Amortization | | | Amount | | |\n| | | | | | | | | | | | | | | | | | | | | | |\n| | | | | (Dollars in millions) | | | | | | | | | | | | | | | | | |\n| | Identifiable intangible assets: | | | | | | | | | | | | | | | | | | | | |\n| | | CDI | | $ | 672 | | $ | (522) | | $ | 150 | | $ | 626 | | $ | (484) | | $ | 142 | |\n| | | Other (1) | | | 1,080 | | | (557) | | | 523 | | | 787 | | | (485) | | | 302 | |\n| | | | Totals | $ | 1,752 | | $ | (1,079) | | $ | 673 | | $ | 1,413 | | $ | (969) | | $ | 444 | |\n| | | | | | | | | | | | | | | | | | | | | | |\n| (1) | Other identifiable intangibles are primarily customer relationship intangibles. | | | | | | | | | | | | | | | | | | | | |\n\n","source":"TFC\/10-K\/0000092230-13-000023"} {"title":"ACL","text":"Field: Page; Sequence: 107; Value: 2 \n\n\u00a0\n\u00a0\n\u00a0\n\u00a0\nAs Of \/ For The\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\n\u00a0\nYears Ended December 31,\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n2012\n\u00a0\n2011\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n(Dollars in millions)\n\u00a0\n\u00a0\n\n\u00a0\nUnpaid principal balance of residential mortgage loans sold from the held for\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\n\u00a0\n\u00a0\nsale portfolio\n$\n25,640\u00a0\n\u00a0\n\u00a0\n$\n17,202\u00a0\n\u00a0\n\u00a0\n\n\u00a0\nPre-tax gains recognized on mortgage loans sold and held for sale\n\u00a0\n539\u00a0\n\u00a0\n\u00a0\n\u00a0\n175\u00a0\n\u00a0\n\u00a0\n\n\u00a0\nServicing fees recognized from mortgage loans serviced for others\n\u00a0\n247\u00a0\n\u00a0\n\u00a0\n\u00a0\n240\u00a0\n\u00a0\n\u00a0\n\n\u00a0\nApproximate weighted average servicing fee on the outstanding balance of\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\n\u00a0\n\u00a0\nresidential mortgage loans serviced for others\n\u00a0\n0.32\u00a0\n%\n\u00a0\n\u00a0\n0.34\u00a0\n%\n\u00a0\n\n\u00a0\nWeighted average coupon interest rate on mortgage loans serviced for others\n\u00a0\n4.59\u00a0\n\u00a0\n\u00a0\n\u00a0\n5.02\u00a0\n\u00a0\n\u00a0\nThe unpaid principal balances of BB&T\u2019s total residential\nmortgage loans serviced for others consist primarily of agency conforming fixed-rate mortgage loans. Mortgage loans serviced for\nothers are not included in loans and leases on the accompanying Consolidated Balance Sheets.During the years ended December 31, 2012 and 2011, BB&T\nsold residential mortgage loans from the held for sale portfolio and recognized pre-tax gains including marking LHFS to fair value\nand the impact of interest rate lock commitments. These gains are recorded in noninterest income as a component of mortgage banking\nincome. BB&T retained the related MSRs and receives servicing fees.At December 31, 2012 and 2011, BB&T had residential mortgage\nloans sold with recourse liability. In the event of nonperformance by the borrower, BB&T has recourse exposure for these loans.\nAt both December 31, 2012 and 2011, BB&T has recorded reserves related to these recourse exposures. Payments made to date have\nbeen immaterial.BB&T also issues standard representations and warranties\nrelated to mortgage loan sales to GSEs. Although these agreements often do not specify limitations, BB&T does not believe that\nany payments related to these warranties would materially change the financial condition or results of operations of BB&T.Residential MSRs are primarily recorded on the\nConsolidated Balance Sheets at fair value with changes in fair value recorded as a component of mortgage banking income in\nthe Consolidated Statements of Income for each period. BB&T uses various derivative instruments to mitigate the income\nstatement effect of changes in fair value due to changes in valuation inputs and assumptions of its residential MSRs. The\nfollowing is an analysis of the activity in BB&T\u2019s residential MSRs:\n\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\nYears Ended December 31,\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n2012\n\u00a0\n2011\n\u00a0\n2010\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n(Dollars in millions)\n\u00a0\n\n\u00a0\nCarrying value, January\u00a01,\n$\n563\u00a0\n\u00a0\n$\n830\u00a0\n\u00a0\n$\n832\u00a0\n\u00a0\n\n\u00a0\n\u00a0\nAdditions\n\u00a0\n270\u00a0\n\u00a0\n\u00a0\n225\u00a0\n\u00a0\n\u00a0\n265\u00a0\n\u00a0\n\n\u00a0\n\u00a0\nChange in fair value due to changes in valuation inputs or assumptions:\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\nPrepayment speeds\n\u00a0\n19\u00a0\n\u00a0\n\u00a0\n(284)\n\u00a0\n\u00a0\n(66)\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\nWeighted average OAS\n\u00a0\n(36)\n\u00a0\n\u00a0\n(20)\n\u00a0\n\u00a0\n(28)\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\nServicing costs\n\u00a0\n(22)\n\u00a0\n\u00a0\n(30)\n\u00a0\n\u00a0\n(44)\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\nOther\n\u00a0\n7\u00a0\n\u00a0\n\u00a0\n(7)\n\u00a0\n\u00a0\n\u2015\n\u00a0\n\n\u00a0\n\u00a0\nOther changes (1)\n\u00a0\n(174)\n\u00a0\n\u00a0\n(151)\n\u00a0\n\u00a0\n(129)\n\u00a0\n\n\u00a0\nCarrying value, December 31,\n$\n627\u00a0\n\u00a0\n$\n563\u00a0\n\u00a0\n$\n830\u00a0\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\n\u00a0\nGains (losses) on derivative financial instruments used to mitigate the\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\n\u00a0\n\u00a0\nincome statement effect of changes in fair value\n$\n128\u00a0\n\u00a0\n$\n394\u00a0\n\u00a0\n$\n196\u00a0\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\n(1)\nRepresents the realization of expected net servicing cash flows, expected borrower payments and the passage of time.\nDuring 2012, the prepayment speed assumptions were updated\nas actual prepayments have slowed relative to modeled projections as interest rates have begun to stabilize and the higher coupon,\nfaster prepaying mortgage loans were refinanced over the past two years. Management also increased its OAS assumption to reflect\nthe return that management believes a market participant would require in the current market. The servicing costs assumptions have\nalso been increased due to the expectation of higher costs that continued to impact the industry.At December 31, 2012, the valuation of MSRs was based on\nprepayment speeds ranging from 15.3% to 18.5% and OAS ranging from 8.22% to 8.35%. The sensitivity of the current fair value of\nthe residential MSRs to immediate 10% and 20% adverse changes in key economic assumptions is included in the accompanying table: Field: Page; Sequence: 108; Value: 2 \n\n\u00a0\n\u00a0\n\u00a0\n\u00a0\nDecember 31,\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n2012\n\u00a0\n2011\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n(Dollars in millions)\n\u00a0\n\n\u00a0\nFair value of residential MSRs\n$\n627\u00a0\n\u00a0\n\u00a0\n$\n563\u00a0\n\u00a0\n\u00a0\n\n\u00a0\nComposition of residential loans serviced for others:\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\n\u00a0\n\u00a0\nFixed-rate mortgage loans\n\u00a0\n99\u00a0\n%\n\u00a0\n\u00a0\n99\u00a0\n%\n\u00a0\n\n\u00a0\n\u00a0\nAdjustable-rate mortgage loans\n\u00a0\n1\u00a0\n\u00a0\n\u00a0\n\u00a0\n1\u00a0\n\u00a0\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\nTotal\n\u00a0\n100\u00a0\n%\n\u00a0\n\u00a0\n100\u00a0\n%\n\u00a0\n\n\u00a0\nWeighted average life\n\u00a0\n4.4\u00a0\nyrs\n\u00a0\n\u00a0\n3.7\u00a0\nyrs\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\n\u00a0\nPrepayment speed\n\u00a0\n17.3\u00a0\n%\n\u00a0\n\u00a0\n20.8\u00a0\n%\n\u00a0\n\n\u00a0\n\u00a0\nEffect on fair value of a 10% increase\n$\n(35)\n\u00a0\n\u00a0\n$\n(35)\n\u00a0\n\u00a0\n\n\u00a0\n\u00a0\nEffect on fair value of a 20% increase\n\u00a0\n(67)\n\u00a0\n\u00a0\n\u00a0\n(66)\n\u00a0\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\n\u00a0\nWeighted average OAS\n\u00a0\n8.3\u00a0\n%\n\u00a0\n\u00a0\n6.9\u00a0\n%\n\u00a0\n\n\u00a0\n\u00a0\nEffect on fair value of a 10% increase\n$\n(17)\n\u00a0\n\u00a0\n$\n(12)\n\u00a0\n\u00a0\n\n\u00a0\n\u00a0\nEffect on fair value of a 20% increase\n\u00a0\n(33)\n\u00a0\n\u00a0\n\u00a0\n(23)\n\u00a0\n\u00a0\nThe sensitivity calculations above are hypothetical and should\nnot be considered to be predictive of future performance. As indicated, changes in fair value based on adverse changes in assumptions\ngenerally cannot be extrapolated because the relationship of the change in assumption to the change in fair value may not be linear.\nAlso, in the above table, the effect of an adverse variation in a particular assumption on the fair value of the MSRs is calculated\nwithout changing any other assumption; while in reality, changes in one factor may result in changes in another, which may magnify\nor counteract the effect of the change.Commercial Mortgage Banking Activities CRE mortgage loans serviced for others are not included in\nloans and leases on the accompanying Consolidated Balance Sheets. The following table summarizes commercial mortgage banking activities\nfor the periods presented:\n\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\nDecember 31,\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n2012\n\u00a0\n2011\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n(Dollars in millions)\n\u00a0\n\n\u00a0\nUnpaid principal balance of CRE mortgages serviced for others\n$\n29,520\u00a0\n\u00a0\n$\n25,367\u00a0\n\u00a0\n\n\u00a0\nCRE mortgages serviced for others covered by recourse provisions\n\u00a0\n4,970\u00a0\n\u00a0\n\u00a0\n4,520\u00a0\n\u00a0\n\n\u00a0\nMaximum recourse exposure from CRE mortgages\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\n\u00a0\n\u00a0\nsold with recourse liability\n\u00a0\n1,368\u00a0\n\u00a0\n\u00a0\n1,226\u00a0\n\u00a0\n\n\u00a0\nRecorded reserves related to recourse exposure\n\u00a0\n13\u00a0\n\u00a0\n\u00a0\n15\u00a0\n\u00a0\n\n\u00a0\nOriginated CRE mortgages during the period - year to date\n\u00a0\n4,934\u00a0\n\u00a0\n\u00a0\n4,803\u00a0\n\u00a0\nNOTE 8. Federal Funds Purchased, Securities Sold Under\nAgreements to Repurchase and Short-Term Borrowed FundsFederal funds purchased, securities sold under agreements\nto repurchase and short-term borrowed funds are summarized as follows:\n\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\nDecember 31,\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n2012\n\u00a0\n2011\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n(Dollars in millions)\n\u00a0\n\n\u00a0\nFederal funds purchased\n$\n4\u00a0\n\u00a0\n$\n12\u00a0\n\u00a0\n\n\u00a0\nSecurities sold under agreements to repurchase\n\u00a0\n514\u00a0\n\u00a0\n\u00a0\n619\u00a0\n\u00a0\n\n\u00a0\nMaster notes\n\u00a0\n37\u00a0\n\u00a0\n\u00a0\n296\u00a0\n\u00a0\n\n\u00a0\nOther short-term borrowed funds\n\u00a0\n2,309\u00a0\n\u00a0\n\u00a0\n2,639\u00a0\n\u00a0\n\n\u00a0\n\u00a0\nTotal\n$\n2,864\u00a0\n\u00a0\n$\n3,566\u00a0\n\u00a0\nFederal funds purchased represent unsecured borrowings from\nother banks and generally mature daily. Securities sold under agreements to repurchase are borrowings collateralized primarily\nby securities of the U.S. government or its agencies. Master notes are unsecured, non-negotiable obligations of BB&T (variable\nrate commercial paper) that mature in 270 days or less. Other short-term borrowed funds include unsecured bank notes that mature\nin less than one year, bank obligations with Field: Page; Sequence: 109; Value: 2 a maturity of seven days that are collateralized by municipal securities and U.S.\nTreasury tax and loan deposit notes payable to the U.S. Treasury upon demand.A summary of selected data related to Federal funds purchased,\nsecurities sold under agreements to repurchase and short-term borrowed funds follows:\n\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\nAs Of \/ For The Years Ended December 31,\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n2012\n\u00a0\n2011\n\u00a0\n2010\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n(Dollars in millions)\n\u00a0\n\n\u00a0\nMaximum outstanding at any month-end during the year\n$\n4,385\u00a0\n\u00a0\n\u00a0\n$\n10,473\u00a0\n\u00a0\n\u00a0\n$\n11,690\u00a0\n\u00a0\n\u00a0\n\n\u00a0\nBalance outstanding at end of year\n\u00a0\n2,864\u00a0\n\u00a0\n\u00a0\n\u00a0\n3,566\u00a0\n\u00a0\n\u00a0\n\u00a0\n5,673\u00a0\n\u00a0\n\u00a0\n\n\u00a0\nAverage outstanding during the year\n\u00a0\n3,408\u00a0\n\u00a0\n\u00a0\n\u00a0\n5,189\u00a0\n\u00a0\n\u00a0\n\u00a0\n9,022\u00a0\n\u00a0\n\u00a0\n\n\u00a0\nAverage interest rate during the year (1)\n\u00a0\n0.20\u00a0\n%\n\u00a0\n\u00a0\n0.21\u00a0\n%\n0.24\u00a0\n%\n\u00a0\n\n\u00a0\nAverage interest rate at end of year\n\u00a0\n0.22\u00a0\n\u00a0\n\u00a0\n\u00a0\n0.20\u00a0\n\u00a0\n\u00a0\n\u00a0\n0.46\u00a0\n\u00a0\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\n(1)\nIncludes the impact of derivative activities.\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0NOTE 9. DepositsA summary of BB&T\u2019s deposits is presented in the accompanying\ntable:\n\n\n\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\nDecember 31,\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n2012\n\u00a0\n2011\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n(Dollars in millions)\n\u00a0\n\n\u00a0\nNoninterest-bearing deposits\n$\n32,452\u00a0\n\u00a0\n$\n25,684\u00a0\n\u00a0\n\n\u00a0\nInterest checking\n\u00a0\n21,091\u00a0\n\u00a0\n\u00a0\n20,701\u00a0\n\u00a0\n\n\u00a0\nMoney market and savings\n\u00a0\n47,908\u00a0\n\u00a0\n\u00a0\n44,618\u00a0\n\u00a0\n\n\u00a0\nCertificates and other time deposits\n\u00a0\n31,624\u00a0\n\u00a0\n\u00a0\n33,899\u00a0\n\u00a0\n\n\u00a0\nForeign office deposits - interest-bearing\n\u00a0\n\u00a0\u2015\n\u00a0\n\u00a0\n37\u00a0\n\u00a0\n\n\u00a0\n\u00a0\nTotal deposits\n$\n133,075\u00a0\n\u00a0\n$\n124,939\u00a0\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\n\u00a0\nTime deposits $100,000 and greater\n$\n19,328\u00a0\n\u00a0\n$\n19,819\u00a0\n\u00a0\n Field: Page; Sequence: 110; Value: 2 NOTE 10. Long-Term DebtLong-term debt comprised the following:","markdown_table":"\n\n| | | | | December 31, | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | | | 2012 | | | 2011 | | |\n| | | | | | | | | | |\n| | | | | (Dollars in millions) | | | | | |\n| | Mortgage loans managed or securitized (1) | | | $ | 29,882 | | $ | 26,559 | |\n| | Less: Loans securitized and transferred to securities available for sale | | | | 4 | | | 4 | |\n| | | LHFS | | | 3,547 | | | 3,394 | |\n| | | Covered mortgage loans | | | 1,040 | | | 1,264 | |\n| | | Mortgage loans sold with recourse | | | 1,019 | | | 1,316 | |\n| | Mortgage loans held for investment | | | $ | 24,272 | | $ | 20,581 | |\n| | Mortgage loans on nonaccrual status | | | $ | 269 | | $ | 308 | |\n| | Mortgage loans 90 days or more past due and still accruing interest (2) | | | | 92 | | | 104 | |\n| | Mortgage loans net charge-offs - year to date | | | | 133 | | | 264 | |\n| | Unpaid principal balance of residential mortgage loans servicing portfolio | | | | 101,270 | | | 91,640 | |\n| | Unpaid principal balance of residential mortgage loans serviced for others | | | | 73,769 | | | 67,066 | |\n| | Maximum recourse exposure from mortgage loans sold with recourse liability | | | | 446 | | | 522 | |\n| | Recorded reserves related to recourse exposure | | | | 12 | | | 6 | |\n| | Repurchase reserves for mortgage loan sales to GSEs | | | | 59 | | | 29 | |\n| | | | | | | | | | |\n| (1) | Balances exclude loans serviced for others with no other continuing involvement. | | | | | | | | |\n| (2) | Includes amounts related to residential mortgage LHFS and excludes amounts related to government guaranteed loans and covered mortgage loans.\u00a0 Refer to the Loans and Leases Note for additional disclosures related to past due government guaranteed loans. | | | | | | | | |\n\n","source":"TFC\/10-K\/0000092230-13-000023"} {"title":"ACL","text":"Excluding capitalized leases, future debt maturities total\n$1.7 billion, $2.1 billion, $1.1 billion, $3.9 billion, and $2.5 billion for the next five years. The maturities for 2018 and later\nyears total $7.8 billion.In connection with the acquisition of BankAtlantic, BB&T\nassumed $285 million in junior subordinated debt to unconsolidated trusts, which was redeemed prior to December 31, 2012. BB&T\nhas no junior subordinated debt outstanding as of December 31, 2012. Field: Page; Sequence: 111; Value: 2 NOTE 11. Shareholders\u2019 Equity Preferred Stock Dividends on the preferred stock, if declared, accrue and\nare payable quarterly, in arrears. For each issuance, BB&T issued depositary shares, each of which represents a fractional\nownership interest in a share of the Company\u2019s preferred stock. The preferred stock has no stated maturity and redemption\nis solely at the option of the Company in whole, but not in part, upon the occurrence of a regulatory capital treatment event,\nas defined. In addition, the preferred stock may be redeemed in whole or in part, on any dividend payment date after five years\nfrom the date of issuance. Under current rules, any redemption of the preferred stock is subject to prior approval of the FRB.\nThe preferred stock is not subject to any sinking fund or other obligations of the Company.The following table presents a summary of the preferred stock\nas of December 31, 2012:\n\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\nIssuance\n\u00a0\nLiquidation\n\u00a0\nNet\n\u00a0\nDividend\n\u00a0\n\n\u00a0\nIssue\n\u00a0\nDate\n\u00a0\nAmount\n\u00a0\nProceeds\n\u00a0\nRate\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n(Dollars in millions)\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\n\u00a0\nSeries D Non-Cumulative Perpetual Preferred Stock\n\u00a0\n5\/1\/12\n\u00a0\n$\n575\u00a0\n\u00a0\n$\n559\u00a0\n\u00a0\n5.850\u00a0\n%\n\u00a0\n\n\u00a0\nSeries E Non-Cumulative Perpetual Preferred Stock\n\u00a0\n7\/31\/12\n\u00a0\n\u00a0\n1,150\u00a0\n\u00a0\n\u00a0\n1,120\u00a0\n\u00a0\n5.625\u00a0\n\u00a0\n\u00a0\n\n\u00a0\nSeries F Non-Cumulative Perpetual Preferred Stock\n\u00a0\n10\/31\/12\n\u00a0\n\u00a0\n450\u00a0\n\u00a0\n\u00a0\n437\u00a0\n\u00a0\n5.200\u00a0\n\u00a0\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n$\n2,175\u00a0\n\u00a0\n$\n2,116\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\nEquity-Based Plans At December 31, 2012, BB&T had options, restricted shares\nand restricted share units outstanding from the following equity-based compensation plans: the 2012 Plan, the 2004 Plan, the Omnibus\nPlan, the Directors\u2019 Plan, and a plan assumed from an acquired entity. BB&T\u2019s shareholders have approved all equity-based\ncompensation plans with the exception of the plan assumed from an acquired entity. As of December 31, 2012, the 2012 Plan is the\nonly plan that has shares available for future grants. The 2012 and 2004 Plans allow for accelerated vesting of awards for holders\nwho retire and have met all retirement eligibility requirements and in connection with certain other events.BB&T\u2019s 2012 and 2004 Plans are intended to assist\nthe Company in recruiting and retaining employees, directors and independent contractors and to associate the interests of eligible\nparticipants with those of BB&T and its shareholders. At December 31, 2012, there were 30.6 million non-qualified and incentive\nstock options at exercise prices ranging from $16.88 to $44.20, 13.9 million restricted shares and restricted share units outstanding\nunder the 2004 Plan and 110 thousand restricted share units outstanding under the 2012 Plan. Awards outstanding under the 2004\nand 2012 Plans vest as follows: (1) those granted prior to 2010 generally vest over five years and (2) those granted after 2009\ngenerally vest over four years. Options outstanding have a ten year term. At December 31, 2012, there were no shares available\nfor future grants under the 2004 Plan and 34.9 million shares available for future grants under the 2012 Plan.At December 31, 2012, 14.7 million non-qualified and qualified\nstock options at prices ranging from $32.66 to $43.25 were outstanding under the Omnibus Plan. All options under this plan are\nfully vested and have a ten year term.BB&T measures the fair value of each option award on\nthe date of grant using the Black-Scholes option-pricing model with the following weighted average assumptions used for grants\nawarded in 2012, 2011 and 2010, respectively. Substantially all of BB&T\u2019s option awards are granted in February of each\nyear:\n\n\u00a0\n\u00a0\n\u00a0\n\u00a0\nDecember 31,\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n2012\n\u00a0\n2011\n\u00a0\n2010\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\n\u00a0\nAssumptions:\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\n\u00a0\n\u00a0\nRisk-free interest rate\n\u00a0\n1.5\u00a0\n%\n\u00a0\n\u00a0\n1.7\u00a0\n%\n\u00a0\n\u00a0\n2.0\u00a0\n%\n\u00a0\n\n\u00a0\n\u00a0\nDividend yield\n\u00a0\n4.4\u00a0\n\u00a0\n\u00a0\n\u00a0\n3.5\u00a0\n\u00a0\n\u00a0\n\u00a0\n5.4\u00a0\n\u00a0\n\u00a0\n\n\u00a0\n\u00a0\nVolatility factor\n\u00a0\n33.0\u00a0\n\u00a0\n\u00a0\n\u00a0\n37.2\u00a0\n\u00a0\n\u00a0\n\u00a0\n36.0\u00a0\n\u00a0\n\u00a0\n\n\u00a0\n\u00a0\nExpected life\n\u00a0\n7.0\u00a0\nyrs\n\u00a0\n\u00a0\n7.4\u00a0\nyrs\n\u00a0\n\u00a0\n7.2\u00a0\nyrs\n\u00a0\n\n\u00a0\nFair value of options per share\n$\n6.07\u00a0\n\u00a0\n\u00a0\n$\n7.45\u00a0\n\u00a0\n\u00a0\n$\n5.60\u00a0\n\u00a0\n\u00a0\nBB&T determines the assumptions used in the Black-Scholes\noption pricing model as follows: the risk-free interest rate is based on the U.S. Treasury yield curve in effect at the time of\nthe grant; the dividend yield is based on the historical dividend yield of BB&T\u2019s stock, adjusted to reflect the expected\ndividend yield over the expected life of the option; the volatility factor is based on the historical volatility of BB&T\u2019s\nstock, adjusted to reflect the ways in which current information Field: Page; Sequence: 112; Value: 2 indicates that the future is reasonably expected to differ\nfrom the past; and the weighted-average expected life is based on the historical behavior of employees related to exercises, forfeitures\nand cancellations.BB&T measures the fair value of restricted shares based\non the price of BB&T\u2019s common stock on the grant date and the fair value of restricted share units based on the price\nof BB&T\u2019s common stock on the grant date less the present value of expected dividends that are foregone during the vesting\nperiod.A summary of selected data related to BB&T\u2019s equity-based\ncompensation costs follows:\n\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\nYears Ended December 31,\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n2012\u00a0\n\u00a0\n2011\u00a0\n\u00a0\n2010\u00a0\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n(Dollars in millions)\n\u00a0\n\n\u00a0\nEquity-based compensation expense\n$\n97\u00a0\n\u00a0\n$\n98\u00a0\n\u00a0\n$\n79\u00a0\n\u00a0\n\n\u00a0\nIncome tax benefit from equity-based compensation expense\n\u00a0\n36\u00a0\n\u00a0\n\u00a0\n36\u00a0\n\u00a0\n\u00a0\n30\u00a0\n\u00a0\n\n\u00a0\nIntrinsic value of options exercised and RSUs that vested during the year\n\u00a0\n62\u00a0\n\u00a0\n\u00a0\n54\u00a0\n\u00a0\n\u00a0\n22\u00a0\n\u00a0\n\n\u00a0\nGrant date fair value of equity-based awards that vested during the year\n\u00a0\n88\u00a0\n\u00a0\n\u00a0\n76\u00a0\n\u00a0\n\u00a0\n39\u00a0\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\nDecember 31,\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n2012\u00a0\n\u00a0\n2011\u00a0\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n(Dollars in millions)\n\u00a0\n\n\u00a0\nUnrecognized compensation cost related to equity-based awards\n\u00a0\n\u00a0\n\u00a0\n$\n98\u00a0\n\u00a0\n$\n109\u00a0\n\u00a0\n\n\u00a0\nWeighted-average life over which compensation cost is expected to be recognized (years)\n\u00a0\n\u00a0\n2.0\u00a0\n\u00a0\n\u00a0\n2.6\u00a0\n\u00a0\nThe following table details the activity during 2012 related to stock options awarded by BB&T:\n\n\n\u00a0\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\nWtd. Avg.\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\nWtd. Avg.\n\u00a0\nAggregate\n\u00a0\nRemaining\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\nExercise\n\u00a0\nIntrinsic\n\u00a0\nContractual\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\nOptions\n\u00a0\nPrice\n\u00a0\nValue\n\u00a0\n\u00a0Life\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\n(Dollars in millions, except per share amounts)\n\u00a0\n\n\u00a0\nOutstanding at January 1, 2012\n45,384,554\u00a0\n\u00a0\n$\n34.42\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\n\u00a0\n\u00a0\nGranted\n4,686,780\u00a0\n\u00a0\n\u00a0\n30.09\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\n\u00a0\n\u00a0\nExercised\n(1,345,570)\n\u00a0\n\u00a0\n23.70\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\n\u00a0\n\u00a0\nForfeited or expired\n(3,334,690)\n\u00a0\n\u00a0\n36.35\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\n\u00a0\nOutstanding at December 31, 2012\n45,391,074\u00a0\n\u00a0\n\u00a0\n34.15\u00a0\n\u00a0\n$\n37\u00a0\n\u00a0\n4.3\u00a0\nyrs\n\u00a0\n\n\u00a0\nExercisable at December 31, 2012\n34,229,207\u00a0\n\u00a0\n\u00a0\n36.06\u00a0\n\u00a0\n\u00a0\n18\u00a0\n\u00a0\n3.2\u00a0\n\u00a0\n\u00a0\n\n\u00a0\nExercisable and expected to vest at December 31, 2012\n44,678,275\u00a0\n\u00a0\n\n34.25\u00a0\n\u00a0\n\u00a0\n36\u00a0\n\u00a0\n4.3\u00a0\n\u00a0\n\u00a0\nThe following table details the activity related to restricted shares and restricted share units awarded by BB&T:\n\n\n\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\nWtd. Avg.\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\nGrant Date\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\nShares\/Units\n\u00a0\nFair Value\n\u00a0\n\n\u00a0\nNonvested at January 1, 2012\n13,462,630\u00a0\n\u00a0\n$\n19.47\u00a0\n\u00a0\n\n\u00a0\n\u00a0\nGranted\n2,614,405\u00a0\n\u00a0\n\u00a0\n25.79\u00a0\n\u00a0\n\n\u00a0\n\u00a0\nVested\n(1,812,225)\n\u00a0\n\u00a0\n30.60\u00a0\n\u00a0\n\n\u00a0\n\u00a0\nForfeited\n(333,986)\n\u00a0\n\u00a0\n19.24\u00a0\n\u00a0\n\n\u00a0\nNonvested at December 31, 2012\n13,930,824\u00a0\n\u00a0\n\n19.26\u00a0\n\u00a0\nAt December 31, 2012, BB&T\u2019s restricted shares\nand restricted share units had a weighted-average life of 1.6 years. At December 31, 2012, management estimates that 12.5 million\nrestricted shares and restricted share units will vest over a weighted-average life of 1.7 years.Share Repurchase ActivityAt December 31, 2012, BB&T was authorized to repurchase\nan additional 44 million shares under the June 27, 2006 Board of Directors\u2019 authorization. No shares of common stock were\nrepurchased under this plan during 2012, 2011 or 2010. Field: Page; Sequence: 113; Value: 2 NOTE 12. Accumulated Other Comprehensive Income (Loss)\n\nThe balances in AOCI are shown in the following table:\n\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\n\u00a0\nDecember 31, 2012\n\u00a0\nDecember 31, 2011\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\nDeferred\n\u00a0\nAfter-\n\u00a0\n\u00a0\n\u00a0\nDeferred\n\u00a0\nAfter-\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\n\u00a0\nPre-Tax\n\u00a0\nTax\u00a0Expense\n\u00a0\nTax\n\u00a0\nPre-Tax\n\u00a0\nTax\u00a0Expense\n\u00a0\nTax\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\n\u00a0\nAmount\n\u00a0\n(Benefit)\n\u00a0\nAmount\n\u00a0\nAmount\n\u00a0\n(Benefit)\n\u00a0\nAmount\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n(Dollars in millions)\n\u00a0\n\n\u00a0\nUnrecognized net pension and postretirement costs\n$\n(1,146)\n\u00a0\n$\n(432)\n\u00a0\n$\n(714)\n\u00a0\n$\n(965)\n\u00a0\n$\n(362)\n\u00a0\n$\n(603)\n\u00a0\n\n\u00a0\nUnrealized net gains (losses) on cash flow hedges\n\u00a0\n(277)\n\u00a0\n\u00a0\n(104)\n\u00a0\n\u00a0\n(173)\n\u00a0\n\u00a0\n(254)\n\u00a0\n\u00a0\n(95)\n\u00a0\n\u00a0\n(159)\n\u00a0\n\n\u00a0\nUnrealized net gains (losses) on securities\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\n\u00a0\n\u00a0\navailable for sale\n\u00a0\n960\u00a0\n\u00a0\n\u00a0\n362\u00a0\n\u00a0\n\u00a0\n598\u00a0\n\u00a0\n\u00a0\n421\u00a0\n\u00a0\n\u00a0\n158\u00a0\n\u00a0\n\u00a0\n263\u00a0\n\u00a0\n\n\u00a0\nFDIC\u2019s share of unrealized (gains) losses on\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\n\u00a0\n\u00a0\nsecurities available for sale under loss\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\n\u00a0\n\u00a0\nshare agreements\u00a0\n\u00a0\n(410)\n\u00a0\n\u00a0\n(154)\n\u00a0\n\u00a0\n(256)\n\u00a0\n\u00a0\n(311)\n\u00a0\n\u00a0\n(116)\n\u00a0\n\u00a0\n(195)\n\u00a0\n\n\u00a0\nOther, net\n\u00a0\n(30)\n\u00a0\n\u00a0\n(16)\n\u00a0\n\u00a0\n(14)\n\u00a0\n\u00a0\n(37)\n\u00a0\n\u00a0\n(18)\n\u00a0\n\u00a0\n(19)\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\nTotal\n$\n(903)\n\u00a0\n$\n(344)\n\u00a0\n$\n(559)\n\u00a0\n$\n(1,146)\n\u00a0\n$\n(433)\n\u00a0\n$\n(713)\n\u00a0\nAs of December 31, 2012 and 2011, unrealized net losses on\nsecurities available for sale, excluding covered securities, included $11 million and $55 million, respectively, of pre-tax losses\nrelated to other-than-temporarily impaired non-agency RMBS where a portion of the loss was recognized in net income.NOTE 13. Income Taxes\n\nThe provision for income taxes comprised the following:\n\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\nYears Ended December 31,\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n2012\n\u00a0\n2011\n\u00a0\n2010\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n(Dollars in millions)\n\u00a0\n\n\u00a0\nCurrent expense:\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\n\u00a0\n\u00a0\nFederal\n$\n252\u00a0\n\u00a0\n$\n83\u00a0\n\u00a0\n$\n161\u00a0\n\u00a0\n\n\u00a0\n\u00a0\nState\n\u00a0\n67\u00a0\n\u00a0\n\u00a0\n26\u00a0\n\u00a0\n\u00a0\n18\u00a0\n\u00a0\n\n\u00a0\n\u00a0\nForeign\n\u00a0\n2\u00a0\n\u00a0\n\u00a0\n2\u00a0\n\u00a0\n\u00a0\n2\u00a0\n\u00a0\n\n\u00a0\nTotal current expense\n\u00a0\n321\u00a0\n\u00a0\n\u00a0\n111\u00a0\n\u00a0\n\u00a0\n181\u00a0\n\u00a0\n\n\u00a0\nDeferred expense (benefit):\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\n\u00a0\n\u00a0\nFederal\n\u00a0\n417\u00a0\n\u00a0\n\u00a0\n163\u00a0\n\u00a0\n\u00a0\n(65)\n\u00a0\n\n\u00a0\n\u00a0\nState\n\u00a0\n26\u00a0\n\u00a0\n\u00a0\n22\u00a0\n\u00a0\n\u00a0\n(1)\n\u00a0\n\n\u00a0\nTotal deferred expense (benefit)\n\u00a0\n443\u00a0\n\u00a0\n\u00a0\n185\u00a0\n\u00a0\n\u00a0\n(66)\n\u00a0\n\n\u00a0\nProvision for income taxes\n$\n764\u00a0\n\u00a0\n$\n296\u00a0\n\u00a0\n$\n115\u00a0\n\u00a0\nThe foreign income tax expense is related to income generated\non assets controlled by a foreign subsidiary of Branch Bank.The reasons for the difference between the provision for\nincome taxes and the amount computed by applying the statutory Federal income tax rate to income before income taxes were as follows: Field: Page; Sequence: 114; Value: 2 \n\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\nYears Ended December 31,\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n2012\n\u00a0\n2011\n\u00a0\n2010\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n(Dollars in millions)\n\u00a0\n\u00a0\n\n\u00a0\nFederal income taxes at statutory rate of 35%\n$\n977\u00a0\n\u00a0\n\u00a0\n$\n570\u00a0\n\u00a0\n\u00a0\n$\n339\u00a0\n\u00a0\n\u00a0\n\n\u00a0\nIncrease (decrease) in provision for income taxes as a result of:\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\n\u00a0\n\u00a0\nState income taxes, net of Federal tax benefit\n\u00a0\n61\u00a0\n\u00a0\n\u00a0\n\u00a0\n31\u00a0\n\u00a0\n\u00a0\n\u00a0\n11\u00a0\n\u00a0\n\u00a0\n\n\u00a0\n\u00a0\nFederal tax credits\n\u00a0\n(126)\n\u00a0\n\u00a0\n\u00a0\n(115)\n\u00a0\n\u00a0\n\u00a0\n(105)\n\u00a0\n\u00a0\n\n\u00a0\n\u00a0\nTax exempt income\n\u00a0\n(133)\n\u00a0\n\u00a0\n\u00a0\n(135)\n\u00a0\n\u00a0\n\u00a0\n(125)\n\u00a0\n\u00a0\n\n\u00a0\n\u00a0\nNontaxable gain on termination of leveraged lease\n\u00a0\n(12)\n\u00a0\n\u00a0\n\u00a0\n(22)\n\u00a0\n\u00a0\n\u00a0\n(2)\n\u00a0\n\u00a0\n\n\u00a0\n\u00a0\nOther, net\n\u00a0\n(3)\n\u00a0\n\u00a0\n\u00a0\n(33)\n\u00a0\n\u00a0\n\u00a0\n(3)\n\u00a0\n\u00a0\n\n\u00a0\nProvision for income taxes\n$\n764\u00a0\n\u00a0\n\u00a0\n$\n296\u00a0\n\u00a0\n\u00a0\n$\n115\u00a0\n\u00a0\n\u00a0\n\n\u00a0\nEffective income tax rate\n\u00a0\n27.4\u00a0\n%\n\u00a0\n\u00a0\n18.2\u00a0\n%\n\u00a0\n\u00a0\n11.9\u00a0\n%\n\u00a0\nThe tax effects of temporary differences that gave rise to\nsignificant portions of the net deferred tax assets and liabilities are reflected in the table below. Net deferred tax assets are\nincluded in other assets on the Consolidated Balance Sheets.\n\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\nDecember 31,\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n2012\n\u00a0\n2011\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n(Dollars in millions)\n\u00a0\n\n\u00a0\nDeferred tax assets:\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\n\u00a0\n\u00a0\nALLL\n$\n771\u00a0\n\u00a0\n$\n855\u00a0\n\u00a0\n\n\u00a0\n\u00a0\nPostretirement plans\n\u00a0\n432\u00a0\n\u00a0\n\u00a0\n362\u00a0\n\u00a0\n\n\u00a0\n\u00a0\nEquity-based compensation\n\u00a0\n144\u00a0\n\u00a0\n\u00a0\n130\u00a0\n\u00a0\n\n\u00a0\n\u00a0\nLoan\/securities basis difference\n\u00a0\n6\u00a0\n\u00a0\n\u00a0\n127\u00a0\n\u00a0\n\n\u00a0\n\u00a0\nForeclosed property write-downs\n\u00a0\n56\u00a0\n\u00a0\n\u00a0\n240\u00a0\n\u00a0\n\n\u00a0\n\u00a0\nNet unrealized loss on cash flow hedges\n\u00a0\n105\u00a0\n\u00a0\n\u00a0\n95\u00a0\n\u00a0\n\n\u00a0\n\u00a0\nOther\n\u00a0\n277\u00a0\n\u00a0\n\u00a0\n257\u00a0\n\u00a0\n\n\u00a0\nTotal deferred tax assets\n\u00a0\n1,791\u00a0\n\u00a0\n\u00a0\n2,066\u00a0\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\n\u00a0\nDeferred tax liabilities:\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\n\u00a0\n\u00a0\nNet unrealized gain on securities available for sale\n\u00a0\n201\u00a0\n\u00a0\n\u00a0\n31\u00a0\n\u00a0\n\n\u00a0\n\u00a0\nLease financing\n\u00a0\n270\u00a0\n\u00a0\n\u00a0\n267\u00a0\n\u00a0\n\n\u00a0\n\u00a0\nPrepaid pension plan expense\n\u00a0\n373\u00a0\n\u00a0\n\u00a0\n352\u00a0\n\u00a0\n\n\u00a0\n\u00a0\nLoan fees and expenses\n\u00a0\n244\u00a0\n\u00a0\n\u00a0\n225\u00a0\n\u00a0\n\n\u00a0\n\u00a0\nDepreciation\n\u00a0\n57\u00a0\n\u00a0\n\u00a0\n76\u00a0\n\u00a0\n\n\u00a0\n\u00a0\nIdentifiable intangible assets\n\u00a0\n161\u00a0\n\u00a0\n\u00a0\n92\u00a0\n\u00a0\n\n\u00a0\n\u00a0\nLoan servicing rights\n\u00a0\n201\u00a0\n\u00a0\n\u00a0\n156\u00a0\n\u00a0\n\n\u00a0\n\u00a0\nDerivatives and hedging\n\u00a0\n163\u00a0\n\u00a0\n\u00a0\n136\u00a0\n\u00a0\n\n\u00a0\n\u00a0\nOther\n\u00a0\n70\u00a0\n\u00a0\n\u00a0\n89\u00a0\n\u00a0\n\n\u00a0\nTotal deferred tax liabilities\n\u00a0\n1,740\u00a0\n\u00a0\n\u00a0\n1,424\u00a0\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\nNet deferred tax assets\n$\n51\u00a0\n\u00a0\n$\n642\u00a0\n\u00a0\nOn a periodic basis, BB&T evaluates its income tax positions\nbased on tax laws and regulations and financial reporting considerations, and records adjustments as appropriate. This evaluation\ntakes into consideration the status of current taxing authorities\u2019 examinations of BB&T\u2019s tax returns, recent positions\ntaken by the taxing authorities on similar transactions, if any, and the overall tax environment in relation to tax-advantaged\ntransactions. The following table presents changes in unrecognized tax benefits for the years ended December 31, 2012, 2011 and\n2010. Field: Page; Sequence: 115; Value: 2 \n\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\nYears Ended December 31,\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n2012\n\u00a0\n2011\n\u00a0\n2010\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n(Dollars in millions)\n\u00a0\n\n\u00a0\nBeginning balance of unrecognized tax benefits\n$\n301\u00a0\n\u00a0\n$\n292\u00a0\n\u00a0\n$\n179\u00a0\n\u00a0\n\n\u00a0\n\u00a0\nAdditions based on tax positions related to current year\n\u00a0\n14\u00a0\n\u00a0\n\u00a0\n\u00a0\u2015\n\u00a0\n\u00a0\n\u00a0\u2015\n\u00a0\n\n\u00a0\n\u00a0\nAdditions for tax positions of prior years\n\u00a0\n\u2015\n\u00a0\n\u00a0\n6\u00a0\n\u00a0\n\u00a0\n\u00a0\u2015\n\u00a0\n\n\u00a0\n\u00a0\nSettlements\n\u00a0\n(5)\n\u00a0\n\u00a0\n(1)\n\u00a0\n\u00a0\n\u00a0\u2015\n\u00a0\n\n\u00a0\n\u00a0\nLapse of statute of limitations\n\u00a0\n\u2015\n\u00a0\n\u00a0\n\u00a0\u2015\n\u00a0\n\u00a0\n(1)\n\u00a0\n\n\u00a0\n\u00a0\nUnrecognized deferred tax benefits from business acquisitions\n\u00a0\n(13)\n\u00a0\n\u00a0\n4\u00a0\n\u00a0\n\u00a0\n114\u00a0\n\u00a0\n\n\u00a0\nEnding balance of unrecognized tax benefits\n$\n297\u00a0\n\u00a0\n$\n301\u00a0\n\u00a0\n$\n292\u00a0\n\u00a0\nAs of December 31, 2012, BB&T had $297 million of unrecognized\nFederal and state tax benefits that would have impacted the effective tax rate if recognized. In addition, the Company had $37\nmillion and $39 million in liabilities for tax-related interest recorded on its Consolidated Balance Sheets at December 31, 2012\nand 2011, respectively. Total interest, net of the Federal benefit, related to unrecognized tax benefits recognized in the 2012,\n2011 and 2010 Consolidated Statements of Income was immaterial. BB&T classifies interest and penalties related to income taxes\nas a component of the provision for income taxes in the Consolidated Statements of Income.The IRS has completed its Federal income tax examinations\nof BB&T through 2007.\u00a0 Various years remain subject to examination by state taxing authorities.\u00a0 In February 2010,\nBB&T received an IRS statutory notice of deficiency for tax years 2002-2007 asserting a liability for taxes, penalties and\ninterest of approximately $892 million related to the disallowance of foreign tax credits and other deductions claimed by a subsidiary\nin connection with a financing transaction.\u00a0 BB&T paid the disputed tax, penalties and interest in March 2010 and filed\na lawsuit seeking a refund in the U.S. Court of Federal Claims.\u00a0 The Court has scheduled the trial to begin March 4, 2013.\u00a0\nBB&T recorded a receivable in other assets for the amount of this payment, less the reserve considered necessary in accordance\nwith applicable income tax accounting guidance. \u00a0On February 11, 2013, the U.S. Tax Court issued an adverse opinion in a case\nbetween the Bank of New York Mellon Corporation and the IRS involving a transaction with a structure similar to BB&T\u2019s\nfinancing transaction.\u00a0 BB&T has confidence in its position because, among other reasons, BB&T will raise arguments\nand issues in its case that were not considered by the Tax Court.\u00a0 Bank of New York Mellon has indicated it intends to appeal\nthe decision.\u00a0 Nonetheless, BB&T recognized a charge of approximately $281 million in the first quarter of 2013\nas a result of its consideration of this adverse decision.\u00a0 As litigation progresses, it is reasonably possible changes in\nthe reserve for uncertain tax positions could range from a decrease of $496 million to an increase of $328 million within the next\n12 months. Field: Page; Sequence: 116; Value: 2 NOTE 14. Benefit Plans Defined Benefit Retirement Plans BB&T provides a defined benefit retirement plan qualified\nunder the Internal Revenue Code that covers most employees. Benefits are based on years of service, age at retirement and the employee's\ncompensation during the five highest consecutive years of earnings within the last ten years of employment.In addition, supplemental retirement benefits are provided\nto certain key officers under supplemental defined benefit executive retirement plans, which are not qualified under the Internal\nRevenue Code. Although technically unfunded plans, a Rabbi Trust and insurance policies on the lives of the certain covered employees\nare available to finance future benefits.The following are the significant actuarial assumptions that\nwere used to determine net periodic pension costs for the qualified pension plan:\n\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\nDecember 31,\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n2012\n\u00a0\n2011\u00a0\n\u00a0\n2010\u00a0\n\u00a0\n\n\u00a0\nWeighted average assumed discount rate\n4.82\u00a0\n%\n\u00a0\n5.52\u00a0\n%\n\u00a0\n6.16\u00a0\n%\n\u00a0\n\n\u00a0\nWeighted average expected long-term rate of return on plan assets\n8.00\u00a0\n\u00a0\n\u00a0\n8.00\u00a0\n\u00a0\n\u00a0\n8.00\u00a0\n\u00a0\n\u00a0\n\n\u00a0\nAssumed long-term rate of annual compensation increases (1)\n4.50\u00a0\n\u00a0\n\u00a0\n4.50\u00a0\n\u00a0\n\u00a0\n4.50\u00a0\n\u00a0\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\n(1)\nRepresents the rate to be achieved by 2015.\nThe weighted average expected long-term rate of return on\nplan assets represents the average rate of return expected to be earned on plan assets over the period the benefits included in\nthe benefit obligation are to be paid. In developing the expected rate of return, BB&T considers long-term compound annualized\nreturns of historical market data for each asset category, as well as historical actual returns on the plan assets. Using this\nreference information, the Company develops forward-looking return expectations for each asset category and a weighted average\nexpected long-term rate of return for the plan based on target asset allocations contained in BB&T's Investment Policy Statement.Financial data relative to the defined benefit pension plans\nis summarized in the following tables for the years indicated. The qualified pension plan prepaid asset is recorded on the Consolidated\nBalance Sheets as a component of other assets and the nonqualified pension plans accrued liability is recorded on the Consolidated\nBalance Sheets as a component of other liabilities. The data is calculated using an actuarial measurement date of December 31.\n\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\nYears Ended December 31,\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n2012\u00a0\n\u00a0\n2011\u00a0\n\u00a0\n2010\u00a0\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n(Dollars in millions)\n\u00a0\n\n\u00a0\nNet Periodic Pension Cost:\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\n\u00a0\n\u00a0\nService cost\n$\n120\u00a0\n\u00a0\n$\n105\u00a0\n\u00a0\n$\n83\u00a0\n\u00a0\n\n\u00a0\n\u00a0\nInterest cost\n\u00a0\n110\u00a0\n\u00a0\n\u00a0\n103\u00a0\n\u00a0\n\u00a0\n93\u00a0\n\u00a0\n\n\u00a0\n\u00a0\nEstimated return on plan assets\n\u00a0\n(200)\n\u00a0\n\u00a0\n(197)\n\u00a0\n\u00a0\n(178)\n\u00a0\n\n\u00a0\n\u00a0\nNet amortization and other\n\u00a0\n76\u00a0\n\u00a0\n\u00a0\n34\u00a0\n\u00a0\n\u00a0\n24\u00a0\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\nNet periodic benefit cost\n\u00a0\n106\u00a0\n\u00a0\n\u00a0\n45\u00a0\n\u00a0\n\u00a0\n22\u00a0\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\n\u00a0\nPre-Tax Amounts Recognized in Total Comprehensive Income:\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\n\u00a0\n\u00a0\nNet actuarial loss (gain)\n\u00a0\n270\u00a0\n\u00a0\n\u00a0\n388\u00a0\n\u00a0\n\u00a0\n133\u00a0\n\u00a0\n\n\u00a0\n\u00a0\nNet amortization\n\u00a0\n(76)\n\u00a0\n\u00a0\n(34)\n\u00a0\n\u00a0\n(24)\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\nNet amount recognized in OCI\n\u00a0\n194\u00a0\n\u00a0\n\u00a0\n354\u00a0\n\u00a0\n\u00a0\n109\u00a0\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\n\u00a0\nTotal net periodic pension costs (income) recognized in\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\ntotal comprehensive income, pre-tax\n$\n300\u00a0\n\u00a0\n$\n399\u00a0\n\u00a0\n$\n131","markdown_table":"\n\n| | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | | | | | | | | | | |\n| | | | | | | December 31, | | | | | |\n| | | | | | | 2012 | | | 2011 | | |\n| | | | | | | | | | | | |\n| | | | | | | (Dollars in millions) | | | | | |\n| | BB&T Corporation: | | | | | | | | | | |\n| | | 3.85% Senior Notes Due 2012 | | | | $ | \u2015 | | $ | 1,000 | |\n| | | 3.38% Senior Notes Due 2013 | | | | | 500 | | | 500 | |\n| | | 5.70% Senior Notes Due 2014 | | | | | 510 | | | 510 | |\n| | | 2.05% Senior Notes Due 2014 | | | | | 700 | | | 700 | |\n| | | Floating Rate Senior Note Due 2014 (1) | | | | | 300 | | | 300 | |\n| | | 3.95% Senior Notes Due 2016 | | | | | 500 | | | 499 | |\n| | | 3.20% Senior Notes Due 2016 | | | | | 999 | | | 999 | |\n| | | 2.15% Senior Notes Due 2017 | | | | | 748 | | | \u2015 | |\n| | | 1.60% Senior Notes Due 2017 | | | | | 749 | | | \u2015 | |\n| | | 1.45% Senior Notes Due 2018 | | | | | 499 | | | \u2015 | |\n| | | 6.85% Senior Notes Due 2019 | | | | | 539 | | | 538 | |\n| | | 4.75% Subordinated Notes Due 2012 (2) | | | | | \u2015 | | | 490 | |\n| | | 5.20% Subordinated Notes Due 2015 (2) | | | | | 933 | | | 933 | |\n| | | 4.90% Subordinated Notes Due 2017 (2) | | | | | 345 | | | 342 | |\n| | | 5.25% Subordinated Notes Due 2019 (2) | | | | | 586 | | | 586 | |\n| | | 3.95% Subordinated Notes Due 2022 (2) | | | | | 298 | | | \u2015 | |\n| | | | | | | | | | | | |\n| | Branch Bank: | | | | | | | | | | |\n| | | Floating Rate Subordinated Notes Due 2016 (2)(3) | | | | | 350 | | | 350 | |\n| | | Floating Rate Subordinated Notes Due 2017 (2)(3) | | | | | 262 | | | 262 | |\n| | | 4.875% Subordinated Notes Due 2013 (2) | | | | | 222 | | | 222 | |\n| | | 5.625% Subordinated Notes Due 2016 (2) | | | | | 386 | | | 386 | |\n| | | | | | | | | | | | |\n| | FHLB Advances to Branch Bank: (4) | | | | | | | | | | |\n| | | Varying maturities to 2034 | | | | | 8,994 | | | 8,998 | |\n| | | | | | | | | | | | |\n| | Junior Subordinated Debt to Unconsolidated Trusts (5) | | | | | | \u2015 | | | 3,271 | |\n| | | | | | | | | | | | |\n| | Other Long-Term Debt | | | | | | 100 | | | 83 | |\n| | | | | | | | | | | | |\n| | Fair value hedge-related basis adjustments | | | | | | 594 | | | 834 | |\n| | | | Total Long-Term Debt | | | $ | 19,114 | | $ | 21,803 | |\n| | | | | | | | | | | | |\n| (1) | This floating-rate senior note is based on LIBOR and had an effective rate of 1.01% at December 31, 2012. | | | | | | | | | | |\n| (2) | Subordinated notes that qualify under the risk-based capital guidelines as Tier 2 supplementary capital, subject to certain limitations. | | | | | | | | | | |\n| (3) | These floating-rate securities are based on LIBOR, but the majority of the cash flows have been swapped to a fixed rate.\u00a0 The effective rate paid on these securities including the effect of the swapped portion was 3.25% at December 31, 2012. | | | | | | | | | | |\n| (4) | Certain of these advances have been swapped to floating rates from fixed rates or from fixed rates to floating rates.\u00a0 At December 31, 2012, the weighted average rate paid on these advances including the effect of the swapped portion was 3.58%, and the weighted average maturity was 6.9 years. | | | | | | | | | | |\n| (5) | Securities that qualified under the risk-based capital guidelines as Tier 1 capital, subject to certain limitations. | | | | | | | | | | |\n\n","source":"TFC\/10-K\/0000092230-13-000023"} {"title":"ACL","text":"Field: Page; Sequence: 117; Value: 2 \n\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\nQualified Pension Plan\n\u00a0\nNonqualified Pension Plans\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\nYears Ended December 31,\n\u00a0\nYears Ended December 31,\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n2012\u00a0\n\u00a0\n2011\n\u00a0\n2012\n\u00a0\n2011\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n(Dollars in millions)\n\u00a0\n\n\u00a0\nProjected benefit obligation, January 1,\n\u00a0\n$\n2,055\u00a0\n\u00a0\n$\n1,696\u00a0\n\u00a0\n$\n207\u00a0\n\u00a0\n$\n182\u00a0\n\u00a0\n\n\u00a0\n\u00a0\nService cost\n\u00a0\n\u00a0\n113\u00a0\n\u00a0\n\u00a0\n99\u00a0\n\u00a0\n\u00a0\n7\u00a0\n\u00a0\n\u00a0\n6\u00a0\n\u00a0\n\n\u00a0\n\u00a0\nInterest cost\n\u00a0\n\u00a0\n100\u00a0\n\u00a0\n\u00a0\n93\u00a0\n\u00a0\n\u00a0\n10\u00a0\n\u00a0\n\u00a0\n10\u00a0\n\u00a0\n\n\u00a0\n\u00a0\nActuarial (gain) loss\n\u00a0\n\u00a0\n296\u00a0\n\u00a0\n\u00a0\n218\u00a0\n\u00a0\n\u00a0\n70\u00a0\n\u00a0\n\u00a0\n17\u00a0\n\u00a0\n\n\u00a0\n\u00a0\nBenefits paid\n\u00a0\n\u00a0\n(57)\n\u00a0\n\u00a0\n(51)\n\u00a0\n\u00a0\n(7)\n\u00a0\n\u00a0\n(8)\n\u00a0\n\n\u00a0\n\u00a0\nAcquisitions\n\u00a0\n\u00a0\n41\u00a0\n\u00a0\n\u00a0\n\u00a0\u2015\n\u00a0\n\u00a0\n\u00a0\u2015\n\u00a0\n\u00a0\n\u00a0\u2015\n\u00a0\n\n\u00a0\nProjected benefit obligation, December 31,\n\u00a0\n$\n2,548\u00a0\n\u00a0\n$\n2,055\u00a0\n\u00a0\n$\n287\u00a0\n\u00a0\n$\n207\u00a0\n\u00a0\n\n\u00a0\nAccumulated benefit obligation, December 31,\n\u00a0\n$\n2,166\u00a0\n\u00a0\n$\n1,784\u00a0\n\u00a0\n$\n213\u00a0\n\u00a0\n$\n178\u00a0\n\u00a0\n\n\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\nQualified Pension Plan\n\u00a0\nNonqualified Pension Plans\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\nYears Ended December 31,\n\u00a0\nYears Ended December 31,\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n2012\n\u00a0\n2011\n\u00a0\n2012\n\u00a0\n2011\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n(Dollars in millions)\n\u00a0\n\n\u00a0\nFair value of plan assets, January 1,\n\u00a0\n$\n2,478\u00a0\n\u00a0\n$\n2,484\u00a0\n\u00a0\n$\n\u00a0\u2014\u00a0\n\u00a0\n$\n\u00a0\u2014\u00a0\n\u00a0\n\n\u00a0\n\u00a0\nActual return on plan assets\n\u00a0\n\u00a0\n295\u00a0\n\u00a0\n\u00a0\n45\u00a0\n\u00a0\n\u00a0\n\u00a0\u2014\u00a0\n\u00a0\n\u00a0\n\u00a0\u2014\u00a0\n\u00a0\n\n\u00a0\n\u00a0\nEmployer contributions\n\u00a0\n\u00a0\n202\u00a0\n\u00a0\n\u00a0\n\u00a0\u2014\u00a0\n\u00a0\n\u00a0\n7\u00a0\n\u00a0\n\u00a0\n8\u00a0\n\u00a0\n\n\u00a0\n\u00a0\nBenefits paid\n\u00a0\n\u00a0\n(57)\n\u00a0\n\u00a0\n(51)\n\u00a0\n\u00a0\n(7)\n\u00a0\n\u00a0\n(8)\n\u00a0\n\n\u00a0\n\u00a0\nAcquisitions\n\u00a0\n\u00a0\n34\u00a0\n\u00a0\n\u00a0\n\u00a0\u2014\u00a0\n\u00a0\n\u00a0\n\u00a0\u2014\u00a0\n\u00a0\n\u00a0\n\u00a0\u2014\u00a0\n\u00a0\n\n\u00a0\nFair value of plan assets, December 31,\n\u00a0\n$\n2,952\u00a0\n\u00a0\n$\n2,478\u00a0\n\u00a0\n$\n\u00a0\u2014\u00a0\n\u00a0\n$\n\u00a0\u2014\u00a0\n\u00a0\n\n\u00a0\nFunded status at end of year\n\u00a0\n$\n404\u00a0\n\u00a0\n$\n423\u00a0\n\u00a0\n$\n(287)\n\u00a0\n$\n(207)\n\u00a0\nThe following are the pre-tax amounts recognized in AOCI:\n\n\n\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\nQualified Pension Plan\n\u00a0\nNonqualified Pension Plans\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\nYears Ended December 31,\n\u00a0\nYears Ended December 31,\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n2012\n\u00a0\n2011\n\u00a0\n2012\n\u00a0\n2011\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n(Dollars in millions)\n\u00a0\n\n\u00a0\nPrior service credit (cost)\n\u00a0\n$\n1\u00a0\n\u00a0\n$\n1\u00a0\n\u00a0\n$\n(1)\n\u00a0\n$\n(1)\n\u00a0\n\n\u00a0\nNet actuarial gain (loss)\n\u00a0\n\u00a0\n(993)\n\u00a0\n\u00a0\n(864)\n\u00a0\n\u00a0\n(128)\n\u00a0\n\u00a0\n(63)\n\u00a0\n\n\u00a0\n\u00a0\nNet amount recognized\n\u00a0\n$\n(992)\n\u00a0\n$\n(863)\n\u00a0\n$\n(129)\n\u00a0\n$\n(64)\n\u00a0\nThe expected amortization of unrecognized prior service credit\nand unrecognized net actuarial losses for the qualified plan and nonqualified plans that are expected to be amortized from AOCI\ninto net periodic pension cost during 2013 are reflected in the following table:\n\n\u00a0\n\u00a0\n\u00a0\nQualified\n\u00a0\nNonqualified\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\nPension Plan\n\u00a0\nPension Plans\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\n(Dollars in millions)\n\u00a0\n\n\u00a0\nPrior service credit (cost)\n$\n1\u00a0\n\u00a0\n$\n\u00a0\u2014\u00a0\n\u00a0\n\n\u00a0\nNet actuarial gain (loss)\n\u00a0\n(82)\n\u00a0\n\u00a0\n(12)\n\u00a0\n\n\u00a0\n\u00a0\nNet amount expected to be amortized in 2013\n$\n(81)\n\u00a0\n$\n(12)\n\u00a0\nEmployer contributions to the qualified pension plan are\nin amounts between the minimum required for funding standard accounts and the maximum amount deductible for federal income tax\npurposes. Management is not required to make a contribution to the qualified pension plan during 2013; however, management elected\nto make a discretionary contribution of $270 million in the first quarter of 2013, and may make additional contributions in 2013\nif determined appropriate. For the nonqualified plans, the employer contributions are based on benefit payments. Field: Page; Sequence: 118; Value: 2 The following table reflects the estimated benefit payments\nfor the periods presented.\n\n\u00a0\n\u00a0\nQualified\n\u00a0\nNonqualified\n\u00a0\n\n\u00a0\n\u00a0\nPension Plan\n\u00a0\nPension Plans\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\n\u00a0\n\u00a0\n(Dollars in millions)\n\u00a0\n\n\u00a0\n2013\n$\n64\u00a0\n\u00a0\n$\n9\u00a0\n\u00a0\n\n\u00a0\n2014\n\u00a0\n71\u00a0\n\u00a0\n\u00a0\n10\u00a0\n\u00a0\n\n\u00a0\n2015\n\u00a0\n78\u00a0\n\u00a0\n\u00a0\n11\u00a0\n\u00a0\n\n\u00a0\n2016\n\u00a0\n86\u00a0\n\u00a0\n\u00a0\n12\u00a0\n\u00a0\n\n\u00a0\n2017\n\u00a0\n94\u00a0\n\u00a0\n\u00a0\n13\u00a0\n\u00a0\n\n\u00a0\n2018-2022\n\u00a0\n613\u00a0\n\u00a0\n\u00a0\n83\u00a0\n\u00a0\nBB&T's primary total return objective is to achieve returns\nthat, over the long term, will fund retirement liabilities and provide for the desired plan benefits in a manner that satisfies\nthe fiduciary requirements of the Employee Retirement Income Security Act of 1974. The plan assets have a long-term time horizon\nthat runs concurrent with the average life expectancy of the participants. As such, the Plan can assume a time horizon that extends\nwell beyond a full market cycle, and can assume an above-average level of risk, as measured by the standard deviation of annual\nreturn. It is expected, however, that both professional investment management and sufficient portfolio diversification will smooth\nvolatility and help to generate a reasonable consistency of return. The investments are broadly diversified among economic sector,\nindustry, quality and size in order to reduce risk and to produce incremental return. Within approved guidelines and restrictions,\ninvestment managers have wide discretion over the timing and selection of individual investments.BB&T periodically reviews its asset allocation and investment\npolicy and makes changes to its target asset allocation. BB&T has established guidelines within each asset category to ensure\nthe appropriate balance of risk and reward. The current target asset allocations for the plan assets include a range of 40% to\n52% for U.S. equity securities, 10% to 20% for international equity securities, 25% to 40% for fixed income securities, and 0%\nto 12% for alternative investments, which include real estate, hedge funds, private equities and commodities, with any remainder\nto be held in cash equivalents.The fair value of BB&T's pension plan assets at December\n31, 2012 and 2011, by asset category are reflected in the following tables. The three level fair value hierarchy that describes\nthe inputs used to measure these plan assets is defined in Note 18 \"Fair Value Disclosures.\u201d","markdown_table":"\n\n| The following are the significant actuarial assumptions that were used to determine benefit obligations: | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | | | | | | | | | | |\n| | | | | | | December 31, | | | | | |\n| | | | | | | 2012 | | | 2011 | | |\n| | Weighted average assumed discount rate | | | | | 4.25 | % | | 4.82 | % | |\n| | Assumed rate of annual compensation increases (1) | | | | | 4.50 | | | 4.50 | | |\n| | | | | | | | | | | | |\n| (1) | Represents the rate to be achieved by 2015. | | | | | | | | | | |\n\n","source":"TFC\/10-K\/0000092230-13-000023"} {"title":"ACL","text":"Field: Page; Sequence: 119; Value: 2 The following table presents the activity for Level 3 plan assets, all of which are in alternative investments:\n\n\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\nYears Ended December 31,\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n2012\n\u00a0\n2011\n\u00a0\n2010\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n(Dollars in millions)\n\u00a0\n\n\u00a0\nBalance at January 1,\n$\n99\u00a0\n\u00a0\n$\n124\u00a0\n\u00a0\n$\n92\u00a0\n\u00a0\n\n\u00a0\n\u00a0\nActual return on plan assets\n\u00a0\n7\u00a0\n\u00a0\n\u00a0\n9\u00a0\n\u00a0\n\u00a0\n9\u00a0\n\u00a0\n\n\u00a0\n\u00a0\nPurchases, sales and settlements\n\u00a0\n(8)\n\u00a0\n\u00a0\n(34)\n\u00a0\n\u00a0\n23\u00a0\n\u00a0\n\n\u00a0\nBalance at December 31,\n$\n98\u00a0\n\u00a0\n$\n99\u00a0\n\u00a0\n$\n124\u00a0\n\u00a0\nDefined Contribution PlansBB&T offers a 401(k) Savings Plan and other defined contribution\nplans that permit employees to contribute from 1% to 50% of their cash compensation. For full-time employees who are 21 years of\nage or older with one year or more of service, BB&T makes matching contributions of up to 6% of the employee's compensation.\nBB&T's contribution to the 401(k) Savings Plan and nonqualified defined contribution plans totaled $97 million, $85 million\nand $83 million for the years ended December 31, 2012, 2011 and 2010, respectively. BB&T also offers defined contribution plans\nto certain employees of subsidiaries who do not participate in the 401(k) Savings Plan.Other benefitsThere are various other employment contracts, deferred compensation\narrangements and covenants not to compete with selected members of management and certain retirees. In addition, BB&T sponsors\na plan which provides certain retirees with a subsidy for purchasing health care and life insurance. In 2004, BB&T amended\nthis plan to eliminate the subsidy for those employees retiring after December 31, 2004. BB&T also reduced the subsidy paid\nto employees who retired on or before December 31, 2004, were age 55 years or older, and had at least ten years of service. For\nthose employees, the subsidy is based upon years of service of the employee at the time of retirement. These plans and their obligations\nare not material to BB&T\u2019s financial statements.NOTE 15. Commitments and Contingencies BB&T utilizes a variety of financial instruments to meet\nthe financing needs of clients and to reduce exposure to fluctuations in interest rates. These financial instruments include commitments\nto extend credit, letters of credit and financial guarantees and derivatives. BB&T also has commitments to fund certain affordable\nhousing investments and contingent liabilities related to certain sold loans.Commitments to extend, originate or purchase credit are primarily\nlines of credit to businesses and consumers and have specified rates and maturity dates. Many of these commitments also have adverse\nchange clauses, which allow BB&T to cancel the commitment due to deterioration in the borrowers\u2019 creditworthiness.The following table presents a summary of certain commitments and contingencies:\n\n\n\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\nDecember 31,\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n2012\n\u00a0\n2011\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n(Dollars in millions)\n\u00a0\n\n\u00a0\nLetters of credit and financial guarantees written\n$\n5,164\u00a0\n\u00a0\n$\n6,095\u00a0\n\u00a0\n\n\u00a0\nCarrying amount of the liability for letter of credit guarantees\n\u00a0\n30\u00a0\n\u00a0\n\u00a0\n27\u00a0\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\n\u00a0\nInvestments related to affordable housing and historic building rehabilitation projects\n\u00a0\n1,223\u00a0\n\u00a0\n\u00a0\n1,159\u00a0\n\u00a0\n\n\u00a0\nAmount of future funding commitments included in investments related to affordable\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\n\u00a0\n\u00a0\nhousing and historic rehabilitation projects\n\u00a0\n461\u00a0\n\u00a0\n\u00a0\n394\u00a0\n\u00a0\n\n\u00a0\nLending exposure to these affordable housing projects\n\u00a0\n87\u00a0\n\u00a0\n\u00a0\n76\u00a0\n\u00a0\n\n\u00a0\nTax credits subject to recapture related to affordable housing projects\n\u00a0\n193\u00a0\n\u00a0\n\u00a0\n161\u00a0\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\n\u00a0\nInvestments in private equity and similar investments\n\u00a0\n323\u00a0\n\u00a0\n\u00a0\n261\u00a0\n\u00a0\n\n\u00a0\nFuture funding commitments to private equity and similar investments\n\u00a0\n129\u00a0\n\u00a0\n\u00a0\n129\u00a0\n\u00a0\nLetters of credit and financial guarantees written are unconditional\ncommitments issued by BB&T to guarantee the performance of a customer to a third party. These guarantees are primarily issued\nto support public and private borrowing arrangements, including commercial paper issuance, bond financing and similar transactions,\nthe majority of which are to tax Field: Page; Sequence: 120; Value: 2 exempt entities. The credit risk involved in the issuance of these guarantees is essentially the\nsame as that involved in extending loans to clients and as such, the instruments are collateralized when necessary.BB&T invests in certain affordable housing and historic\nbuilding rehabilitation projects throughout its market area as a means of supporting local communities, and receives tax credits\nrelated to these investments. BB&T typically acts as a limited partner in these investments and does not exert control over\nthe operating or financial policies of the partnerships. Branch Bank typically provides financing during the construction and development\nof the properties; however, permanent financing is generally obtained from independent third parties upon completion of a project.\nTax credits are subject to recapture by taxing authorities based on compliance features required to be met at the project level.\nBB&T\u2019s maximum potential exposure to losses relative to investments in VIEs is generally limited to the sum of the outstanding\nbalance, future funding commitments and any related loans to the entity. Loans to these entities are underwritten in substantially\nthe same manner as are other loans and are generally secured.BB&T has investments in and future funding commitments\nto certain private equity and similar investments. BB&T\u2019s risk exposure relating to such commitments is generally limited\nto the amount of investments and future funding commitments made.A derivative is a financial instrument that derives its cash\nflows, and therefore its value, by reference to an underlying instrument, index or interest rate. For additional disclosures related\nto BB&T\u2019s derivatives refer to Note 19 \u201cDerivative Financial Instruments.\u201dBB&T has sold certain mortgage-related loans that contain\nrecourse provisions. These provisions generally require BB&T to reimburse the investor for a share of any loss that is incurred\nafter the disposal of the property. BB&T also issues standard representations and warranties related to mortgage loan sales\nto GSEs. Refer to Note 7 \u201cLoan Servicing\u201d for additional disclosures related to these exposures.In the ordinary course of business, BB&T indemnifies\nits officers and directors to the fullest extent permitted by law against liabilities arising from pending litigation. BB&T\nalso issues standard representations and warranties in underwriting agreements, merger and acquisition agreements, loan sales,\nbrokerage activities and other similar arrangements. Counterparties in many of these indemnification arrangements provide similar\nindemnifications to BB&T. Although these agreements often do not specify limitations, BB&T does not believe that any payments\nrelated to these guarantees would materially change the financial position or results of operations of BB&T.Legal Proceedings The nature of the business of BB&T\u2019s banking and\nother subsidiaries ordinarily results in a certain amount of claims, litigation, investigations and legal and administrative cases\nand proceedings, all of which are considered incidental to the normal conduct of business. BB&T believes it has meritorious\ndefenses to the claims asserted against it in its currently outstanding legal proceedings and, with respect to such legal proceedings,\nintends to continue to defend itself vigorously, litigating or settling cases according to management\u2019s judgment as to what\nis in the best interests of BB&T and its shareholders.The Company was a defendant in three separate cases primarily\nchallenging the Company\u2019s daily ordering of debit transactions posted to customer checking accounts for the period from 2003\nto 2010. The plaintiffs requested class action treatment; however, no class was certified. The court initially denied motions by\nthe Company to dismiss these cases and compel them to be submitted to individual arbitration. The Company then filed appeals in\nall three matters. There were numerous subsequent procedural developments. These included an appeal to the U.S. Supreme Court in\none matter which resulted in a November 2011 decision that benefited the Company and two decisions in July 2012 in two other matters\nby the U.S. Court of Appeals for the Eleventh Circuit ordering arbitration. Those latter two matters are now concluded. The first\nremains pending and therefore, the issues raised by the motions and appeal in this one matter have not been finally decided. If\nthe motions or any appeals are ultimately granted, they would preclude class action treatment. Even if such an appeal is denied,\nthe Company believes it has meritorious defenses against this matter, including class certification. In addition, no damages have\nbeen specified by the plaintiffs. Because of these circumstances, no specific loss or range of loss can currently be determined.On at least a quarterly basis, BB&T assesses its liabilities\nand contingencies in connection with outstanding legal proceedings utilizing the latest information available. For those matters\nwhere it is probable that BB&T will incur a loss and the amount of the loss can be reasonably estimated, BB&T records a\nliability in its consolidated financial statements. These legal reserves may be increased or decreased to reflect any relevant\ndevelopments on at least a quarterly basis. For other matters, where a loss is not probable or the amount of the loss is not estimable,\nBB&T has not accrued legal reserves. While the outcome of legal proceedings is inherently uncertain, based on information currently\navailable, advice of counsel and Field: Page; Sequence: 121; Value: 2 available insurance coverage, BB&T\u2019s management\nbelieves that its established legal reserves are adequate and the liabilities arising from BB&T\u2019s legal proceedings\nwill not have a material adverse effect on the consolidated financial position, consolidated results of operations or consolidated\ncash flows of BB&T. However, in the event of unexpected future developments, it is possible that the ultimate resolution of\nthese matters, if unfavorable, may be material to BB&T\u2019s consolidated financial position, consolidated results of operations\nor consolidated cash flows.NOTE 16. Regulatory Requirements and Other RestrictionsBranch Bank and BB&T FSB are required by the FRB to maintain\nreserve balances in the form of vault cash or deposits with the FRB based on specified percentages of certain deposit types, subject\nto various adjustments. At December 31, 2012, the net reserve requirement amounted to $266 million.Branch Bank is subject to laws and regulations that limit\nthe amount of dividends it can pay. In addition, both BB&T and Branch Bank are subject to various regulatory restrictions relating\nto the payment of dividends, including requirements to maintain capital at or above regulatory minimums, and to remain \u201cwell-capitalized\u201d\nunder the prompt corrective action regulations. BB&T does not expect that any of these laws, regulations or policies will materially\naffect the ability of Branch Bank to pay dividends.BB&T is subject to various regulatory capital requirements\nadministered by the Federal banking agencies. Failure to meet minimum capital requirements can initiate certain mandatory\u2014and\npossibly additional discretionary\u2014actions by regulators that, if undertaken, could have a direct material effect on BB&T\u2019s\nfinancial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Company\nmust meet specific capital guidelines that involve quantitative measures of BB&T\u2019s assets, liabilities and certain off-balance-sheet\nitems calculated pursuant to regulatory directives. BB&T\u2019s capital amounts and classification also are subject to qualitative\njudgments by the regulators about components, risk weightings and other factors. BB&T is in full compliance with these requirements.\nBanking regulations also identify five capital categories for insured depository institutions: well-capitalized, adequately capitalized,\nundercapitalized, significantly undercapitalized and critically undercapitalized. At December 31, 2012 and 2011, BB&T and Branch\nBank were classified as \u201cwell-capitalized.\u201dQuantitative measures established by regulation to ensure\ncapital adequacy require BB&T to maintain minimum amounts and ratios of total and Tier 1 capital (as defined in the regulations)\nto risk-weighted assets (as defined), and of Tier 1 capital to average tangible assets (leverage ratio).Risk-based capital ratios, which include Tier 1\nCapital, Total Capital and Tier 1 Common Equity, are calculated based on regulatory guidance related to the measurement of\ncapital and risk-weighted assets. BB&T reevaluated its process related to calculating risk-weighted assets and determined\nthat certain adjustments, primarily related to the presentation of certain unfunded lending commitments, were required in\norder to conform to regulatory guidance. These adjustments resulted in an increase to risk-weighted assets and a decrease in\nBB&T\u2019s risk-based capital ratios.","markdown_table":"\n\n| | | | | December 31, 2012 | | | | | | | | | | | | December 31, 2011 | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | | | Total | | | Level 1 | | | Level 2 | | | Level 3 | | | Total | | | Level 1 | | | Level 2 | | | Level 3 | | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | | | | (Dollars in millions) | | | | | | | | | | | | (Dollars in millions) | | | | | | | | | | | |\n| | Cash and cash-equivalents | | | $ | 89 | | $ | 89 | | $ | \u2014 | | $ | \u2014 | | $ | \u2014 | | $ | \u2014 | | $ | \u2014 | | $ | \u2014 | |\n| | U.S. equity securities (1) | | | | 1,226 | | | 1,226 | | | \u2014 | | | \u2014 | | | 1,072 | | | 1,072 | | | \u2014 | | | \u2014 | |\n| | International equity securities (2) | | | | 570 | | | 462 | | | 108 | | | \u2014 | | | 439 | | | 336 | | | 103 | | | \u2014 | |\n| | Fixed income securities | | | | 951 | | | 126 | | | 825 | | | \u2014 | | | 852 | | | 130 | | | 722 | | | \u2014 | |\n| | Alternative investments | | | | 98 | | | \u2014 | | | \u2014 | | | 98 | | | 99 | | | \u2014 | | | \u2014 | | | 99 | |\n| | | Total plan assets (3) | | $ | 2,934 | | $ | 1,903 | | $ | 933 | | $ | 98 | | $ | 2,462 | | $ | 1,538 | | $ | 825 | | $ | 99 | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| (1) | Includes 3.7 million and 3.6 million shares of BB&T common stock valued at $107 million and $92 million at December 31, 2012 and 2011, respectively. | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| (2) | Includes a common\/commingled fund that consists of assets from several accounts, pooled together, to reduce management and administration costs. | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| (3) | Excludes accrued income of $18 million and $16 million at December 31, 2012 and 2011, respectively. | | | | | | | | | | | | | | | | | | | | | | | | | | |\n\n","source":"TFC\/10-K\/0000092230-13-000023"} {"title":"ACL","text":"As an approved seller\/servicer, Branch Bank is required\nto maintain minimum levels of shareholders\u2019 equity, as specified by various agencies, including the United States Department\nof Housing and Urban Development, GNMA, FHLMC and FNMA. At December 31, 2012 and 2011, Branch Bank\u2019s equity was above all\nrequired levels.At December 31, 2012 and 2011, BB&T had segregated cash\ndeposits totaling $36 million and $20 million, respectively. These deposits relate to monies held for the exclusive benefit of\nclients, primarily at BB&T\u2019s broker\/dealer subsidiaries. Field: Page; Sequence: 122; Value: 2 NOTE 17. Parent Company Financial Statements\n\n\u00a0\nParent Company\n\u00a0\n\n\u00a0\nCondensed Balance Sheets\n\u00a0\n\n\u00a0\nDecember 31, 2012 and 2011\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n2012\n\u00a0\n2011\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n(Dollars in millions)\n\u00a0\n\n\u00a0\nAssets:\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\n\u00a0\n\u00a0\nCash and due from banks\n$\n4,239\u00a0\n\u00a0\n$\n3,564\u00a0\n\u00a0\n\n\u00a0\n\u00a0\nSecurities available for sale at fair value\n\u00a0\n27\u00a0\n\u00a0\n\u00a0\n29\u00a0\n\u00a0\n\n\u00a0\n\u00a0\nSecurities held to maturity\n\u00a0\n37\u00a0\n\u00a0\n\u00a0\n40\u00a0\n\u00a0\n\n\u00a0\n\u00a0\nInvestment in banking subsidiaries\n\u00a0\n21,189\u00a0\n\u00a0\n\u00a0\n20,853\u00a0\n\u00a0\n\n\u00a0\n\u00a0\nInvestment in other subsidiaries\n\u00a0\n1,837\u00a0\n\u00a0\n\u00a0\n1,572\u00a0\n\u00a0\n\n\u00a0\n\u00a0\nAdvances to \/ receivables from banking subsidiaries\n\u00a0\n44\u00a0\n\u00a0\n\u00a0\n615\u00a0\n\u00a0\n\n\u00a0\n\u00a0\nAdvances to \/ receivables from other subsidiaries\n\u00a0\n2,408\u00a0\n\u00a0\n\u00a0\n2,392\u00a0\n\u00a0\n\n\u00a0\n\u00a0\nOther assets\n\u00a0\n246\u00a0\n\u00a0\n\u00a0\n268\u00a0\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\nTotal assets\n$\n30,027\u00a0\n\u00a0\n$\n29,333\u00a0\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\n\u00a0\nLiabilities and Shareholders' Equity:\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\n\u00a0\n\u00a0\nShort-term borrowed funds\n$\n37\u00a0\n\u00a0\n$\n296\u00a0\n\u00a0\n\n\u00a0\n\u00a0\nShort-term borrowed funds due to subsidiaries\n\u00a0\n\u00a0-\u00a0\n\u00a0\n\u00a0\n72\u00a0\n\u00a0\n\n\u00a0\n\u00a0\nDividends payable\n\u00a0\n170\u00a0\n\u00a0\n\u00a0\n112\u00a0\n\u00a0\n\n\u00a0\n\u00a0\nAccounts payable and other liabilities\n\u00a0\n30\u00a0\n\u00a0\n\u00a0\n116\u00a0\n\u00a0\n\n\u00a0\n\u00a0\nLong-term debt\n\u00a0\n8,567\u00a0\n\u00a0\n\u00a0\n7,930\u00a0\n\u00a0\n\n\u00a0\n\u00a0\nLong-term debt due to subsidiaries\n\u00a0\n\u00a0-\u00a0\n\u00a0\n\u00a0\n3,327\u00a0\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\nTotal liabilities\n\u00a0\n8,804\u00a0\n\u00a0\n\u00a0\n11,853\u00a0\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\nTotal shareholders' equity\n\u00a0\n21,223\u00a0\n\u00a0\n\u00a0\n17,480\u00a0\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\nTotal liabilities and shareholders' equity\n$\n30,027\u00a0\n\u00a0\n$\n29,333\u00a0\n\u00a0\n Field: Page; Sequence: 123; Value: 2 \n\n\u00a0\nParent Company\n\u00a0\n\n\u00a0\nCondensed Income Statements\n\u00a0\n\n\u00a0\nYears Ended December 31, 2012, 2011 and 2010\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n2012\u00a0\n\u00a0\n2011\u00a0\n\u00a0\n2010\u00a0\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n(Dollars in millions)\n\u00a0\n\n\u00a0\nIncome:\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\n\u00a0\n\u00a0\nDividends from banking subsidiaries\n$\n1,720\u00a0\n\u00a0\n$\n620\u00a0\n\u00a0\n$\n345\u00a0\n\u00a0\n\n\u00a0\n\u00a0\nDividends from other subsidiaries\n\u00a0\n81\u00a0\n\u00a0\n\u00a0\n278\u00a0\n\u00a0\n\u00a0\n321\u00a0\n\u00a0\n\n\u00a0\n\u00a0\nInterest and other income from subsidiaries\n\u00a0\n79\u00a0\n\u00a0\n\u00a0\n107\u00a0\n\u00a0\n\u00a0\n138\u00a0\n\u00a0\n\n\u00a0\n\u00a0\nOther income\n\u00a0\n1\u00a0\n\u00a0\n\u00a0\n8\u00a0\n\u00a0\n\u00a0\n4\u00a0\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\nTotal income\n\u00a0\n1,881\u00a0\n\u00a0\n\u00a0\n1,013\u00a0\n\u00a0\n\u00a0\n808\u00a0\n\u00a0\n\n\u00a0\nExpenses:\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\n\u00a0\n\u00a0\nInterest expense\n\u00a0\n239\u00a0\n\u00a0\n\u00a0\n334\u00a0\n\u00a0\n\u00a0\n445\u00a0\n\u00a0\n\n\u00a0\n\u00a0\nOther expenses\n\u00a0\n52\u00a0\n\u00a0\n\u00a0\n34\u00a0\n\u00a0\n\u00a0\n38\u00a0\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\nTotal expenses\n\u00a0\n291\u00a0\n\u00a0\n\u00a0\n368\u00a0\n\u00a0\n\u00a0\n483\u00a0\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\n\u00a0\nIncome before income taxes and equity in\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\n\u00a0\n\u00a0\nundistributed earnings of subsidiaries\n\u00a0\n1,590\u00a0\n\u00a0\n\u00a0\n645\u00a0\n\u00a0\n\u00a0\n325\u00a0\n\u00a0\n\n\u00a0\nIncome tax benefit\n\u00a0\n20\u00a0\n\u00a0\n\u00a0\n26\u00a0\n\u00a0\n\u00a0\n60\u00a0\n\u00a0\n\n\u00a0\nIncome before equity in undistributed earnings of subsidiaries\n\u00a0\n1,610\u00a0\n\u00a0\n\u00a0\n671\u00a0\n\u00a0\n\u00a0\n385\u00a0\n\u00a0\n\n\u00a0\nEquity in undistributed earnings of subsidiaries in excess of\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\n\u00a0\n\u00a0\ndividends from subsidiaries\n\u00a0\n418\u00a0\n\u00a0\n\u00a0\n661\u00a0\n\u00a0\n\u00a0\n469\u00a0\n\u00a0\n\n\u00a0\nNet income\n\u00a0\n2,028\u00a0\n\u00a0\n\u00a0\n1,332\u00a0\n\u00a0\n\u00a0\n854\u00a0\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\n\u00a0\nNoncontrolling interests\n\u00a0\n49\u00a0\n\u00a0\n\u00a0\n43\u00a0\n\u00a0\n\u00a0\n38\u00a0\n\u00a0\n\n\u00a0\nDividends on preferred stock\n\u00a0\n63\u00a0\n\u00a0\n\u00a0\n\u00a0\u2015\n\u00a0\n\u00a0\n\u00a0\u2015\n\u00a0\n\n\u00a0\nNet income available to common shareholders\n$\n1,916\u00a0\n\u00a0\n$\n1,289\u00a0\n\u00a0\n$\n816\u00a0\n\u00a0\n\n\n\u00a0\nParent Company\n\u00a0\n\n\u00a0\nCondensed Statements of Comprehensive Income\n\u00a0\n\n\u00a0\nYears Ended December 31, 2012, 2011 and 2010\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n2012\u00a0\n\u00a0\n\u00a0\n2011\u00a0\n\u00a0\n\u00a0\n2010\u00a0\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n(Dollars in millions)\n\u00a0\n\n\u00a0\nNet Income\n$\n2,028\u00a0\n\u00a0\n$\n1,332\u00a0\n\u00a0\n$\n854\u00a0\n\u00a0\n\n\u00a0\nOCI, Net of Tax:\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\n\u00a0\n\u00a0\nUnrealized net holding gains (losses) arising during the period on\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\nsecurities available for sale\n\u00a0\n\u00a0\u2015\n\u00a0\n\u00a0\n\u00a0\u2015\n\u00a0\n\u00a0\n7\u00a0\n\u00a0\n\n\u00a0\n\u00a0\nChange in unrecognized gains (losses) on cash flow hedges\n\u00a0\n(2)\n\u00a0\n\u00a0\n(1)\n\u00a0\n\u00a0\n\u00a0\u2015\n\u00a0\n\n\u00a0\n\u00a0\nOther, net\n\u00a0\n1\u00a0\n\u00a0\n\u00a0\n(8)\n\u00a0\n\u00a0\n\u00a0\u2015\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\nTotal OCI\n\u00a0\n(1)\n\u00a0\n\u00a0\n(9)\n\u00a0\n\u00a0\n7\u00a0\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\nTotal comprehensive income\n$\n2,027\u00a0\n\u00a0\n$\n1,323\u00a0\n\u00a0\n$\n861\u00a0\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\n\u00a0\nIncome Tax Effect of Items Included in OCI\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\n\u00a0\n\u00a0\nUnrealized net holding gains (losses) arising during the period on\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\nsecurities available for sale\n$\n\u00a0\u2015\n\u00a0\n$\n\u2015\n\u00a0\n$\n3\u00a0\n\u00a0\n\n\u00a0\n\u00a0\nChange in unrecognized gains (losses) on cash flow hedges\n\u00a0\n(1)\n\u00a0\n\u00a0\n\u00a0\u2015\n\u00a0\n\u00a0\n\u00a0\u2015\n\u00a0\n\n\u00a0\n\u00a0\nOther, net\n\u00a0\n\u00a0\u2015\n\u00a0\n\u00a0\n(4)\n\u00a0\n\u00a0\n\u00a0\u2015\n\u00a0\n Field: Page; Sequence: 124; Value: 2 \n\n\u00a0\nParent Company\n\u00a0\n\n\u00a0\nCondensed Statements of Cash Flows\n\u00a0\n\n\u00a0\nYears Ended December 31, 2012, 2011 and 2010\n\u00a0\n\n\u00a0\n.\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n2012\u00a0\n\u00a0\n2011\u00a0\n\u00a0\n2010\u00a0\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n(Dollars in millions)\n\u00a0\n\n\u00a0\nCash Flows From Operating Activities:\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\n\u00a0\n\u00a0\nNet income\n$\n2,028\u00a0\n\u00a0\n$\n1,332\u00a0\n\u00a0\n$\n854\u00a0\n\u00a0\n\n\u00a0\n\u00a0\nAdjustments to reconcile net income to net cash provided by\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\noperating activities:\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\nEquity in earnings of subsidiaries in excess of dividends\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\n\u00a0\nfrom subsidiaries\n\u00a0\n(418)\n\u00a0\n\u00a0\n(661)\n\u00a0\n\u00a0\n(469)\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\nNet change in other assets\n\u00a0\n265\u00a0\n\u00a0\n\u00a0\n63\u00a0\n\u00a0\n\u00a0\n(147)\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\nNet change in accounts payable and accrued liabilities\n\u00a0\n(71)\n\u00a0\n\u00a0\n(3)\n\u00a0\n\u00a0\n(24)\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\nOther, net\n\u00a0\n(228)\n\u00a0\n\u00a0\n20\u00a0\n\u00a0\n\u00a0\n(65)\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\n\u00a0\nNet cash from operating activities\n\u00a0\n1,576\u00a0\n\u00a0\n\u00a0\n751\u00a0\n\u00a0\n\u00a0\n149\u00a0\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\n\u00a0\nCash Flows From Investing Activities:\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\n\u00a0\n\u00a0\nProceeds from sales, calls and maturities of securities available for sale\n\u00a0\n26\u00a0\n\u00a0\n\u00a0\n49\u00a0\n\u00a0\n\u00a0\n87\u00a0\n\u00a0\n\n\u00a0\n\u00a0\nPurchases of securities available for sale\n\u00a0\n(26)\n\u00a0\n\u00a0\n(48)\n\u00a0\n\u00a0\n(8)\n\u00a0\n\n\u00a0\n\u00a0\nProceeds from maturities, calls and paydowns of securities held\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\nto maturity\n\u00a0\n4\u00a0\n\u00a0\n\u00a0\n24\u00a0\n\u00a0\n\u00a0\n\u00a0\u2015\n\u00a0\n\n\u00a0\n\u00a0\nInvestment in subsidiaries\n\u00a0\n(30)\n\u00a0\n\u00a0\n(12)\n\u00a0\n\u00a0\n(113)\n\u00a0\n\n\u00a0\n\u00a0\nAdvances to subsidiaries\n\u00a0\n(10,785)\n\u00a0\n\u00a0\n(20,306)\n\u00a0\n\u00a0\n(37,341)\n\u00a0\n\n\u00a0\n\u00a0\nProceeds from repayment of advances to subsidiaries\n\u00a0\n11,325\u00a0\n\u00a0\n\u00a0\n22,637\u00a0\n\u00a0\n\u00a0\n37,028\u00a0\n\u00a0\n\n\u00a0\n\u00a0\nNet cash from business combinations\n\u00a0\n51\u00a0\n\u00a0\n\u00a0\n\u00a0\u2015\n\u00a0\n\u00a0\n\u00a0\u2015\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\nNet cash from investing activities\n\u00a0\n565\u00a0\n\u00a0\n\u00a0\n2,344\u00a0\n\u00a0\n\u00a0\n(347)\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\n\u00a0\nCash Flows From Financing Activities:\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\n\u00a0\n\u00a0\nNet change in long-term debt\n\u00a0\n(2,764)\n\u00a0\n\u00a0\n1,121\u00a0\n\u00a0\n\u00a0\n765\u00a0\n\u00a0\n\n\u00a0\n\u00a0\nNet change in short-term borrowed funds\n\u00a0\n(259)\n\u00a0\n\u00a0\n(509)\n\u00a0\n\u00a0\n(198)\n\u00a0\n\n\u00a0\n\u00a0\nNet change in advances from subsidiaries\n\u00a0\n(72)\n\u00a0\n\u00a0\n69\u00a0\n\u00a0\n\u00a0\n3\u00a0\n\u00a0\n\n\u00a0\n\u00a0\nNet proceeds from common stock issued\n\u00a0\n15\u00a0\n\u00a0\n\u00a0\n22\u00a0\n\u00a0\n\u00a0\n110\u00a0\n\u00a0\n\n\u00a0\n\u00a0\nNet proceeds from preferred stock issued\n\u00a0\n2,116\u00a0\n\u00a0\n\u00a0\n\u00a0\u2015\n\u00a0\n\u00a0\n\u00a0\u2015\n\u00a0\n\n\u00a0\n\u00a0\nCash dividends paid on common and preferred stock\n\u00a0\n(564)\n\u00a0\n\u00a0\n(446)\n\u00a0\n\u00a0\n(415)\n\u00a0\n\n\u00a0\n\u00a0\nOther, net\n\u00a0\n62\u00a0\n\u00a0\n\u00a0\n\u00a0\u2015\n\u00a0\n\u00a0\n\u00a0\u2015\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\nNet cash from financing activities\n\u00a0\n(1,466)\n\u00a0\n\u00a0\n257\u00a0\n\u00a0\n\u00a0\n265\u00a0\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\n\u00a0\nNet Change in Cash and Cash Equivalents\n\u00a0\n675\u00a0\n\u00a0\n\u00a0\n3,352\u00a0\n\u00a0\n\u00a0\n67\u00a0\n\u00a0\n\n\u00a0\nCash and Cash Equivalents at Beginning of Year\n\u00a0\n3,564\u00a0\n\u00a0\n\u00a0\n212\u00a0\n\u00a0\n\u00a0\n145\u00a0\n\u00a0\n\n\u00a0\nCash and Cash Equivalents at End of Year\n$\n4,239\u00a0\n\u00a0\n$\n3,564\u00a0\n\u00a0\n$\n212\u00a0\n\u00a0\n Field: Page; Sequence: 125; Value: 2 NOTE 18. Fair Value Disclosures BB&T carries various assets and liabilities at fair value\nbased on applicable accounting standards, including prime residential mortgage and commercial mortgage loans originated as LHFS.\nAccounting standards define fair value as the exchange price that would be received on the measurement date to sell an asset or\nthe price paid to transfer a liability in the principal or most advantageous market available to the entity in an orderly transaction\nbetween market participants. These standards also established a three level fair value hierarchy that describes the inputs that\nare used to measure assets and liabilities. Level 1 asset and liability fair values are based on quoted prices in active markets\nfor identical assets and liabilities. Level 2 asset and liability fair values are based on observable inputs that include: quoted\nmarket prices for similar assets or liabilities; quoted market prices that are not in an active market; or other inputs that are\nobservable in the market and can be corroborated by observable market data for substantially the full term of the assets or liabilities.\nLevel 3 assets and liabilities are financial instruments whose value is calculated by the use of pricing models and\/or discounted\ncash flow methodologies, as well as financial instruments for which the determination of fair value requires significant management\njudgment or estimation. These methodologies may result in a significant portion of the fair value being derived from unobservable\ndata.Assets and liabilities measured at fair value on a\nrecurring basis are summarized below:\n\n\n\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\nFair\u00a0Value\u00a0Measurements\u00a0for\u00a0Assets\u00a0and\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\nLiabilities\u00a0Measured\u00a0on\u00a0a\u00a0 Recurring\u00a0Basis\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n12\/31\/2012\n\u00a0\nLevel 1\n\u00a0\nLevel 2\n\u00a0\nLevel 3\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n(Dollars in millions)\n\u00a0\n\n\u00a0\nAssets:\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\n\u00a0\n\u00a0\nTrading securities\n$\n497\u00a0\n\u00a0\n$\n302\u00a0\n\u00a0\n$\n194\u00a0\n\u00a0\n$\n1\u00a0\n\u00a0\n\n\u00a0\n\u00a0\nSecurities available for sale:\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\nGSE securities\n\u00a0\n290\u00a0\n\u00a0\n\u00a0\n\u00a0\u2015\n\u00a0\n\u00a0\n290\u00a0\n\u00a0\n\u00a0\n\u00a0\u2015\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\nRMBS issued by GSE\n\u00a0\n20,930\u00a0\n\u00a0\n\u00a0\n\u00a0\u2015\n\u00a0\n\u00a0\n20,930\u00a0\n\u00a0\n\u00a0\n\u00a0\u2015\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\nStates and political subdivisions\n\u00a0\n2,011\u00a0\n\u00a0\n\u00a0\n\u00a0\u2015\n\u00a0\n\u00a0\n2,011\u00a0\n\u00a0\n\u00a0\n\u00a0\u2015\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\nNon-agency RMBS\n\u00a0\n312\u00a0\n\u00a0\n\u00a0\n\u00a0\u2015\n\u00a0\n\u00a0\n312\u00a0\n\u00a0\n\u00a0\n\u00a0\u2015\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\nOther securities\n\u00a0\n3\u00a0\n\u00a0\n\u00a0\n2\u00a0\n\u00a0\n\u00a0\n1\u00a0\n\u00a0\n\u00a0\n\u00a0\u2015\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\nCovered securities\n\u00a0\n1,591\u00a0\n\u00a0\n\u00a0\n\u00a0\u2015\n\u00a0\n\u00a0\n597\u00a0\n\u00a0\n\u00a0\n994\u00a0\n\u00a0\n\n\u00a0\n\u00a0\nLHFS\n\u00a0\n3,761\u00a0\n\u00a0\n\u00a0\n\u00a0\u2015\n\u00a0\n\u00a0\n3,761\u00a0\n\u00a0\n\u00a0\n\u00a0\u2015\n\u00a0\n\n\u00a0\n\u00a0\nResidential MSRs\n\u00a0\n627\u00a0\n\u00a0\n\u00a0\n\u00a0\u2015\n\u00a0\n\u00a0\n\u00a0\u2015\n\u00a0\n\u00a0\n627\u00a0\n\u00a0\n\n\u00a0\n\u00a0\nDerivative assets: (1)\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\nInterest rate contracts\n\u00a0\n1,446\u00a0\n\u00a0\n\u00a0\n\u00a0\u2015\n\u00a0\n\u00a0\n1,391\u00a0\n\u00a0\n\u00a0\n55\u00a0\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\nForeign exchange contracts\n\u00a0\n5\u00a0\n\u00a0\n\u00a0\n\u00a0\u2015\n\u00a0\n\u00a0\n5\u00a0\n\u00a0\n\u00a0\n\u00a0\u2015\n\u00a0\n\n\u00a0\n\u00a0\nPrivate equity and similar investments (1)(2)\n\u00a0\n323\u00a0\n\u00a0\n\u00a0\n\u00a0\u2015\n\u00a0\n\u00a0\n\u00a0\u2015\n\u00a0\n\u00a0\n323\u00a0\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\nTotal assets\n$\n31,796\u00a0\n\u00a0\n$\n304\u00a0\n\u00a0\n$\n29,492\u00a0\n\u00a0\n$\n2,000\u00a0\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\n\u00a0\nLiabilities:\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\n\u00a0\n\u00a0\nDerivative liabilities: (1)\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\nInterest rate contracts\n$\n1,434\u00a0\n\u00a0\n$\n\u00a0\u2015\n\u00a0\n$\n1,433\u00a0\n\u00a0\n$\n1\u00a0\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\nForeign exchange contracts\n\u00a0\n4\u00a0\n\u00a0\n\u00a0\n\u00a0\u2015\n\u00a0\n\u00a0\n4\u00a0\n\u00a0\n\u00a0\n\u00a0\u2015\n\u00a0\n\n\u00a0\n\u00a0\nShort-term borrowed funds (3)\n\u00a0\n98\u00a0\n\u00a0\n\u00a0\n\u00a0\u2015\n\u00a0\n\u00a0\n98\u00a0\n\u00a0\n\u00a0\n\u00a0\u2015\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\nTotal liabilities\n$\n1,536\u00a0\n\u00a0\n$\n\u00a0\u2015\n\u00a0\n$\n1,535\u00a0\n\u00a0\n$\n1\u00a0\n\u00a0\n Field: Page; Sequence: 126; Value: 2","markdown_table":"\n\n| | | | | December 31, 2012 | | | | | | | | | | | | December 31, 2011 | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | | | Actual Capital | | | | | | Capital Requirements | | | | | | Actual Capital | | | | | | Capital Requirements | | | | |\n| | | | | Ratio | | | **Amount** | | | Minimum | | | Well-Capitalized | | | Ratio | | | Amount | | | Minimum | | | Well-Capitalized | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | | | | (Dollars in millions) | | | | | | | | | | | | | | | | | | | | | | |\n| Tier 1 Capital (1): | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | BB&T | | | 11.0 | % | | $ | 14,373 | | $ | 5,244 | | $ | 7,866 | | 12.0 | % | | $ | 14,913 | | $ | 4,980 | | $ | 7,470 |\n| | Branch Bank | | | 11.6 | | | | 14,587 | | | 5,011 | | | 7,516 | | 12.8 | | | | 15,274 | | | 4,759 | | | 7,138 |\n| Total Capital (1): | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | BB&T | | | 13.9 | | | | 18,204 | | | 10,488 | | | 13,110 | | 15.1 | | | | 18,862 | | | 9,961 | | | 12,451 |\n| | Branch Bank | | | 13.4 | | | | 16,809 | | | 10,022 | | | 12,527 | | 15.1 | | | | 17,915 | | | 9,517 | | | 11,897 |\n| Leverage Capital: | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | BB&T | | | 8.2 | | | | 14,373 | | | 7,001 | | | 8,751 | | 9.0 | | | | 14,913 | | | 6,614 | | | 8,267 |\n| | Branch Bank | | | 8.6 | | | | 14,587 | | | 5,086 | | | 8,476 | | 9.5 | | | | 15,274 | | | 4,801 | | | 8,002 |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| (1) | The Company has revised its calculation of risk-weighted assets and adjusted the applicable ratios. | | | | | | | | | | | | | | | | | | | | | | | | | |\n\n","source":"TFC\/10-K\/0000092230-13-000023"} {"title":"ACL","text":"The following discussion focuses on the valuation techniques\nand significant inputs used by BB&T in determining the Level 2 and Level 3 fair values of each significant class of assets\nand liabilities.BB&T generally utilizes a third-party pricing service\nin determining the fair value of its securities portfolio. Fair value measurements are derived from market-based pricing matrices\nthat were developed using observable inputs that include benchmark yields, benchmark securities, reported trades, offers, bids,\nissuer spreads and broker quotes. As described by security type below, additional inputs may be used, or some inputs may not be\napplicable. In the event that market observable data was not available, which would generally occur due to the lack of an active\nmarket for a given security, the valuation of the security would be subjective and may involve substantial judgment by management.Specific valuation techniques and inputs used in determining\nthe fair value of each significant class of assets and liabilities follows:Trading securities: Trading securities are composed\nof all types of debt and equity securities, but the majority consists of debt securities issued by the U.S. Treasury, GSEs, or\nstates and political subdivisions. The valuation techniques used for these investments are more fully discussed below.GSE securities and RMBS issued by GSE: These are debt\nsecurities issued by GSEs. GSE pass-through securities are valued using market-based pricing matrices that are based on observable\ninputs including benchmark TBA security pricing and yield curves that were estimated based on U.S. Treasury yields and certain\nfloating rate indices. The pricing matrices for these securities may also give consideration to pool-specific data supplied directly\nby the GSE. GSE CMOs are valued using market-based pricing matrices that are based on observable inputs including offers, bids,\nreported trades, dealer quotes and market research reports, the characteristics of a specific tranche, market convention prepayment\nspeeds and benchmark yield curves as described above.States and political subdivisions: These securities\nare valued using market-based pricing matrices that are based on observable inputs including MSRB reported trades, issuer spreads,\nmaterial event notices and benchmark yield curves. Field: Page; Sequence: 127; Value: 2 Non-agency RMBS: Pricing matrices for these securities\nare based on observable inputs including offers, bids, reported trades, dealer quotes and market research reports, the characteristics\nof a specific tranche, market convention prepayment speeds and benchmark yield curves as described above.Other securities: These securities consist primarily\nof mutual funds and corporate bonds. These securities are valued based on a review of quoted market prices for assets as well as\nthrough the various other inputs discussed previously.Covered securities: Covered securities are covered\nby FDIC loss sharing agreements and consist of re-remic non-agency RMBS, municipal securities and non-agency RMBS. Covered state\nand political subdivision securities and certain non-agency RMBS are valued in a manner similar to the approach described above\nfor these asset classes. The re-remic non-agency RMBS, which are categorized as Level 3, were valued based on broker dealer quotes\nthat reflected certain unobservable market inputs. Sensitivity to changes in the fair value of covered securities is significantly\noffset by changes in BB&T\u2019s indemnification asset from the FDIC. Subject to certain restrictions, the terms of the loss\nsharing agreement associated with these re-remic non-agency RMBS provide that Branch Bank will be reimbursed by the FDIC for 95%\nof any and all losses.LHFS: BB&T originates certain mortgage loans to\nbe sold to investors. These loans are carried at fair value based on BB&T\u2019s election of the Fair Value Option. The fair\nvalue is primarily based on quoted market prices for securities backed by similar types of loans. The changes in fair value of\nthese assets are largely driven by changes in interest rates subsequent to loan funding and changes in the fair value of servicing\nassociated with the mortgage loan held for sale.Residential MSRs: BB&T estimates the fair value\nof residential MSRs using an OAS valuation model to project MSR cash flows over multiple interest rate scenarios, which are then\ndiscounted at risk-adjusted rates. The OAS model considers portfolio characteristics, contractually specified servicing fees, prepayment\nassumptions, delinquency rates, late charges, other ancillary revenue, costs to service and other economic factors. Fair value\nestimates and assumptions are compared to industry surveys, recent market activity, actual portfolio experience and, when available,\nother observable market data.Derivative assets and liabilities: BB&T uses derivatives\nto manage various financial risks. The fair values of derivative financial instruments are determined based on quoted market prices,\ndealer quotes and internal pricing models that are primarily sensitive to market observable data. The fair values of interest rate\nlock commitments, which are related to mortgage loan commitments and are categorized as Level 3, are based on quoted market prices\nadjusted for commitments that BB&T does not expect to fund and include the value attributable to the net servicing fees.Private equity and similar investments: BB&T has\nprivate equity and similar investments that are measured at fair value based on the investment\u2019s net asset value. In many\ncases there are no observable market values for these investments and therefore management must estimate the fair value based on\na comparison of the operating performance of the company to multiples in the marketplace for similar entities. This analysis requires\nsignificant judgment and actual values in a sale could differ materially from those estimated.Short-term borrowed funds: Short-term borrowed funds\nrepresent debt securities sold short. These are entered into through BB&T\u2019s brokerage subsidiary. These trades are executed\nas a hedging strategy for the purposes of supporting institutional and retail client trading activities. Field: Page; Sequence: 128; Value: 2 \n\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\nFair Value Measurements Using Significant Unobservable Inputs\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\nPrivate\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\nEquity and\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\nCovered\n\u00a0\nResidential\n\u00a0\nNet\n\u00a0\nSimilar\n\u00a0\n\n\u00a0\nYear Ended December 31, 2012\n\u00a0\nTrading\n\u00a0\nSecurities\n\u00a0\nMSRs\n\u00a0\nDerivatives\n\u00a0\nInvestments\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n(Dollars in millions)\n\u00a0\n\n\u00a0\nBalance at January 1, 2012\n\u00a0\n$\n1\u00a0\n\u00a0\n$\n984\u00a0\n\u00a0\n$\n563\u00a0\n\u00a0\n$\n59\u00a0\n\u00a0\n$\n261\u00a0\n\u00a0\n\n\u00a0\n\u00a0\nTotal realized and unrealized gains (losses):\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\nIncluded in earnings:\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\n\u00a0\nInterest income\n\u00a0\n\u00a0\n\u00a0\u2015\n\u00a0\n\u00a0\n48\u00a0\n\u00a0\n\u00a0\n\u00a0\u2015\n\u00a0\n\u00a0\n\u00a0\u2015\n\u00a0\n\u00a0\n\u00a0\u2015\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\n\u00a0\nMortgage banking income\n\u00a0\n\u00a0\n\u00a0\u2015\n\u00a0\n\u00a0\n\u00a0\u2015\n\u00a0\n\u00a0\n(32)\u00a0\n\u00a0\n\u00a0\n458\u00a0\n\u00a0\n\u00a0\n\u00a0\u2015\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\n\u00a0\nOther noninterest income\n\u00a0\n\u00a0\n\u00a0\u2015\n\u00a0\n\u00a0\n\u00a0\u2015\n\u00a0\n\u00a0\n\u00a0\u2015\n\u00a0\n\u00a0\n\u00a0\u2015\n\u00a0\n\u00a0\n21\u00a0\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\nIncluded in unrealized net holding gains (losses)\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\n\u00a0\nin OCI\n\u00a0\n\u00a0\n\u00a0\u2015\n\u00a0\n\u00a0\n88\u00a0\n\u00a0\n\u00a0\n\u00a0\u2015\n\u00a0\n\u00a0\n\u00a0\u2015\n\u00a0\n\u00a0\n\u00a0\u2015\n\u00a0\n\n\u00a0\n\u00a0\nPurchases\n\u00a0\n\u00a0\n4\u00a0\n\u00a0\n\u00a0\n\u00a0\u2015\n\u00a0\n\u00a0\n\u00a0\u2015\n\u00a0\n\u00a0\n\u00a0\u2015\n\u00a0\n\u00a0\n101\u00a0\n\u00a0\n\n\u00a0\n\u00a0\nIssuances\n\u00a0\n\u00a0\n\u00a0\u2015\n\u00a0\n\u00a0\n\u00a0\u2015\n\u00a0\n\u00a0\n270\u00a0\n\u00a0\n\u00a0\n308\u00a0\n\u00a0\n\u00a0\n\u00a0\u2015\n\u00a0\n\n\u00a0\n\u00a0\nSales\n\u00a0\n\u00a0\n(4)\n\u00a0\n\u00a0\n\u00a0\u2015\n\u00a0\n\u00a0\n\u00a0\u2015\n\u00a0\n\u00a0\n\u00a0\u2015\n\u00a0\n\u00a0\n(59)\n\u00a0\n\n\u00a0\n\u00a0\nSettlements\n\u00a0\n\u00a0\n\u00a0\u2015\n\u00a0\n\u00a0\n(126)\n\u00a0\n\u00a0\n(174)\n\u00a0\n\u00a0\n(771)\n\u00a0\n\u00a0\n(1)\n\u00a0\n\n\u00a0\nBalance at December 31, 2012\n\u00a0\n$\n1\u00a0\n\u00a0\n$\n994\u00a0\n\u00a0\n$\n627\u00a0\n\u00a0\n$\n54\u00a0\n\u00a0\n$\n323\u00a0\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\n\u00a0\nChange in unrealized gains (losses) included in earnings for\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\n\u00a0\n\u00a0\nthe period, attributable to assets and liabilities still held\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\n\u00a0\n\u00a0\nat December 31, 2012\n\u00a0\n$\n\u00a0\u2015\n\u00a0\n$\n48\u00a0\n\u00a0\n$\n(32)\n\u00a0\n$\n54\u00a0\n\u00a0\n$\n12\u00a0\n\u00a0\n\n\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\nFair Value Measurements Using Significant Unobservable Inputs\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\nPrivate\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\nStates &\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\nEquity and\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\nPolitical\n\u00a0\nOther\n\u00a0\nCovered\n\u00a0\nResidential\n\u00a0\nNet\n\u00a0\nSimilar\n\u00a0\n\n\u00a0\nYear Ended December 31, 2011\n\u00a0\nTrading\n\u00a0\nSubdivisions\n\u00a0\nSecurities\n\u00a0\nSecurities\n\u00a0\nMSRs\n\u00a0\nDerivatives\n\u00a0\nInvestments\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n(Dollars in millions)\n\u00a0\n\n\u00a0\nBalance at January 1, 2011\n\u00a0\n$\n11\u00a0\n\u00a0\n$\n119\u00a0\n\u00a0\n$\n7\u00a0\n\u00a0\n$\n954\u00a0\n\u00a0\n$\n830\u00a0\n\u00a0\n$\n(25)\n\u00a0\n$\n266\u00a0\n\u00a0\n\n\u00a0\n\u00a0\nTotal realized and unrealized gains (losses):\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\nIncluded in earnings:\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\n\u00a0\nInterest income\n\u00a0\n\u00a0\n\u00a0\u2015\n\u00a0\n\u00a0\n\u00a0\u2015\n\u00a0\n\u00a0\n\u00a0\u2015\n\u00a0\n\u00a0\n54\u00a0\n\u00a0\n\u00a0\n\u00a0\u2015\n\u00a0\n\u00a0\n\u00a0\u2015\n\u00a0\n\u00a0\n\u00a0\u2015\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\n\u00a0\nMortgage banking income\n\u00a0\n\u00a0\n\u00a0\u2015\n\u00a0\n\u00a0\n\u00a0\u2015\n\u00a0\n\u00a0\n\u00a0\u2015\n\u00a0\n\u00a0\n\u00a0\u2015\n\u00a0\n\u00a0\n(341)\n\u00a0\n\u00a0\n151\u00a0\n\u00a0\n\u00a0\n\u00a0\u2015\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\n\u00a0\nOther noninterest income\n\u00a0\n\u00a0\n(3)\n\u00a0\n\u00a0\n\u00a0\u2015\n\u00a0\n\u00a0\n\u00a0\u2015\n\u00a0\n\u00a0\n\u00a0\u2015\n\u00a0\n\u00a0\n\u00a0\u2015\n\u00a0\n\u00a0\n\u00a0\u2015\n\u00a0\n\u00a0\n64\u00a0\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\nIncluded in unrealized net holding\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\n\u00a0\ngains (losses) in OCI\n\u00a0\n\u00a0\n\u00a0\u2015\n\u00a0\n\u00a0\n(9)\n\u00a0\n\u00a0\n(1)\n\u00a0\n\u00a0\n24\u00a0\n\u00a0\n\u00a0\n\u00a0\u2015\n\u00a0\n\u00a0\n\u00a0\u2015\n\u00a0\n\u00a0\n\u00a0\u2015\n\u00a0\n\n\u00a0\n\u00a0\nPurchases\n\u00a0\n\u00a0\n7\u00a0\n\u00a0\n\u00a0\n\u00a0\u2015\n\u00a0\n\u00a0\n\u00a0\u2015\n\u00a0\n\u00a0\n\u00a0\u2015\n\u00a0\n\u00a0\n\u00a0\u2015\n\u00a0\n\u00a0\n\u00a0\u2015\n\u00a0\n\u00a0\n61\u00a0\n\u00a0\n\n\u00a0\n\u00a0\nIssuances\n\u00a0\n\u00a0\n\u00a0\u2015\n\u00a0\n\u00a0\n\u00a0\u2015\n\u00a0\n\u00a0\n\u00a0\u2015\n\u00a0\n\u00a0\n\u00a0\u2015\n\u00a0\n\u00a0\n225\u00a0\n\u00a0\n\u00a0\n110\u00a0\n\u00a0\n\u00a0\n\u00a0\u2015\n\u00a0\n\n\u00a0\n\u00a0\nSales\n\u00a0\n\u00a0\n(14)\n\u00a0\n\u00a0\n\u00a0\u2015\n\u00a0\n\u00a0\n\u00a0\u2015\n\u00a0\n\u00a0\n\u00a0\u2015\n\u00a0\n\u00a0\n\u00a0\u2015\n\u00a0\n\u00a0\n\u00a0\u2015\n\u00a0\n\u00a0\n(112)\n\u00a0\n\n\u00a0\n\u00a0\nSettlements\n\u00a0\n\u00a0\n\u00a0\u2015\n\u00a0\n\u00a0\n(53)\n\u00a0\n\u00a0\n(1)\n\u00a0\n\u00a0\n(48)\n\u00a0\n\u00a0\n(151)\n\u00a0\n\u00a0\n(177)\n\u00a0\n\u00a0\n(15)\n\u00a0\n\n\u00a0\n\u00a0\nTransfers into Level 3\n\u00a0\n\u00a0\n\u00a0\u2015\n\u00a0\n\u00a0\n\u00a0\u2015\n\u00a0\n\u00a0\n\u00a0\u2015\n\u00a0\n\u00a0\n\u00a0\u2015\n\u00a0\n\u00a0\n\u00a0\u2015\n\u00a0\n\u00a0\n\u00a0\u2015\n\u00a0\n\u00a0\n1\u00a0\n\u00a0\n\n\u00a0\n\u00a0\nTransfers out of Level 3\n\u00a0\n\u00a0\n\u00a0\u2015\n\u00a0\n\u00a0\n(57)\n\u00a0\n\u00a0\n(5)\n\u00a0\n\u00a0\n\u00a0\u2015\n\u00a0\n\u00a0\n\u00a0\u2015\n\u00a0\n\u00a0\n\u00a0\u2015\n\u00a0\n\u00a0\n(4)\n\u00a0\n\n\u00a0\nBalance at December 31, 2011\n\u00a0\n$\n1\u00a0\n\u00a0\n$\n\u00a0\u2015\n\u00a0\n$\n\u00a0\u2015\n\u00a0\n$\n984\u00a0\n\u00a0\n$\n563\u00a0\n\u00a0\n$\n59\u00a0\n\u00a0\n$\n261\u00a0\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\n\u00a0\nChange in unrealized gains (losses)\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\n\u00a0\n\u00a0\nincluded in earnings for the period,\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\n\u00a0\n\u00a0\nattributable to assets and liabilities\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\n\u00a0\n\u00a0\nstill held at December 31, 2011\n\u00a0\n$\n\u00a0\u2015\n\u00a0\n$\n\u00a0\u2015\n\u00a0\n$\n\u00a0\u2015\n\u00a0\n$\n54\u00a0\n\u00a0\n$\n(341)\n\u00a0\n$\n59\u00a0\n\u00a0\n$\n39\u00a0\n\u00a0\n Field: Page; Sequence: 129; Value: 2 \n\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\nFair Value Measurements Using Significant Unobservable Inputs\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\nPrivate\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\nStates &\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\nEquity and\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\nPolitical\n\u00a0\nOther\n\u00a0\nCovered\n\u00a0\nResidential\n\u00a0\nNet\n\u00a0\nSimilar\n\u00a0\n\n\u00a0\nYear Ended December 31, 2010\n\u00a0\nTrading\n\u00a0\nSubdivisions\n\u00a0\nSecurities\n\u00a0\nSecurities\n\u00a0\nMSRs\n\u00a0\nDerivatives\n\u00a0\nInvestments\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n(Dollars in millions)\n\u00a0\n\n\u00a0\nBalance at January 1, 2010\n\u00a0\n$\n93\u00a0\n\u00a0\n$\n210\u00a0\n\u00a0\n$\n9\u00a0\n\u00a0\n$\n668\u00a0\n\u00a0\n$\n832\u00a0\n\u00a0\n$\n(20)\n\u00a0\n$\n281\u00a0\n\u00a0\n\n\u00a0\n\u00a0\nTotal realized and unrealized gains (losses):\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\nIncluded in earnings:\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\n\u00a0\nInterest income\n\u00a0\n\u00a0\n\u00a0\u2015\n\u00a0\n\u00a0\n\u00a0\u2015\n\u00a0\n\u00a0\n\u00a0\u2015\n\u00a0\n\u00a0\n61\u00a0\n\u00a0\n\u00a0\n\u00a0\u2015\n\u00a0\n\u00a0\n\u00a0\u2015\n\u00a0\n\u00a0\n\u00a0\u2015\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\n\u00a0\nMortgage banking income\n\u00a0\n\u00a0\n\u00a0\u2015\n\u00a0\n\u00a0\n\u00a0\u2015\n\u00a0\n\u00a0\n\u00a0\u2015\n\u00a0\n\u00a0\n\u00a0\u2015\n\u00a0\n\u00a0\n(138)\n\u00a0\n\u00a0\n246\u00a0\n\u00a0\n\u00a0\n\u00a0\u2015\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\n\u00a0\nOther noninterest income\n\u00a0\n\u00a0\n(1)\n\u00a0\n\u00a0\n\u00a0\u2015\n\u00a0\n\u00a0\n\u00a0\u2015\n\u00a0\n\u00a0\n\u00a0\u2015\n\u00a0\n\u00a0\n\u00a0\u2015\n\u00a0\n\u00a0\n\u00a0\u2015\n\u00a0\n\u00a0\n35\u00a0\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\nIncluded in OCI\n\u00a0\n\u00a0\n\u00a0\u2015\n\u00a0\n\u00a0\n12\u00a0\n\u00a0\n\u00a0\n(1)\n\u00a0\n\u00a0\n225\u00a0\n\u00a0\n\u00a0\n\u00a0\u2015\n\u00a0\n\u00a0\n\u00a0\u2015\n\u00a0\n\u00a0\n\u00a0\u2015\n\u00a0\n\n\u00a0\n\u00a0\nPurchases, issuances and settlements\n\u00a0\n\u00a0\n(5)\n\u00a0\n\u00a0\n(87)\n\u00a0\n\u00a0\n(1)\n\u00a0\n\u00a0\n\u00a0\u2015\n\u00a0\n\u00a0\n136\u00a0\n\u00a0\n\u00a0\n(251)\n\u00a0\n\u00a0\n(50)\n\u00a0\n\n\u00a0\n\u00a0\nTransfers in and\/or out of Level 3\n\u00a0\n\u00a0\n(76)\n\u00a0\n\u00a0\n(16)\n\u00a0\n\u00a0\n\u00a0\u2015\n\u00a0\n\u00a0\n\u00a0\u2015\n\u00a0\n\u00a0\n\u00a0\u2015\n\u00a0\n\u00a0\n\u00a0\u2015\n\u00a0\n\u00a0\n\u00a0\u2015\n\u00a0\n\n\u00a0\nBalance at December 31, 2010\n\u00a0\n$\n11\u00a0\n\u00a0\n$\n119\u00a0\n\u00a0\n$\n7\u00a0\n\u00a0\n$\n954\u00a0\n\u00a0\n$\n830\u00a0\n\u00a0\n$\n(25)\n\u00a0\n$\n266\u00a0\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\n\u00a0\nChange in unrealized gains (losses)\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\n\u00a0\n\u00a0\nincluded in earnings for the period,\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\n\u00a0\n\u00a0\nattributable to assets and liabilities\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\n\u00a0\n\u00a0\nstill held at December 31, 2010\n\u00a0\n$\n(2)\n\u00a0\n$\n\u00a0\u2015\n\u00a0\n$\n\u00a0\u2015\n\u00a0\n$\n61\u00a0\n\u00a0\n$\n(138)\n\u00a0\n$\n(25)\n\u00a0\n$\n9\u00a0\n\u00a0\nBB&T\u2019s policy is to recognize transfers in and\ntransfers out of Levels 1, 2 and 3 as of the end of a reporting period. During the year ended December 31, 2012, BB&T did not\nhave any material transfer of securities between levels in the fair value hierarchy. During the year ended December 31, 2011, BB&T\ntransferred certain state and political subdivision securities out of Level 3 as a result of management\u2019s decision to reclassify\nthem from available for sale to held to maturity classification, which is not recorded at fair value. During the year ended December\n31, 2010, transfers from Level 3 to Level 2 were the result of increased observable market activity for these securities. There\nwere no gains or losses recognized as a result of the transfers of securities during the years ended December 31, 2012, 2011 or\n2010. There were no significant transfers of securities between Level 1 and Level 2 for the years ended December 31, 2012, 2011\nor 2010.The majority of BB&T\u2019s private equity and similar\ninvestments are in SBIC qualified funds. The significant investment strategies for these funds primarily focus on equity and subordinated\ndebt investments in privately-held middle market companies. The majority of these investments are not redeemable and distributions\nare received as the underlying assets of the funds liquidate. The timing of distributions, which are expected to occur on various\ndates through 2025, is uncertain and dependent on various events such as recapitalizations, refinance transactions and ownership\nchanges among others. Excluding the investment of future funds, BB&T estimates these investments have a weighted average remaining\nlife of approximately three years; however, the timing and amount of distributions may vary significantly. As of December 31, 2012,\nrestrictions on the ability to sell the investments include, but are not limited to, consent of a majority member or general partner\napproval for transfer of ownership. BB&T\u2019s investments are spread over numerous privately-held middle market companies,\nand thus the sensitivity to a change in fair value for any single investment is limited. The significant unobservable inputs for\nthese investments are EBITDA multiples that ranged from 5x to 11x, with a weighted average of 7x, at December 31, 2012.","markdown_table":"\n\n| | | | | | | | Fair\u00a0Value\u00a0Measurements\u00a0for\u00a0Assets\u00a0and | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | | | | | | Liabilities\u00a0Measured\u00a0on\u00a0a\u00a0 Recurring\u00a0Basis | | | | | | | | |\n| | | | | 12\/31\/2011 | | | Level 1 | | | Level 2 | | | Level 3 | | |\n| | | | | | | | | | | | | | | | |\n| | | | | | | | (Dollars in millions) | | | | | | | | |\n| | Assets: | | | | | | | | | | | | | | |\n| | | Trading securities | | $ | 534 | | $ | 298 | | $ | 235 | | $ | 1 | |\n| | | Securities available for sale: | | | | | | | | | | | | | |\n| | | | GSE securities | | 306 | | | \u2015 | | | 306 | | | \u2015 | |\n| | | | RMBS issued by GSE | | 18,132 | | | \u2015 | | | 18,132 | | | \u2015 | |\n| | | | States and political subdivisions | | 1,923 | | | \u2015 | | | 1,923 | | | \u2015 | |\n| | | | Non-agency RMBS | | 368 | | | \u2015 | | | 368 | | | \u2015 | |\n| | | | Other securities | | 7 | | | 6 | | | 1 | | | \u2015 | |\n| | | | Covered securities | | 1,577 | | | \u2015 | | | 593 | | | 984 | |\n| | | LHFS | | | 3,736 | | | \u2015 | | | 3,736 | | | \u2015 | |\n| | | Residential MSRs | | | 563 | | | \u2015 | | | \u2015 | | | 563 | |\n| | | Derivative assets: (1) | | | | | | | | | | | | | |\n| | | | Interest rate contracts | | 1,518 | | | 1 | | | 1,457 | | | 60 | |\n| | | | Foreign exchange contracts | | 7 | | | \u2015 | | | 7 | | | \u2015 | |\n| | | Private equity and similar investments (1)(2) | | | 261 | | | \u2015 | | | \u2015 | | | 261 | |\n| | | | Total assets | $ | 28,932 | | $ | 305 | | $ | 26,758 | | $ | 1,869 | |\n| | | | | | | | | | | | | | | | |\n| | Liabilities: | | | | | | | | | | | | | | |\n| | | Derivative liabilities: (1) | | | | | | | | | | | | | |\n| | | | Interest rate contracts | $ | 1,498 | | $ | \u2015 | | $ | 1,497 | | $ | 1 | |\n| | | | Foreign exchange contracts | | 8 | | | \u2015 | | | 8 | | | \u2015 | |\n| | | Short-term borrowed funds (3) | | | 118 | | | \u2015 | | | 118 | | | \u2015 | |\n| | | | Total liabilities | $ | 1,624 | | $ | \u2015 | | $ | 1,623 | | $ | 1 | |\n| | | | | | | | | | | | | | | | |\n| (1) | These amounts are reflected in other assets and other liabilities on the Consolidated Balance Sheets. | | | | | | | | | | | | | | |\n| (2) | Based on an analysis of the nature and risks of these investments, BB&T has determined that presenting these investments as a single class is appropriate. | | | | | | | | | | | | | | |\n| (3) | Short-term borrowed funds reflect securities sold short positions. | | | | | | | | | | | | | | |\n\n","source":"TFC\/10-K\/0000092230-13-000023"} {"title":"ACL","text":"Field: Page; Sequence: 130; Value: 2","markdown_table":"\n\n| The following table details the fair value and unpaid principal balance of LHFS that were elected to be carried at fair value: | | | | | | | | | | | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | | | | | | | | | | | | | | | | | | | | | |\n| | | | | | December 31, | | | | | | | | | | | | | | | | | |\n| | | | | | 2012 | | | | | | | | | 2011 | | | | | | | | |\n| | | | | | | | | Aggregate | | | | | | | | | Aggregate | | | | | |\n| | | | | | | | | Unpaid | | | | | | | | | Unpaid | | | | | |\n| | | | | | Fair | | | Principal | | | | | | Fair | | | Principal | | | | | |\n| | | | | | Value | | | Balance | | | Difference | | | Value | | | Balance | | | Difference | | |\n| | | | | | | | | | | | | | | | | | | | | | | |\n| | | | | | (Dollars in millions) | | | | | | | | | | | | | | | | | |\n| | LHFS reported at fair value (1) | | | | $ | 3,761 | | $ | 3,652 | | $ | 109 | | $ | 3,736 | | $ | 3,652 | | $ | 84 | |\n| | | | | | | | | | | | | | | | | | | | | | | |\n| (1) | The change in fair value is reflected in mortgage banking income.\u00a0 Excluding government guaranteed loans, there were no nonaccrual loans or loans 90 days or more past due and still accruing interest. | | | | | | | | | | | | | | | | | | | | | |\n\n","source":"TFC\/10-K\/0000092230-13-000023"} {"title":"ACL","text":"Additionally, accounting standards require the disclosure\nof the estimated fair value of financial instruments that are not recorded at fair value. A financial instrument is defined as\ncash, evidence of an ownership interest in an entity or a contract that creates a contractual obligation or right to deliver or\nreceive cash or another financial instrument from a second entity. For the financial instruments that BB&T does not record\nat fair value, estimates of fair value are made at a point in time, based on relevant market data and information about the financial\ninstrument. Fair values are calculated based on the value of one trading unit without regard to any premium or discount that may\nresult from concentrations of ownership of a financial instrument, possible tax ramifications, estimated transaction costs that\nmay result from bulk sales or the relationship between various financial instruments. No readily available market exists for a\nsignificant portion of BB&T\u2019s financial instruments. Fair value estimates for these instruments are based on current\neconomic conditions, currency and interest rate risk characteristics, loss experience and other factors. Many of these estimates\ninvolve uncertainties and matters of significant judgment and cannot be determined with precision. Therefore, the calculated fair\nvalue estimates in many instances cannot be substantiated by comparison to independent markets and, in many cases, may not be realizable\nin a current sale of the instrument. In addition, changes in assumptions could significantly affect these fair value estimates.\nThe following methods and assumptions were used by BB&T in estimating the fair value of these financial instruments.Cash and cash equivalents and segregated cash due from\nbanks: For these short-term instruments, the carrying amounts are a reasonable estimate of fair values.Securities held to maturity: The fair values of securities\nheld to maturity are based on a market approach using observable inputs such as benchmark yields and securities, TBA prices, reported\ntrades, issuer spreads, current bids and offers, monthly payment information and collateral performance.Loans receivable: The fair values for loans are estimated\nusing discounted cash flow analyses, applying interest rates currently being offered for loans with similar terms and credit quality,\nwhich are deemed to be indicative of orderly transactions in the current market. For commercial loans and leases, discount rates\nmay be adjusted to address additional credit risk on lower risk grade instruments. For residential mortgage and other consumer\nloans, internal prepayment risk models are used to adjust contractual cash flows. Loans are aggregated into pools of similar terms\nand credit quality and discounted using a LIBOR based rate. The carrying amounts of accrued interest approximate fair values.FDIC loss share receivable: The fair value of the\nFDIC loss share receivable was estimated using discounted cash flow analyses, applying a risk free interest rate that is adjusted\nfor the uncertainty in the timing and amount of these cash flows. The expected cash flows to\/from the FDIC related to loans were\nestimated using the same assumptions that were used in determining the accounting values for the related loans. The expected cash\nflows to\/from the FDIC related to securities are based upon the fair value of the related securities and the payment that would\nbe required if the securities were sold for that amount. The FDIC loss share agreements are not transferrable and, accordingly,\nthere is no market for this receivable.Deposit liabilities: The fair values for demand deposits,\ninterest-checking accounts, savings accounts and certain money market accounts are, by definition, equal to the amount payable\non demand. Fair values for CDs are estimated using a discounted cash flow calculation that applies current interest rates to aggregate\nexpected maturities. In addition, nonfinancial instruments such as core deposit intangibles are not recorded at fair value. BB&T\nhas developed long-term relationships with its customers through its deposit base and, in the opinion of management, these items\nadd significant value to BB&T. Field: Page; Sequence: 131; Value: 2 Federal funds purchased, securities sold under repurchase\nagreements and short-term borrowed funds: The carrying amounts of Federal funds purchased, borrowings under repurchase agreements\nand short-term borrowed funds approximate their fair values.Long-term debt: The fair values of long-term debt\nare estimated based on quoted market prices for the instrument if available, or for similar instruments if not available, or by\nusing discounted cash flow analyses, based on BB&T\u2019s current incremental borrowing rates for similar types of instruments.Contractual commitments: The fair values of commitments\nare estimated using the fees charged to enter into similar agreements, taking into account the remaining terms of the agreements\nand the present creditworthiness of the counterparties. For fixed-rate loan commitments, fair values also consider the difference\nbetween current levels of interest rates and the committed rates. The fair values of guarantees and letters of credit are estimated\nbased on the counterparties\u2019 creditworthiness and average default rates for loan products with similar risks. These respective\nfair value measurements would be categorized within Level 3 of the fair value hierarchy.\n\nFinancial assets and liabilities not recorded at fair value are summarized below:\n\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\nCarrying\n\u00a0\nTotal\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\n\u00a0\nDecember 31, 2012\n\u00a0\nAmount\n\u00a0\nFair Value\n\u00a0\nLevel 2\n\u00a0\nLevel 3\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n(Dollars in millions)\n\u00a0\n\n\u00a0\nFinancial assets:\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\n\u00a0\n\u00a0\nSecurities held to maturity (1)\n\u00a0\n$\n13,594\u00a0\n\u00a0\n$\n13,848\u00a0\n\u00a0\n$\n13,810\u00a0\n\u00a0\n$\n38\u00a0\n\u00a0\n\n\u00a0\n\u00a0\nLoans and leases, net of ALLL excluding covered loans\n\u00a0\n\u00a0\n109,419\u00a0\n\u00a0\n\u00a0\n109,621\u00a0\n\u00a0\n\u00a0\n\u00a0\u2015\n\u00a0\n\u00a0\n109,621\u00a0\n\u00a0\n\n\u00a0\n\u00a0\nCovered loans, net of ALLL\n\u00a0\n\u00a0\n3,166\u00a0\n\u00a0\n\u00a0\n3,661\u00a0\n\u00a0\n\u00a0\n\u00a0\u2015\n\u00a0\n\u00a0\n3,661\u00a0\n\u00a0\n\n\u00a0\n\u00a0\nFDIC loss share receivable\n\u00a0\n\u00a0\n479\u00a0\n\u00a0\n\u00a0\n149\u00a0\n\u00a0\n\u00a0\n\u00a0\u2015\n\u00a0\n\u00a0\n149\u00a0\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\n\u00a0\nFinancial liabilities:\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\n\u00a0\n\u00a0\nDeposits\n\u00a0\n\u00a0\n133,075\u00a0\n\u00a0\n\u00a0\n133,377\u00a0\n\u00a0\n\u00a0\n133,377\u00a0\n\u00a0\n\u00a0\n\u2015\n\u00a0\n\n\u00a0\n\u00a0\nLong-term debt\n\u00a0\n\u00a0\n19,114\u00a0\n\u00a0\n\u00a0\n20,676\u00a0\n\u00a0\n\u00a0\n20,676\u00a0\n\u00a0\n\u00a0\n\u2015\n\u00a0\n\n\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\nCarrying\n\u00a0\n\u00a0\n\u00a0\n\n\u00a0\nDecember 31, 2011\n\u00a0\nAmount\n\u00a0\nFair Value\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n(Dollars in millions)\n\u00a0\n\n\u00a0\nFinancial assets:\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\n\u00a0\n\u00a0\nSecurities held to maturity (1)\n\u00a0\n$\n14,094\u00a0\n\u00a0\n$\n14,098\u00a0\n\u00a0\n\n\u00a0\n\u00a0\nLoans and leases, net of ALLL, excluding covered loans\n\u00a0\n\u00a0\n100,495\u00a0\n\u00a0\n\u00a0\n100,036\u00a0\n\u00a0\n\n\u00a0\n\u00a0\nCovered loans, net of ALLL\n\u00a0\n\u00a0\n4,718\u00a0\n\u00a0\n\u00a0\n5,706\u00a0\n\u00a0\n\n\u00a0\n\u00a0\nFDIC loss share receivable\n\u00a0\n\u00a0\n1,100\u00a0\n\u00a0\n\u00a0\n910\u00a0\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\n\u00a0\nFinancial liabilities:\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\n\u00a0\n\u00a0\nDeposits\n\u00a0\n\u00a0\n124,939\u00a0\n\u00a0\n\u00a0\n125,317\u00a0\n\u00a0\n\n\u00a0\n\u00a0\nLong-term debt\n\u00a0\n\u00a0\n21,803\u00a0\n\u00a0\n\u00a0\n23,001\u00a0\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\n(1)\nExcludes amounts deferred in OCI resulting from the transfer of securities available for sale to held to maturity.\n\n\nThe following is a summary of selected information pertaining to off-balance sheet financial instruments:\n\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\n\u00a0\nDecember 31,\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n2012\u00a0\n\u00a0\n2011\u00a0\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\n\u00a0\nNotional\/\n\u00a0\n\u00a0\n\u00a0\nNotional\/\n\u00a0\n\u00a0\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\n\u00a0\nContract\n\u00a0\n\u00a0\n\u00a0\nContract\n\u00a0\n\u00a0\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\nAmount\n\u00a0\nFair Value\n\u00a0\nAmount\n\u00a0\nFair Value\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n(Dollars in millions)\n\u00a0\n\n\u00a0\nCommitments to extend, originate or purchase credit\n\u00a0\n$\n43,760\u00a0\n\u00a0\n$\n81\u00a0\n\u00a0\n$\n41,575\u00a0\n\u00a0\n$\n73\u00a0\n\u00a0\n\n\u00a0\nResidential mortgage loans sold with recourse\n\u00a0\n\u00a0\n1,019\u00a0\n\u00a0\n\u00a0\n12\u00a0\n\u00a0\n\u00a0\n1,316\u00a0\n\u00a0\n\u00a0\n6\u00a0\n\u00a0\n\n\u00a0\nOther loans sold with recourse\n\u00a0\n\u00a0\n4,970\u00a0\n\u00a0\n\u00a0\n13\u00a0\n\u00a0\n\u00a0\n4,520\u00a0\n\u00a0\n\u00a0\n15\u00a0\n\u00a0\n\n\u00a0\nLetters of credit and financial guarantees written\n\u00a0\n\u00a0\n5,164\u00a0\n\u00a0\n\u00a0\n30\u00a0\n\u00a0\n\u00a0\n6,095\u00a0\n\u00a0\n\u00a0\n27\u00a0\n\u00a0\n Field: Page; Sequence: 132; Value: 2 NOTE 19. Derivative Financial Instruments","markdown_table":"\n\n| The following tables provide information about certain financial assets measured at fair value on a nonrecurring basis: | | | | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | | | | | | | | | | | | | | |\n| | | | | | | | | | December 31, | | | | | | |\n| | | | | | | | | | 2012 | | | 2011 | | | |\n| | | | | | | | | | | | | | | | |\n| | | | | | | | | | (Dollars in millions) | | | | | | |\n| | Assets that are still held (1): | | | | | | | | | | | | | | |\n| | | Impaired loans, excluding covered | | | | | | | $ | 137 | | $ | 389 | | |\n| | | Foreclosed real estate, excluding covered | | | | | | | | 107 | | | 536 | | |\n| | | | | | | | | | | | | | | | |\n| | | | | | | Years Ended December 31, | | | | | | | | | |\n| | | | | | | 2012 | | | 2011 | | | 2010 | | | |\n| | | | | | | | | | | | | | | | |\n| | | | | | | (Dollars in millions) | | | | | | | | | |\n| | Negative valuation adjustments recognized (1): | | | | | | | | | | | | | | |\n| | | Impaired loans, excluding covered | | | | $ | 109 | | $ | 348 | | $ | 602 | | |\n| | | Foreclosed real estate, excluding covered | | | | | 180 | | | 550 | | | 496 | | |\n| | | | | | | | | | | | | | | | |\n| (1) | Classified as level 3 assets. | | | | | | | | | | | | | | |\n\n","source":"TFC\/10-K\/0000092230-13-000023"} {"title":"ACL","text":"Field: Page; Sequence: 133; Value: 2","markdown_table":"\n\n| The following tables set forth certain information concerning BB&T\u2019s derivative financial instruments and related hedged items as of the periods indicated: | | | | | | | | | | | | | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | | | | | | | | | | | | | | | | | | | | | | | |\n| **Derivative Classifications and Hedging Relationships** | | | | | | | | | | | | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | | | | | | | | | | | |\n| | | | | | | | | **December 31, 2012** | | | | | | | | | **December 31, 2011** | | | | | | | |\n| | | | | | | **Hedged Item or** | | **Notional** | | | **Fair Value** | | | | | | **Notional** | | | **Fair Value** | | | | |\n| | | | | | | **Transaction** | | **Amount** | | | **Gain (1)** | | | **Loss (1)** | | | **Amount** | | | **Gain (1)** | | | **Loss (1)** | |\n| | | | | | | | | | | | | | | | | | | | | | | | | |\n| | | | | | | | | **(Dollars in millions)** | | | | | | | | | | | | | | | | |\n| Cash Flow Hedges: (2) | | | | | | | | | | | | | | | | | | | | | | | | |\n| | Interest rate contracts: | | | | | | | | | | | | | | | | | | | | | | | |\n| | | Pay fixed swaps | | | | 3 month LIBOR funding | | $ | 6,035 | | $ | \u2015 | | $ | (298) | | $ | 5,750 | | $ | \u2015 | | $ | (307) |\n| | | | | Total | | | | | 6,035 | | | \u2015 | | | (298) | | | 5,750 | | | \u2015 | | | (307) |\n| | | | | | | | | | | | | | | | | | | | | | | | | |\n| Net Investment Hedges: | | | | | | | | | | | | | | | | | | | | | | | | |\n| | Foreign exchange contracts | | | | | | | | \u2015 | | | \u2015 | | | \u2015 | | | 73 | | | 1 | | | \u2015 |\n| | | | | Total | | | | | \u2015 | | | \u2015 | | | \u2015 | | | 73 | | | 1 | | | \u2015 |\n| | | | | | | | | | | | | | | | | | | | | | | | | |\n| Fair Value Hedges: | | | | | | | | | | | | | | | | | | | | | | | | |\n| | Interest rate contracts: | | | | | | | | | | | | | | | | | | | | | | | |\n| | | Receive fixed swaps and option trades | | | | Long-term debt | | | 800 | | | 182 | | | \u2015 | | | 2,556 | | | 254 | | | \u2015 |\n| | | Pay fixed swaps | | | | Commercial loans | | | 187 | | | \u2015 | | | (7) | | | 98 | | | \u2015 | | | (5) |\n| | | Pay fixed swaps | | | | Municipal securities | | | 345 | | | \u2015 | | | (153) | | | 355 | | | \u2015 | | | (158) |\n| | | | | Total | | | | | 1,332 | | | 182 | | | (160) | | | 3,009 | | | 254 | | | (163) |\n| | | | | | | | | | | | | | | | | | | | | | | | | |\n| Not Designated as Hedges: | | | | | | | | | | | | | | | | | | | | | | | | |\n| | Client-related and other risk management: | | | | | | | | | | | | | | | | | | | | | | | |\n| | | Interest rate contracts: | | | | | | | | | | | | | | | | | | | | | | |\n| | | | Receive fixed swaps | | | | | | 9,352 | | | 687 | | | \u2015 | | | 9,176 | | | 703 | | | \u2015 |\n| | | | Pay fixed swaps | | | | | | 9,464 | | | \u2015 | | | (717) | | | 9,255 | | | \u2015 | | | (730) |\n| | | | Other swaps | | | | | | 2,273 | | | 1 | | | (2) | | | 2,450 | | | \u2015 | | | (6) |\n| | | | Option trades | | | | | | 814 | | | 23 | | | (26) | | | 1,004 | | | 38 | | | (40) |\n| | | | Futures contracts | | | | | | 109 | | | \u2015 | | | \u2015 | | | 240 | | | \u2015 | | | \u2015 |\n| | | | Risk participations | | | | | | 204 | | | \u2015 | | | \u2015 | | | 150 | | | \u2015 | | | \u2015 |\n| | | Foreign exchange contracts | | | | | | | 1,005 | | | 5 | | | (4) | | | 575 | | | 6 | | | (8) |\n| | | | | Total | | | | | 23,221 | | | 716 | | | (749) | | | 22,850 | | | 747 | | | (784) |\n| | | | | | | | | | | | | | | | | | | | | | | | | |\n| | Mortgage Banking: | | | | | | | | | | | | | | | | | | | | | | | |\n| | | Interest rate contracts: | | | | | | | | | | | | | | | | | | | | | | |\n| | | | Receive fixed swaps | | | | | | 114 | | | \u2015 | | | (2) | | | 50 | | | 1 | | | \u2015 |\n| | | | Pay fixed swaps | | | | | | \u2015 | | | \u2015 | | | \u2015 | | | 16 | | | \u2015 | | | \u2015 |\n| | | | Interest rate lock commitments | | | | | | 6,064 | | | 55 | | | (1) | | | 4,977 | | | 60 | | | (1) |\n| | | | When issued securities, forward rate agreements and forward | | | | | | | | | | | | | | | | | | | | | |\n| | | | | commitments | | | | | 8,886 | | | 10 | | | (19) | | | 7,125 | | | 10 | | | (88) |\n| | | | Option trades | | | | | | 70 | | | 6 | | | \u2015 | | | 70 | | | 5 | | | \u2015 |\n| | | | Futures contracts | | | | | | 31 | | | \u2015 | | | \u2015 | | | 65 | | | 1 | | | \u2015 |\n| | | | | Total | | | | | 15,165 | | | 71 | | | (22) | | | 12,303 | | | 77 | | | (89) |\n| | | | | | | | | | | | | | | | | | | | | | | | | |\n| | MSRs: | | | | | | | | | | | | | | | | | | | | | | | |\n| | | Interest rate contracts: | | | | | | | | | | | | | | | | | | | | | | |\n| | | | Receive fixed swaps | | | | | | 5,178 | | | 110 | | | (27) | | | 5,616 | | | 154 | | | (1) |\n| | | | Pay fixed swaps | | | | | | 5,389 | | | 7 | | | (94) | | | 4,651 | | | 1 | | | (111) |\n| | | | Option trades | | | | | | 14,510 | | | 363 | | | (88) | | | 9,640 | | | 273 | | | (51) |\n| | | | Futures contracts | | | | | | 30 | | | \u2015 | | | \u2015 | | | 38 | | | \u2015 | | | \u2015 |\n| | | | When issued securities, forward rate agreements and forward | | | | | | | | | | | | | | | | | | | | | |\n| | | | | commitments | | | | | 2,406 | | | 2 | | | \u2015 | | | 3,651 | | | 18 | | | \u2015 |\n| | | | | Total | | | | | 27,513 | | | 482 | | | (209) | | | 23,596 | | | 446 | | | (163) |\n| | | | | | Total nonhedging derivatives | | | | 65,899 | | | 1,269 | | | (980) | | | 58,749 | | | 1,270 | | | (1,036) |\n| Total Derivatives | | | | | | | | $ | 73,266 | | $ | 1,451 | | $ | (1,438) | | $ | 67,581 | | $ | 1,525 | | $ | (1,506) |\n| | | | | | | | | | | | | | | | | | | | | | | | | |\n| (1) | Derivatives in a gain position are recorded as Other assets and derivatives in a loss position are recorded as Other liabilities on the Consolidated Balance Sheets. | | | | | | | | | | | | | | | | | | | | | | | |\n| (2) | Cash flow hedges are hedging the first unhedged forecasted settlements associated with the listed hedged item descriptions. | | | | | | | | | | | | | | | | | | | | | | | |\n\n","source":"TFC\/10-K\/0000092230-13-000023"} {"title":"ACL","text":"BB&T uses a variety of derivative instruments to manage\ninterest rate and foreign exchange risks. These instruments consist of interest-rate swaps, swaptions, caps, floors, collars, financial\nforward and futures contracts, when-issued securities, foreign exchange contracts and options written and purchased. A derivative\nis a financial instrument that derives its cash flows, and therefore its value, by reference to an underlying instrument, index\nor referenced interest rate. There are four areas of risk management addressed through the use of derivatives: balance sheet management,\nmortgage banking operations, MSRs and client-related and other risk management activities. No portion of the change in fair value\nof the derivative has been excluded from effectiveness testing. The ineffective portion was immaterial for all periods presented.Cash Flow Hedges BB&T\u2019s floating rate business loans, overnight\nfunding, FHLB advances, medium-term bank notes and long-term debt expose it to variability in cash flows for interest payments.\nThe risk management objective for these floating rate assets and liabilities is to hedge the variability in the interest payments\nand receipts on future cash flows for forecasted transactions. All of BB&T\u2019s current cash flow hedges are hedging exposure\nto variability in future cash flows for forecasted transactions related to the payment of variable interest on then existing financial\ninstruments.For a qualifying cash flow hedge, the portion of changes\nin the fair value of the derivatives that has been highly effective is recognized in OCI until the related cash flows from the\nhedged item are recognized in earnings. If a derivative designated as a cash flow hedge is terminated or ceases to be highly effective,\nthe gain or loss in OCI is amortized to earnings over the period the forecasted hedged transactions impact earnings. If a hedged\nforecasted transaction is no longer probable of occurring during the forecast period or within a short period thereafter, hedge\naccounting is ceased and any gain or loss included in OCI is reported in earnings immediately. At December 31, 2012, BB&T had\n$173 million of unrecognized after-tax losses on derivatives classified as cash flow hedges recorded in OCI, compared to $159 million\nof unrecognized after-tax losses at December 31, 2011.The estimated amount to be reclassified from OCI into earnings\nduring the next 12 months is a loss totaling approximately $59 million. This includes active hedges and gains and losses related\nto hedges that were terminated early for which the forecasted transactions are still probable. The proceeds from these terminations\nwere included in cash flows from financing activities. Field: Page; Sequence: 134; Value: 2 Fair Value Hedges BB&T\u2019s fixed rate long-term debt, CDs, FHLB advances,\nloans and state and political subdivision securities produce exposure to losses in value as interest rates change. The risk management\nobjective for hedging fixed rate assets and liabilities is to convert the fixed rate paid or received to a floating rate. BB&T\naccomplishes its risk management objective by hedging exposure to changes in fair value of fixed rate financial instruments primarily\nthrough the use of swaps. For a qualifying fair value hedge, changes in the value of the derivatives that have been highly effective\nas hedges are recognized in current period earnings along with the corresponding changes in the fair value of the designated hedged\nitem attributable to the risk being hedged.During the years ended December 31, 2012 and 2011, BB&T\nterminated certain fair value hedges related to its long-term debt and municipal securities and received net proceeds of $85 million\nand $185 million, respectively. When a hedge has been terminated but the hedged item remains outstanding, the proceeds from the\ntermination of these hedges have been reflected as part of the carrying value of the underlying debt\/other financial instrument\nand are being amortized to earnings over its estimated remaining life. The proceeds from these terminations were included in cash\nflows from financing activities. During the years ended December 31, 2012 and 2011, BB&T recognized pre-tax benefits of $256\nmillion and $205 million, respectively, through reductions of interest expense from previously unwound fair value debt hedges.Derivatives Not Designated As Hedges Derivatives not designated as hedges are those that are entered\ninto as either balance sheet risk management instruments or to facilitate client needs. Balance sheet risk management hedges are\nthose hedges that do not qualify to be treated as a cash flow hedge, a fair value hedge or a foreign currency hedge for accounting\npurposes, but are necessary to economically manage the risk associated with an asset or liability.This category of hedges includes derivatives that hedge mortgage\nbanking operations and MSRs. For mortgage loans originated for sale, BB&T is exposed to changes in market rates and conditions\nsubsequent to the interest rate lock and funding date. BB&T\u2019s risk management strategy related to its interest rate lock\ncommitment derivatives and LHFS includes using mortgage-based derivatives such as forward commitments and options in order to mitigate\nmarket risk. For MSRs, BB&T uses various derivative instruments to mitigate the income statement effect of changes in the fair\nvalue of its MSRs. For the year ended December 31, 2012, BB&T recorded a gain of $128 million related to these derivatives,\nwhich was offset by a negative $32 million valuation adjustment related to the MSR. For the year ended December 31, 2011, BB&T\nrecorded a gain of $394 million related to these derivatives, which was offset by a negative $341 million valuation adjustment\nrelated to the MSR.BB&T also held, as risk management instruments, other\nderivatives not designated as hedges primarily to facilitate transactions on behalf of its clients, as well as activities related\nto balance sheet management.Derivatives Credit Risk \u2013 Dealer CounterpartiesCredit risk related to derivatives arises when amounts receivable\nfrom a counterparty exceed those payable to the same counterparty. BB&T addresses the risk of loss by subjecting dealer counterparties\nto credit reviews and approvals similar to those used in making loans or other extensions of credit and by requiring collateral.\nDealer counterparties operate under agreements to provide cash and\/or liquid collateral when unsecured loss positions exceed negotiated\nlimits.As of December 31, 2012, BB&T had received cash collateral\nfrom dealer counterparties totaling $44 million related to derivatives in a gain position of $40 million and had posted $639 million\nin cash collateral to dealer counterparties to secure derivatives in a loss position of $650 million. In the event that BB&T\u2019s\ncredit ratings had been downgraded below investment grade, the amount of collateral posted to these counterparties would have increased\nby $12 million. As of December 31, 2011, BB&T had received cash collateral from dealer counterparties totaling $82 million\nrelated to derivatives in a gain position of $79 million and had posted $639 million in cash collateral to dealer counterparties\nto secure derivatives in a loss position of $669 million. In the event that BB&T\u2019s credit ratings had been downgraded\nbelow investment grade, the amount of collateral posted to these counterparties would have increased by $30 million.After collateral postings are considered, BB&T had no\nunsecured positions in a gain with dealer counterparties at December 31, 2012, compared to $3 million at December 31, 2011. All\nof BB&T\u2019s derivative contracts with dealer counterparties settle on a monthly, quarterly or semiannual basis, with daily\nmovement of collateral between counterparties required within established netting agreements. BB&T only transacts with dealer\ncounterparties that are national market makers with strong credit ratings. Field: Page; Sequence: 135; Value: 2 Derivatives Credit Risk \u2013 Central Clearing PartiesBB&T also clears certain derivatives through central\nclearing parties that require initial margin collateral, as well as additional collateral for trades in a net loss position. Initial\nmargin collateral requirements are established by central clearing parties on varying bases, with such amounts generally designed\nto offset the risk of non-payment. Initial margin is generally calculated by applying the maximum loss experienced in value over\na specified time horizon to the portfolio of existing trades. As of December 31, 2012, BB&T had posted $111 million in cash\ncollateral, including initial margin, related to the clearing of derivatives in an $11 million net loss position. As of December\n31, 2011, BB&T had posted $145 million in cash collateral, including initial margin, related to the clearing of derivatives\nin a $60 million net loss position. BB&T had no significant unsecured positions in a gain with central clearing parties at\nDecember 31, 2012.NOTE 20. Computation of EPS\n\nBB&T\u2019s basic and diluted EPS calculations are presented in the following table:\n\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\nYears Ended December 31,\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n2012\n\u00a0\n2011\u00a0\n\u00a0\n2010\u00a0\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n(Dollars in millions, except per share data,\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\nshares in thousands)\n\u00a0\n\n\u00a0\nBasic EPS:\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\nNet income available to common shareholders\n$\n1,916\u00a0\n\u00a0\n$\n1,289\u00a0\n\u00a0\n$\n816\u00a0\n\u00a0\n\n\u00a0\n\u00a0\nWeighted average number of common shares\n\u00a0\n698,739\u00a0\n\u00a0\n\u00a0\n696,532\u00a0\n\u00a0\n\u00a0\n692,489\u00a0\n\u00a0\n\n\u00a0\n\u00a0\nBasic EPS\n$\n2.74\u00a0\n\u00a0\n$\n1.85\u00a0\n\u00a0\n$\n1.18\u00a0\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\n\u00a0\nDiluted EPS:\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\nNet income available to common shareholders\n$\n1,916\u00a0\n\u00a0\n$\n1,289\u00a0\n\u00a0\n$\n816\u00a0\n\u00a0\n\n\u00a0\n\u00a0\nWeighted average number of common shares\n\u00a0\n698,739\u00a0\n\u00a0\n\u00a0\n696,532\u00a0\n\u00a0\n\u00a0\n692,489\u00a0\n\u00a0\n\n\u00a0\n\u00a0\nAdd:\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\u00a0\n\n\u00a0\n\u00a0\n\u00a0\nEffect of dilutive outstanding equity-based awards\n\u00a0\n10,138\u00a0\n\u00a0\n\u00a0\n8,636\u00a0\n\u00a0\n\u00a0\n8,550\u00a0\n\u00a0\n\n\u00a0\n\u00a0\nWeighted average number of diluted common shares\n\u00a0\n708,877\u00a0\n\u00a0\n\u00a0\n705,168\u00a0\n\u00a0\n\u00a0\n701,039\u00a0\n\u00a0\n\n\u00a0\n\u00a0\nDiluted EPS\n$\n2.70\u00a0\n\u00a0\n$\n1.83\u00a0\n\u00a0\n$\n1.16\u00a0\n\u00a0\nFor the years ended December 31, 2012, 2011 and 2010, the\nnumber of anti-dilutive awards was 36.6\u00a0million, 40.9 million and 36.8 million shares, respectively. Field: Page; Sequence: 136; Value: 2 NOTE 21. Operating Segments BB&T's operations are divided into six reportable business\nsegments: Community Banking, Residential Mortgage Banking, Dealer Financial Services, Specialized Lending, Insurance Services,\nand Financial Services. These business segments have been identified based on BB&T\u2019s organizational structure. The segments\nrequire unique technology and marketing strategies and offer different products and services through a number of distinct branded\nLOBs. While BB&T is managed as an integrated organization, individual executive managers are held accountable for the operations\nof these business segments.BB&T emphasizes revenue growth by focusing on client\nservice, sales effectiveness and relationship management along with an organizational focus on referring clients between LOBs.\nThe business objective is to provide BB&T\u2019s entire suite of products to our clients with the end goal of providing our\nclients the best financial experience in the marketplace. The segment results contained herein are presented based on internal\nmanagement accounting policies that were designed to support these strategic objectives. Unlike financial accounting, there is\nno comprehensive authoritative body of guidance for management accounting equivalent to GAAP. The performance of the segments is\nnot comparable with BB&T\u2019s consolidated results or with similar information presented by any other financial institution.\nAdditionally, because of the interrelationships of the various segments, the information presented is not indicative of how the\nsegments would perform if they operated as independent entities.The management accounting process uses various estimates\nand allocation methodologies to measure the performance of the operating segments. To determine financial performance for each\nsegment, BB&T allocates capital, funding charges and credits, an allocated provision for loan and lease losses, certain noninterest\nexpenses and income tax provisions to each segment, as applicable. To promote revenue growth, certain revenues of Residential Mortgage\nBanking, Specialized Lending, Insurance Services, Financial Services and other segments are reflected in noninterest income in\nthe individual segment results and also allocated to Community Banking and Financial Services. These allocated revenues are reflected\nin intersegment net referral fees and eliminated in Other, Treasury\u00a0& Corporate. Additionally certain client groups of\nthe Community Bank have also been identified as clients of other LOBs within the business segments. These client groups include\nthe commercial clients being serviced within the Commercial Finance LOB that is part of the Specialized Lending segment and the\nidentified wealth and private banking clients of the Wealth Division within the Financial Services segment. The net interest income\nand associated net FTP associated with these customers\u2019 loans and deposits is accounted for in the Community Bank in the\nrespective line categories of net interest income (expense) and net intersegment interest income (expense). For the Commercial\nFinance LOB and the Wealth Division, their NIM and net intersegment interest income has been combined in the net intersegment interest\nincome (expense) line with an appropriate offsetting amount to the Other, Treasury, and Corporate line item to ensure consolidated\ntotals reflect the Company\u2019s total NIM for loans and deposits. Allocation methodologies are subject to periodic adjustment\nas the internal management accounting system is revised and business or product lines within the segments change. Also, because\nthe development and application of these methodologies is a dynamic process, the financial results presented may be periodically\nrevised.BB&T utilizes an FTP system to eliminate the effect\nof interest rate risk from the segments\u2019 net interest income because such risk is centrally managed within the Treasury function.\nThe FTP system credits or charges the segments with the economic value or cost of the funds the segments create or use. The FTP\nsystem provides a funds credit for sources of funds and a funds charge for the use of funds by each segment. The net FTP credit\nor charge, which includes intercompany interest income and expense, is reflected as net intersegment income (expense) in the accompanying\ntables.The allocated provision for loan and lease losses is also\nallocated to the relevant segments based on management\u2019s assessment of the segments\u2019 credit risks. During the first\nquarter of 2011, management refined the process related to assigning the allocated provision between the Company\u2019s operating\nsegments. Unlike the provision for loan and lease losses recorded pursuant to GAAP, the allocated provision is designed to achieve\na higher degree of correlation between the loan loss experience and the GAAP basis provision at the segment level, while at the\nsame time providing management with a measure of operating performance that gives appropriate consideration to the risks inherent\nin each of the Company\u2019s operating segments. Any over or under allocated provision for loan and lease losses is reflected\nin Other, Treasury\u00a0& Corporate to arrive at consolidated results.BB&T allocates expenses to the reportable segments based\non various methodologies, including volume and amount of loans and deposits and the number of full-time equivalent employees. Allocation\nsystems are refined from time to time along with further identification of certain cost pools. These cost pools and refinements\nare implemented to provide for improved managerial reporting of cost to the appropriate business segments. A portion of corporate\noverhead expense is not allocated, but is retained in corporate accounts and reflected as Other, Treasury\u00a0& Corporate\nin the accompanying tables. The majority of depreciation expense is recorded in support units and allocated to the segments as\npart of allocated corporate expense. Income taxes are allocated to the various segments based on taxable income and statutory rates\napplicable to the segment. Field: Page; Sequence: 137; Value: 2 Community Banking Community Banking serves individual and business clients\nby offering a variety of loan and deposit products and other financial services. Community Banking is primarily responsible for\nserving client relationships and, therefore, is credited with certain revenue from the Residential Mortgage Banking, Financial\nServices, Insurance Services, Specialized Lending, and other segments, which is reflected in net referral fees.Residential Mortgage Banking Residential Mortgage Banking retains and services mortgage\nloans originated by Community Banking as well as those purchased from various correspondent originators. Mortgage loan products\ninclude fixed and adjustable rate government and conventional loans for the purpose of constructing, purchasing or refinancing\nresidential properties. Substantially all of the properties are owner occupied. BB&T generally retains the servicing rights\nto loans sold. Residential Mortgage Banking earns interest on loans held in the warehouse and portfolio, earns fee income from\nthe origination and servicing of mortgage loans and recognizes gains or losses from the sale of mortgage loans.Dealer Financial Services Dealer Financial Services originates loans to consumers on\na prime and nonprime basis for the purchase of automobiles. Such loans are originated on an indirect basis through approved franchised\nand independent automobile dealers throughout the BB&T market area and nationally through Regional Acceptance Corporation.\nThis segment also originates loans for the purchase of boats and recreational vehicles originated through dealers in BB&T\u2019s\nmarket area. In addition, financing and servicing to dealers for their inventories is provided through a joint relationship between\nDealer Financial Services and Community Banking.Specialized Lending BB&T's Specialized Lending consists of eight LOBs that\nprovide specialty finance products to consumers and businesses. These LOBs are a combination of LOBs and operating subsidiaries\nof either the Company or Branch Bank. The LOBs include Commercial Finance, which contains commercial finance and mortgage warehouse\nlending, and Governmental Finance, which is responsible for tax-exempt government finance. Operating subsidiaries include BB&T\nEquipment Finance, which provides equipment leasing largely within BB&T\u2019s banking footprint; Sheffield Financial, a division\nof BB&T FSB (merged into Branch Bank on January 1, 2013), a dealer-based financer of equipment for both small businesses and\nconsumers; Lendmark Financial Services, a direct consumer finance lending company; Prime Rate Premium Finance Corporation, which\nincludes AFCO and CAFO, insurance premium finance LOBs that provide funding to businesses in the United States and Canada and to\nconsumers in certain markets within BB&T\u2019s banking footprint; and Grandbridge, a full-service commercial mortgage banking\nlender providing loans on a national basis. Branch Bank clients as well as nonbank clients within and outside BB&T\u2019s\nprimary geographic market area are served by these eight LOBs. The Community Banking segment receives credit for referrals to these\nLOBs with the corresponding charge retained as part of Other, Treasury\u00a0& Corporate in the accompanying tables.Insurance Services BB&T's insurance agency \/ brokerage network is the eighth\nlargest in the world. Insurance Services provides property and casualty, life and health insurance to businesses and individuals.\nIt also provides small business and corporate services, such as workers compensation and professional liability, as well as surety\ncoverage and title insurance. In addition, Insurance Services underwrites a limited amount of property and casualty coverage. Community\nBanking and Financial Services receive credit for insurance commissions on referred accounts, with the corresponding charge retained\nin the corporate office, which is reflected as part of Other, Treasury\u00a0& Corporate in the accompanying tables.Financial Services Financial Services provides personal trust administration,\nestate planning, investment counseling, wealth management, asset management, employee benefits services, corporate banking and\ncorporate trust services to individuals, corporations, institutions, foundations and government entities. Financial Services also\noffers clients investment alternatives, including discount brokerage services, equities, fixed-rate and variable-rate annuities,\nmutual funds and governmental and municipal bonds through BB&T Investment Services, Inc., a subsidiary of Branch Bank.Financial Services includes a full-service brokerage and\ninvestment banking firm that provides services in retail brokerage, equity and debt underwriting, investment advice, corporate\nfinance and equity research and facilitates the origination, trading and distribution of fixed-income securities and equity products\nin both the public and private capital markets. Financial Field: Page; Sequence: 138; Value: 2 Services also has a public finance department that provides\ninvestment banking services, financial advisory services and municipal bond financing to a variety of regional taxable and tax-exempt\nissuers.Financial Services includes a group of BB&T-sponsored\nprivate equity and mezzanine investment funds that invests in privately owned middle-market operating companies to facilitate growth\nor ownership transition while leveraging the Community Banking network for referrals and other bank services. Financial Services\nalso includes the Corporate Banking Division that originates and services large corporate relationships, syndicated lending relationships\nand client derivatives. Community Banking receives an interoffice credit for referral fees, with the corresponding charge reflected\nas part of Other, Treasury\u00a0& Corporate in the accompanying tables. Also captured within the net intersegment interest\nincome for Financial Services is the NIM for the loans and deposits assigned to the Wealth Management Division that are housed\nin the Community Bank.Other, Treasury & Corporate Other, Treasury\u00a0& Corporate is the combination of\nthe Other segment that represents operating entities that do not meet the quantitative or qualitative thresholds for disclosure;\nBB&T\u2019s Treasury function, which is responsible for the management of the securities portfolios, overall balance sheet\nfunding and liquidity, and overall management of interest rate risk; the corporate support functions that have not been allocated\nto the business segments; merger-related charges or credits that are incurred as part of acquisition and conversion of acquired\nentities; nonrecurring charges that are considered to be unusual in nature or infrequent and not reflective of the normal operations\nof the segments; and intercompany eliminations including intersegment net referral fees and net intersegment interest income (expense).The substantial majority of the loan portfolio acquired in\nthe Colonial acquisition is covered by loss sharing agreements with the FDIC and is managed outside of the Community Banking segment.\nThe assets and related interest income from this loan portfolio have an expected finite business life and are therefore included\nin the Other, Treasury\u00a0& Corporate segment. Results for BankAtlantic were included in the Other, Treasury & Corporate\nsegment until the system conversion in October 2012. Historically, performance results of bank acquisitions prior to system conversion\nare reported in this segment and on a post-conversion date are reported in the Community Banking segment.The following table discloses selected financial information\nwith respect to BB&T's reportable business segments for the years indicated: Field: Page; Sequence: 139; Value: 2","markdown_table":"\n\n| The Effect of Derivative Instruments on the Consolidated Statements of Income | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| Years Ended December 31, 2012, 2011 and 2010 | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | | | | | | | | Effective Portion | | | | | | | | | | | | | | | | | | |\n| | | | | | | | | Pre-tax Gain (Loss) | | | | | | | | | Location of | | Pre-tax Gain (Loss) Reclassified | | | | | | | |\n| | | | | | | | | Recognized in OCI | | | | | | | | | Amounts Reclassified | | from AOCI into Income | | | | | | | |\n| | | | | | | | | 2012 | | | 2011 | | | 2010 | | | from AOCI into Income | | 2012 | | | 2011 | | | 2010 | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | | | | | | | | | (Dollars in millions) | | | | | | | | | | | | | | | | | |\n| Cash Flow Hedges: | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | Interest rate contracts | | | | | | | $ | (84) | | $ | (225) | | $ | (233) | | Total interest income | | $ | 11 | | $ | 26 | | $ | 44 |\n| | | | | | | | | | | | | | | | | | Total interest expense | | | (72) | | | (72) | | | (29) |\n| | | | | | | | | | | | | | | | | | | | $ | (61) | | $ | (46) | | $ | 15 |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | | | | | | Pre-tax Gain (Loss) | | | | | | | |\n| | | | | | | | | | | | | | | | | | Location of\u00a0 Amounts | | Recognized in Income | | | | | | | |\n| | | | | | | | | | | | | | | | | | Recognized in Income | | 2012 | | | 2011 | | | 2010 | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | | | | | (Dollars in millions) | | | | | | | | |\n| Fair Value Hedges: | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | Interest rate contracts | | | | | | | | | | | | | | | | Total interest income | | $ | (21) | | $ | (21) | | $ | (19) |\n| | | | | | | | | | | | | | | | | | Total interest expense | | | 288 | | | 314 | | | 179 |\n| | | | | | | | | | | | | | | | | | | | $ | 267 | | $ | 293 | | $ | 160 |\n| Not Designated as Hedges: | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | Client-related and other risk management: | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | | | Interest rate contracts | | | | | | | | | | | | | | Other income | | $ | 35 | | $ | 10 | | $ | 5 |\n| | | | Foreign exchange contracts | | | | | | | | | | | | | | Other income | | | 9 | | | 6 | | | 6 |\n| | Mortgage Banking: | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | | Interest rate contracts | | | | | | | | | | | | | | | Mortgage banking income | | | 59 | | | (70) | | | 33 |\n| | MSRs: | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | | Interest rate contracts | | | | | | | | | | | | | | | Mortgage banking income | | | 128 | | | 394 | | | 196 |\n| | | | | | | | | | | | | | | | | | | | $ | 231 | | $ | 340 | | $ | 240 |\n\n","source":"TFC\/10-K\/0000092230-13-000023"} {"title":"ACL","text":"Field: Page; Sequence: 140; Value: 2","markdown_table":"\n\n| BB&T Corporation | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| Reportable Segments | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Years Ended December 31, 2012, 2011 and 2010 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | | | | Community Banking | | | | | | | | | Residential Mortgage Banking | | | | | | | | | Dealer Financial Services | | | | | | | | | Specialized Lending | | | | | | | |\n| | | | | 2012 | | | 2011 | | | 2010 | | | 2012 | | | 2011 | | | 2010 | | | 2012 | | | 2011 | | | 2010 | | | 2012 | | | 2011 | | | 2010 | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | | | | | (Dollars in millions) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Net interest income (expense) | | | | $ | 2,086 | | $ | 1,937 | | $ | 1,771 | | $ | 1,148 | | $ | 1,025 | | $ | 981 | | $ | 845 | | $ | 852 | | $ | 858 | | $ | 701 | | $ | 636 | | $ | 591 |\n| Net intersegment interest income (expense) | | | | | 1,342 | | | 1,642 | | | 2,033 | | | (776) | | | (734) | | | (721) | | | (216) | | | (270) | | | (344) | | | (154) | | | (171) | | | (184) |\n| Segment net interest income | | | | | 3,428 | | | 3,579 | | | 3,804 | | | 372 | | | 291 | | | 260 | | | 629 | | | 582 | | | 514 | | | 547 | | | 465 | | | 407 |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Allocated provision for loan and lease losses | | | | | 666 | | | 589 | | | 1,801 | | | 95 | | | 320 | | | 553 | | | 164 | | | 125 | | | 93 | | | 137 | | | 72 | | | 110 |\n| Noninterest income | | | | | 1,125 | | | 1,016 | | | 1,200 | | | 753 | | | 349 | | | 457 | | | 7 | | | 7 | | | 4 | | | 228 | | | 211 | | | 176 |\n| Intersegment net referral fees (expense) | | | | | 182 | | | 132 | | | 146 | | | (1) | | | \u2015 | | | \u2015 | | | \u2015 | | | \u2015 | | | \u2015 | | | \u2015 | | | \u2015 | | | \u2015 |\n| Noninterest expense | | | | | 1,828 | | | 2,354 | | | 2,373 | | | 388 | | | 296 | | | 254 | | | 101 | | | 90 | | | 90 | | | 256 | | | 233 | | | 218 |\n| Amortization of intangibles | | | | | 37 | | | 47 | | | 66 | | | \u2015 | | | \u2015 | | | \u2015 | | | 1 | | | 1 | | | 1 | | | 5 | | | 6 | | | 6 |\n| Allocated corporate expenses | | | | | 1,025 | | | 899 | | | 799 | | | 54 | | | 48 | | | 33 | | | 36 | | | 37 | | | 37 | | | 79 | | | 72 | | | 62 |\n| Income (loss) before income taxes | | | | | 1,179 | | | 838 | | | 111 | | | 587 | | | (24) | | | (123) | | | 334 | | | 336 | | | 297 | | | 298 | | | 293 | | | 187 |\n| Provision (benefit) for income taxes | | | | | 427 | | | 302 | | | 35 | | | 221 | | | (9) | | | (46) | | | 126 | | | 127 | | | 112 | | | 63 | | | 58 | | | 19 |\n| Segment net income (loss) | | | | $ | 752 | | $ | 536 | | $ | 76 | | $ | 366 | | $ | (15) | | $ | (77) | | $ | 208 | | $ | 209 | | $ | 185 | | $ | 235 | | $ | 235 | | $ | 168 |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Identifiable segment assets (period end) | | | | $ | 62,945 | | $ | 61,072 | | $ | 63,244 | | $ | 29,391 | | $ | 25,471 | | $ | 22,183 | | $ | 10,264 | | $ | 9,874 | | $ | 9,418 | | $ | 18,907 | | $ | 16,766 | | $ | 14,945 |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | | | | Insurance Services | | | | | | | | | Financial Services | | | | | | | | | Other, Treasury and Corporate (1) | | | | | | | | | Total BB&T Corporation | | | | | | | |\n| | | | | 2012 | | | 2011 | | | 2010 | | | 2012 | | | 2011 | | | 2010 | | | 2012 | | | 2011 | | | 2010 | | | 2012 | | | 2011 | | | 2010 | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | | | | (Dollars in millions) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Net interest income (expense) | | | | $ | 3 | | $ | 3 | | $ | 3 | | $ | 119 | | $ | 107 | | $ | 99 | | $ | 955 | | $ | 947 | | $ | 1,017 | | $ | 5,857 | | $ | 5,507 | | $ | 5,320 |\n| Net intersegment interest income (expense) | | | | | 3 | | | 4 | | | 6 | | | 332 | | | 267 | | | 215 | | | (531) | | | (738) | | | (1,005) | | | \u2015 | | | \u2015 | | | \u2015 |\n| Segment net interest income | | | | | 6 | | | 7 | | | 9 | | | 451 | | | 374 | | | 314 | | | 424 | | | 209 | | | 12 | | | 5,857 | | | 5,507 | | | 5,320 |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Allocated provision for loan and lease losses | | | | | \u2015 | | | \u2015 | | | \u2015 | | | 10 | | | (1) | | | 45 | | | (15) | | | 85 | | | 36 | | | 1,057 | | | 1,190 | | | 2,638 |\n| Noninterest income | | | | | 1,365 | | | 1,040 | | | 1,033 | | | 725 | | | 694 | | | 657 | | | (383) | | | (204) | | | 430 | | | 3,820 | | | 3,113 | | | 3,957 |\n| Intersegment net referral fees (expense) | | | | | \u2015 | | | \u2015 | | | \u2015 | | | 29 | | | 20 | | | 16 | | | (210) | | | (152) | | | (162) | | | \u2015 | | | \u2015 | | | \u2015 |\n| Noninterest expense | | | | | 1,015 | | | 786 | | | 774 | | | 641 | | | 574 | | | 527 | | | 1,489 | | | 1,370 | | | 1,312 | | | 5,718 | | | 5,703 | | | 5,548 |\n| Amortization of intangibles | | | | | 61 | | | 42 | | | 45 | | | 3 | | | 3 | | | 3 | | | 3 | | | \u2015 | | | 1 | | | 110 | | | 99 | | | 122 |\n| Allocated corporate expenses | | | | | 82 | | | 72 | | | 68 | | | 94 | | | 75 | | | 39 | | | (1,370) | | | (1,203) | | | (1,038) | | | \u2015 | | | \u2015 | | | \u2015 |\n| Income (loss) before income taxes | | | | | 213 | | | 147 | | | 155 | | | 457 | | | 437 | | | 373 | | | (276) | | | (399) | | | (31) | | | 2,792 | | | 1,628 | | | 969 |\n| Provision (benefit) for income taxes | | | | | 69 | | | 46 | | | 52 | | | 171 | | | 164 | | | 139 | | | (313) | | | (392) | | | (196) | | | 764 | | | 296 | | | 115 |\n| Segment net income (loss) | | | | $ | 144 | | $ | 101 | | $ | 103 | | $ | 286 | | $ | 273 | | $ | 234 | | $ | 37 | | $ | (7) | | $ | 165 | | $ | 2,028 | | $ | 1,332 | | $ | 854 |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Identifiable segment assets (period end) | | | | $ | 3,297 | | $ | 2,350 | | $ | 2,294 | | $ | 9,184 | | $ | 7,413 | | $ | 6,053 | | $ | 49,884 | | $ | 51,633 | | $ | 38,944 | | $ | 183,872 | | $ | 174,579 | | $ | 157,081 |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| (1) | Includes financial data from subsidiaries below the quantitative and qualitative thresholds requiring disclosure. | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n\n","source":"TFC\/10-K\/0000092230-13-000023"} {"title":"EXHIBIT INDEX","text":"Field: Page; Sequence: 143; Value: 2","markdown_table":"\n\n| Exhibit No. | | Description | | Location |\n| --- | --- | --- | --- | --- |\n| 2.1 | | Purchase and Assumption Agreement Whole Bank All Deposits, among the Federal Deposit Insurance Corporation, receiver of Colonial Bank, Montgomery, Alabama, the Federal Deposit Insurance Corporation and Branch Banking and Trust Company, dated as of August 14, 2009. | | Incorporated herein by reference to Exhibit 2.1 of the Current Report on Form 8-K, filed August 17, 2009. |\n| 3(i) | | Articles of Incorporation of the Registrant, as Restated February 25, 2009, and amended May 10, 2010, April 27, 2012, July 24, 2012 and October 26, 2012. | | Incorporated herein by reference to Exhibit 3 (i) of the Quarterly Report on Form 10-Q, filed November 2, 2012. |\n| 3(ii) | | Bylaws of the Registrant, as amended February 21, 2012. | | Incorporated herein by reference to Exhibit 3(ii) of the Current Report on Form 8-K, filed February 24, 2012. |\n| 4.1 | | Articles of Incorporation of the Registrant, as Restated February 25, 2009 and amended May 10, 2010, April 27, 2012, July 24, 2012 and October 26, 2012. | | Incorporated herein by reference to Exhibit 3 (i) of the Quarterly Report on Form 10-Q, filed November 2, 2012. |\n| 4.2 | | Articles of Incorporation of the Registrant, as Restated February 25, 2009 and amended May 10, 2010, April 27, 2012, July 24, 2012 and October 26, 2012. | | Incorporated herein by reference to Exhibit 3 (i) of the Quarterly Report on Form 10-Q, filed November 2, 2012. |\n| 4.3 | | Indenture Regarding Senior Securities (including form of Senior Debt Security) between Registrant and U.S. Bank National Association (as successor in interest to State Street Bank and Trust Company), as trustee, dated as of May 24, 1996. | | Incorporated herein by reference to Exhibit 4(c) of Form S-3 Registration Statement No. 333-02899. |\n| 4.4 | | First Supplemental Indenture, dated May 4, 2009, to the Indenture Regarding Senior Securities, dated as of May 24, 1996, between the Registrant and U.S. Bank National Association. | | Incorporated herein by reference to Exhibit 4.2 of the Current Report on Form 8-K, filed May 4, 2009. |\n| 4.5 | | Indenture Regarding Subordinated Securities (including Form of Subordinated Debt Security) between the Registrant and U.S. Bank National Association (as successor in interest to State Street Bank and Trust Company), as trustee, dated as of May 24, 1996. | | Incorporated herein by reference to Exhibit 4(d) of Form S-3 Registration Statement No. 333-02899. |\n| 4.6 | | First Supplemental Indenture, dated as of December 23, 2003, to the Indenture Regarding Subordinated Securities, dated as of May 24, 1996, between the Registrant and U.S. Bank National Association. | | Incorporated herein by reference to Exhibit 4.5 of the Annual Report on Form 10-K, filed February 27, 2009. |\n| 4.7 | | Second Supplemental Indenture, dated as of September 24, 2004, to the Indenture Regarding Subordinated Securities, dated as of May 24, 1996, between the Registrant and U.S. Bank National Association. | | Incorporated herein by reference to Exhibit 4.7 of the Annual Report on Form 10-K, filed February 26, 2010. |\n| 4.8 | | Third Supplemental Indenture, dated May 4, 2009, to the Indenture Regarding Subordinated Securities, dated as of May 24, 1996, between the Registrant and U.S. Bank National Association. | | Incorporated herein by reference to Exhibit 4.6 of the Current Report on Form 8-K, filed May 4, 2009. |\n| 10.1\\* | | BB&T Corporation Amended and Restated Non-Employee Directors\u2019 Deferred Compensation and Stock Option Plan (amended and restated January 1, 2005). | | Incorporated herein by reference to Exhibit 10.1 of the Annual Report on Form 10-K, filed February 28, 2008. |\n\n","source":"TFC\/10-K\/0000092230-13-000023"} {"title":"EXHIBIT INDEX","text":"Field: Page; Sequence: 144; Value: 2","markdown_table":"\n\n| 10.2\\*\u2020 | | Form of Non-Employee Director Nonqualified Stock Option Agreement for the BB&T Corporation Amended and Restated Non-Employee Directors\u2019 Deferred Compensation and Stock Option Plan. | | Incorporated herein by reference to Exhibit 10.2 of the Annual Report on Form 10-K, filed February 25, 2011. |\n| --- | --- | --- | --- | --- |\n| 10.3\\* | | BB&T Corporation 1995 Omnibus Stock Incentive Plan (as amended and restated through February 25, 2003). | | Incorporated herein by reference to Exhibit 99 of Form S-8 Registration Statement No. 333-116502. |\n| 10.4\\* | | 2008 Declaration of Amendment to BB&T Corporation 1995 Omnibus Stock Incentive Plan. | | Incorporated herein by reference to Exhibit 10.2.a of the Annual Report on Form 10-K, filed February 27, 2009. |\n| 10.5\\* | | 409A Declaration of Amendment to BB&T Corporation 1995 Omnibus Stock Incentive Plan. | | Incorporated herein by reference to Exhibit 10.2.b of the Annual Report on Form 10-K, filed February 27, 2009. |\n| 10.6\\* | | Form of Employee Nonqualified Stock Option Agreement for the BB&T Corporation 1995 Omnibus Stock Incentive Plan, as amended and restated. | | Incorporated herein by reference to Exhibit 10.5 of the Annual Report on Form 10-K, filed February 25, 2011. |\n| 10.7\\* | | BB&T Corporation Amended and Restated 2004 Stock Incentive Plan, as amended (as amended through February 24, 2009). | | Incorporated herein by reference to the Appendix to the Proxy Statement for the 2009 Annual Meeting of Shareholders on Schedule 14A, filed March 13, 2009. |\n| 10.8\\* | | Form of Restricted Stock Unit Agreement (Performance-Based Vesting Component) for Executive Officers under the BB&T Corporation Amended and Restated 2004 Stock Incentive Plan (June 2010 Performance Award). | | Incorporated herein by reference to Exhibit 10.1 of the Current Report on Form 8-K, filed June 25, 2010. |\n| 10.9\\* | | Form of Performance Unit Award Agreement for the BB&T Corporation Amended and Restated 2004 Stock Incentive Plan (3-Year Vesting). | | Incorporated herein by reference to Exhibit 10.6 of the Quarterly Report on Form 10-Q, filed May 7, 2010. |\n| 10.10\\* | | Form of Non-Employee Director Restricted Stock Unit Agreement for the BB&T Corporation Amended and Restated 2004 Stock Incentive Plan (5-Year Vesting). | | Incorporated herein by reference to Exhibit 10.6 of the Annual Report on Form 10-K, filed February 28, 2008. |\n| 10.11\\* | | Form of Non-Employee Director Restricted Stock Unit Agreement for the BB&T Corporation Amended and Restated 2004 Stock Incentive Plan (4-Year Vesting). | | Incorporated herein by reference to Exhibit 10.2 of the Quarterly Report on Form 10-Q, filed May 7, 2010. |\n| 10.12\\* | | Form of Non-Employee Director Nonqualified Stock Option Agreement for the BB&T Corporation Amended and Restated 2004 Stock Incentive Plan (5-Year Vesting). | | Incorporated herein by reference to Exhibit 10.7 of the Annual Report on Form 10-K, filed February 28, 2008. |\n| 10.13\\* | | Form of Non-Employee Director Nonqualified Stock Option Agreement for the BB&T Corporation Amended and Restated 2004 Stock Incentive Plan (4-Year Vesting). | | Incorporated herein by reference to Exhibit 10.3 of the Quarterly Report on Form 10-Q, filed May 7, 2010. |\n| |\n\n","source":"TFC\/10-K\/0000092230-13-000023"} {"title":"EXHIBIT INDEX","text":"Field: Page; Sequence: 145; Value: 2","markdown_table":"\n\n| 10.14\\* | | Form of Employee Nonqualified Stock Option Agreement for the BB&T Corporation Amended and Restated 2004 Stock Incentive Plan (5-Year Vesting). | | Incorporated herein by reference to Exhibit 10.8 of the Annual Report on Form 10-K, filed February 28, 2008. |\n| --- | --- | --- | --- | --- |\n| 10.15\\* | | Form of Employee Nonqualified Stock Option Agreement for the BB&T Corporation Amended and Restated 2004 Stock Incentive Plan (4-Year Vesting). | | Incorporated herein by reference to Exhibit 10.5 of the Quarterly Report on Form 10-Q, filed May 7, 2010. |\n| 10.16\\* | | Form of Restricted Stock Unit Agreement for the BB&T Corporation Amended and Restated 2004 Stock Incentive Plan (5-Year Vesting). | | Incorporated herein by reference to Exhibit 10.1 of the Quarterly Report on Form 10-Q, filed May 8, 2009. |\n| 10.17\\* | | Form of Restricted Stock Unit Agreement for the BB&T Corporation Amended and Restated 2004 Stock Incentive Plan (4-Year Vesting). | | Incorporated herein by reference to Exhibit 10.4 of the Quarterly Report on Form 10-Q, filed May 7, 2010. |\n| 10.18\\* | | BB&T Corporation Amended and Restated Short-term Incentive Plan. | | Incorporated herein by reference to Exhibit 10.11 of the Annual Report on Form 10-K, filed February 27, 2009. |\n| 10.19\\* | | First Amendment to BB&T Corporation Short-term Incentive Plan (January 1, 2009 Restatement). | | Incorporated herein by reference to Exhibit 10.1 of the Quarterly Report on Form 10-Q, filed May 7, 2010. |\n| 10.20\\* | | Southern National Deferred Compensation Plan for Key Executives including amendments. | | Incorporated herein by reference to Exhibit 10.21 of the Annual Report on Form 10-K, filed February 25, 2011. |\n| 10.21\\* | | BB&T Corporation Target Pension Plan. | | Incorporated herein by reference to Exhibit 10.13 of the Annual Report on Form 10-K, filed February 27, 2009. |\n| 10.22\\* | | First Amendment to the BB&T Corporation Target Pension Plan. | | Incorporated herein by reference to Exhibit 10.23 of the Annual Report on Form 10-K, filed February 25, 2011. |\n| 10.23\\*\u2020 | | Second Amendment to the BB&T Corporation Target Pension Plan. | | Incorporated herein by reference to Exhibit 10.24 of the Annual Report on Form 10-K, filed February 25, 2011. |\n| 10.24\\*\u2020 | | Third Amendment to the BB&T Corporation Target Pension Plan. | | Incorporated herein by reference to Exhibit 10.25 of the Annual Report on Form 10-K, filed February 25, 2011. |\n| 10.25\\* | | BB&T Corporation Non-Qualified Defined Benefit Plan. | | Incorporated herein by reference to Exhibit 10.14 of the Annual Report on Form 10-K, filed February 27, 2009. |\n| 10.26\\* | | First Amendment to the BB&T Corporation Non-Qualified Defined Benefit Plan. | | Incorporated herein by reference to Exhibit 10.25 of the Annual Report on Form 10-K, filed February 25, 2011. |\n| |\n\n","source":"TFC\/10-K\/0000092230-13-000023"} {"title":"EXHIBIT INDEX","text":"Field: Page; Sequence: 146; Value: 2","markdown_table":"\n\n| 10.27\\*\u2020 | | Second Amendment to the BB&T Corporation Non-Qualified Defined Benefit Plan. | | Incorporated herein by reference to Exhibit 10.28 of the Annual Report on Form 10-K, filed February 25, 2011. |\n| --- | --- | --- | --- | --- |\n| 10.28\\*\u2020 | | Third Amendment to the BB&T Corporation Non-Qualified Defined Benefit Plan. | | Incorporated herein by reference to Exhibit 10.29 of the Annual Report on Form 10-K, filed February 25, 2011. |\n| 10.29\\* | | BB&T Corporation Non-Qualified Defined Contribution Plan. | | Incorporated herein by reference to Exhibit 10.15 of the Annual Report on Form 10-K, filed February 27, 2009. |\n| 10.30\\* | | BB&T Corporation Non-Qualified Deferred Compensation Trust Amended and Restated effective November 1, 2001 (including amendments). | | Incorporated herein by reference to Exhibit 10.16 of the Annual Report on Form 10-K, filed February 27, 2009. |\n| 10.31\\* | | BB&T Corporation Non-Qualified Deferred Compensation Trust Amended and Restated effective November 1, 2001 (including amendments). | | Incorporated herein by reference to Exhibit 10.17 of the Annual Report on Form 10-K, filed February 28, 2008. |\n| 10.32\\* | | Form of Employee Nonqualified Stock Option Agreement for the BB&T Corporation Amended and Restated 2004 Stock Incentive Plan (4-Year Vesting with Clawback Provision). | | Incorporated herein by reference to Exhibit 10.1 of the Quarterly Report on Form 10-Q, filed May 4, 2012. |\n| 10.33\\* | | Form of Employee Restricted Stock Unit Agreement for the BB&T Corporation Amended and Restated 2004 Stock Incentive Plan (4-Year Vesting with Clawback Provision). | | Incorporated herein by reference to Exhibit 10.2 of the Quarterly Report on Form 10-Q, filed May 4, 2012. |\n| 10.34\\* | | Form of Performance Unit Award Agreement for the BB&T Corporation Amended and Restated 2004 Stock Incentive Plan (3-Year Vesting 2012 - 2014). | | Incorporated herein by reference to Exhibit 10.3 of the Quarterly Report on Form 10-Q, filed May 4, 2012. |\n| 10.35\\* | | Form of Employee Nonqualified Stock Option Agreement for the BB&T Corporation 2012 Incentive Plan. | | Incorporated herein by reference to Exhibit 10.1 of the Quarterly Report on Form 10-Q, filed August 7, 2012. |\n| 10.36\\* | | Form of Employee Restricted Stock Unit Agreement for the BB&T Corporation 2012 Incentive Plan. | | Incorporated herein by reference to Exhibit 10.2 of the Quarterly Report on Form 10-Q, filed August 7, 2012. |\n| 10.37\\* | | Amended and Restated Employment Agreement by and among BB&T Corporation, Branch Banking and Trust Co. and Kelly S. King dated as of December 19, 2012. | | Incorporated herein by reference to Exhibit 10.1 of the Current Report on Form 8-K, filed December 19, 2012. |\n| 10.38\\* | | 2008 Amended and Restated Employment Agreement by and among BB&T Corporation, Branch Banking and Trust Co. and Christopher L. Henson. | | Incorporated herein by reference to Exhibit 10.21 of the Annual Report on Form 10-K, filed February 27, 2009. |\n| 10.39\\* | | 2008 Amended and Restated Employment Agreement by and among BB&T Corporation, Branch Banking and Trust Co. and Daryl N. Bible. | | Incorporated herein by reference to Exhibit 10.22 of the Annual Report on Form 10-K, filed February 27, 2009. |\n| |\n\n","source":"TFC\/10-K\/0000092230-13-000023"} {"title":"EXHIBIT INDEX","text":"Field: Page; Sequence: 147; Value: 2","markdown_table":"\n\n| 10.40\\* | | 2008 Amended and Restated Employment Agreement by and among BB&T Corporation, Branch Banking and Trust Co. and Ricky K. Brown. | | Incorporated herein by reference to Exhibit 10.23 of the Annual Report on Form 10-K, filed February 27, 2009. |\n| --- | --- | --- | --- | --- |\n| 10.41\\* | | 2008 Amended and Restated Employment Agreement by and among BB&T Corporation, Branch Banking and Trust Co. and Barbara F. Duck. | | Incorporated herein by reference to Exhibit 10.24 of the Annual Report on Form 10-K, filed February 27, 2009. |\n| 10.42\\* | | 2008 Amended and Restated Employment Agreement by and among BB&T Corporation, Branch Banking and Trust Co. and Donna C. Goodrich. | | Incorporated herein by reference to Exhibit 10.25 of the Annual Report on Form 10-K, filed February 27, 2009. |\n| 10.43\\* | | 2008 Amended and Restated Employment Agreement by and among BB&T Corporation, Branch Banking and Trust Co. and Robert E. Greene. | | Incorporated herein by reference to Exhibit 10.26 of the Annual Report on Form 10-K, filed February 27, 2009. |\n| 10.44\\* | | 2008 Amended and Restated Employment Agreement by and among BB&T Corporation, Branch Banking and Trust Co. and Clarke R. Starnes, III. | | Incorporated herein by reference to Exhibit 10.27 of the Annual Report on Form 10-K, filed February 27, 2009. |\n| 10.45\\* | | 2008 Amended and Restated Employment Agreement by and among BB&T Corporation, Branch Banking and Trust Co. and Steven B. Wiggs. | | Incorporated herein by reference to Exhibit 10.28 of the Annual Report on Form 10-K, filed February 27, 2009. |\n| 10.46\\* | | 2008 Amended and Restated Employment Agreement by and among BB&T Corporation, Branch Banking and Trust Co. and C. Leon Wilson, III. | | Incorporated herein by reference to Exhibit 10.29 of the Annual Report on Form 10-K, filed February 27, 2009. |\n| 10.47\\* | | 2012 Employment Agreement by and among BB&T Corporation, Branch Banking and Trust Co. and Cynthia A. Williams | | Incorporated herein by reference to Exhibit 10.1 of the Quarterly Report on Form 10-Q, filed November 2, 2012. |\n| 10.48\\* | | 2012 Employment Agreement by and among BB&T Corporation, Branch Banking and Trust Co. and William R. Yates | | Incorporated herein by reference to Exhibit 10.2 of the Quarterly Report on Form 10-Q, filed November 2, 2012. |\n| 11 | | Statement re computation of earnings per share | | Filed herewith as Note 20 to the consolidated financial statements. |\n| 12\u2020 | | Statement re computation of ratios | | Filed herewith. |\n| 21\u2020 | | Subsidiaries of the Registrant | | Filed herewith. |\n| 22 | | Proxy Statement for the Annual Meeting of Shareholders | | Future filing incorporated herein by reference pursuant to General Instruction G(3). |\n| 23\u2020 | | Consent of Independent Registered Public Accounting Firm | | Filed herewith. |\n| 31.1 | | Certification of Chief Executive Officer pursuant to Rule 13a-14(a) or 15(d)-14(a) of the Exchange Act, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | | Filed herewith. |\n| |\n\n","source":"TFC\/10-K\/0000092230-13-000023"} {"title":"Net Interest Income and NIM","text":"(1)Yields are stated on a TE basis utilizing the marginal income tax rates for the periods presented. The change in interest not solely due to changes in yield\/rate or volume has been allocated on a pro-rata basis based on the absolute dollar amount of each. (2)Total securities include AFS and HTM securities. (3)Includes Federal funds sold, securities purchased under resale agreements or similar arrangements, interest-bearing deposits with banks, trading securities, FHLB stock and other earning assets. (4)Loan fees, which are not material for any of the periods shown, are included for rate calculation purposes. (5)NPLs are included in the average balances. (6)Excludes basis adjustments for fair value hedges.","markdown_table":"\n\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Table 5 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| TE Net Interest Income and Rate \/ Volume Analysis (1) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Year Ended December 31, 2016, 2015 and 2014 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 2016 vs. 2015 | | | | | | | | | | | | 2015 vs. 2014 | | | | | | | | | | |\n| | | Average Balances (7) | | | | | | | | | | | | Yield\/Rate | | | | | | | | | Income\/Expense | | | | | | | | | | | | Incr. | | | | Change due to | | | | | | | | Incr. | | | | Change due to | | | | | | |\n| | | 2016 | | | | 2015 | | | | 2014 | | | | 2016 | | | 2015 | | | 2014 | | | 2016 | | | | 2015 | | | | 2014 | | | | (Decr.) | | | | Rate | | | | Vol. | | | | (Decr.) | | | | Rate | | | | Vol. | | |\n| | | (Dollars in millions) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Assets | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Total securities, at amortized cost: (2) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| U.S. Treasury | | $ | 3,061 | | | $ | 2,650 | | | $ | 1,969 | | | 1.67 | % | | 1.58 | % | | 1.51 | % | | $ | 51 | | | $ | 42 | | | $ | 30 | | | $ | 9 | | | $ | 2 | | | $ | 7 | | | $ | 12 | | | $ | 1 | | | $ | 11 | |\n| GSE | | 3,601 | | | | 5,338 | | | | 5,516 | | | | 2.13 | | | 2.13 | | | 2.10 | | | 77 | | | | 113 | | | | 116 | | | | (36 | | ) | | \u2014 | | | | (36 | | ) | | (3 | | ) | | 2 | | | | (5 | | ) |\n| Agency MBS | | 36,658 | | | | 30,683 | | | | 29,504 | | | | 2.05 | | | 1.98 | | | 2.00 | | | 750 | | | | 605 | | | | 589 | | | | 145 | | | | 22 | | | | 123 | | | | 16 | | | | (5 | | ) | | 21 | | |\n| States and political subdivisions | | 2,361 | | | | 2,204 | | | | 2,122 | | | | 5.20 | | | 5.65 | | | 5.80 | | | 123 | | | | 125 | | | | 124 | | | | (2 | | ) | | (11 | | ) | | 9 | | | | 1 | | | | (4 | | ) | | 5 | | |\n| Non-agency MBS | | 534 | | | | 751 | | | | 883 | | | | 14.56 | | | 13.51 | | | 14.23 | | | 78 | | | | 102 | | | | 126 | | | | (24 | | ) | | 7 | | | | (31 | | ) | | (24 | | ) | | (6 | | ) | | (18 | | ) |\n| Other | | 64 | | | | 477 | | | | 547 | | | | 1.87 | | | 1.31 | | | 1.43 | | | \u2014 | | | | 7 | | | | 8 | | | | (7 | | ) | | 1 | | | | (8 | | ) | | (1 | | ) | | (1 | | ) | | \u2014 | | |\n| Total securities | | 46,279 | | | | 42,103 | | | | 40,541 | | | | 2.33 | | | 2.36 | | | 2.45 | | | 1,079 | | | | 994 | | | | 993 | | | | 85 | | | | 21 | | | | 64 | | | | 1 | | | | (13 | | ) | | 14 | | |\n| Other earning assets (3) | | 3,202 | | | | 2,768 | | | | 1,881 | | | | 1.64 | | | 1.39 | | | 2.13 | | | 53 | | | | 38 | | | | 40 | | | | 15 | | | | (2 | | ) | | 7 | | | | (2 | | ) | | (17 | | ) | | 15 | | |\n| Loans and leases, net of unearned income: (4)(5) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Commercial: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Commercial and industrial | | 50,623 | | | | 44,648 | | | | 39,537 | | | | 3.33 | | | 3.21 | | | 3.35 | | | 1,687 | | | | 1,434 | | | | 1,325 | | | | 253 | | | | 55 | | | | 198 | | | | 109 | | | | (57 | | ) | | 166 | | |\n| CRE-income producing properties | | 14,379 | | | | 11,806 | | | | 10,489 | | | | 3.73 | | | 3.66 | | | 3.49 | | | 536 | | | | 432 | | | | 366 | | | | 104 | | | | 8 | | | | 96 | | | | 66 | | | | 35 | | | | 31 | | |\n| CRE-construction and development | | 3,742 | | | | 3,196 | | | | 2,616 | | | | 3.71 | | | 3.57 | | | 3.51 | | | 139 | | | | 114 | | | | 92 | | | | 25 | | | | 5 | | | | 20 | | | | 22 | | | | 7 | | | | 15 | | |\n| Dealer floor plan | | 1,295 | | | | 1,068 | | | | 985 | | | | 2.08 | | | 1.85 | | | 1.87 | | | 27 | | | | 20 | | | | 18 | | | | 7 | | | | 3 | | | | 4 | | | | 2 | | | | \u2014 | | | | 2 | | |\n| Direct retail lending (6) | | 11,796 | | | | 9,375 | | | | 8,249 | | | | 4.27 | | | 4.07 | | | 4.10 | | | 503 | | | | 381 | | | | 338 | | | | 122 | | | | 20 | | | | 102 | | | | 43 | | | | (1 | | ) | | 44 | | |\n| Sales finance | | 9,914 | | | | 9,975 | | | | 9,022 | | | | 3.12 | | | 2.86 | | | 2.80 | | | 310 | | | | 286 | | | | 253 | | | | 24 | | | | 26 | | | | (2 | | ) | | 33 | | | | 6 | | | | 27 | | |\n| Revolving credit | | 2,521 | | | | 2,406 | | | | 2,385 | | | | 8.77 | | | 8.76 | | | 8.70 | | | 221 | | | | 211 | | | | 208 | | | | 10 | | | | \u2014 | | | | 10 | | | | 3 | | | | 1 | | | | 2 | | |\n| Residential mortgage (6) | | 30,184 | | | | 30,252 | | | | 31,528 | | | | 4.05 | | | 4.15 | | | 4.20 | | | 1,224 | | | | 1,255 | | | | 1,325 | | | | (31 | | ) | | (28 | | ) | | (3 | | ) | | (70 | | ) | | (16 | | ) | | (54 | | ) |\n| Other lending subsidiaries | | 14,277 | | | | 12,291 | | | | 10,848 | | | | 8.22 | | | 8.68 | | | 9.08 | | | 1,173 | | | | 1,067 | | | | 985 | | | | 106 | | | | (59 | | ) | | 165 | | | | 82 | | | | (45 | | ) | | 127 | | |\n| PCI | | 1,063 | | | | 1,083 | | | | 1,613 | | | | 19.55 | | | 16.57 | | | 17.22 | | | 208 | | | | 179 | | | | 278 | | | | 29 | | | | 32 | | | | (3 | | ) | | (99 | | ) | | (10 | | ) | | (89 | | ) |\n| Total loans and leases HFI | | 139,794 | | | | 126,100 | | | | 117,272 | | | | 4.31 | | | 4.27 | | | 4.42 | | | 6,028 | | | | 5,379 | | | | 5,188 | | | | 649 | | | | 62 | | | | 587 | | | | 191 | | | | (80 | | ) | | 271 | | |\n| LHFS | | 1,965 | | | | 1,702 | | | | 1,558 | | | | 3.34 | | | 3.63 | | | 4.19 | | | 66 | | | | 62 | | | | 65 | | | | 4 | | | | (5 | | ) | | 9 | | | | (3 | | ) | | (9 | | ) | | 6 | | |\n| Total loans and leases | | 141,759 | | | | 127,802 | | | | 118,830 | | | | 4.30 | | | 4.26 | | | 4.42 | | | 6,094 | | | | 5,441 | | | | 5,253 | | | | 653 | | | | 57 | | | | 596 | | | | 188 | | | | (89 | | ) | | 277 | | |\n| Total earning assets | | 191,240 | | | | 172,673 | | | | 161,252 | | | | 3.78 | | | 3.75 | | | 3.90 | | | 7,226 | | | | 6,473 | | | | 6,286 | | | | 753 | | | | 76 | | | | 667 | | | | 187 | | | | (119 | | ) | | 306 | | |\n| Nonearning assets | | 27,705 | | | | 24,674 | | | | 23,843 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Total assets | | $ | 218,945 | | | $ | 197,347 | | | $ | 185,095 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Liabilities and Shareholders\u2019 Equity | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Interest-bearing deposits: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Interest checking | | $ | 27,595 | | | $ | 22,092 | | | $ | 18,731 | | | 0.14 | | | 0.08 | | | 0.07 | | | $ | 39 | | | $ | 18 | | | $ | 13 | | | $ | 21 | | | $ | 16 | | | $ | 5 | | | $ | 5 | | | $ | 2 | | | $ | 3 | |\n| Money market and savings | | 62,966 | | | | 56,592 | | | | 49,728 | | | | 0.20 | | | 0.19 | | | 0.15 | | | 123 | | | | 107 | | | | 74 | | | | 16 | | | | 5 | | | | 11 | | | | 33 | | | | 22 | | | | 11 | | |\n| Time deposits | | 16,619 | | | | 16,405 | | | | 22,569 | | | | 0.51 | | | 0.66 | | | 0.67 | | | 85 | | | | 107 | | | | 151 | | | | (22 | | ) | | (23 | | ) | | 1 | | | | (44 | | ) | | (1 | | ) | | (43 | | ) |\n| Foreign office deposits - interest-bearing | | 1,034 | | | | 593 | | | | 722 | | | | 0.38 | | | 0.12 | | | 0.07 | | | 4 | | | | 1 | | | | 1 | | | | 3 | | | | 2 | | | | 1 | | | | \u2014 | | | | \u2014 | | | | \u2014 | | |\n| Total interest-bearing deposits | | 108,214 | | | | 95,682 | | | | 91,750 | | | | 0.23 | | | 0.24 | | | 0.26 | | | 251 | | | | 233 | | | | 239 | | | | 18 | | | | \u2014 | | | | 18 | | | | (6 | | ) | | 23 | | | | (29 | | ) |\n| Short-term borrowings | | 2,554 | | | | 3,221 | | | | 3,421 | | | | 0.35 | | | 0.15 | | | 0.13 | | | 9 | | | | 5 | | | | 5 | | | | 4 | | | | 5 | | | | (1 | | ) | | \u2014 | | | | \u2014 | | | | \u2014 | | |\n| Long-term debt | | 22,791 | | | | 23,343 | | | | 22,210 | | | | 2.13 | | | 2.13 | | | 2.36 | | | 485 | | | | 497 | | | | 525 | | | | (12 | | ) | | \u2014 | | | | (12 | | ) | | (28 | | ) | | (54 | | ) | | 26 | | |\n| Total interest-bearing liabilities | | 133,559 | | | | 122,246 | | | | 117,381 | | | | 0.56 | | | 0.60 | | | 0.65 | | | 745 | | | | 735 | | | | 769 | | | | 10 | | | | 5 | | | | 5 | | | | (34 | | ) | | (31 | | ) | | (3 | | ) |\n| Noninterest-bearing deposits | | 49,255 | | | | 42,816 | | | | 37,327 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Other liabilities | | 6,776 | | | | 6,414 | | | | 6,433 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Shareholders\u2019 equity | | 29,355 | | | | 25,871 | | | | 23,954 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Total liabilities and shareholders\u2019 equity | | $ | 218,945 | | | $ | 197,347 | | | $ | 185,095 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Average interest rate spread | | | | | | | | | | | | | | 3.22 | % | | 3.15 | % | | 3.25 | % | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| NIM \/ net interest income | | | | | | | | | | | | | | 3.39 | % | | 3.32 | % | | 3.42 | % | | $ | 6,481 | | | $ | 5,738 | | | $ | 5,517 | | | $ | 743 | | | $ | 71 | | | $ | 662 | | | $ | 221 | | | $ | (88 | ) | | $ | 309 | |\n| TE adjustment | | | | | | | | | | | | | | | | | | | | | | | $ | 160 | | | $ | 146 | | | $ | 143 | | | | | | | | | | | | | | | | | | | | | | | | | |\n\n","source":"TFC\/10-K\/0000092230-17-000021"} {"title":"Noninterest Income","text":"Noninterest income was a record $4.5 billion for 2016, an increase of $453 million compared to 2015. This increase was across all categories and primarily reflects the impact from acquisitions.Income from BB&T\u2019s insurance agency\/brokerage operations was the largest source of noninterest income in 2016. Insurance income totaled $1.7 billion for 2016, an increase of $117 million compared to 2015. The increase was largely the result of the acquisition of Swett and Crawford on April 1, 2016, which was partially offset by the impact from selling American Coastal in 2015.FDIC loss share income improved by $111 million, primarily due to the termination of the loss sharing agreements during the third quarter of 2016. Other income totaled $362 million for 2016, an increase of $36 million from 2015. This increase is primarily due to the $26 million loss on sale of American Coastal during the second quarter of 2015, $19 million for client derivatives revenues and $10 million of trading gains. These increases were partially offset by lower partnerships and other investment income, which was the result of an opportunistic sale that resulted in a $28 million gain during the third quarter of 2015.Noninterest income was $4.0 billion for 2015, an increase of $163 million compared to 2014. This increase was driven by improved FDIC loss share income, higher mortgage banking income and higher operating lease income, partially offset by lower insurance income and lower other income.FDIC loss share income improved by $90 million, primarily due to a $58 million reduction in negative accretion related to credit losses on covered loans and a $20 million change in the offset to the provision for covered loans. Mortgage banking income increased $60 million, primarily due to higher volume and $17 million of higher MSR valuation adjustments.Operating lease income increased $29 million, primarily due to a larger leasing portfolio size as this business has continued to demonstrate steady growth.Income from BB&T\u2019s insurance agency\/brokerage operations was the largest source of noninterest income in 2015. Insurance income totaled $1.6 billion for 2015, a decline of $47 million compared to 2014. The second quarter sale of American Coastal resulted in a $79 million decline in insurance income, which was partially offset by higher volume in the property and casualty business.Other income totaled $326 million for 2015, a decline of $23 million from 2014. This decline is primarily due to the $26 million loss on sale of American Coastal during the second quarter of 2015 and $18 million of lower income related to assets for certain post-employment benefits (which is offset in personnel expense). These declines were partially offset by higher partnerships and other investment income, which was the result of an opportunistic sale that resulted in a $28 million gain during the third quarter of 2015.","markdown_table":"\n\n| | | | | | | | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | | | | | | | | | | | | | | | | | |\n| Table 6 | | | | | | | | | | | | | | | | | | |\n| Noninterest Income | | | | | | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | | | | | |\n| | | Year Ended December 31, | | | | | | | | | | | | % Change | | | | |\n| | | | 2016 vs. 2015 | | | 2015 vs. 2014 | |\n| | | 2016 | | | | 2015 | | | | 2014 | | | | |\n| | | (Dollars in millions) | | | | | | | | | | | | | | | | |\n| Insurance income | | $ | 1,713 | | | $ | 1,596 | | | $ | 1,643 | | | 7.3 | % | | (2.9 | )% |\n| Service charges on deposits | | 664 | | | | 631 | | | | 632 | | | | 5.2 | | | (0.2 | ) |\n| Mortgage banking income | | 463 | | | | 455 | | | | 395 | | | | 1.8 | | | 15.2 | |\n| Investment banking and brokerage fees and commissions | | 408 | | | | 398 | | | | 387 | | | | 2.5 | | | 2.8 | |\n| Trust and investment advisory revenues | | 266 | | | | 240 | | | | 221 | | | | 10.8 | | | 8.6 | |\n| Bankcard fees and merchant discounts | | 237 | | | | 218 | | | | 207 | | | | 8.7 | | | 5.3 | |\n| Checkcard fees | | 195 | | | | 174 | | | | 163 | | | | 12.1 | | | 6.7 | |\n| Operating lease income | | 137 | | | | 124 | | | | 95 | | | | 10.5 | | | 30.5 | |\n| Income from bank-owned life insurance | | 123 | | | | 113 | | | | 110 | | | | 8.8 | | | 2.7 | |\n| FDIC loss share income, net | | (142 | | ) | | (253 | | ) | | (343 | | ) | | (43.9 | ) | | (26.2 | ) |\n| Securities gains (losses), net | | 46 | | | | (3 | | ) | | (3 | | ) | | NM | | | \u2014 | |\n| Other income | | 362 | | | | 326 | | | | 349 | | | | 11.0 | | | (6.6 | ) |\n| Total noninterest income | | $ | 4,472 | | | $ | 4,019 | | | $ | 3,856 | | | 11.3 | | | 4.2 | |\n\n","source":"TFC\/10-K\/0000092230-17-000021"} {"title":"Noninterest Expense","text":"Noninterest expense totaled $6.7 billion for 2016, an increase of $455 million from 2015. This increase was primarily driven by higher personnel expense. Personnel expense is the largest component of noninterest expense and includes salaries, wages and incentives, as well as pension and other employee benefit costs. Personnel expense totaled $4.0 billion, a $495 million increase compared to 2015. This increase was driven by a $284 million increase in salaries, which was primarily due to additional headcount from acquisitions. Incentives expense was higher $110 million due to performance against targets and acquisitions. Personnel expense also increased due to a $48 million increase in pension expense that reflects higher amortization, service and interest costs. Additionally, personnel expense reflects a $26 million increase in payroll taxes as a result of higher salaries and incentives.Loss on early extinguishment of debt was down $173 million for 2016, as the prior year included a loss of $172 million, compared to a small gain for 2016.Occupancy and equipment expense totaled $786 million for 2016, compared to $708 million for 2015. The increase reflects the acquisition activity. Software expense was higher $32 million compared to 2015, primarily reflecting higher depreciation on recent investments.Outside IT services expense totaled $186 million for 2016, compared to $135 million in the prior year. This increase was due to higher costs related to projects.Loan-related expense totaled $95 million for 2016, a decrease of $55 million compared to the prior year. This decrease is largely the result of a release of $31 million in reserves during the fourth quarter of 2016, which was primarily driven by lower anticipated loan repurchase requests.Regulatory charges totaled $145 million for 2016, an increase of $44 million compared to the prior year. This increase reflects the impact from acquisitions and the surcharge assessed to large banks, which was implemented in the third quarter of 2016.Other expense decreased $40 million primarily due to a net benefit of $73 million in the third quarter related to the settlement of certain legacy mortgage matters involving the origination of mortgage loans insured by the FHA. In addition, business referral expense decreased $16 million primarily due to the sale of American Coastal in the prior year. Partially offsetting these decreases was a $50 million charitable contribution that was also made in the third quarter.Noninterest expense totaled $6.3 billion for 2015, an increase of $414 million from 2014. This increase was driven by higher personnel expense, merger-related and restructuring charges and loss on early extinguishment of debt, partially offset by lower loan-related expense.Personnel expense totaled $3.5 billion, a $289 million increase compared to 2014. This increase was driven by a $114 million increase in salaries, which was primarily due to additional headcount from acquisitions. Personnel expense also increased due to a $74 million increase in pension expense that reflects higher amortization, service and interest costs, partially offset by the estimated return on higher plan assets. Additionally, personnel expense reflects a $50 million increase in employee medical and insurance benefits and a $32 million increase in incentives.Merger-related and restructuring charges totaled $165 million, an increase of $119 million compared to 2014. This increase was primarily related to the Susquehanna acquisition, with additional amounts related to The Bank of Kentucky and the planned acquisition of National Penn.Loss on early extinguishment of debt was $172 million for 2015, compared to $122 million for 2014. The combined debt extinguishments for the two years totaled $2.0 billion of FHLB advances with a weighted average interest rate of 4.5%.Occupancy and equipment expense totaled $708 million for 2015, compared to $682 million for 2014. The increase reflects the acquisition activity occurring during the year.Loan-related expense totaled $150 million for 2015, a decrease of $117 million compared to the prior year. This decrease is largely the result of lower claims and charge-offs in the current year, as well as charges recorded in the prior year of $33 million related to the FHA-insured loan origination process and $27 million related to a review of mortgage lending processes.","markdown_table":"\n\n| | | | | | | | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | | | | | | | | | | | | | | | | | |\n| Table 7 | | | | | | | | | | | | | | | | | | |\n| Noninterest Expense | | | | | | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | | | | | |\n| | | Year Ended December 31, | | | | | | | | | | | | % Change | | | | |\n| | | | 2016 vs. 2015 | | | 2015 vs. 2014 | |\n| | | 2016 | | | | 2015 | | | | 2014 | | | | |\n| | | (Dollars in millions) | | | | | | | | | | | | | | | | |\n| Personnel expense | | $ | 3,964 | | | $ | 3,469 | | | $ | 3,180 | | | 14.3 | % | | 9.1 | % |\n| Occupancy and equipment expense | | 786 | | | | 708 | | | | 682 | | | | 11.0 | | | 3.8 | |\n| Software expense | | 224 | | | | 192 | | | | 174 | | | | 16.7 | | | 10.3 | |\n| Outside IT services | | 186 | | | | 135 | | | | 115 | | | | 37.8 | | | 17.4 | |\n| Amortization of intangibles | | 150 | | | | 105 | | | | 91 | | | | 42.9 | | | 15.4 | |\n| Regulatory charges | | 145 | | | | 101 | | | | 106 | | | | 43.6 | | | (4.7 | ) |\n| Professional services | | 102 | | | | 130 | | | | 139 | | | | (21.5 | ) | | (6.5 | ) |\n| Loan-related expense | | 95 | | | | 150 | | | | 267 | | | | (36.7 | ) | | (43.8 | ) |\n| Merger-related and restructuring charges, net | | 171 | | | | 165 | | | | 46 | | | | 3.6 | | | NM | |\n| Loss (gain) on early extinguishment of debt | | (1 | | ) | | 172 | | | | 122 | | | | (100.6 | ) | | 41.0 | |\n| Other expense | | 899 | | | | 939 | | | | 930 | | | | (4.3 | ) | | 1.0 | |\n| Total noninterest expense | | $ | 6,721 | | | $ | 6,266 | | | $ | 5,852 | | | 7.3 | | | 7.1 | |\n\n","source":"TFC\/10-K\/0000092230-17-000021"} {"title":"Merger-Related and Restructuring Charges","text":"The 2016 costs primarily reflect the acquisitions of National Penn and Swett & Crawford, while the 2015 activities were largely related to Susquehanna.","markdown_table":"\n\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Table 8 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Merger-related and Restructuring Accrual Activity | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | | Year Ended December 31, 2016 | | | | | | | | | | | | | | | | Year Ended December 31, 2015 | | | | | | | | | | | | | | |\n| | | Beginning Balance | | | | Expense | | | | Utilized | | | | Ending Balance | | | | Beginning Balance | | | | Expense | | | | Utilized | | | | Ending Balance | | |\n| | | (Dollars in millions) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Severance and personnel-related | | $ | 26 | | | $ | 51 | | | $ | (52 | ) | | $ | 25 | | | $ | 2 | | | $ | 60 | | | $ | (36 | ) | | $ | 26 | |\n| Occupancy and equipment | | 11 | | | | 49 | | | | (39 | | ) | | 21 | | | | 7 | | | | 16 | | | | (12 | | ) | | 11 | | |\n| Professional services | | 13 | | | | 14 | | | | (26 | | ) | | 1 | | | | 17 | | | | 34 | | | | (38 | | ) | | 13 | | |\n| Systems conversion and related costs | | \u2014 | | | | 27 | | | | (26 | | ) | | 1 | | | | \u2014 | | | | 25 | | | | (25 | | ) | | \u2014 | | |\n| Other adjustments | | 2 | | | | 30 | | | | (31 | | ) | | 1 | | | | 5 | | | | 30 | | | | (33 | | ) | | 2 | | |\n| Total | | $ | 52 | | | $ | 171 | | | $ | (174 | ) | | $ | 49 | | | $ | 31 | | | $ | 165 | | | $ | (144 | ) | | $ | 52 | |\n\n","source":"TFC\/10-K\/0000092230-17-000021"} {"title":"Investment Activities","text":"The securities portfolio totaled $43.6 billion at December\u00a031,\u00a02016, compared to $43.8 billion at December 31, 2015. The overall portfolio was relatively flat compared to the prior year, with a slight change in the mix between AFS and HTM as new purchases and reinvestments were directed to the AFS portfolio.As of December\u00a031,\u00a02016, approximately 7.5% of the securities portfolio was variable rate, compared to 12.4% as of December 31, 2015. The effective duration of the securities portfolio was 4.8 years at December\u00a031,\u00a02016, compared to 4.0 years at the end of 2015. The duration of the securities portfolio excludes equity securities and certain non-agency MBS acquired from the FDIC.Agency MBS represented 79.1% of the total securities portfolio at year-end 2016, compared to 73.7% as of prior year end. BB&T transferred $517 million of HTM securities to AFS during the third quarter of 2015. These securities, which were sold by the end of the third quarter, represented investments in student loans for which there was a significant increase in risk weighting as a result of the implementation of Basel III.","markdown_table":"\n\n| | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | | | | | | | | | | | |\n| Table 9 | | | | | | | | | | | | |\n| Composition of Securities Portfolio | | | | | | | | | | | | |\n| | | | | | | | | | | | | |\n| | | December 31, | | | | | | | | | | |\n| | | 2016 | | | | 2015 | | | | 2014 | | |\n| | | (Dollars in millions) | | | | | | | | | | |\n| AFS securities (at fair value): | | | | | | | | | | | | |\n| U.S. Treasury | | $ | 2,587 | | | $ | 1,832 | | | $ | 1,231 | |\n| GSE | | 180 | | | | 51 | | | | \u2014 | | |\n| Agency MBS | | 21,264 | | | | 20,046 | | | | 16,154 | | |\n| States and political subdivisions | | 2,205 | | | | 2,375 | | | | 2,286 | | |\n| Non-agency MBS | | 679 | | | | 989 | | | | 1,195 | | |\n| Other | | 11 | | | | 4 | | | | 41 | | |\n| Total AFS securities | | 26,926 | | | | 25,297 | | | | 20,907 | | |\n| | | | | | | | | | | | | |\n| HTM securities (at amortized cost): | | | | | | | | | | | | |\n| U.S. Treasury | | 1,098 | | | | 1,097 | | | | 1,096 | | |\n| GSE | | 2,197 | | | | 5,045 | | | | 5,394 | | |\n| Agency MBS | | 13,225 | | | | 12,267 | | | | 13,120 | | |\n| States and political subdivisions | | 110 | | | | 63 | | | | 22 | | |\n| Other | | 50 | | | | 58 | | | | 608 | | |\n| Total HTM securities | | 16,680 | | | | 18,530 | | | | 20,240 | | |\n| Total securities | | $ | 43,606 | | | $ | 43,827 | | | $ | 41,147 | |\n\n","source":"TFC\/10-K\/0000092230-17-000021"} {"title":"Investment Activities","text":"(1)Yields represent interest computed using the effective interest method on a TE basis using marginal income tax rates and the amortized cost of the securities.(2)For purposes of the maturity table, MBS, which are not due at a single maturity date, have been included in maturity groupings based on the contractual maturity. The expected life of MBS will differ from contractual maturities because borrowers may have the right to call or prepay the underlying mortgage loans.(3)Weighted-average yield excludes the effect of pay-fixed swaps hedging municipal securities.","markdown_table":"\n\n| | | | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | | | | | | | | | | | | | |\n| Table 10 | | | | | | | | | | | | | | |\n| Securities Yields By Major Category and Maturity | | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | |\n| | | December\u00a031,\u00a02016 | | | | | | | | | | | | |\n| | | AFS | | | | | | | HTM | | | | | |\n| | | Fair Value | | | | Effective Yield (1) | | | Amortized Cost | | | | Effective Yield (1) | |\n| | | (Dollars in millions) | | | | | | | | | | | | |\n| U.S. Treasury: | | | | | | | | | | | | | | |\n| Within one year | | $ | 246 | | | 0.75 | % | | $ | \u2014 | | | \u2014 | % |\n| One to five years | | 696 | | | | 1.23 | | | 1,098 | | | | 2.21 | |\n| Five to ten years | | 1,645 | | | | 1.40 | | | \u2014 | | | | \u2014 | |\n| Total | | 2,587 | | | | 1.29 | | | 1,098 | | | | 2.21 | |\n| | | | | | | | | | | | | | | |\n| GSE: | | | | | | | | | | | | | | |\n| One to five years | | \u2014 | | | | \u2014 | | | 582 | | | | 2.29 | |\n| Five to ten years | | 167 | | | | 1.49 | | | 1,615 | | | | 2.18 | |\n| After ten years | | 13 | | | | 2.60 | | | \u2014 | | | | \u2014 | |\n| Total | | 180 | | | | 1.57 | | | 2,197 | | | | 2.21 | |\n| | | | | | | | | | | | | | | |\n| Agency MBS: (2) | | | | | | | | | | | | | | |\n| One to five years | | 4 | | | | 3.69 | | | \u2014 | | | | \u2014 | |\n| Five to ten years | | 9 | | | | 2.22 | | | \u2014 | | | | \u2014 | |\n| After ten years | | 21,251 | | | | 1.99 | | | 13,225 | | | | 2.26 | |\n| Total | | 21,264 | | | | 1.99 | | | 13,225 | | | | 2.26 | |\n| | | | | | | | | | | | | | | |\n| States and political subdivisions: (3) | | | | | | | | | | | | | | |\n| Within one year | | 18 | | | | 5.19 | | | \u2014 | | | | \u2014 | |\n| One to five years | | 318 | | | | 5.91 | | | 3 | | | | 2.12 | |\n| Five to ten years | | 759 | | | | 5.62 | | | 73 | | | | 1.16 | |\n| After ten years | | 1,110 | | | | 6.33 | | | 34 | | | | 1.45 | |\n| Total | | 2,205 | | | | 6.02 | | | 110 | | | | 1.28 | |\n| | | | | | | | | | | | | | | |\n| Non-agency MBS: (2) | | | | | | | | | | | | | | |\n| After ten years | | 679 | | | | 18.12 | | | \u2014 | | | | \u2014 | |\n| Total | | 679 | | | | 18.12 | | | \u2014 | | | | \u2014 | |\n| | | | | | | | | | | | | | | |\n| Other: | | | | | | | | | | | | | | |\n| Within one year | | 11 | | | | 0.17 | | | \u2014 | | | | \u2014 | |\n| After ten years | | \u2014 | | | | \u2014 | | | 50 | | | | 2.16 | |\n| Total | | 11 | | | | 0.17 | | | 50 | | | | 2.16 | |\n| | | | | | | | | | | | | | | |\n| Total securities | | $ | 26,926 | | | 2.66 | | | $ | 16,680 | | | 2.24 | |\n\n","source":"TFC\/10-K\/0000092230-17-000021"} {"title":"Lending Activities","text":"Average loans held for investment for the fourth quarter of 2016 were $142.3 billion, up $1.1 billion compared to the third quarter of 2016. The increase was driven by sales finance loans. There was also modest growth in other lending subsidiaries loans, which was offset by a continued decline in residential mortgage loans.Average sales finance loans increased $1.3 billion, primarily due to a $1.0 billion portfolio acquisition late in the third quarter of 2016 and a $1.9 billion portfolio acquisition in the fourth quarter. These increases were partially offset by the continued effects of dealer pricing structure changes implemented during 2015 and also reflect the continued runoff of the auto lease portfolio obtained in connection with the Susquehanna acquisition.The following table excludes sales finance and retail other lending subsidiaries loans as the substantial majority of those loans have fixed interest rates:","markdown_table":"\n\n| | | | | | | | | | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | | | | | | | | | | | | | | | | | | | |\n| Table 11 | | | | | | | | | | | | | | | | | | | | |\n| Quarterly Average Balances of Loans and Leases | | | | | | | | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | | | | | | | |\n| | | For the Three Months Ended | | | | | | | | | | | | | | | | | | |\n| | | 12\/31\/2016 | | | | 9\/30\/2016 | | | | 6\/30\/2016 | | | | 3\/31\/2016 | | | | 12\/31\/2015 | | |\n| | | (Dollars in millions) | | | | | | | | | | | | | | | | | | |\n| Commercial and industrial | | $ | 51,306 | | | $ | 51,508 | | | $ | 51,646 | | | $ | 48,013 | | | $ | 48,047 | |\n| CRE-income producing properties | | 14,566 | | | | 14,667 | | | | 14,786 | | | | 13,490 | | | | 13,264 | | |\n| CRE-construction and development | | 3,874 | | | | 3,802 | | | | 3,669 | | | | 3,619 | | | | 3,766 | | |\n| Dealer floor plan | | 1,367 | | | | 1,268 | | | | 1,305 | | | | 1,239 | | | | 1,164 | | |\n| Direct retail lending | | 12,046 | | | | 11,994 | | | | 12,031 | | | | 11,107 | | | | 10,896 | | |\n| Sales finance | | 10,599 | | | | 9,339 | | | | 9,670 | | | | 10,049 | | | | 10,533 | | |\n| Revolving credit | | 2,608 | | | | 2,537 | | | | 2,477 | | | | 2,463 | | | | 2,458 | | |\n| Residential mortgage | | 30,044 | | | | 30,357 | | | | 30,471 | | | | 29,864 | | | | 30,334 | | |\n| Other lending subsidiaries | | 14,955 | | | | 14,742 | | | | 13,961 | | | | 13,439 | | | | 13,281 | | |\n| PCI | | 974 | | | | 1,052 | | | | 1,130 | | | | 1,098 | | | | 1,070 | | |\n| Total loans and leases HFI | | 142,339 | | | | 141,266 | | | | 141,146 | | | | 134,381 | | | | 134,813 | | |\n| LHFS | | 2,230 | | | | 2,423 | | | | 1,951 | | | | 1,247 | | | | 1,377 | | |\n| Total loans and leases | | $ | 144,569 | | | $ | 143,689 | | | $ | 143,097 | | | $ | 135,628 | | | $ | 136,190 | |\n\n","source":"TFC\/10-K\/0000092230-17-000021"} {"title":"Lending Activities","text":"(1)The weighted average remaining term for dealer floor plan is excluded as the balance primarily represents loans that are callable on demand.(2)Margin loans totaling $90 million have been excluded because they do not have a contractual end date and are callable on demand.As of December\u00a031,\u00a02016, approximately $258 million of variable rate residential mortgage loans are currently in an interest-only phase. Approximately 94.8% of these balances will begin amortizing within the next three years. Variable rate residential mortgage loans typically reset every 12 months beginning after a 3 to 10 year fixed period, with an annual cap on rate changes ranging from 2.0% to 6.0%.As of December\u00a031,\u00a02016, the direct retail lending portfolio includes $8.7 billion of variable rate home equity lines, $946 million of variable rate other lines of credit and $326 million of variable rate loans. Approximately $6.4 billion of the variable rate home equity lines is currently in the interest-only phase and approximately 8.5% of these balances will begin amortizing within the next three years. Approximately $788 million of the outstanding balance of variable rate other lines of credit is in the interest-only phase and 23.2% of these balances will begin amortizing within the next three years. Variable rate home equity lines and other lines of credit typically reset on a monthly basis. BB&T monitors the performance of its home equity loans and lines secured by second liens similarly to other consumer loans and utilizes assumptions specific to these loans in determining the necessary ALLL. BB&T also receives notification when the first lien holder, whether BB&T or another financial institution, has initiated foreclosure proceedings against the borrower. When notified that the first lien is in the process of foreclosure, BB&T obtains valuations to determine if any additional charge-offs or reserves are warranted. These valuations are updated at least annually thereafter.BB&T has limited ability to monitor the delinquency status of the first lien, unless the first lien is held or serviced by BB&T. As a result, using migration assumptions that are based on historical experience and adjusted for current trends, BB&T estimates the volume of second lien positions where the first lien is delinquent and adjusts the ALLL to reflect the increased risk of loss on these credits. Finally, BB&T also provides additional reserves to second lien positions when the estimated combined current loan to value ratio for the credit exceeds 100%. As of December\u00a031,\u00a02016, BB&T held or serviced the first lien on 31.5% of its second lien positions.Scheduled repayments are reported in the maturity category in which the payment is due. Determinations of maturities are based on contract terms. BB&T\u2019s credit policy typically does not permit automatic renewal of loans. At the scheduled maturity date (including balloon payment date), the customer generally must request a new loan to replace the matured loan and execute either a new note or note modification with rate, terms and conditions negotiated at that time.BB&T lends to a diverse customer base that is substantially located within the Company\u2019s primary market area. At the same time, the loan portfolio is geographically dispersed throughout BB&T\u2019s branch network to mitigate concentration risk arising from local and regional economic downturns. Refer to the \"Risk Management\" section for a discussion of each of the loan portfolios and the credit risk management policies used to manage the portfolios.The following table presents the loan portfolio based upon BB&T\u2019s BUs:","markdown_table":"\n\n| | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | | | | | | | | | | |\n| Table 12 | | | | | | | | | | | |\n| Variable Rate Loans (Excluding PCI and LHFS) | | | | | | | | | | | |\n| | | | | | | | | | | | |\n| December\u00a031,\u00a02016 | | Outstanding Balance | | | | Wtd. Avg. Contractual Rate | | | Wtd. Avg. Remaining Term | | |\n| | | (Dollars in millions) | | | | | | | | | |\n| Commercial: | | | | | | | | | | | |\n| Commercial and industrial | | $ | 35,851 | | | 2.60 | % | | 3.0 | | yrs |\n| CRE-income producing properties | | 10,755 | | | | 3.27 | | | 4.6 | | |\n| CRE-construction and development | | 3,597 | | | | 3.56 | | | 2.7 | | |\n| Dealer floor plan (1) | | 1,413 | | | | 2.08 | | | NM | | |\n| Other lending subsidiaries | | 797 | | | | 2.70 | | | 1.8 | | |\n| Retail: | | | | | | | | | | | |\n| Direct retail lending (2) | | 9,945 | | | | 3.72 | | | 8.4 | | |\n| Revolving credit | | 2,352 | | | | 9.79 | | | NM | | |\n| Residential mortgage-nonguaranteed | | 5,805 | | | | 3.50 | | | 24.6 | | |\n| Residential mortgage-government guaranteed | | 25 | | | | 3.05 | | | 19.2 | | |\n\n","source":"TFC\/10-K\/0000092230-17-000021"} {"title":"Lending Activities","text":"(1) During the first quarter of 2014, $8.3 billion of loans were transferred from direct retail lending to residential mortgage.Loans and leases HFI were $143.3 billion at December\u00a031,\u00a02016, an increase of $7.4 billion compared to the prior year. This increase reflects the impact of the April 1, 2016 acquisition of National Penn, which contributed $6.0 billion in loans. Commercial and industrial loans were up $3.3 billion, other lending subsidiaries loans were up $1.5 billion, CRE-income producing properties loans were up $1.1 billion and direct retail lending loans were up $952 million, all of which were primarily due to the acquisition of National Penn. Sales finance loans were up $940 million over the prior year, primarily due to a $1.0 billion portfolio acquisition late in the third quarter of 2016 and a $1.9 billion portfolio acquisition during the fourth quarter. These increases were partially offset by the continued effects of dealer pricing structure changes implemented during 2015 and also reflect the continued runoff of the auto lease portfolio obtained in connection with the Susquehanna acquisition.The $612 million decline in residential mortgage balances reflects the continuing strategy to sell conforming residential mortgage loan production.The PCI loan portfolio, which totaled $910 million at December\u00a031,\u00a02016, continued to runoff during the year, partially offset by the addition of $124 million of PCI loans in connection with the National Penn acquisition.The majority of loans are with clients in domestic market areas, which are primarily concentrated in the southeastern United States. International loans were immaterial as of December\u00a031,\u00a02016 and 2015.","markdown_table":"\n\n| | | | | | | | | | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | | | | | | | | | | | | | | | | | | | |\n| Table 13 | | | | | | | | | | | | | | | | | | | | |\n| Composition of Loan and Lease Portfolio | | | | | | | | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | | | | | | | |\n| | | December 31, | | | | | | | | | | | | | | | | | | |\n| | | 2016 | | | | 2015 | | | | 2014 | | | | 2013 | | | | 2012 | | |\n| | | (Dollars in millions) | | | | | | | | | | | | | | | | | | |\n| Commercial: | | | | | | | | | | | | | | | | | | | | |\n| Commercial and industrial | | $ | 51,719 | | | $ | 48,430 | | | $ | 41,454 | | | $ | 38,508 | | | $ | 38,295 | |\n| CRE-income producing properties | | 14,538 | | | | 13,421 | | | | 10,722 | | | | 10,228 | | | | 9,861 | | |\n| CRE-construction and development | | 3,819 | | | | 3,732 | | | | 2,735 | | | | 2,382 | | | | 2,861 | | |\n| Dealer floor plan | | 1,413 | | | | 1,215 | | | | 1,091 | | | | 904 | | | | 431 | | |\n| Other lending subsidiaries | | 7,691 | | | | 6,795 | | | | 5,356 | | | | 4,502 | | | | 4,138 | | |\n| Retail: | | | | | | | | | | | | | | | | | | | | |\n| Direct retail lending (1) | | 12,092 | | | | 11,140 | | | | 8,146 | | | | 15,869 | | | | 15,817 | | |\n| Sales finance | | 11,267 | | | | 10,327 | | | | 9,509 | | | | 8,478 | | | | 7,305 | | |\n| Revolving credit | | 2,655 | | | | 2,510 | | | | 2,460 | | | | 2,403 | | | | 2,330 | | |\n| Residential mortgage-nonguaranteed (1) | | 29,022 | | | | 29,663 | | | | 30,107 | | | | 23,513 | | | | 23,189 | | |\n| Residential mortgage-government guaranteed | | 899 | | | | 870 | | | | 983 | | | | 1,135 | | | | 1,083 | | |\n| Other lending subsidiaries | | 7,297 | | | | 6,726 | | | | 6,106 | | | | 5,960 | | | | 5,999 | | |\n| PCI | | 910 | | | | 1,122 | | | | 1,215 | | | | 2,035 | | | | 3,294 | | |\n| Total loans and leases HFI | | 143,322 | | | | 135,951 | | | | 119,884 | | | | 115,917 | | | | 114,603 | | |\n| LHFS | | 1,716 | | | | 1,035 | | | | 1,423 | | | | 1,222 | | | | 3,761 | | |\n| Total loans and leases | | $ | 145,038 | | | $ | 136,986 | | | $ | 121,307 | | | $ | 117,139 | | | $ | 118,364 | |\n\n","source":"TFC\/10-K\/0000092230-17-000021"} {"title":"Asset Quality","text":"(1)Includes charge-offs and losses recorded upon sale of $210 million and $170 million for the year ended December 31, 2016 and\u00a02015, respectively.(2)Includes charge-offs and losses recorded upon sale of $30 million and $17 million for the year ended December 31, 2016 and 2015, respectively.NPAs, which include foreclosed real estate, repossessions and NPLs, totaled $813 million at December\u00a031,\u00a02016 compared to $712 million (or $686 million excluding foreclosed real estate acquired from the FDIC) at December 31, 2015. This increase consisted of a $160 million increase in NPLs partially offset by a $59 million decrease in foreclosed real estate and other property.The increase in NPLs is primarily due to commercial and industrial NPLs that were downgraded as a result of a review of shared national credits in the energy lending portfolio during the first quarter, partially offset by the sale of several energy-related credits during the year. NPAs as a percentage of loans and leases plus foreclosed property were 0.57% at December\u00a031,\u00a02016 compared with 0.52% at December 31, 2015.The following tables summarize asset quality information for the past five years.","markdown_table":"\n\n| | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | | | | | | | |\n| Table 15 | | | | | | | | |\n| Rollforward of NPAs | | | | | | | | |\n| | | Year Ended December 31, | | | | | | |\n| | | 2016 | | | | 2015 | | |\n| | | (Dollars in millions) | | | | | | |\n| Balance at beginning of year | | $ | 686 | | | $ | 726 | |\n| New NPAs | | 1,716 | | | | 1,266 | | |\n| Advances and principal increases | | 253 | | | | 85 | | |\n| Disposals of foreclosed assets (1) | | (516 | | ) | | (484 | | ) |\n| Disposals of NPLs (2) | | (302 | | ) | | (165 | | ) |\n| Charge-offs and losses | | (279 | | ) | | (246 | | ) |\n| Payments | | (586 | | ) | | (358 | | ) |\n| Transfers to performing status | | (179 | | ) | | (149 | | ) |\n| Foreclosed real estate, included as a result of loss share termination | | 17 | | | | \u2014 | | |\n| Other, net | | 3 | | | | 11 | | |\n| Balance at end of year | | $ | 813 | | | $ | 686 | |\n\n","source":"TFC\/10-K\/0000092230-17-000021"} {"title":"Asset Quality","text":"(1)During 2016, approximately $191 million of nonaccrual energy-related loans were sold.(2)During 2014, approximately $121 million of nonaccrual residential mortgage loans were sold.(3)During 2014, approximately $94 million of performing TDRs were transferred from direct retail lending to residential mortgage.(4)During 2014, approximately $540 million of performing residential mortgage TDRs were sold.BB&T\u2019s performing TDRs totaled $1.2 billion at December\u00a031,\u00a02016, an increase of $188 million compared to the prior year. This increase includes a $148 million increase for residential mortgage loans, which was primarily the result of the permanent restructuring of certain mortgage loan modifications that successfully completed their trial periods and of implementing a change in the strategy of repurchasing loans from GNMA pools that BB&T has the right but not the obligation to repurchase.Loans 90 days or more past due and still accruing interest totaled $636 million at December\u00a031,\u00a02016, compared with $677 million at prior year-end, a decline of $41 million. This decline includes a $43 million reduction for past due government guaranteed residential mortgage loans, which reflects general improvements in credit quality within that portfolio.Loans 30-89 days past due totaled $1.1 billion at December\u00a031,\u00a02016, an increase of $46 million compared to the prior year, primarily due to higher loan balances.","markdown_table":"\n\n| | | | | | | | | | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | | | | | | | | | | | | | | | | | | | |\n| Table 16 | | | | | | | | | | | | | | | | | | | | |\n| Asset Quality | | | | | | | | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | | | | | | | |\n| | | December 31, | | | | | | | | | | | | | | | | | | |\n| | | 2016 | | | | 2015 | | | | 2014 | | | | 2013 | | | | 2012 | | |\n| | | (Dollars in millions) | | | | | | | | | | | | | | | | | | |\n| Nonaccrual loans and leases: | | | | | | | | | | | | | | | | | | | | |\n| Commercial and industrial (1) | | $ | 363 | | | $ | 237 | | | $ | 239 | | | $ | 363 | | | $ | 545 | |\n| CRE-income producing properties | | 40 | | | | 38 | | | | 74 | | | | 113 | | | | 171 | | |\n| CRE-construction and development | | 17 | | | | 13 | | | | 26 | | | | 51 | | | | 170 | | |\n| Direct retail lending | | 63 | | | | 43 | | | | 48 | | | | 109 | | | | 132 | | |\n| Sales finance | | 6 | | | | 7 | | | | 5 | | | | 5 | | | | 7 | | |\n| Residential mortgage-nonguaranteed (2) | | 172 | | | | 173 | | | | 164 | | | | 243 | | | | 269 | | |\n| Residential mortgage-government guaranteed | | \u2014 | | | | \u2014 | | | | 2 | | | | \u2014 | | | | \u2014 | | |\n| Other lending subsidiaries | | 75 | | | | 65 | | | | 58 | | | | 51 | | | | 86 | | |\n| Total nonaccrual loans and leases (1)(2) | | 736 | | | | 576 | | | | 616 | | | | 935 | | | | 1,380 | | |\n| Foreclosed real estate | | 37 | | | | 82 | | | | 87 | | | | 71 | | | | 107 | | |\n| Foreclosed real estate-acquired from FDIC | | 13 | | | | 26 | | | | 56 | | | | 121 | | | | 254 | | |\n| Other foreclosed property | | 27 | | | | 28 | | | | 23 | | | | 47 | | | | 49 | | |\n| Total NPAs (1)(2) | | $ | 813 | | | $ | 712 | | | $ | 782 | | | $ | 1,174 | | | $ | 1,790 | |\n| | | | | | | | | | | | | | | | | | | | | |\n| Performing TDRs: | | | | | | | | | | | | | | | | | | | | |\n| Commercial and industrial | | $ | 55 | | | $ | 49 | | | $ | 64 | | | $ | 77 | | | $ | 77 | |\n| CRE-income producing properties | | 16 | | | | 13 | | | | 27 | | | | 50 | | | | 53 | | |\n| CRE-construction and development | | 9 | | | | 16 | | | | 30 | | | | 39 | | | | 35 | | |\n| Direct retail lending (3) | | 67 | | | | 72 | | | | 84 | | | | 187 | | | | 197 | | |\n| Sales finance | | 16 | | | | 17 | | | | 19 | | | | 17 | | | | 19 | | |\n| Revolving credit | | 29 | | | | 33 | | | | 41 | | | | 48 | | | | 56 | | |\n| Residential mortgage-nonguaranteed (3)(4) | | 332 | | | | 288 | | | | 261 | | | | 785 | | | | 769 | | |\n| Residential mortgage-government guaranteed | | 420 | | | | 316 | | | | 360 | | | | 376 | | | | 313 | | |\n| Other lending subsidiaries | | 226 | | | | 178 | | | | 164 | | | | 126 | | | | 121 | | |\n| Total performing TDRs (4) | | $ | 1,170 | | | $ | 982 | | | $ | 1,050 | | | $ | 1,705 | | | $ | 1,640 | |\n| | | | | | | | | | | | | | | | | | | | | |\n| Loans 90 days or more past due and still accruing: | | | | | | | | | | | | | | | | | | | | |\n| Commercial and industrial | | $ | \u2014 | | | $ | \u2014 | | | $ | \u2014 | | | $ | \u2014 | | | $ | 1 | |\n| Direct retail lending | | 6 | | | | 7 | | | | 12 | | | | 33 | | | | 38 | | |\n| Sales finance | | 6 | | | | 5 | | | | 5 | | | | 5 | | | | 10 | | |\n| Revolving credit | | 12 | | | | 10 | | | | 9 | | | | 10 | | | | 16 | | |\n| Residential mortgage-nonguaranteed | | 79 | | | | 55 | | | | 83 | | | | 69 | | | | 91 | | |\n| Residential mortgage-government guaranteed | | 443 | | | | 486 | | | | 648 | | | | 807 | | | | 769 | | |\n| Other lending subsidiaries | | \u2014 | | | | \u2014 | | | | \u2014 | | | | 5 | | | | 10 | | |\n| PCI | | 90 | | | | 114 | | | | 188 | | | | 304 | | | | 442 | | |\n| Total loans 90 days or more past due and still accruing | | $ | 636 | | | $ | 677 | | | $ | 945 | | | $ | 1,233 | | | $ | 1,377 | |\n| | | | | | | | | | | | | | | | | | | | | |\n| Loans 30-89 days past due and still accruing: | | | | | | | | | | | | | | | | | | | | |\n| Commercial and industrial | | $ | 27 | | | $ | 36 | | | $ | 23 | | | $ | 35 | | | $ | 42 | |\n| CRE-income producing properties | | 6 | | | | 13 | | | | 4 | | | | 8 | | | | 11 | | |\n| CRE-construction and development | | 2 | | | | 9 | | | | 1 | | | | 2 | | | | 3 | | |\n| Direct retail lending | | 60 | | | | 58 | | | | 41 | | | | 132 | | | | 145 | | |\n| Sales finance | | 76 | | | | 72 | | | | 62 | | | | 56 | | | | 56 | | |\n| Revolving credit | | 23 | | | | 22 | | | | 23 | | | | 23 | | | | 23 | | |\n| Residential mortgage-nonguaranteed | | 393 | | | | 397 | | | | 392 | | | | 454 | | | | 477 | | |\n| Residential mortgage-government guaranteed | | 132 | | | | 78 | | | | 82 | | | | 92 | | | | 89 | | |\n| Other lending subsidiaries | | 322 | | | | 304 | | | | 237 | | | | 221 | | | | 290 | | |\n| PCI | | 36 | | | | 42 | | | | 33 | | | | 88 | | | | 135 | | |\n| Total loans 30-89 days past due and still accruing | | $ | 1,077 | | | $ | 1,031 | | | $ | 898 | | | $ | 1,111 | | | $ | 1,271 | |\n\n","source":"TFC\/10-K\/0000092230-17-000021"} {"title":"Asset Quality","text":"(1)These asset quality ratios have been adjusted to remove the impact of government guaranteed and PCI assets. Appropriate adjustments to the numerator and denominator have been reflected in the calculation of these ratios.The following table provides a summary of performing TDR activity:","markdown_table":"\n\n| | | | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | | | | | | | | | | | | | |\n| Table 17 | | | | | | | | | | | | | | |\n| Asset Quality Ratios | | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | |\n| | As Of \/ For The Year Ended December 31, | | | | | | | | | | | | | |\n| | 2016 | | | 2015 | | | 2014 | | | 2013 | | | 2012 | |\n| Asset Quality Ratios: | | | | | | | | | | | | | | |\n| Loans 30-89 days past due and still accruing as a percentage of loans and leases HFI | 0.75 | % | | 0.76 | % | | 0.75 | % | | 0.96 | % | | 1.11 | % |\n| Loans 90 days or more past due and still accruing as a percentage of loans and leases HFI | 0.44 | | | 0.50 | | | 0.79 | | | 1.06 | | | 1.20 | |\n| NPLs as a percentage of loans and leases HFI | 0.51 | | | 0.42 | | | 0.51 | | | 0.81 | | | 1.20 | |\n| NPAs as a percentage of: | | | | | | | | | | | | | | |\n| Total assets | 0.37 | | | 0.34 | | | 0.42 | | | 0.64 | | | 0.97 | |\n| Loans and leases HFI plus foreclosed property | 0.57 | | | 0.52 | | | 0.65 | | | 1.01 | | | 1.56 | |\n| Net charge-offs as a percentage of average loans and leases HFI | 0.38 | | | 0.35 | | | 0.46 | | | 0.69 | | | 1.17 | |\n| ALLL as a percentage of loans and leases HFI | 1.04 | | | 1.07 | | | 1.23 | | | 1.49 | | | 1.76 | |\n| Ratio of ALLL to: | | | | | | | | | | | | | | |\n| Net charge-offs | 2.80 | x | | 3.36 | x | | 2.74 | x | | 2.19 | x | | 1.56 | x |\n| NPLs | 2.03 | | | 2.53 | | | 2.39 | | | 1.85 | | | 1.46 | |\n| | | | | | | | | | | | | | | |\n| Asset Quality Ratios (Excluding Government Guaranteed and PCI): (1) | | | | | | | | | | | | | | |\n| Loans 90 days or more past due and still accruing as a percentage of loans and leases HFI | 0.07 | % | | 0.06 | % | | 0.09 | % | | 0.11 | % | | 0.15 | % |\n\n","source":"TFC\/10-K\/0000092230-17-000021"} {"title":"Asset Quality","text":"Payments and payoffs include scheduled principal payments, prepayments and payoffs of amounts outstanding. Transfers to nonperforming TDRs represent loans that no longer meet the requirements necessary to reflect the loan in accruing status.TDRs may be removed due to the passage of time if they: (1) did not include a forgiveness of principal or interest, (2) have performed in accordance with the modified terms (generally a minimum of six months), (3) were reported as a TDR over a year end reporting period, and (4) reflected an interest rate on the modified loan that was no less than a market rate at the date of modification. These loans were previously considered TDRs as a result of structural concessions such as extended interest-only terms or an amortization period that did not otherwise conform to normal underwriting guidelines.In addition, certain loans may be removed from classification as a TDR as a result of a subsequent non-concessionary re-modification. Non-concessionary re-modifications represent TDRs that did not contain concessionary terms at the date of a subsequent renewal\/modification and there was a reasonable expectation that the borrower would continue to comply with the terms of the loan subsequent to the date of the re-modification. A re-modification may be considered for such a re-classification if the loan has not had a forgiveness of principal or interest and the modified terms qualify as more than minor such that the re-modified loan is considered a new loan. Alternatively, such loans may be considered for reclassification in years subsequent to the date of the re-modification based on the passage of time as described in the preceding paragraph.In connection with consumer loan TDRs, a NPL will be returned to accruing status when current as to principal and interest and upon a sustained historical repayment performance (generally a minimum of six months).","markdown_table":"\n\n| | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | | | | | | | |\n| Table 18 | | | | | | | | |\n| Rollforward of Performing TDRs | | | | | | | | |\n| | | Year Ended December 31, | | | | | | |\n| | | 2016 | | | | 2015 | | |\n| | | (Dollars in millions) | | | | | | |\n| Balance at beginning of year | | $ | 982 | | | $ | 1,050 | |\n| Inflows | | 681 | | | | 448 | | |\n| Payments and payoffs | | (216 | | ) | | (224 | | ) |\n| Charge-offs | | (41 | | ) | | (44 | | ) |\n| Transfers to nonperforming TDRs, net | | (68 | | ) | | (85 | | ) |\n| Removal due to the passage of time | | (54 | | ) | | (31 | | ) |\n| Non-concessionary re-modifications | | \u2014 | | | | (2 | | ) |\n| Sold and transferred to LHFS | | (114 | | ) | | (130 | | ) |\n| Balance at end of year | | $ | 1,170 | | | $ | 982 | |\n\n","source":"TFC\/10-K\/0000092230-17-000021"} {"title":"Asset Quality","text":"(1)Past due performing TDRs are included in past due disclosures.(2)Nonperforming TDRs are included in NPL disclosures.","markdown_table":"\n\n| | | | | | | | | | | | | | | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Table 19 | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Payment Status of TDRs | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | | December\u00a031,\u00a02016 | | | | | | | | | | | | | | | | | | | | | | | |\n| | | Current | | | | | | | Past Due 30-89 Days | | | | | | | Past Due 90 Days Or More | | | | | | | Total | | |\n| | | (Dollars in millions) | | | | | | | | | | | | | | | | | | | | | | | |\n| Performing TDRs (1): | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Commercial and industrial | | $ | 55 | | | 100.0 | % | | $ | \u2014 | | | \u2014 | % | | $ | \u2014 | | | \u2014 | % | | $ | 55 | |\n| CRE-income producing properties | | 16 | | | | 100.0 | | | \u2014 | | | | \u2014 | | | \u2014 | | | | \u2014 | | | 16 | | |\n| CRE-construction and development | | 9 | | | | 100.0 | | | \u2014 | | | | \u2014 | | | \u2014 | | | | \u2014 | | | 9 | | |\n| Direct retail lending | | 64 | | | | 95.5 | | | 3 | | | | 4.5 | | | \u2014 | | | | \u2014 | | | 67 | | |\n| Sales finance | | 15 | | | | 93.8 | | | 1 | | | | 6.2 | | | \u2014 | | | | \u2014 | | | 16 | | |\n| Revolving credit | | 24 | | | | 82.8 | | | 4 | | | | 13.8 | | | 1 | | | | 3.4 | | | 29 | | |\n| Residential mortgage-nonguaranteed | | 259 | | | | 78.0 | | | 47 | | | | 14.2 | | | 26 | | | | 7.8 | | | 332 | | |\n| Residential mortgage-government guaranteed | | 170 | | | | 40.5 | | | 73 | | | | 17.4 | | | 177 | | | | 42.1 | | | 420 | | |\n| Other lending subsidiaries | | 188 | | | | 83.2 | | | 38 | | | | 16.8 | | | \u2014 | | | | \u2014 | | | 226 | | |\n| Total performing TDRs | | 800 | | | | 68.4 | | | 166 | | | | 14.2 | | | 204 | | | | 17.4 | | | 1,170 | | |\n| Nonperforming TDRs (2) | | 101 | | | | 55.2 | | | 16 | | | | 8.7 | | | 66 | | | | 36.1 | | | 183 | | |\n| Total TDRs | | $ | 901 | | | 66.6 | | | $ | 182 | | | 13.4 | | | $ | 270 | | | 20.0 | | | $ | 1,353 | |\n\n","source":"TFC\/10-K\/0000092230-17-000021"} {"title":"ACL","text":"(1)During the first quarter of 2014, $8.3 billion of loans were transferred from direct retail lending to residential mortgage. Charge-offs and recoveries have been reflected in these line items based upon the date the loans were transferred.The ACL consists of the ALLL, which is presented separately on the Consolidated Balance Sheets, and the RUFC, which is included in other liabilities on the Consolidated Balance Sheets. The ACL totaled $1.6 billion at December\u00a031,\u00a02016, an increase of $49 million compared to the prior year.The ALLL amounted to 1.04% of loans and leases held for investment at December\u00a031,\u00a02016, compared to 1.07% at December 31, 2015. This decline is primarily due to the acquisitions of National Penn during 2016 and Susquehanna during 2015, which provided a total of $18.9 billion in loans and no related allowance as of the acquisition dates. The ratio of the ALLL to NPLs held for investment was 2.03x at December\u00a031,\u00a02016 compared to 2.53x at December 31, 2015.The energy portfolio totals approximately $1.2 billion and has allocated reserves of 11.7%. This portfolio does not include any offshore, second lien or mezzanine loans. The allowance includes the impact of the shared national credit review related to the energy lending portfolio.Net charge-offs totaled $532 million for 2016, compared to $436 million in 2015. Net charge-offs as a percentage of average loans and leases were 0.38% for 2016, compared to 0.35% in 2015. Net charge-offs increased by $59 million in the other lending subsidiaries portfolio, driven by an increase in loss severity associated with used car values and loan growth. Commercial and industrial net charge-offs increased $44 million, primarily due to the energy portfolio.","markdown_table":"\n\n| | | | | | | | | | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | | | | | | | | | | | | | | | | | | | |\n| Table 20 | | | | | | | | | | | | | | | | | | | | |\n| Analysis of ACL | | | | | | | | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | | | | | | | |\n| | | Year Ended December 31, | | | | | | | | | | | | | | | | | | |\n| | | 2016 | | | | 2015 | | | | 2014 | | | | 2013 | | | | 2012 | | |\n| | | (Dollars in millions) | | | | | | | | | | | | | | | | | | |\n| Beginning balance | | $ | 1,550 | | | $ | 1,534 | | | $ | 1,821 | | | $ | 2,048 | | | $ | 2,285 | |\n| Provision for credit losses (excluding PCI) | | 574 | | | | 430 | | | | 280 | | | | 587 | | | | 1,044 | | |\n| Provision for PCI loans | | (2 | | ) | | (2 | | ) | | (29 | | ) | | 5 | | | | 13 | | |\n| Charge-offs: | | | | | | | | | | | | | | | | | | | | |\n| Commercial and industrial | | (128 | | ) | | (81 | | ) | | (131 | | ) | | (248 | | ) | | (337 | | ) |\n| CRE-income producing properties | | (8 | | ) | | (20 | | ) | | (31 | | ) | | (74 | | ) | | (150 | | ) |\n| CRE-construction and development | | (1 | | ) | | (4 | | ) | | (11 | | ) | | (58 | | ) | | (245 | | ) |\n| Direct retail lending (1) | | (53 | | ) | | (54 | | ) | | (69 | | ) | | (148 | | ) | | (224 | | ) |\n| Sales finance | | (29 | | ) | | (26 | | ) | | (23 | | ) | | (23 | | ) | | (26 | | ) |\n| Revolving credit | | (69 | | ) | | (70 | | ) | | (71 | | ) | | (85 | | ) | | (81 | | ) |\n| Residential mortgage-nonguaranteed (1) | | (35 | | ) | | (40 | | ) | | (82 | | ) | | (79 | | ) | | (135 | | ) |\n| Residential mortgage-government guaranteed | | (5 | | ) | | (6 | | ) | | (2 | | ) | | (2 | | ) | | (1 | | ) |\n| Other lending subsidiaries | | (358 | | ) | | (286 | | ) | | (269 | | ) | | (255 | | ) | | (225 | | ) |\n| PCI | | (15 | | ) | | (1 | | ) | | (21 | | ) | | (19 | | ) | | (34 | | ) |\n| Total charge-offs | | (701 | | ) | | (588 | | ) | | (710 | | ) | | (991 | | ) | | (1,458 | | ) |\n| | | | | | | | | | | | | | | | | | | | | |\n| Recoveries: | | | | | | | | | | | | | | | | | | | | |\n| Commercial and industrial | | 40 | | | | 37 | | | | 42 | | | | 47 | | | | 17 | | |\n| CRE-income producing properties | | 8 | | | | 7 | | | | 14 | | | | 20 | | | | 9 | | |\n| CRE-construction and development | | 11 | | | | 11 | | | | 19 | | | | 31 | | | | 45 | | |\n| Direct retail lending (1) | | 26 | | | | 29 | | | | 29 | | | | 38 | | | | 36 | | |\n| Sales finance | | 12 | | | | 9 | | | | 9 | | | | 9 | | | | 10 | | |\n| Revolving credit | | 20 | | | | 20 | | | | 19 | | | | 17 | | | | 18 | | |\n| Residential mortgage-nonguaranteed (1) | | 3 | | | | 3 | | | | 7 | | | | 3 | | | | 3 | | |\n| Other lending subsidiaries | | 49 | | | | 36 | | | | 33 | | | | 34 | | | | 26 | | |\n| Total recoveries | | 169 | | | | 152 | | | | 172 | | | | 199 | | | | 164 | | |\n| Net charge-offs | | (532 | | ) | | (436 | | ) | | (538 | | ) | | (792 | | ) | | (1,294 | | ) |\n| Other changes, net | | 9 | | | | 24 | | | | \u2014 | | | | (27 | | ) | | \u2014 | | |\n| Ending balance | | $ | 1,599 | | | $ | 1,550 | | | $ | 1,534 | | | $ | 1,821 | | | $ | 2,048 | |\n| | | | | | | | | | | | | | | | | | | | | |\n| ALLL (excluding PCI loans) | | $ | 1,445 | | | $ | 1,399 | | | $ | 1,410 | | | $ | 1,618 | | | $ | 1,890 | |\n| Allowance for PCI loans | | 44 | | | | 61 | | | | 64 | | | | 114 | | | | 128 | | |\n| RUFC | | 110 | | | | 90 | | | | 60 | | | | 89 | | | | 30 | | |\n| Total ACL | | $ | 1,599 | | | $ | 1,550 | | | $ | 1,534 | | | $ | 1,821 | | | $ | 2,048 | |\n\n","source":"TFC\/10-K\/0000092230-17-000021"} {"title":"ACL","text":"(1) During the first quarter of 2014, $8.3 billion in loans were transferred from direct retail lending to residential mortgage.","markdown_table":"\n\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Table 21 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Allocation of ALLL by Category | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | | December 31, | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | | 2016 | | | | | | | 2015 | | | | | | | 2014 | | | | | | | 2013 | | | | | | | 2012 | | | | | |\n| | | Amount | | | | % Loans in each category | | | Amount | | | | % Loans in each category | | | Amount | | | | % Loans in each category | | | Amount | | | | % Loans in each category | | | Amount | | | | % Loans in each category | |\n| | | (Dollars in millions) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Balances at end of period applicable to: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Commercial and industrial | | $ | 500 | | | 36.1 | % | | $ | 466 | | | 35.8 | % | | $ | 422 | | | 34.6 | % | | $ | 454 | | | 33.2 | % | | $ | 470 | | | 33.4 | % |\n| CRE-income producing properties | | 117 | | | | 10.1 | | | 135 | | | | 9.9 | | | 162 | | | | 8.9 | | | 149 | | | | 8.8 | | | 170 | | | | 8.6 | |\n| CRE-construction and development | | 25 | | | | 2.7 | | | 37 | | | | 2.7 | | | 48 | | | | 2.3 | | | 76 | | | | 2.1 | | | 134 | | | | 2.5 | |\n| Dealer floor plan | | 11 | | | | 1.0 | | | 8 | | | | 0.9 | | | 10 | | | | 0.9 | | | 8 | | | | 0.8 | | | 2 | | | | 0.4 | |\n| Direct retail lending (1) | | 103 | | | | 8.4 | | | 105 | | | | 8.2 | | | 110 | | | | 6.8 | | | 209 | | | | 13.7 | | | 300 | | | | 13.8 | |\n| Sales finance | | 38 | | | | 7.9 | | | 40 | | | | 7.6 | | | 40 | | | | 7.9 | | | 37 | | | | 7.3 | | | 27 | | | | 6.4 | |\n| Revolving credit | | 106 | | | | 1.9 | | | 104 | | | | 1.8 | | | 110 | | | | 2.1 | | | 115 | | | | 2.1 | | | 102 | | | | 2.0 | |\n| Residential mortgage-nonguaranteed (1) | | 186 | | | | 20.2 | | | 194 | | | | 21.8 | | | 217 | | | | 25.1 | | | 269 | | | | 20.3 | | | 296 | | | | 20.3 | |\n| Residential mortgage-government guaranteed | | 41 | | | | 0.6 | | | 23 | | | | 0.6 | | | 36 | | | | 0.8 | | | 62 | | | | 1.0 | | | 32 | | | | 0.9 | |\n| Other lending subsidiaries | | 318 | | | | 10.5 | | | 287 | | | | 9.9 | | | 255 | | | | 9.6 | | | 239 | | | | 9.0 | | | 277 | | | | 8.8 | |\n| PCI | | 44 | | | | 0.6 | | | 61 | | | | 0.8 | | | 64 | | | | 1.0 | | | 114 | | | | 1.7 | | | 128 | | | | 2.9 | |\n| Unallocated | | \u2014 | | | | \u2014 | | | \u2014 | | | | \u2014 | | | \u2014 | | | | \u2014 | | | \u2014 | | | | \u2014 | | | 80 | | | | \u2014 | |\n| Total ALLL | | 1,489 | | | | 100.0 | % | | 1,460 | | | | 100.0 | % | | 1,474 | | | | 100.0 | % | | 1,732 | | | | 100.0 | % | | 2,018 | | | | 100.0 | % |\n| RUFC | | 110 | | | | | | | 90 | | | | | | | 60 | | | | | | | 89 | | | | | | | 30 | | | | | |\n| Total ACL | | $ | 1,599 | | | | | | $ | 1,550 | | | | | | $ | 1,534 | | | | | | $ | 1,821 | | | | | | $ | 2,048 | | | | |\n\n","source":"TFC\/10-K\/0000092230-17-000021"} {"title":"Deposits","text":"Average deposits for the fourth quarter of 2016 were $160.1 billion, up $615 million compared to the prior quarter.Average noninterest-bearing deposits increased $862 million, primarily due to increases in commercial balances with smaller increases in public funds and personal balances.Interest checking increased $880 million, primarily due to increases in personal and commercial balances.Money market and savings decreased $451 million primarily due to commercial balances partially offset by increased personal balances.Average time deposits decreased $125 million as decreases in IRAs and personal balances were partially offset by higher commercial balances.Average foreign office deposits decreased $551 million due to lower overall funding needs.Noninterest-bearing deposits represented 32.1% of total average deposits for the fourth quarter, compared to 31.7% for the prior quarter and 30.9% a year ago. The cost of interest-bearing deposits was 0.22% for the fourth quarter, down one basis point compared to the prior quarter.","markdown_table":"\n\n| | | | | | | | | | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | | | | | | | | | | | | | | | | | | | |\n| Table 22 | | | | | | | | | | | | | | | | | | | | |\n| Quarterly Composition of Average Deposits | | | | | | | | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | | | | | | | |\n| | | For the Three Months Ended | | | | | | | | | | | | | | | | | | |\n| | | 12\/31\/2016 | | | | 9\/30\/2016 | | | | 6\/30\/2016 | | | | 3\/31\/2016 | | | | 12\/31\/2015 | | |\n| | | (Dollars in millions) | | | | | | | | | | | | | | | | | | |\n| Noninterest-bearing deposits | | $ | 51,421 | | | $ | 50,559 | | | $ | 48,801 | | | $ | 46,203 | | | $ | 45,824 | |\n| Interest checking | | 28,634 | | | | 27,754 | | | | 28,376 | | | | 25,604 | | | | 24,157 | | |\n| Money market and savings | | 63,884 | | | | 64,335 | | | | 63,195 | | | | 60,424 | | | | 61,431 | | |\n| Time deposits | | 15,693 | | | | 15,818 | | | | 18,101 | | | | 16,884 | | | | 16,981 | | |\n| Foreign office deposits - interest-bearing | | 486 | | | | 1,037 | | | | 1,865 | | | | 752 | | | | 98 | | |\n| Total average deposits | | $ | 160,118 | | | $ | 159,503 | | | $ | 160,338 | | | $ | 149,867 | | | $ | 148,491 | |\n\n","source":"TFC\/10-K\/0000092230-17-000021"} {"title":"Risk Management","text":"The CRO leads the RMO, which designs, organizes and manages BB&T\u2019s risk management framework. The RMO is responsible for ensuring effective risk management oversight, measurement, monitoring, reporting and consistency. The CRO has direct access to the Board of Directors and Executive Management. The CRO is responsible for identifying and communicating in a timely manner to the CEO and the Board of Directors meaningful risks and significant instances when the RMO\u2019s assessment of risk differs from that of a BU, significant instances when a BU is not adhering to the risk governance framework, and BB&T\u2019s risk profile in relation to its risk appetite on at least a quarterly basis. In the event that the CRO and CEO\u2019s assessment of risk were to differ or if the CEO were to not adhere to the risk management framework, the CRO would have the responsibility to report such matters to the Board of Directors.The Executive Management-led enterprise risk committees provide oversight of the first and second lines of defense and communicate risk appetite and values to the RMO. The CRO and the enterprise risk committees approve policies, set risk limits and tolerances and monitor results.The RMC, CRMC, ORMC, CROC and the MRLCC are the enterprise risk committees and provide oversight of the risks as described in the common risk language. Executive Management members participate in all five committees.The risk management framework is composed of specialized risk functions focused on specific types of risk. The MRLCC, CRMC, CROC and ORMC provide oversight of market, liquidity, capital, credit, compliance, and operational risk while RMC provides a fully integrated view of all material risks across the company. The RMC provides oversight of all risks and its purpose is to review BB&T\u2019s aggregate risk exposure, evaluate risk appetite, and evaluate risks not reviewed by other risk committees.The RMC is responsible for taking a broad view of risk, incorporating information from all risk functions. This combination of broad and specific focus provides the most effective framework for the management of risk. The RMC is chaired by the CRO and its membership includes all members of Executive Management, the General Auditor (ex officio) and senior leaders from Financial Management, the RMO and other areas.The principal types of inherent risk include compliance, credit, liquidity, market, operational, reputation and strategic risks.","markdown_table":"\n\n| | | | | |\n| --- | --- | --- | --- | --- |\n| | | | | |\n| Risk Committees | Board of Directors | | | Executive Management |\n| | | |\n| 1st Line of Defense | 2nd Line of Defense | 3rd Line of Defense |\n| Business Units | Risk Functions | Audit Services |\n| | | |\n| Chief Risk Officer | | |\n\n","source":"TFC\/10-K\/0000092230-17-000021"} {"title":"Branch Bank","text":"BB&T and Branch Bank have Contingency Funding Plans designed to ensure that liquidity sources are sufficient to meet their ongoing obligations and commitments, particularly in the event of a liquidity contraction. These plans are designed to examine and quantify the organization\u2019s liquidity under various \"stress\" scenarios. Additionally, the plans provide a framework for management and other critical personnel to follow in the event of a liquidity contraction or in anticipation of such an event. The plans address authority for activation and decision making, liquidity options and the responsibilities of key departments in the event of a liquidity contraction. The liquidity options available to management could include seeking secured funding, asset sales, and under the most extreme scenarios, curtailing new loan originations.Management believes current sources of liquidity are adequate to meet BB&T\u2019s current requirements and plans for continued growth. See the \"Premises and Equipment,\" \"Long-Term Debt\" and \"Commitments and Contingencies\" notes in the \"Notes to Consolidated Financial Statements\" for additional information regarding outstanding balances of sources of liquidity and contractual commitments and obligations.","markdown_table":"\n\n| | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- |\n| | | | | | | | |\n| Table 28 | | | | | | | |\n| Credit Ratings of BB&T Corporation and Branch Bank | | | | | | | |\n| December\u00a031, 2016 | | | | | | | |\n| | | | | | | | |\n| | S&P | | Moody's | | Fitch | | DBRS |\n| BB&T Corporation: | | | | | | | |\n| Commercial Paper | A-2 | | N\/A | | F1 | | R-1(low) |\n| Issuer | A- | | A2 | | A+ | | A(high) |\n| LT\/Senior debt | A- | | A2 | | A+ | | A(high) |\n| Subordinated debt | BBB+ | | A2 | | A | | A |\n| | | | | | | | |\n| Branch Bank: | | | | | | | |\n| Bank financial strength | N\/A | | N\/A | | a+ | | N\/A |\n| Long term deposits | N\/A | | Aa1 | | AA- | | AA(low) |\n| LT\/Senior unsecured bank notes | A | | A1 | | A+ | | AA(low) |\n| Long term issuer | A | | A1 | | A+ | | AA(low) |\n| Other long term senior obligations | A | | N\/A | | A+ | | AA(low) |\n| Other short term senior obligations | A-1 | | N\/A | | F1 | | R-1(middle) |\n| Short term bank notes | A-1 | | P-1 | | F1 | | R-1(middle) |\n| Short term deposits | N\/A | | P-1 | | F1+ | | R-1(middle) |\n| Subordinated bank notes | A- | | A2 | | A | | A(high) |\n| | | | | | | | |\n| Ratings Outlook: | | | | | | | |\n| Credit Trend | Stable | | Stable | | Stable | | Stable |\n\n","source":"TFC\/10-K\/0000092230-17-000021"} {"title":"Contractual Obligations, Commitments, Contingent Liabilities, Off-Balance Sheet Arrangements and Related Party Transactions","text":"(1)Based on estimated payment dates.(2)Includes accrued interest, future contractual interest obligations and the impact of hedges in a loss position. Other derivatives are excluded. Variable rate payments are based upon the rate in effect at December\u00a031,\u00a02016.(3)Represents obligations to purchase goods or services that are enforceable and legally binding. Many of the purchase obligations have terms that are not fixed and determinable and are included in the table above based upon the estimated timing and amount of payment. In addition, certain of the purchase agreements contain clauses that would allow BB&T to cancel the agreement with specified notice; however, that impact is not included in the table above.(4)Although technically unfunded plans, Rabbi Trusts and insurance policies on the lives of certain of the covered employees are available to finance future benefit plan payments.BB&T\u2019s commitments include investments in affordable housing and historic building rehabilitation projects throughout its market area and private equity funds. Refer to the \"Summary of Significant Accounting Policies\" note and the \"Commitments and Contingencies\" note in the \"Notes to Consolidated Financial Statements\" for further discussion of these commitments.In addition, BB&T enters into derivative contracts to manage various financial risks. A derivative is a financial instrument that derives its cash flows, and therefore its value, by reference to an underlying instrument, index or referenced interest rate. Derivative contracts are carried at fair value on the Consolidated Balance Sheets with the fair value representing the net present value of expected future cash receipts or payments based on market interest rates as of the balance sheet date. Derivative contracts are written in amounts referred to as notional amounts, which only provide the basis for calculating payments between counterparties and are not a measure of financial risk. Therefore, the derivative liabilities recorded on the balance sheet as of December\u00a031,\u00a02016 do not represent the amounts that may ultimately be paid under these contracts. Further discussion of derivative instruments is included in the \"Summary of Significant Accounting Policies\" note and the \"Derivative Financial Instruments\" note in the \"Notes to Consolidated Financial Statements.\"In the ordinary course of business, BB&T indemnifies its officers and directors to the fullest extent permitted by law against liabilities arising from litigation. BB&T also issues standard representation and warranties in underwriting agreements, merger and acquisition agreements, loan sales, brokerage activities and other similar arrangements. Counterparties in many of these indemnifications provide similar indemnifications to BB&T. Although these agreements often do not specify limitations, BB&T does not believe that any payments related to these guarantees would materially change the financial condition or results of operations of BB&T.BB&T holds public funds in certain states that do not require 100% collateralization on public fund bank deposits. In these states, should the failure of another public fund depository institution result in a loss for the public entity, the resulting shortfall would have to be absorbed on a pro-rata basis by the remaining financial institutions holding public funds in that state.As a member of the FHLB, BB&T is required to maintain a minimum investment in capital stock. The board of directors of the FHLB can increase the minimum investment requirements in the event it has concluded that additional capital is required to allow it to meet its own regulatory capital requirements. Any increase in the minimum investment requirements outside of specified ranges requires the approval of the Federal Housing Finance Agency. Because the extent of any obligation to increase BB&T\u2019s investment in the FHLB depends entirely upon the occurrence of a future event, potential future payments to the FHLB are not determinable.In the normal course of business, BB&T is also a party to financial instruments to meet the financing needs of clients and to mitigate exposure to interest rate risk. Such financial instruments include commitments to extend credit and certain contractual agreements, including standby letters of credit and financial guarantee arrangements. Further discussion of BB&T\u2019s commitments is included in the \"Commitments and Contingencies\" note and the \"Fair Value Disclosures\" note in the \"Notes to Consolidated Financial Statements.\"","markdown_table":"\n\n| | | | | | | | | | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | | | | | | | | | | | | | | | | | | | |\n| Table 29 | | | | | | | | | | | | | | | | | | | | |\n| Contractual Obligations and Other Commitments | | | | | | | | | | | | | | | | | | | | |\n| December\u00a031, 2016 | | | | | | | | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | | | | | | | |\n| | | Total | | | | Less than 1 Year | | | | 1 to 3 Years | | | | 3 to 5 Years | | | | After 5 Years | | |\n| | | (Dollars in millions) | | | | | | | | | | | | | | | | | | |\n| Long-term debt and capital leases | | $ | 21,728 | | | $ | 3,696 | | | $ | 6,208 | | | $ | 7,238 | | | $ | 4,586 | |\n| Operating leases | | 1,619 | | | | 263 | | | | 449 | | | | 333 | | | | 574 | | |\n| Commitments to fund affordable housing investments | | 738 | | | | 470 | | | | 233 | | | | 15 | | | | 20 | | |\n| Private equity and other investments commitments (1) | | 200 | | | | 49 | | | | 98 | | | | 41 | | | | 12 | | |\n| Time deposits | | 14,391 | | | | 7,929 | | | | 5,028 | | | | 1,411 | | | | 23 | | |\n| Contractual interest payments (2) | | 3,401 | | | | 725 | | | | 1,260 | | | | 745 | | | | 671 | | |\n| Purchase obligations (3) | | 968 | | | | 522 | | | | 356 | | | | 58 | | | | 32 | | |\n| Nonqualified benefit plan obligations (4) | | 1,204 | | | | 15 | | | | 33 | | | | 38 | | | | 1,118 | | |\n| Total contractual cash obligations | | $ | 44,249 | | | $ | 13,669 | | | $ | 13,665 | | | $ | 9,879 | | | $ | 7,036 | |\n\n","source":"TFC\/10-K\/0000092230-17-000021"} {"title":"Contractual Obligations, Commitments, Contingent Liabilities, Off-Balance Sheet Arrangements and Related Party Transactions","text":"(1)Excludes the FHA-insured mortgage loan reserve of $85 million established during 2014 and settled in 2016.","markdown_table":"\n\n| | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | | | | | | | | | | | |\n| Table 30 | | | | | | | | | | | | |\n| Mortgage Indemnification, Recourse and Repurchase Reserves Activity (1) | | | | | | | | | | | | |\n| | | | | | | | | | | | | |\n| | | Year Ended December 31, | | | | | | | | | | |\n| | | 2016 | | | | 2015 | | | | 2014 | | |\n| | | (Dollars in millions) | | | | | | | | | | |\n| Balance, at beginning of period | | $ | 79 | | | $ | 94 | | | $ | 72 | |\n| Payments | | (2 | | ) | | (5 | | ) | | (23 | | ) |\n| Expense | | (37 | | ) | | (15 | | ) | | 45 | | |\n| Acquisitions | | \u2014 | | | | 5 | | | | \u2014 | | |\n| Balance, at end of period | | $ | 40 | | | $ | 79 | | | $ | 94 | |\n\n","source":"TFC\/10-K\/0000092230-17-000021"} {"title":"Capital","text":"(1) BB&T's goal is to maintain capital levels above the 2019 requirements. Payments of cash dividends and repurchases of common shares are the methods used to manage any excess capital generated. In addition, management closely monitors the Parent Company\u2019s double leverage ratio (investments in subsidiaries as a percentage of shareholders\u2019 equity). The active management of the subsidiaries\u2019 equity capital, as described above, is the process used to manage this important driver of Parent Company liquidity and is a key element in the management of BB&T\u2019s capital position.Management intends to maintain capital at Branch Bank at levels that will result in classification as \"well-capitalized\" for regulatory purposes. Secondarily, it is management\u2019s intent to maintain Branch Bank\u2019s capital at levels that result in regulatory risk-based capital ratios that are generally comparable with peers of similar size, complexity and risk profile. If the capital levels of Branch Bank increase above these guidelines, excess capital may be transferred to the Parent Company in the form of special dividend payments, subject to regulatory and other operating considerations.While nonrecurring events or management decisions may result in the Company temporarily falling below its operating minimum guidelines for one or more of these ratios, it is management\u2019s intent through capital planning to return to these targeted operating minimums within a reasonable period of time. Such temporary decreases below the operating minimums shown above are not considered an infringement of BB&T\u2019s overall capital policy, provided a return above the minimums is forecast to occur within a reasonable time period.BB&T regularly performs stress testing on its capital levels and is required to periodically submit the company\u2019s capital plans to the banking regulators. The FRB did not object to the Company\u2019s 2016 capital plan, and the 2017 capital plan is expected to be submitted during April 2017. Management\u2019s capital deployment plan in order of preference is to focus on 1) organic growth, 2) dividends and 3) acquisitions and\/or share repurchases depending on opportunities in the marketplace and our interest and ability to proceed with acquisitions.Risk-based capital ratios, which include Tier 1 Capital, Total Capital and Tier 1 Common Equity, are calculated based on regulatory guidance related to the measurement of capital and risk-weighted assets. Branch Bank's capital ratios are presented in the following table:","markdown_table":"\n\n| | | | | | | | | | | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | | | | | | | | | | | | | | | | | | | | |\n| Table 32 | | | | | | | | | | | | | | | | | | | | | |\n| Capital Requirements Under Basel III | | | | | | | | | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | | | | | | | | |\n| | | Minimum Capital | | | Well-Capitalized | | | Minimum Capital Plus Capital Conservation Buffer | | | | | | | | | | | | BB&T Target | |\n| | | | | 2016 | | | 2017 | | | 2018 | | | 2019 (1) | | |\n| CET1 to risk-weighted assets | | 4.5 | % | | 6.5 | % | | 5.125 | % | | 5.750 | % | | 6.375 | % | | 7.000 | % | | 8.5 | % |\n| Tier 1 capital to risk-weighted assets | | 6.0 | | | 8.0 | | | 6.625 | | | 7.250 | | | 7.875 | | | 8.500 | | | 10.0 | |\n| Total capital to risk-weighted assets | | 8.0 | | | 10.0 | | | 8.625 | | | 9.250 | | | 9.875 | | | 10.500 | | | 12.0 | |\n| Leverage ratio | | 4.0 | | | 5.0 | | | N\/A | | | N\/A | | | N\/A | | | N\/A | | | 8.0 | |\n\n","source":"TFC\/10-K\/0000092230-17-000021"} {"title":"Capital","text":"BB&T's capital ratios are presented in the following table:","markdown_table":"\n\n| | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- |\n| | | | | | | |\n| Table 33 | | | | | | |\n| Capital Ratios - Branch Bank | | | | | | |\n| | | | | | | |\n| | | December 31, | | | | |\n| | | 2016 | | | 2015 | |\n| CET1 to risk-weighted assets | | 11.5 | % | | 11.3 | % |\n| Tier 1 capital to risk-weighted assets | | 11.5 | | | 11.3 | |\n| Total capital to risk-weighted assets | | 13.6 | | | 13.4 | |\n| Leverage ratio | | 9.6 | | | 9.3 | |\n\n","source":"TFC\/10-K\/0000092230-17-000021"} {"title":"Capital","text":"(1)Tangible common equity and related ratios are non-GAAP measures. Management uses these measures to assess the quality of capital and believes that investors may find them useful in their analysis of the Company. These capital measures are not necessarily comparable to similar capital measures that may be presented by other companies.The Company\u2019s estimated CET1 ratio using the Basel III standardized approach on a fully phased-in basis was 10.0% at December\u00a031,\u00a02016 and 2015. During April 2016, BB&T's Board of Directors approved a $0.01 increase in the quarterly dividend. During July 2016, BB&T's Board of Directors approved an additional $0.02 increase in the quarterly dividend, which increased the amount of the quarterly dividend to $0.30. The Board of Directors also authorized cumulative share buybacks of up to $640 million beginning during the third quarter of 2016. Pursuant to this authorization, the Company completed $160 million of share repurchases during the third quarter of 2016 and $160 million of share repurchases during the fourth quarter of 2016. The Board of Directors also approved an additional $200 million of share repurchases through an accelerated share repurchase program that began in December and resulted in the retirement of 3.4 million shares. The program concluded in January 2017 with approximately 910,000 additional shares being retired. The conclusion of the program in January does not impact capital as the full cost was charged to equity in the fourth quarter. The total payout ratio was 64.0% for the year ended December 31, 2016.","markdown_table":"\n\n| | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | | | | | | | |\n| Table 34 | | | | | | | | |\n| Capital Ratios - BB&T Corporation | | | | | | | | |\n| | | | | | | | | |\n| | | December 31, | | | | | | |\n| | | 2016 | | | | 2015 | | |\n| | | (Dollars in millions, except per share data, shares in thousands) | | | | | | |\n| Risk-based: | | | | | | | | |\n| CET1 | | 10.2 | | % | | 10.3 | | % |\n| Tier 1 | | 12.0 | | | | 11.8 | | |\n| Total | | 14.1 | | | | 14.3 | | |\n| Leverage capital | | 10.0 | | | | 9.8 | | |\n| | | | | | | | | |\n| Non-GAAP capital measures (1): | | | | | | | | |\n| Tangible common equity per common share | | $ | 20.18 | | | $ | 19.82 | |\n| | | | | | | | | |\n| Calculations of tangible common equity (1): | | | | | | | | |\n| Total shareholders' equity | | $ | 29,926 | | | $ | 27,340 | |\n| Less: | | | | | | | | |\n| Preferred stock | | 3,053 | | | | 2,603 | | |\n| Noncontrolling interests | | 45 | | | | 34 | | |\n| Intangible assets | | 10,492 | | | | 9,234 | | |\n| Tangible common equity | | $ | 16,336 | | | $ | 15,469 | |\n| | | | | | | | | |\n| Risk-weighted assets | | $ | 176,138 | | | $ | 166,611 | |\n| Common shares outstanding at end of period | | 809,475 | | | | 780,337 | | |\n\n","source":"TFC\/10-K\/0000092230-17-000021"} {"title":"Capital","text":"(1)Loans and leases are net of unearned income and include LHFS.","markdown_table":"\n\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Table 35 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Quarterly Financial Summary \u2013 Unaudited | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | | 2016 | | | | | | | | | | | | | | | | 2015 | | | | | | | | | | | | | | |\n| | | Fourth Quarter | | | | Third Quarter | | | | Second Quarter | | | | First Quarter | | | | Fourth Quarter | | | | Third Quarter | | | | Second Quarter | | | | First Quarter | | |\n| | | (Dollars in millions, except per share data) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Consolidated Summary of Operations: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Interest income | | $ | 1,745 | | | $ | 1,795 | | | $ | 1,805 | | | $ | 1,721 | | | $ | 1,695 | | | $ | 1,650 | | | $ | 1,489 | | | $ | 1,493 | |\n| Interest expense | | 180 | | | | 185 | | | | 188 | | | | 192 | | | | 191 | | | | 186 | | | | 177 | | | | 181 | | |\n| Provision for credit losses | | 129 | | | | 148 | | | | 111 | | | | 184 | | | | 129 | | | | 103 | | | | 97 | | | | 99 | | |\n| Noninterest income | | 1,162 | | | | 1,164 | | | | 1,130 | | | | 1,016 | | | | 1,015 | | | | 988 | | | | 1,019 | | | | 997 | | |\n| Noninterest expense | | 1,668 | | | | 1,711 | | | | 1,797 | | | | 1,545 | | | | 1,597 | | | | 1,594 | | | | 1,653 | | | | 1,422 | | |\n| Provision for income taxes | | 287 | | | | 273 | | | | 252 | | | | 246 | | | | 251 | | | | 222 | | | | 80 | | | | 241 | | |\n| Net income | | 643 | | | | 642 | | | | 587 | | | | 570 | | | | 542 | | | | 533 | | | | 501 | | | | 547 | | |\n| Noncontrolling interest | | 7 | | | | \u2014 | | | | 3 | | | | 6 | | | | 3 | | | | 4 | | | | 10 | | | | 22 | | |\n| Preferred stock dividends | | 44 | | | | 43 | | | | 43 | | | | 37 | | | | 37 | | | | 37 | | | | 37 | | | | 37 | | |\n| Net income available to common shareholders | | $ | 592 | | | $ | 599 | | | $ | 541 | | | $ | 527 | | | $ | 502 | | | $ | 492 | | | $ | 454 | | | $ | 488 | |\n| Basic EPS | | $ | 0.73 | | | $ | 0.74 | | | $ | 0.67 | | | $ | 0.67 | | | $ | 0.64 | | | $ | 0.64 | | | $ | 0.63 | | | $ | 0.68 | |\n| Diluted EPS | | $ | 0.72 | | | $ | 0.73 | | | $ | 0.66 | | | $ | 0.67 | | | $ | 0.64 | | | $ | 0.64 | | | $ | 0.62 | | | $ | 0.67 | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Selected Average Balances: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Assets | | $ | 220,165 | | | $ | 222,065 | | | $ | 223,399 | | | $ | 210,102 | | | $ | 209,217 | | | $ | 203,531 | | | $ | 189,033 | | | $ | 187,297 | |\n| Securities, at amortized cost | | 44,881 | | | | 47,152 | | | | 48,510 | | | | 44,580 | | | | 43,468 | | | | 43,048 | | | | 40,727 | | | | 41,133 | | |\n| Loans and leases (1) | | 144,569 | | | | 143,689 | | | | 143,097 | | | | 135,628 | | | | 136,190 | | | | 132,499 | | | | 122,056 | | | | 120,235 | | |\n| Total earning assets | | 192,574 | | | | 193,909 | | | | 194,822 | | | | 183,612 | | | | 183,151 | | | | 178,464 | | | | 165,428 | | | | 163,367 | | |\n| Deposits | | 160,118 | | | | 159,503 | | | | 160,338 | | | | 149,867 | | | | 148,491 | | | | 143,837 | | | | 131,868 | | | | 129,531 | | |\n| Short-term borrowings | | 2,373 | | | | 2,128 | | | | 2,951 | | | | 2,771 | | | | 2,698 | | | | 3,572 | | | | 3,080 | | | | 3,539 | | |\n| Long-term debt | | 21,563 | | | | 23,428 | | | | 23,272 | | | | 22,907 | | | | 24,306 | | | | 23,394 | | | | 22,616 | | | | 23,043 | | |\n| Total interest-bearing liabilities | | 132,633 | | | | 134,500 | | | | 137,760 | | | | 129,342 | | | | 129,671 | | | | 126,650 | | | | 116,062 | | | | 116,412 | | |\n| Shareholders' equity | | 30,054 | | | | 29,916 | | | | 29,610 | | | | 27,826 | | | | 27,378 | | | | 26,612 | | | | 24,888 | | | | 24,566 | | |\n\n","source":"TFC\/10-K\/0000092230-17-000021"} {"title":"ACL","text":"For collectively evaluated loans, the ALLL is determined by multiplying the loan exposure estimated at the time of default by the loss frequency and loss severity factors. For individually evaluated loans, the ALLL is determined through review of data specific to the borrower. For TDRs, default expectations and estimated slower prepayment speeds that are specific to each of the restructured loan populations are incorporated in the determination of the ALLL. Also included in management\u2019s estimates for loan and lease losses are considerations with respect to the impact of current economic events, the outcomes of which are uncertain. These events may include, but are not limited to, fluctuations in overall interest rates, political conditions, legislation that may directly or indirectly affect the banking industry and economic conditions affecting specific geographical areas and industries in which BB&T conducts business.The methodology used to determine an estimate for the RUFC is inherently similar to the methodology used in calculating the ALLL adjusted for factors specific to binding commitments, including the probability of funding and exposure at the time of funding. A detailed discussion of the methodology used in determining the ALLL and the RUFC is included in the \"Summary of Significant Accounting Policies\" note in the \"Notes to Consolidated Financial Statements.\"","markdown_table":"\n\n| | | |\n| --- | --- | --- |\n| | | |\n| Loss Estimate Factor | | Description |\n| Loss Frequency | | Indicates the likelihood of a borrower defaulting on a loan |\n| Loss Severity | | Indicates the amount of estimated loss at the time of default |\n\n","source":"TFC\/10-K\/0000092230-17-000021"} {"title":"NOTE 2. Acquisitions and Divestitures","text":"The purchase price allocation for this acquisition has not been finalized. The following is a description of the methods used to determine the fair values of significant assets and liabilities.Cash, due from banks and federal funds sold: The carrying amount of these assets is a reasonable estimate of fair value based on the short-term nature of these assets.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 and leases: 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, amortization status 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 as a reduction to the estimated cash flows.CDI: This intangible asset represents the value of the relationships with deposit customers. The fair value 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. The CDI is being amortized over 10 years based upon the estimated economic benefits received.Deposits: The fair values used for the demand and savings deposits 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 contractual interest rates on such time deposits.Debt: The fair values of long-term debt instruments are estimated based on quoted market prices for the instrument if available, or for similar instruments if not available, or by using discounted cash flow analyses, based on current incremental borrowing rates for similar types of instruments.","markdown_table":"\n\n| | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | | | | | | | |\n| | | National Penn | | | | | | |\n| | | UPB | | | | Fair Value | | |\n| | | (Dollars in millions) | | | | | | |\n| Assets acquired: | | | | | | | | |\n| Cash, due from banks and federal funds sold | | | | | | $ | 216 | |\n| Securities | | | | | | 2,499 | | |\n| Loans and leases: | | | | | | | | |\n| Commercial and industrial | | $ | 2,817 | | | 2,596 | | |\n| CRE-income producing properties | | 1,450 | | | | 1,202 | | |\n| CRE-construction and development | | 165 | | | | 127 | | |\n| Direct retail lending | | 801 | | | | 767 | | |\n| Revolving credit | | 7 | | | | 7 | | |\n| Residential mortgage | | 1,217 | | | | 1,004 | | |\n| Sales finance | | 166 | | | | 162 | | |\n| PCI | | 181 | | | | 124 | | |\n| Total loans and leases | | $ | 6,804 | | | 5,989 | | |\n| Goodwill | | | | | | 795 | | |\n| CDI | | | | | | 67 | | |\n| Other assets | | | | | | 503 | | |\n| Total assets acquired | | | | | | 10,069 | | |\n| Liabilities assumed: | | | | | | | | |\n| Deposits: | | | | | | | | |\n| Noninterest-bearing deposits | | | | | | 1,209 | | |\n| Interest-bearing deposits | | | | | | 5,420 | | |\n| Total deposits | | | | | | 6,629 | | |\n| Debt | | | | | | 1,756 | | |\n| Other liabilities | | | | | | 66 | | |\n| Total liabilities assumed | | | | | | 8,451 | | |\n| Consideration paid | | | | | | $ | 1,618 | |\n| | | | | | | | | |\n| Cash paid | | | | | | $ | 555 | |\n| Fair value of common stock issued, including replacement equity awards | | | | | | 1,063 | | |\n\n","source":"TFC\/10-K\/0000092230-17-000021"} {"title":"NOTE 3. Securities","text":"During the third quarter of 2016, Branch Bank entered into an early termination agreement with the FDIC that terminated the loss share agreements. As a result of the settlement, no future loss sharing or gain sharing will occur related to the Colonial acquisition. The accounting for the affected securities has not changed; however, these securities have been classified into their respective categories and prior periods have been revised to conform to the current presentation.During 2015, BB&T transferred $517 million of HTM securities to AFS. These securities, which were sold in 2015, represented securities collateralized by student loans for which there was a significant increase in risk weighting as a result of the implementation of Basel III.Certain investments in marketable debt securities and MBS issued by FNMA and FHLMC exceeded 10% of shareholders\u2019 equity at December\u00a031,\u00a02016. The FNMA investments had total amortized cost and fair value of $13.9 billion and $13.6 billion, respectively. The FHLMC investments had total amortized cost and fair value of $7.8 billion and $7.6 billion, respectively.The following table reflects changes in credit losses on securities with OTTI where a portion of the unrealized loss was recognized in OCI. Assets acquired from the FDIC were excluded from this table prior to the termination of the loss share agreements.","markdown_table":"\n\n| | | | | | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | | | | | | | | | | | | | | | |\n| | | Amortized Cost | | | | Gross\u00a0Unrealized | | | | | | | | Fair Value | | |\n| December\u00a031, 2015 | | | Gains | | | | Losses | | | |\n| | | (Dollars in millions) | | | | | | | | | | | | | | |\n| AFS securities: | | | | | | | | | | | | | | | | |\n| U.S. Treasury | | $ | 1,836 | | | $ | 2 | | | $ | 6 | | | $ | 1,832 | |\n| GSE | | 51 | | | | \u2014 | | | | \u2014 | | | | 51 | | |\n| Agency MBS | | 20,463 | | | | 22 | | | | 439 | | | | 20,046 | | |\n| States and political subdivisions | | 2,312 | | | | 103 | | | | 40 | | | | 2,375 | | |\n| Non-agency MBS | | 683 | | | | 306 | | | | \u2014 | | | | 989 | | |\n| Other | | 4 | | | | \u2014 | | | | \u2014 | | | | 4 | | |\n| Total AFS securities | | $ | 25,349 | | | $ | 433 | | | $ | 485 | | | $ | 25,297 | |\n| | | | | | | | | | | | | | | | | |\n| HTM securities: | | | | | | | | | | | | | | | | |\n| U.S. Treasury | | $ | 1,097 | | | $ | 22 | | | $ | \u2014 | | | $ | 1,119 | |\n| GSE | | 5,045 | | | | 16 | | | | 98 | | | | 4,963 | | |\n| Agency MBS | | 12,267 | | | | 70 | | | | 22 | | | | 12,315 | | |\n| States and political subdivisions | | 63 | | | | \u2014 | | | | \u2014 | | | | 63 | | |\n| Other | | 58 | | | | 2 | | | | 1 | | | | 59 | | |\n| Total HTM securities | | $ | 18,530 | | | $ | 110 | | | $ | 121 | | | $ | 18,519 | |\n\n","source":"TFC\/10-K\/0000092230-17-000021"} {"title":"NOTE 3. Securities","text":"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 with or without prepayment penalties.","markdown_table":"\n\n| | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | | | | | | | | | | | |\n| | | Year Ended December 31, | | | | | | | | | | |\n| | | 2016 | | | | 2015 | | | | 2014 | | |\n| | | (Dollars in millions) | | | | | | | | | | |\n| Balance at beginning of period | | $ | 42 | | | $ | 64 | | | $ | 78 | |\n| Credit losses on securities without previous OTTI | | \u2014 | | | | \u2014 | | | | 6 | | |\n| Credit losses on securities for which OTTI was previously recognized | | \u2014 | | | | 4 | | | | \u2014 | | |\n| Reductions for securities sold\/settled during the period | | (21 | | ) | | (22 | | ) | | (17 | | ) |\n| Credit recoveries through yield | | (1 | | ) | | (4 | | ) | | (3 | | ) |\n| Included as a result of loss share termination | | 1 | | | | \u2014 | | | | \u2014 | | |\n| Balance at end of period | | $ | 21 | | | $ | 42 | | | $ | 64 | |\n\n","source":"TFC\/10-K\/0000092230-17-000021"} {"title":"NOTE 3. Securities","text":"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:","markdown_table":"\n\n| | | | | | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | | | | | | | | | | | | | | | |\n| | | AFS | | | | | | | | HTM | | | | | | |\n| December\u00a031,\u00a02016 | | Amortized Cost | | | | Fair Value | | | | Amortized Cost | | | | Fair Value | | |\n| | | (Dollars in millions) | | | | | | | | | | | | | | |\n| Due in one year or less | | $ | 275 | | | $ | 275 | | | $ | \u2014 | | | $ | \u2014 | |\n| Due after one year through five years | | 1,013 | | | | 1,018 | | | | 1,683 | | | | 1,703 | | |\n| Due after five years through ten years | | 2,670 | | | | 2,580 | | | | 1,688 | | | | 1,672 | | |\n| Due after ten years | | 23,375 | | | | 23,053 | | | | 13,309 | | | | 13,171 | | |\n| Total debt securities | | $ | 27,333 | | | $ | 26,926 | | | $ | 16,680 | | | $ | 16,546 | |\n\n","source":"TFC\/10-K\/0000092230-17-000021"} {"title":"NOTE 3. Securities","text":"Periodic reviews are conducted to identify and evaluate each investment with an unrealized loss for OTTI. 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 AOCI for AFS securities. The unrealized losses on GSE securities and agency MBS were the result of increases in market interest rates compared to the date the securities were acquired rather than the credit quality of the issuers.Cash flow modeling is used to evaluate non-agency MBS in an unrealized loss position for potential credit impairment. These models give consideration to long-term macroeconomic factors applied to current security default rates, prepayment rates and recovery rates and security-level performance. At December\u00a031,\u00a02016, there were no non-agency MBS with other than temporary credit impairment.At December\u00a031,\u00a02016, the majority of the unrealized loss on municipal securities was the result of fair value hedge basis adjustments that are a component of amortized cost. Municipal securities in an unrealized loss position are evaluated for credit impairment through a qualitative analysis of issuer performance and the primary source of repayment. At December\u00a031,\u00a02016, the evaluation of municipal securities did not indicate any municipal securities with other than temporary credit impairment.","markdown_table":"\n\n| | | | | | | | | | | | | | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | | | | | | | | | | | | | | | | | | | | | | | |\n| | | Less than 12 months | | | | | | | | 12 months or more | | | | | | | | Total | | | | | | |\n| December\u00a031, 2015 | | Fair Value | | | | Unrealized Losses | | | | Fair Value | | | | Unrealized Losses | | | | Fair Value | | | | Unrealized Losses | | |\n| | | (Dollars in millions) | | | | | | | | | | | | | | | | | | | | | | |\n| AFS securities: | | | | | | | | | | | | | | | | | | | | | | | | |\n| U.S. Treasury | | $ | 1,211 | | | $ | 6 | | | $ | \u2014 | | | $ | \u2014 | | | $ | 1,211 | | | $ | 6 | |\n| Agency MBS | | 12,052 | | | | 199 | | | | 5,576 | | | | 240 | | | | 17,628 | | | | 439 | | |\n| States and political subdivisions | | 64 | | | | 1 | | | | 329 | | | | 39 | | | | 393 | | | | 40 | | |\n| Total | | $ | 13,327 | | | $ | 206 | | | $ | 5,905 | | | $ | 279 | | | $ | 19,232 | | | $ | 485 | |\n| | | | | | | | | | | | | | | | | | | | | | | | | |\n| HTM securities: | | | | | | | | | | | | | | | | | | | | | | | | |\n| GSE | | $ | 2,307 | | | $ | 41 | | | $ | 1,743 | | | $ | 57 | | | $ | 4,050 | | | $ | 98 | |\n| Agency MBS | | 3,992 | | | | 21 | | | | 124 | | | | 1 | | | | 4,116 | | | | 22 | | |\n| Other | | 56 | | | | 1 | | | | \u2014 | | | | \u2014 | | | | 56 | | | | 1 | | |\n| Total | | $ | 6,355 | | | $ | 63 | | | $ | 1,867 | | | $ | 58 | | | $ | 8,222 | | | $ | 121 | |\n\n","source":"TFC\/10-K\/0000092230-17-000021"} {"title":"NOTE 4. Loans and ACL","text":"The following tables present the carrying amount of loans by risk rating. PCI loans are excluded because their related ALLL is determined by loan pool performance.","markdown_table":"\n\n| | | | | | | | | | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | | | | | | | | | | | | | | | | | | | |\n| | | Accruing | | | | | | | | | | | | | | | | | | |\n| December\u00a031, 2015 | | Current | | | | 30-89 Days Past Due | | | | 90 Days Or More Past Due | | | | Nonaccrual | | | | Total | | |\n| | | (Dollars in millions) | | | | | | | | | | | | | | | | | | |\n| Commercial: | | | | | | | | | | | | | | | | | | | | |\n| Commercial and industrial | | $ | 48,157 | | | $ | 36 | | | $ | \u2014 | | | $ | 237 | | | $ | 48,430 | |\n| CRE-income producing properties | | 13,370 | | | | 13 | | | | \u2014 | | | | 38 | | | | 13,421 | | |\n| CRE-construction and development | | 3,710 | | | | 9 | | | | \u2014 | | | | 13 | | | | 3,732 | | |\n| Dealer floor plan | | 1,215 | | | | \u2014 | | | | \u2014 | | | | \u2014 | | | | 1,215 | | |\n| Other lending subsidiaries | | 6,771 | | | | 18 | | | | \u2014 | | | | 6 | | | | 6,795 | | |\n| Retail: | | | | | | | | | | | | | | | | | | | | |\n| Direct retail lending | | 11,032 | | | | 58 | | | | 7 | | | | 43 | | | | 11,140 | | |\n| Revolving credit | | 2,478 | | | | 22 | | | | 10 | | | | \u2014 | | | | 2,510 | | |\n| Residential mortgage-nonguaranteed | | 29,038 | | | | 397 | | | | 55 | | | | 173 | | | | 29,663 | | |\n| Residential mortgage-government guaranteed | | 306 | | | | 78 | | | | 486 | | | | \u2014 | | | | 870 | | |\n| Sales finance | | 10,243 | | | | 72 | | | | 5 | | | | 7 | | | | 10,327 | | |\n| Other lending subsidiaries | | 6,381 | | | | 286 | | | | \u2014 | | | | 59 | | | | 6,726 | | |\n| PCI | | 966 | | | | 42 | | | | 114 | | | | \u2014 | | | | 1,122 | | |\n| Total | | $ | 133,667 | | | $ | 1,031 | | | $ | 677 | | | $ | 576 | | | $ | 135,951 | |\n\n","source":"TFC\/10-K\/0000092230-17-000021"} {"title":"NOTE 4. Loans and ACL","text":"The following tables present a summary of activity in the ACL:","markdown_table":"\n\n| | | | | | | | | | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | | | | | | | | | | | | | | | | | | | |\n| December\u00a031, 2015 | | Direct Retail Lending | | | | Revolving Credit | | | | Residential Mortgage | | | | Sales Finance | | | | Other Lending Subsidiaries | | |\n| | | (Dollars in millions) | | | | | | | | | | | | | | | | | | |\n| Retail: | | | | | | | | | | | | | | | | | | | | |\n| Performing | | $ | 11,097 | | | $ | 2,510 | | | $ | 30,360 | | | $ | 10,320 | | | $ | 6,667 | |\n| Nonperforming | | 43 | | | | \u2014 | | | | 173 | | | | 7 | | | | 59 | | |\n| Total | | $ | 11,140 | | | $ | 2,510 | | | $ | 30,533 | | | $ | 10,327 | | | $ | 6,726 | |\n\n","source":"TFC\/10-K\/0000092230-17-000021"} {"title":"NOTE 4. Loans and ACL","text":"The following table provides a summary of loans that are collectively evaluated for impairment.","markdown_table":"\n\n| | | | | | | | | | | | | | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | | | | | | | | | | | | | | | | | | | | | | | |\n| Year Ended December 31, 2014 | | Beginning Balance | | | | Charge-Offs | | | | Recoveries | | | | Provision (Benefit) | | | | Other | | | | Ending Balance | | |\n| | | (Dollars in millions) | | | | | | | | | | | | | | | | | | | | | | |\n| Commercial: | | | | | | | | | | | | | | | | | | | | | | | | |\n| Commercial and industrial | | $ | 454 | | | $ | (131 | ) | | $ | 42 | | | $ | 56 | | | $ | \u2014 | | | $ | 421 | |\n| CRE-income producing properties | | 149 | | | | (31 | | ) | | 14 | | | | 30 | | | | \u2014 | | | | 162 | | |\n| CRE-construction and development | | 76 | | | | (11 | | ) | | 19 | | | | (36 | | ) | | \u2014 | | | | 48 | | |\n| Dealer floor plan | | 8 | | | | \u2014 | | | | \u2014 | | | | 2 | | | | \u2014 | | | | 10 | | |\n| Other lending subsidiaries | | 15 | | | | (8 | | ) | | 3 | | | | 11 | | | | \u2014 | | | | 21 | | |\n| Retail: | | | | | | | | | | | | | | | | | | | | | | | | |\n| Direct retail lending | | 209 | | | | (69 | | ) | | 29 | | | | 26 | | | | (85 | | ) | | 110 | | |\n| Revolving credit | | 115 | | | | (71 | | ) | | 19 | | | | 47 | | | | \u2014 | | | | 110 | | |\n| Residential mortgage-nonguaranteed | | 269 | | | | (82 | | ) | | 7 | | | | (62 | | ) | | 85 | | | | 217 | | |\n| Residential mortgage-government guaranteed | | 62 | | | | (2 | | ) | | \u2014 | | | | (24 | | ) | | \u2014 | | | | 36 | | |\n| Sales finance | | 37 | | | | (23 | | ) | | 9 | | | | 17 | | | | \u2014 | | | | 40 | | |\n| Other lending subsidiaries | | 224 | | | | (261 | | ) | | 30 | | | | 242 | | | | \u2014 | | | | 235 | | |\n| PCI | | 114 | | | | (21 | | ) | | \u2014 | | | | (29 | | ) | | \u2014 | | | | 64 | | |\n| ALLL | | 1,732 | | | | (710 | | ) | | 172 | | | | 280 | | | | \u2014 | | | | 1,474 | | |\n| RUFC | | 89 | | | | \u2014 | | | | \u2014 | | | | (29 | | ) | | \u2014 | | | | 60 | | |\n| ACL | | $ | 1,821 | | | $ | (710 | ) | | $ | 172 | | | $ | 251 | | | $ | \u2014 | | | $ | 1,534 | |\n\n","source":"TFC\/10-K\/0000092230-17-000021"} {"title":"NOTE 4. Loans and ACL","text":"The following tables set forth certain information regarding impaired loans, excluding PCI and LHFS, that were individually evaluated for reserves.","markdown_table":"\n\n| | | | | | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | | | | | | | | | | | | | | | |\n| | | December 31, 2016 | | | | | | | | December 31, 2015 | | | | | | |\n| | | Recorded Investment | | | | Related ALLL | | | | Recorded Investment | | | | Related ALLL | | |\n| | | (Dollars in millions) | | | | | | | | | | | | | | |\n| Commercial: | | | | | | | | | | | | | | | | |\n| Commercial and industrial | | $ | 51,253 | | | $ | 463 | | | $ | 48,110 | | | $ | 439 | |\n| CRE-income producing properties | | 14,455 | | | | 112 | | | | 13,339 | | | | 127 | | |\n| CRE-construction and development | | 3,787 | | | | 21 | | | | 3,697 | | | | 32 | | |\n| Dealer floor plan | | 1,413 | | | | 11 | | | | 1,215 | | | | 8 | | |\n| Other lending subsidiaries | | 7,678 | | | | 28 | | | | 6,789 | | | | 21 | | |\n| Retail: | | | | | | | | | | | | | | | | |\n| Direct retail lending | | 12,011 | | | | 93 | | | | 11,055 | | | | 93 | | |\n| Revolving credit | | 2,626 | | | | 95 | | | | 2,477 | | | | 91 | | |\n| Residential mortgage-nonguaranteed | | 28,488 | | | | 136 | | | | 29,199 | | | | 153 | | |\n| Residential mortgage-government guaranteed | | 466 | | | | 8 | | | | 553 | | | | 1 | | |\n| Sales finance | | 11,251 | | | | 37 | | | | 10,308 | | | | 39 | | |\n| Other lending subsidiaries | | 7,057 | | | | 249 | | | | 6,534 | | | | 235 | | |\n| PCI | | 910 | | | | 44 | | | | 1,122 | | | | 61 | | |\n| Total | | $ | 141,395 | | | $ | 1,297 | | | $ | 134,398 | | | $ | 1,300 | |\n\n","source":"TFC\/10-K\/0000092230-17-000021"} {"title":"NOTE 4. Loans and ACL","text":"Trial modifications are excluded from the following disclosures because the specific types and amounts of concessions offered to borrowers frequently change between the trial modification and the permanent modification. The following table provides a summary of TDRs, all of which are considered impaired.","markdown_table":"\n\n| | | | | | | | | | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | | | | | | | | | | | | | | | | | | | |\n| December 31, 2015 | | Recorded Investment | | | | UPB | | | | Related ALLL | | | | Average Recorded Investment | | | | Interest Income Recognized | | |\n| | | (Dollars in millions) | | | | | | | | | | | | | | | | | | |\n| With no related ALLL recorded: | | | | | | | | | | | | | | | | | | | | |\n| Commercial: | | | | | | | | | | | | | | | | | | | | |\n| Commercial and industrial | | $ | 129 | | | $ | 164 | | | $ | \u2014 | | | $ | 95 | | | $ | 1 | |\n| CRE-income producing properties | | 8 | | | | 13 | | | | \u2014 | | | | 17 | | | | \u2014 | | |\n| CRE-construction and development | | 8 | | | | 11 | | | | \u2014 | | | | 10 | | | | \u2014 | | |\n| Dealer floor plan | | \u2014 | | | | \u2014 | | | | \u2014 | | | | 2 | | | | \u2014 | | |\n| Other lending subsidiaries | | 2 | | | | 3 | | | | \u2014 | | | | \u2014 | | | | \u2014 | | |\n| Retail: | | | | | | | | | | | | | | | | | | | | |\n| Direct retail lending | | 11 | | | | 40 | | | | \u2014 | | | | 12 | | | | 1 | | |\n| Residential mortgage-nonguaranteed | | 103 | | | | 153 | | | | \u2014 | | | | 99 | | | | 4 | | |\n| Residential mortgage-government guaranteed | | 5 | | | | 5 | | | | \u2014 | | | | 3 | | | | \u2014 | | |\n| Sales finance | | 1 | | | | 2 | | | | \u2014 | | | | 1 | | | | \u2014 | | |\n| Other lending subsidiaries | | 4 | | | | 8 | | | | \u2014 | | | | 3 | | | | \u2014 | | |\n| With an ALLL recorded: | | | | | | | | | | | | | | | | | | | | |\n| Commercial: | | | | | | | | | | | | | | | | | | | | |\n| Commercial and industrial | | 191 | | | | 194 | | | | 27 | | | | 223 | | | | 5 | | |\n| CRE-income producing properties | | 74 | | | | 77 | | | | 8 | | | | 96 | | | | 3 | | |\n| CRE-construction and development | | 27 | | | | 27 | | | | 5 | | | | 36 | | | | 1 | | |\n| Dealer floor plan | | \u2014 | | | | \u2014 | | | | \u2014 | | | | 1 | | | | \u2014 | | |\n| Other lending subsidiaries | | 4 | | | | 5 | | | | 1 | | | | 6 | | | | \u2014 | | |\n| Retail: | | | | | | | | | | | | | | | | | | | | |\n| Direct retail lending | | 74 | | | | 75 | | | | 12 | | | | 79 | | | | 4 | | |\n| Revolving credit | | 33 | | | | 33 | | | | 13 | | | | 36 | | | | 1 | | |\n| Residential mortgage-nonguaranteed | | 361 | | | | 368 | | | | 41 | | | | 354 | | | | 15 | | |\n| Residential mortgage-government guaranteed | | 312 | | | | 312 | | | | 22 | | | | 323 | | | | 13 | | |\n| Sales finance | | 18 | | | | 18 | | | | 1 | | | | 19 | | | | 1 | | |\n| Other lending subsidiaries | | 188 | | | | 190 | | | | 30 | | | | 179 | | | | 28 | | |\n| Total | | $ | 1,553 | | | $ | 1,698 | | | $ | 160 | | | $ | 1,594 | | | $ | 77 | |\n\n","source":"TFC\/10-K\/0000092230-17-000021"} {"title":"NOTE 4. Loans and ACL","text":"The following table summarizes the primary reason loan modifications were classified as TDRs and includes newly designated TDRs as well as modifications made to existing TDRs. Balances represent the recorded investment at the end of the quarter in which the modification was made. Rate modifications in this table include TDRs made with below market interest rates that also include modifications of loan structures.","markdown_table":"\n\n| | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | | | | | | | |\n| | | December 31, | | | | | | |\n| | | 2016 | | | | 2015 | | |\n| | | (Dollars in millions) | | | | | | |\n| Performing TDRs: | | | | | | | | |\n| Commercial: | | | | | | | | |\n| Commercial and industrial | | $ | 55 | | | $ | 49 | |\n| CRE-income producing properties | | 16 | | | | 13 | | |\n| CRE-construction and development | | 9 | | | | 16 | | |\n| Direct retail lending | | 67 | | | | 72 | | |\n| Revolving credit | | 29 | | | | 33 | | |\n| Residential mortgage-nonguaranteed | | 332 | | | | 288 | | |\n| Residential mortgage-government guaranteed | | 420 | | | | 316 | | |\n| Sales finance | | 16 | | | | 17 | | |\n| Other lending subsidiaries | | 226 | | | | 178 | | |\n| Total performing TDRs | | 1,170 | | | | 982 | | |\n| Nonperforming TDRs (also included in NPL disclosures) | | 183 | | | | 146 | | |\n| Total TDRs | | $ | 1,353 | | | $ | 1,128 | |\n| ALLL attributable to TDRs | | $ | 146 | | | $ | 126 | |\n\n","source":"TFC\/10-K\/0000092230-17-000021"} {"title":"NOTE 4. Loans and ACL","text":"The pre-default balance for modifications that experienced a payment default that had been classified as TDRs during the previous 12 months was $73 million, $81 million and $78 million for the twelve months ended December\u00a031,\u00a02016, 2015 and 2014, respectively. Payment default is defined as movement of the TDR to nonaccrual status, foreclosure or charge-off, whichever occurs first.Changes in the carrying value and accretable yield of PCI loans are presented in the following table:","markdown_table":"\n\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | | Year Ended December 31, | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | | 2016 | | | | | | | | | | | | 2015 | | | | | | | | | | | | 2014 | | | | | | | | | | |\n| | | Type of Modification | | | | | | | | | | | | Type of Modification | | | | | | | | | | | | Type of Modification | | | | | | | | | | |\n| | | Rate | | | | Structure | | | | ALLL Impact | | | | Rate | | | | Structure | | | | ALLL Impact | | | | Rate | | | | Structure | | | | ALLL Impact | | |\n| | | (Dollars in millions) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Commercial: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Commercial and industrial | | $ | 112 | | | $ | 128 | | | $ | 3 | | | $ | 99 | | | $ | 45 | | | $ | 2 | | | $ | 112 | | | $ | 48 | | | $ | 4 | |\n| CRE-income producing properties | | 21 | | | | 17 | | | | \u2014 | | | | 9 | | | | 15 | | | | \u2014 | | | | 18 | | | | 18 | | | | \u2014 | | |\n| CRE-construction and development | | 7 | | | | 11 | | | | \u2014 | | | | 8 | | | | 25 | | | | 1 | | | | 25 | | | | 22 | | | | \u2014 | | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Retail: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Direct retail lending | | 19 | | | | 1 | | | | \u2014 | | | | 16 | | | | 4 | | | | 4 | | | | 32 | | | | 4 | | | | 6 | | |\n| Revolving credit | | 17 | | | | \u2014 | | | | 4 | | | | 16 | | | | \u2014 | | | | 4 | | | | 24 | | | | \u2014 | | | | 4 | | |\n| Residential mortgage-nonguaranteed | | 129 | | | | 54 | | | | 10 | | | | 88 | | | | 37 | | | | 9 | | | | 127 | | | | 36 | | | | 16 | | |\n| Residential mortgage-government guaranteed | | 335 | | | | \u2014 | | | | 18 | | | | 189 | | | | \u2014 | | | | 7 | | | | 282 | | | | \u2014 | | | | 12 | | |\n| Sales finance | | \u2014 | | | | 7 | | | | \u2014 | | | | \u2014 | | | | 10 | | | | 1 | | | | 1 | | | | 14 | | | | 3 | | |\n| Other lending subsidiaries | | 169 | | | | \u2014 | | | | 21 | | | | 129 | | | | \u2014 | | | | 17 | | | | 130 | | | | \u2014 | | | | 17 | | |\n\n","source":"TFC\/10-K\/0000092230-17-000021"} {"title":"NOTE 4. Loans and ACL","text":"The following table presents additional information about BB&T\u2019s loans and leases:","markdown_table":"\n\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | | December 31, 2016 | | | | | | | | | | | | | | | | December 31, 2015 | | | | | | | | | | | | | | |\n| | | Purchased Impaired | | | | | | | | Purchased\u00a0Nonimpaired | | | | | | | | Purchased Impaired | | | | | | | | Purchased\u00a0Nonimpaired | | | | | | |\n| | | Accretable Yield | | | | Carrying Value | | | | Accretable Yield | | | | Carrying Value | | | | Accretable Yield | | | | Carrying Value | | | | Accretable Yield | | | | Carrying Value | | |\n| | | (Dollars in millions) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Balance at beginning of period | | $ | 189 | | | $ | 700 | | | $ | 176 | | | $ | 422 | | | $ | 134 | | | $ | 579 | | | $ | 244 | | | $ | 636 | |\n| Additions | | 36 | | | | 124 | | | | \u2014 | | | | \u2014 | | | | 98 | | | | 402 | | | | \u2014 | | | | \u2014 | | |\n| Accretion | | (134 | | ) | | 134 | | | | (73 | | ) | | 73 | | | | (89 | | ) | | 89 | | | | (89 | | ) | | 89 | | |\n| Payments received, net | | \u2014 | | | | (344 | | ) | | \u2014 | | | | (199 | | ) | | \u2014 | | | | (370 | | ) | | \u2014 | | | | (303 | | ) |\n| Other, net | | 162 | | | | \u2014 | | | | 52 | | | | \u2014 | | | | 46 | | | | \u2014 | | | | 21 | | | | \u2014 | | |\n| Balance at end of period | | $ | 253 | | | $ | 614 | | | $ | 155 | | | $ | 296 | | | $ | 189 | | | $ | 700 | | | $ | 176 | | | $ | 422 | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Outstanding UPB at end of period | | | | | | $ | 910 | | | | | | | $ | 423 | | | | | | | $ | 1,063 | | | | | | | $ | 587 | |\n\n","source":"TFC\/10-K\/0000092230-17-000021"} {"title":"NOTE 5. Premises and Equipment","text":"The following table excludes assets related to the lease financing business.","markdown_table":"\n\n| | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | | | | | | | | | |\n| | | Estimated Useful Life | | December 31, | | | | | | |\n| | | | 2016 | | | | 2015 | | |\n| | | (Years) | | (Dollars in millions) | | | | | | |\n| Land and land improvements | | | | $ | 611 | | | $ | 596 | |\n| Buildings and building improvements | | 40 | | 1,628 | | | | 1,503 | | |\n| Furniture and equipment | | 3 - 15 | | 1,121 | | | | 1,030 | | |\n| Leasehold improvements | | | | 791 | | | | 721 | | |\n| Construction in progress | | | | 62 | | | | 122 | | |\n| Capitalized leases on premises and equipment | | | | 66 | | | | 67 | | |\n| Total | | | | 4,279 | | | | 4,039 | | |\n| Accumulated depreciation and amortization | | | | (2,172 | | ) | | (2,032 | | ) |\n| Net premises and equipment | | | | $ | 2,107 | | | $ | 2,007 | |\n\n","source":"TFC\/10-K\/0000092230-17-000021"} {"title":"NOTE 5. Premises and Equipment","text":"Year Ended December 31,\u00a0\u00a0\u00a0\u00a02017\u00a02018\u00a02019\u00a02020\u00a02021\u00a0Thereafter\u00a0\u00a0(Dollars in millions)Future minimum lease payments for operating leases\u00a0$263\u00a0$239\u00a0$210\u00a0$179\u00a0$154\u00a0$574","markdown_table":"\n\n| | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | | | | | | | | | | | |\n| | | Year Ended December 31, | | | | | | | | | | |\n| | | 2016 | | | | 2015 | | | | 2014 | | |\n| | | (Dollars in millions) | | | | | | | | | | |\n| Rent expense applicable to operating leases | | $ | 278 | | | $ | 245 | | | $ | 227 | |\n| Rental income from owned properties and subleases | | 8 | | | | 7 | | | | 7 | | |\n\n","source":"TFC\/10-K\/0000092230-17-000021"} {"title":"NOTE 6. Goodwill and Other Intangible Assets","text":"During 2014, the transfer of closed-end, first and second lien position residential mortgage loans from Community Banking to Residential Mortgage Banking resulted in a reallocation of the related goodwill, which is included in other adjustments in the above table. During 2015, BB&T sold American Coastal, which resulted in the allocation and write-off of goodwill from the Insurance Holdings segment. During 2016, the valuations and purchase price allocation for Susquehanna were finalized and are included in other adjustments in the above table. The acquisition of Swett & Crawford provided goodwill of $269 million and identifiable intangible assets of $224 million. The identifiable intangible assets are being amortized over a weighted average term of 13 years based upon the estimated economic benefits received. Approximately $135 million of the goodwill and identifiable intangible assets is deductible for tax purposes.The following table presents information for identifiable intangible assets subject to amortization:","markdown_table":"\n\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | | Community Banking | | | | Residential Mortgage Banking | | | | Dealer Financial Services | | | | Specialized Lending | | | | Insurance Holdings | | | | Financial Services | | | | Total | | |\n| | | (Dollars in millions) | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Goodwill, January 1, 2014 | | $ | 4,924 | | | $ | 7 | | | $ | 111 | | | $ | 88 | | | $ | 1,492 | | | $ | 192 | | | $ | 6,814 | |\n| Acquired goodwill, net | | 29 | | | | \u2014 | | | | \u2014 | | | | \u2014 | | | | 12 | | | | \u2014 | | | | 41 | | |\n| Contingent consideration | | \u2014 | | | | \u2014 | | | | \u2014 | | | | \u2014 | | | | 14 | | | | \u2014 | | | | 14 | | |\n| Other adjustments | | (319 | | ) | | 319 | | | | \u2014 | | | | \u2014 | | | | \u2014 | | | | \u2014 | | | | \u2014 | | |\n| Goodwill, December 31, 2014 | | 4,634 | | | | 326 | | | | 111 | | | | 88 | | | | 1,518 | | | | 192 | | | | 6,869 | | |\n| Acquired goodwill, net | | 1,501 | | | | 43 | | | | \u2014 | | | | 155 | | | | 16 | | | | 11 | | | | 1,726 | | |\n| American Coastal sale | | \u2014 | | | | \u2014 | | | | \u2014 | | | | \u2014 | | | | (49 | | ) | | \u2014 | | | | (49 | | ) |\n| Other adjustments | | 5 | | | | \u2014 | | | | \u2014 | | | | \u2014 | | | | (3 | | ) | | \u2014 | | | | 2 | | |\n| Goodwill, December 31, 2015 | | 6,140 | | | | 369 | | | | 111 | | | | 243 | | | | 1,482 | | | | 203 | | | | 8,548 | | |\n| Acquired goodwill, net | | 753 | | | | 39 | | | | \u2014 | | | | 2 | | | | 270 | | | | 9 | | | | 1,073 | | |\n| Other adjustments | | 139 | | | | 8 | | | | \u2014 | | | | (132 | | ) | | \u2014 | | | | 2 | | | | 17 | | |\n| Goodwill, December 31, 2016 | | $ | 7,032 | | | $ | 416 | | | $ | 111 | | | $ | 113 | | | $ | 1,752 | | | $ | 214 | | | $ | 9,638 | |\n\n","source":"TFC\/10-K\/0000092230-17-000021"} {"title":"NOTE 6. Goodwill and Other Intangible Assets","text":"Year Ended December 31,\u00a0\u00a02017\u00a02018\u00a02019\u00a02020\u00a02021\u00a0\u00a0(Dollars in millions)Estimated amortization expense of identifiable intangibles\u00a0$141\u00a0$123\u00a0$104\u00a0$87\u00a0$74","markdown_table":"\n\n| | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | | | | December\u00a031,\u00a02016 | | | | | | | | | | | | December\u00a031, 2015 | | | | | | | | | | |\n| | | Wtd. Avg. Remaining Life | | Gross Carrying Amount | | | | Accumulated Amortization | | | | Net Carrying Amount | | | | Gross Carrying Amount | | | | Accumulated Amortization | | | | Net Carrying Amount | | |\n| | | (Years) | | (Dollars in millions) | | | | | | | | | | | | | | | | | | | | | | |\n| CDI | | 7.9 | | $ | 970 | | | $ | (710 | ) | | $ | 260 | | | $ | 903 | | | $ | (634 | ) | | $ | 269 | |\n| Other, primarily customer relationship intangibles | | 13.0 | | 1,415 | | | | (821 | | ) | | 594 | | | | 1,164 | | | | (747 | | ) | | 417 | | |\n| Total | | | | $ | 2,385 | | | $ | (1,531 | ) | | $ | 854 | | | $ | 2,067 | | | $ | (1,381 | ) | | $ | 686 | |\n\n","source":"TFC\/10-K\/0000092230-17-000021"} {"title":"Residential Mortgage Banking Activities","text":"During 2014, HUD-OIG notified BB&T that it had been selected for an audit\/survey to assess compliance with FHA loan origination and quality control requirements. BB&T subsequently received subpoenas from the HUD-OIG and the Department of Justice seeking additional information regarding its lending practices in connection with loans insured by the FHA. During 2014, BB&T recognized an $85 million charge that was included in other expense on the Consolidated Statements of Income. During the third quarter of 2016, BB&T paid $83 million to settle these matters pursuant to an agreement with the Department of Justice. In addition, the Company separately received recoveries of $71 million, resulting in a net benefit of $73 million, which was included in other expense on the Consolidated Statements of Income. During 2014, BB&T recognized a $33 million adjustment related to the indemnification reserves for mortgage loans sold, which represents an increase in estimated losses that may be incurred on FHA-insured mortgage loans that have not yet defaulted. During 2016, BB&T released $31 million of mortgage repurchase reserves, which was primarily driven by lower anticipated loan repurchase requests. These adjustments were included in loan-related expense on the Consolidated Statements of Income.Payments made to date for recourse exposure on residential mortgage loans sold with recourse liability have been immaterial.","markdown_table":"\n\n| | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | | | | | | | |\n| | | December 31, | | | | | | |\n| | | 2016 | | | | 2015 | | |\n| | | (Dollars in millions) | | | | | | |\n| UPB of residential mortgage and home equity loan servicing portfolio | | $ | 121,639 | | | $ | 122,169 | |\n| UPB of residential mortgage loans serviced for others (primarily agency conforming fixed rate) | | 90,325 | | | | 91,132 | | |\n| Mortgage loans sold with recourse | | 578 | | | | 702 | | |\n| Maximum recourse exposure from mortgage loans sold with recourse liability | | 282 | | | | 326 | | |\n| Indemnification, recourse and repurchase reserves | | 40 | | | | 79 | | |\n| FHA-insured mortgage loan reserve | | \u2014 | | | | 85 | | |\n\n","source":"TFC\/10-K\/0000092230-17-000021"} {"title":"Residential Mortgage Banking Activities","text":"The following table presents a roll forward of the carrying value of residential MSRs recorded at fair value:","markdown_table":"\n\n| | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | | | | | | | | | | | |\n| | | As Of \/ For The Year Ended December 31, | | | | | | | | | | |\n| | | 2016 | | | | 2015 | | | | 2014 | | |\n| | | (Dollars in millions) | | | | | | | | | | |\n| UPB of residential mortgage loans sold from the LHFS portfolio | | $ | 15,675 | | | $ | 14,764 | | | $ | 13,400 | |\n| Pre-tax gains recognized on mortgage loans sold and held for sale | | 139 | | | | 148 | | | | 110 | | |\n| Servicing fees recognized from mortgage loans serviced for others | | 268 | | | | 273 | | | | 275 | | |\n| Approximate weighted average servicing fee on the outstanding balance of residential mortgage loans serviced for others | | 0.28 | | % | | 0.29 | | % | | 0.29 | | % |\n| Weighted average interest rate on mortgage loans serviced for others | | 4.03 | | | | 4.12 | | | | 4.20 | | |\n\n","source":"TFC\/10-K\/0000092230-17-000021"} {"title":"Residential Mortgage Banking Activities","text":"The sensitivity of the fair value of the residential MSRs to changes in key assumptions is included in the accompanying table:","markdown_table":"\n\n| | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | | | | | | | | | | | |\n| | | Year Ended December 31, | | | | | | | | | | |\n| | | 2016 | | | | 2015 | | | | 2014 | | |\n| | | (Dollars in millions) | | | | | | | | | | |\n| Carrying value, beginning of year | | $ | 880 | | | $ | 844 | | | $ | 1,047 | |\n| Additions | | 146 | | | | 156 | | | | 141 | | |\n| Change in fair value due to changes in valuation inputs or assumptions: | | | | | | | | | | | | |\n| Prepayment speeds | | 13 | | | | 91 | | | | (219 | | ) |\n| Weighted average OAS | | 10 | | | | (52 | | ) | | \u2014 | | |\n| Servicing costs | | 2 | | | | (25 | | ) | | (2 | | ) |\n| Realization of expected net servicing cash flows, passage of time and other | | (136 | | ) | | (134 | | ) | | (123 | | ) |\n| Carrying value, end of year | | $ | 915 | | | $ | 880 | | | $ | 844 | |\n| | | | | | | | | | | | | |\n| Gains (losses) on derivative financial instruments used to mitigate the income statement effect of changes in fair value | | $ | 32 | | | $ | 32 | | | $ | 251 | |\n\n","source":"TFC\/10-K\/0000092230-17-000021"} {"title":"Residential Mortgage Banking Activities","text":"The sensitivity calculations above are hypothetical and should not be considered to be predictive of future performance. As indicated, changes in fair value based on adverse changes in assumptions generally cannot be extrapolated because the relationship of the change in assumption to the change in fair value may not be linear. Also, in the above table, the effect of an adverse variation in a particular assumption on the fair value of the MSRs is calculated without changing any other assumption; while in reality, changes in one factor may result in changes in another, which may magnify or counteract the effect of the change.","markdown_table":"\n\n| | | | | | | | | | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | | | | | | | | | | | | | | | | | | | |\n| | | December\u00a031,\u00a02016 | | | | | | | | | | December\u00a031, 2015 | | | | | | | | |\n| | | Range | | | | | | Weighted Average | | | | Range | | | | | | Weighted Average | | |\n| | | Min | | | Max | | | | Min | | | Max | | |\n| | | (Dollars in millions) | | | | | | | | | | | | | | | | | | |\n| Prepayment speed | | 7.5 | % | | 8.4 | % | | 8.1 | | % | | 8.1 | % | | 9.0 | % | | 8.7 | | % |\n| Effect on fair value of a 10% increase | | | | | | | | $ | (28 | ) | | | | | | | | $ | (29 | ) |\n| Effect on fair value of a 20% increase | | | | | | | | (54 | | ) | | | | | | | | (56 | | ) |\n| | | | | | | | | | | | | | | | | | | | | |\n| OAS | | 9.8 | % | | 10.2 | % | | 10.0 | | % | | 10.3 | % | | 10.6 | % | | 10.4 | | % |\n| Effect on fair value of a 10% increase | | | | | | | | $ | (33 | ) | | | | | | | | $ | (33 | ) |\n| Effect on fair value of a 20% increase | | | | | | | | (64 | | ) | | | | | | | | (63 | | ) |\n| | | | | | | | | | | | | | | | | | | | | |\n| Composition of loans serviced for others: | | | | | | | | | | | | | | | | | | | | |\n| Fixed-rate residential mortgage loans | | | | | | | | 99.1 | | % | | | | | | | | 99.2 | | % |\n| Adjustable-rate residential mortgage loans | | | | | | | | 0.9 | | | | | | | | | | 0.8 | | |\n| Total | | | | | | | | 100.0 | | % | | | | | | | | 100.0 | | % |\n| | | | | | | | | | | | | | | | | | | | | |\n| Weighted average life (in years) | | | | | | | | 7.0 | | | | | | | | | | 6.8 | | |\n\n","source":"TFC\/10-K\/0000092230-17-000021"} {"title":"Commercial Mortgage Banking Activities","text":"Effective January 1, 2016, the Company adopted the fair value option for commercial MSRs, which are included in MSRs at fair value on the Consolidated Balance Sheets, to facilitate hedging against changes in the fair value of the MSR asset. Prior to adoption, commercials MSRs were included in other assets. The impact of the adoption was immaterial.","markdown_table":"\n\n| | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | | | | | | | |\n| | | December 31, | | | | | | |\n| | | 2016 | | | | 2015 | | |\n| | | (Dollars in millions) | | | | | | |\n| UPB of CRE mortgages serviced for others | | $ | 29,333 | | | $ | 28,163 | |\n| CRE mortgages serviced for others covered by recourse provisions | | 4,240 | | | | 4,198 | | |\n| Maximum recourse exposure from CRE mortgages sold with recourse liability | | 1,272 | | | | 1,259 | | |\n| Recorded reserves related to recourse exposure | | 7 | | | | 7 | | |\n| Originated CRE mortgages during the year | | 7,145 | | | | 7,012 | | |\n| Commercial MSRs at fair value | | 137 | | | | \u2014 | | |\n\n","source":"TFC\/10-K\/0000092230-17-000021"} {"title":"NOTE 9. Long-Term Debt","text":"The effective rates above reflect the impact of hedges and issuance costs. Subordinated notes with a remaining maturity of one year or greater qualify under the risk-based capital guidelines as Tier 2 supplementary capital, subject to certain limitations.Subsequent to year end, BB&T terminated FHLB advances totaling $2.9 billion of par value, which resulted in a pre-tax loss on early extinguishment of debt totaling $392 million. During 2015, BB&T terminated FHLB advances totaling $931 million, which resulted in a pre-tax loss on early extinguishment of debt totaling $172 million. During 2014, BB&T terminated FHLB advances totaling $1.1 billion, resulting in a pre-tax loss on early extinguishment of debt totaling $122 million.\u00a0\u00a0Year Ended December 31,\u00a0Thereafter\u00a0\u00a02017\u00a02018\u00a02019\u00a02020\u00a02021\u00a0\u00a0\u00a0(Dollars in millions)Future debt maturities\u00a0$3,696\u00a0$2,223\u00a0$3,985\u00a0$3,357\u00a0$3,881\u00a0$4,586","markdown_table":"\n\n| | | | | | | | | | | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | | | | | | | | | | | | | | | | | | | | |\n| | | | | | | Stated Rate | | | | | | Effective Rate | | | December 31, | | | | | | |\n| | | Maturity | | | | Min | | | Max | | | | 2016 | | | | 2015 | | |\n| | | | | | | | | | | | | | | | (Dollars in millions) | | | | | | |\n| BB&T Corporation | | | | | | | | | | | | | | | | | | | | | |\n| Fixed rate senior notes | | 2017 | to | 2024 | | 1.45 | % | | 6.85 | % | | 2.33 | % | | $ | 7,600 | | | $ | 7,831 | |\n| Floating rate senior notes | | 2018 | | 2020 | | 1.55 | | | 1.82 | | | 1.67 | | | 1,898 | | | | 1,050 | | |\n| Fixed rate subordinated notes | | 2017 | | 2022 | | 3.95 | | | 5.25 | | | 1.53 | | | 1,338 | | | | 1,382 | | |\n| Branch Bank | | | | | | | | | | | | | | | | | | | | | |\n| Fixed rate senior notes | | 2017 | | 2021 | | 1.00 | | | 2.85 | | | 1.80 | | | 4,209 | | | | 4,071 | | |\n| Floating rate senior notes | | 2019 | | | | 1.42 | | | 1.42 | | | 1.48 | | | 250 | | | | 375 | | |\n| Fixed rate subordinated notes | | 2025 | | 2026 | | 3.63 | | | 3.80 | | | 3.48 | | | 2,138 | | | | 2,562 | | |\n| Floating rate subordinated notes | | 2017 | | | | 1.22 | | | 1.22 | | | 3.73 | | | 262 | | | | 612 | | |\n| FHLB advances (5.5 years weighted average maturity at December 31, 2016) | | 2017 | | 2034 | | \u2014 | | | 6.38 | | | 4.20 | | | 4,118 | | | | 5,732 | | |\n| Other long-term debt | | | | | | | | | | | | | | | 152 | | | | 154 | | |\n| Total long-term debt | | | | | | | | | | | | | | | $ | 21,965 | | | $ | 23,769 | |\n\n","source":"TFC\/10-K\/0000092230-17-000021"} {"title":"Preferred Stock","text":"Dividends on the preferred stock, if declared, accrue and are payable quarterly, in arrears. For each issuance, BB&T issued depositary shares, each of which represents a fractional ownership interest in a share of the Company\u2019s preferred stock. The preferred stock has no stated maturity and redemption is solely at the option of the Company in whole, but not in part, upon the occurrence of a regulatory capital treatment event, as defined. In addition, the preferred stock may be redeemed in whole or in part, on any dividend payment date after five years from the date of issuance. Under current rules, any redemption of the preferred stock is subject to prior approval of the FRB. The preferred stock is not subject to any sinking fund or other obligations of the Company.","markdown_table":"\n\n| | | | | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | | | | | | | | | | | | | | |\n| Preferred Stock Issue | | Issuance Date | | Earliest Redemption Date | | Liquidation Amount | | | | Carrying Amount | | | | Dividend Rate | |\n| | | | | | | (Dollars in millions) | | | | | | | | | |\n| Series D | | 5\/1\/2012 | | 5\/1\/2017 | | $ | 575 | | | $ | 559 | | | 5.850 | % |\n| Series E | | 7\/31\/2012 | | 8\/1\/2017 | | 1,150 | | | | 1,120 | | | | 5.625 | |\n| Series F | | 10\/31\/2012 | | 11\/1\/2017 | | 450 | | | | 437 | | | | 5.200 | |\n| Series G | | 5\/1\/2013 | | 6\/1\/2018 | | 500 | | | | 487 | | | | 5.200 | |\n| Series H | | 3\/9\/2016 | | 6\/1\/2021 | | 465 | | | | 450 | | | | 5.625 | |\n| | | | | | | $ | 3,140 | | | $ | 3,053 | | | | |\n\n","source":"TFC\/10-K\/0000092230-17-000021"} {"title":"Equity-Based Compensation Plans","text":"The fair value of RSUs is based on the common stock price on the grant date less the present value of expected dividends that will be foregone during the vesting period. The fair value of options is measured on the grant date using the Black-Scholes option-pricing model. Substantially all awards are granted in February of each year. Grants to non-executive employees primarily consist of RSUs.A summary of selected data related to equity-based compensation costs follows:","markdown_table":"\n\n| | | | | |\n| --- | --- | --- | --- | --- |\n| | | | | |\n| | | December\u00a031, 2016 | | |\n| Shares available for future grants (in thousands) | | 16,627 | | |\n| | | | | |\n| Vesting period, awards granted prior to 2010 | | 5.0 | | yrs |\n| Vesting period, awards granted after 2009 (minimum years) | | 1.0 | | |\n| Vesting period, awards granted after 2009 (maximum years) | | 5.0 | | |\n| Option term | | 10.0 | | |\n\n","source":"TFC\/10-K\/0000092230-17-000021"} {"title":"Equity-Based Compensation Plans","text":"The following tables present the activity during 2016 related to equity-based compensation awards:","markdown_table":"\n\n| | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | | | | | | | | | | | |\n| | | Year Ended December 31, | | | | | | | | | | |\n| | | 2016 | | | | 2015 | | | | 2014 | | |\n| | | (Dollars in millions) | | | | | | | | | | |\n| Equity-based compensation expense | | $ | 115 | | | $ | 106 | | | $ | 102 | |\n| Income tax benefit from equity-based compensation expense | | 43 | | | | 40 | | | | 39 | | |\n| Intrinsic value of options exercised and RSUs that vested during the year | | 159 | | | | 170 | | | | 280 | | |\n| Grant date fair value of equity-based awards that vested during the year | | 98 | | | | 115 | | | | 113 | | |\n| | | | | | | | | | | | | |\n| | | | | | | December 31, | | | | | | |\n| | | | | | | 2016 | | | | 2015 | | |\n| | | | | | | (Dollars in millions) | | | | | | |\n| Unrecognized compensation cost related to equity-based awards | | | | | | $ | 109 | | | $ | 103 | |\n| Weighted-average life over which compensation cost is expected to be recognized (years) | | | | | | 2.3 | | | | 2.2 | | |\n\n","source":"TFC\/10-K\/0000092230-17-000021"} {"title":"NOTE 12. Income Taxes","text":"The reasons for the difference between the provision for income taxes and the amount computed by applying the statutory Federal income tax rate to income before income taxes were as follows:","markdown_table":"\n\n| | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | | | | | | | | | | | |\n| | | Year Ended December 31, | | | | | | | | | | |\n| | | 2016 | | | | 2015 | | | | 2014 | | |\n| | | (Dollars in millions) | | | | | | | | | | |\n| Current expense: | | | | | | | | | | | | |\n| Federal | | $ | 959 | | | $ | 585 | | | $ | 706 | |\n| State | | 97 | | | | 99 | | | | 81 | | |\n| Total current expense | | 1,056 | | | | 684 | | | | 787 | | |\n| Deferred expense: | | | | | | | | | | | | |\n| Federal | | (14 | | ) | | 99 | | | | 122 | | |\n| State | | 16 | | | | 11 | | | | 12 | | |\n| Total deferred expense | | 2 | | | | 110 | | | | 134 | | |\n| Provision for income taxes | | $ | 1,058 | | | $ | 794 | | | $ | 921 | |\n\n","source":"TFC\/10-K\/0000092230-17-000021"} {"title":"NOTE 12. Income Taxes","text":"The tax effects of temporary differences that gave rise to deferred tax assets and liabilities are reflected in the table below:","markdown_table":"\n\n| | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | | | | | | | | | | | |\n| | | Year Ended December 31, | | | | | | | | | | |\n| | | 2016 | | | | 2015 | | | | 2014 | | |\n| | | (Dollars in millions) | | | | | | | | | | |\n| Federal income taxes at statutory rate of 35% | | $ | 1,225 | | | $ | 1,021 | | | $ | 1,094 | |\n| Increase (decrease) in provision for income taxes as a result of: | | | | | | | | | | | | |\n| State income taxes, net of federal tax benefit | | 73 | | | | 72 | | | | 61 | | |\n| Affordable housing projects proportional amortization | | 205 | | | | 181 | | | | 159 | | |\n| Affordable housing projects tax credits and other tax benefits | | (279 | | ) | | (249 | | ) | | (221 | | ) |\n| Tax exempt income | | (151 | | ) | | (129 | | ) | | (125 | | ) |\n| Adjustments for uncertain tax positions | | (6 | | ) | | (107 | | ) | | (39 | | ) |\n| Other, net | | (9 | | ) | | 5 | | | | (8 | | ) |\n| Provision for income taxes | | $ | 1,058 | | | $ | 794 | | | $ | 921 | |\n| Effective income tax rate | | 30.2 | | % | | 27.2 | | % | | 29.5 | | % |\n\n","source":"TFC\/10-K\/0000092230-17-000021"} {"title":"NOTE 12. Income Taxes","text":"On a periodic basis, BB&T evaluates its income tax positions based on tax laws and regulations and financial reporting considerations, and records adjustments as appropriate. This evaluation takes into consideration the status of current taxing authorities\u2019 examinations of BB&T\u2019s tax returns, recent positions taken by the taxing authorities on similar transactions and the overall tax environment in relation to tax-advantaged transactions. The following table presents changes in unrecognized tax benefits:","markdown_table":"\n\n| | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | | | | | | | |\n| | | December 31, | | | | | | |\n| | | 2016 | | | | 2015 | | |\n| | | (Dollars in millions) | | | | | | |\n| Deferred tax assets: | | | | | | | | |\n| ALLL | | $ | 564 | | | $ | 553 | |\n| Postretirement plans | | 451 | | | | 431 | | |\n| Net unrealized loss on AFS securities | | 155 | | | | 124 | | |\n| Equity-based compensation | | 124 | | | | 129 | | |\n| Reserves and expense accruals | | 238 | | | | 255 | | |\n| Investments in qualified affordable housing projects | | 116 | | | | 110 | | |\n| Other | | 317 | | | | 292 | | |\n| Total deferred tax assets | | 1,965 | | | | 1,894 | | |\n| | | | | | | | | |\n| Deferred tax liabilities: | | | | | | | | |\n| Prepaid pension plan expense | | 558 | | | | 509 | | |\n| MSRs | | 358 | | | | 331 | | |\n| Lease financing | | 587 | | | | 663 | | |\n| Loan fees and expenses | | 103 | | | | 70 | | |\n| Identifiable intangible assets | | 224 | | | | 207 | | |\n| Other | | 45 | | | | 169 | | |\n| Total deferred tax liabilities | | 1,875 | | | | 1,949 | | |\n| Net deferred tax asset (liability) | | $ | 90 | | | $ | (55 | ) |\n\n","source":"TFC\/10-K\/0000092230-17-000021"} {"title":"NOTE 12. Income Taxes","text":"During 2010, BB&T received an IRS statutory notice of deficiency for tax years 2002-2007 related to the disallowance of foreign tax credits and other deductions claimed by a subsidiary in connection with a financing transaction. BB&T paid the disputed tax, penalties and interest during 2010 and filed a lawsuit seeking a refund in the U.S. Court of Federal Claims, which denied the claim. BB&T appealed the decision to the U.S. Court of Appeals for the Federal Circuit. During 2015, the appeals court overturned a portion of the earlier ruling, resulting in the recognition of a $107 million income tax benefit during 2015. The remainder of the decision was affirmed. BB&T filed a petition requesting the case be heard by the U.S. Supreme Court. During 2016, the U.S. Supreme Court declined to hear the case, which preserves the earlier ruling and effectively concluded this matter.The Company had immaterial amounts accrued for tax-related interest and penalties at December\u00a031,\u00a02016 and $181 million at December 31, 2015. The amount of net interest and penalties related to unrecognized tax benefits recognized in the Consolidated Statements of Income was a benefit of $29 million for 2015.The IRS has completed its Federal income tax examinations of BB&T through 2013. Various years remain subject to examination by state taxing authorities.","markdown_table":"\n\n| | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | | | | | | | | | | | |\n| | | As of\/ For the Year Ended December 31, | | | | | | | | | | |\n| | | 2016 | | | | 2015 | | | | 2014 | | |\n| | | (Dollars in millions) | | | | | | | | | | |\n| Beginning balance of unrecognized tax benefits | | $ | 426 | | | $ | 503 | | | $ | 644 | |\n| Additions based on tax positions related to current year | | \u2014 | | | | \u2014 | | | | 1 | | |\n| Additions (reductions) for tax positions of prior years | | (5 | | ) | | (76 | | ) | | (34 | | ) |\n| Settlements | | (420 | | ) | | (1 | | ) | | (17 | | ) |\n| Lapse of statute of limitations | | \u2014 | | | | (1 | | ) | | \u2014 | | |\n| Unrecognized deferred tax benefits from acquisitions | | \u2014 | | | | 1 | | | | (91 | | ) |\n| Ending balance of unrecognized tax benefits | | $ | 1 | | | $ | 426 | | | $ | 503 | |\n| | | | | | | | | | | | | |\n| Unrecognized tax benefits that would have impacted effective rate if recognized | | | | | | | | | | | | |\n| Federal | | $ | \u2014 | | | $ | 422 | | | $ | 497 | |\n| State | | 1 | | | | 3 | | | | 4 | | |\n\n","source":"TFC\/10-K\/0000092230-17-000021"} {"title":"Defined Benefit Retirement Plans","text":"The weighted average expected long-term rate of return on plan assets represents the average rate of return expected to be earned on plan assets over the period the benefits included in the benefit obligation are to be paid. In developing the expected rate of return, BB&T considers long-term compound annualized returns of historical market data for each asset category, as well as historical actual returns on the plan assets. Using this reference information, the Company develops forward-looking return expectations for each asset category and a weighted average expected long-term rate of return for the plan based on target asset allocations contained in BB&T's Investment Policy Statement. For 2017, the expected rate of return on plan assets is 7.0%.Financial data relative to qualified and nonqualified defined benefit pension plans is summarized in the following tables for the years indicated. On the Consolidated Balance Sheets, the qualified pension plan prepaid asset is recorded as a component of other assets and the nonqualified pension plans accrued liability is recorded as a component of other liabilities. The data is calculated using an actuarial measurement date of December 31.","markdown_table":"\n\n| | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | | | | | | | | |\n| | | December 31, | | | | | | | |\n| | | 2016 | | | 2015 | | | 2014 | |\n| Weighted average assumed discount rate | | 4.68 | % | | 4.27 | % | | 5.10 | % |\n| Weighted average expected long-term rate of return on plan assets | | 7.00 | | | 7.50 | | | 7.75 | |\n| Assumed long-term rate of annual compensation increases | | 4.50 | | | 4.50 | | | 5.00 | |\n\n","source":"TFC\/10-K\/0000092230-17-000021"} {"title":"Defined Benefit Retirement Plans","text":"The following actuarial assumptions were used to determine benefit obligations:","markdown_table":"\n\n| | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | | | | | | | | | | | |\n| | | Year Ended December 31, | | | | | | | | | | |\n| | | 2016 | | | | 2015 | | | | 2014 | | |\n| | | (Dollars in millions) | | | | | | | | | | |\n| Net Periodic Pension Cost: | | | | | | | | | | | | |\n| Service cost | | $ | 186 | | | $ | 176 | | | $ | 138 | |\n| Interest cost | | 181 | | | | 157 | | | | 140 | | |\n| Estimated return on plan assets | | (326 | | ) | | (327 | | ) | | (296 | | ) |\n| Net amortization and other | | 80 | | | | 67 | | | | 17 | | |\n| Net periodic benefit cost | | 121 | | | | 73 | | | | (1 | | ) |\n| | | | | | | | | | | | | |\n| Pre-Tax Amounts Recognized in OCI: | | | | | | | | | | | | |\n| Net actuarial loss (gain) | | 138 | | | | 230 | | | | 532 | | |\n| Net amortization | | (80 | | ) | | (67 | | ) | | (17 | | ) |\n| Net amount recognized in OCI | | 58 | | | | 163 | | | | 515 | | |\n| Total net periodic pension costs (income) recognized in total comprehensive income, pre-tax | | $ | 179 | | | $ | 236 | | | $ | 514 | |\n\n","source":"TFC\/10-K\/0000092230-17-000021"} {"title":"Defined Benefit Retirement Plans","text":"The following are the pre-tax amounts recognized in AOCI:","markdown_table":"\n\n| | | | | | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | | | | | | | | | | | | | | | |\n| | | Qualified Plans | | | | | | | | Nonqualified Plans | | | | | | |\n| | | Year Ended December 31, | | | | | | | | Year Ended December 31, | | | | | | |\n| | | 2016 | | | | 2015 | | | | 2016 | | | | 2015 | | |\n| | | (Dollars in millions) | | | | | | | | | | | | | | |\n| Fair value of plan assets, beginning of year | | $ | 4,369 | | | $ | 4,223 | | | $ | \u2014 | | | $ | \u2014 | |\n| Actual return on plan assets | | 356 | | | | (70 | | ) | | \u2014 | | | | \u2014 | | |\n| Employer contributions | | 360 | | | | 126 | | | | 11 | | | | 15 | | |\n| Benefits paid | | (94 | | ) | | (80 | | ) | | (11 | | ) | | (15 | | ) |\n| Acquisitions | | 53 | | | | 170 | | | | \u2014 | | | | \u2014 | | |\n| Fair value of plan assets, end of year | | $ | 5,044 | | | $ | 4,369 | | | $ | \u2014 | | | $ | \u2014 | |\n| Funded status at end of year | | $ | 1,105 | | | $ | 896 | | | $ | (426 | ) | | $ | (392 | ) |\n\n","source":"TFC\/10-K\/0000092230-17-000021"} {"title":"Defined Benefit Retirement Plans","text":"The following table presents the amount expected to be amortized from AOCI into net periodic pension cost during 2017:","markdown_table":"\n\n| | | | | | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | | | | | | | | | | | | | | | |\n| | | Qualified Plans | | | | | | | | Nonqualified Plans | | | | | | |\n| | | Year Ended December 31, | | | | | | | | Year Ended December 31, | | | | | | |\n| | | 2016 | | | | 2015 | | | | 2016 | | | | 2015 | | |\n| | | (Dollars in millions) | | | | | | | | | | | | | | |\n| Prior service credit (cost) | | $ | \u2014 | | | $ | \u2014 | | | $ | (1 | ) | | $ | (2 | ) |\n| Net actuarial loss | | (1,095 | | ) | | (1,040 | | ) | | (135 | | ) | | (131 | | ) |\n| Net amount recognized | | $ | (1,095 | ) | | $ | (1,040 | ) | | $ | (136 | ) | | $ | (133 | ) |\n\n","source":"TFC\/10-K\/0000092230-17-000021"} {"title":"Defined Benefit Retirement Plans","text":"BB&T makes contributions to the qualified pension plan in amounts between the minimum required for funding and the maximum amount deductible for federal income tax purposes. BB&T made discretionary contributions of $260 million during the first quarter of 2017. Management may make additional contributions in 2017. For the nonqualified plans, the employer contributions are based on benefit payments.The following table reflects the estimated benefit payments for the periods presented:","markdown_table":"\n\n| | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | | | | | | | |\n| | | Qualified Plans | | | | Nonqualified Plans | | |\n| | | (Dollars in millions) | | | | | | |\n| Net actuarial loss | | $ | (66 | ) | | $ | (12 | ) |\n| Net amount expected to be amortized in 2017 | | $ | (66 | ) | | $ | (12 | ) |\n\n","source":"TFC\/10-K\/0000092230-17-000021"} {"title":"Defined Benefit Retirement Plans","text":"BB&T's primary total return objective is to achieve returns that, over the long term, will fund retirement liabilities and provide for the desired plan benefits in a manner that satisfies the fiduciary requirements of the Employee Retirement Income Security Act of 1974. The plan assets have a long-term time horizon that runs concurrent with the average life expectancy of the participants. As such, the Plan can assume a time horizon that extends well beyond a full market cycle, and can assume an above-average level of risk, as measured by the standard deviation of annual return. It is expected, however, that both professional investment management and sufficient portfolio diversification will smooth volatility and help to generate a reasonable consistency of return. The investments are broadly diversified among economic sector, industry, quality and size in order to reduce risk and to produce incremental return. Within approved guidelines and restrictions, investment managers have wide discretion over the timing and selection of individual investments.BB&T periodically reviews its asset allocation and investment policy and makes changes to its target asset allocation. BB&T has established guidelines within each asset category to ensure the appropriate balance of risk and reward. For the year ended December\u00a031,\u00a02016, the target asset allocations for the plan assets included a range of 30% to 50% for U.S. equity securities, 11% to 18% for international equity securities, 35% to 53% for fixed income securities, and 0% to 14% for alternative investments, which include real estate, hedge funds and private equities. The plan may hold up to 10% of its assets in BB&T common stock.The fair values of certain pension plan assets by asset category are reflected in the following table.","markdown_table":"\n\n| | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | | | | | | | |\n| | | Qualified Plans | | | | Nonqualified Plans | | |\n| | | (Dollars in millions) | | | | | | |\n| 2017 | | $ | 104 | | | $ | 15 | |\n| 2018 | | 115 | | | | 16 | | |\n| 2019 | | 125 | | | | 17 | | |\n| 2020 | | 137 | | | | 18 | | |\n| 2021 | | 149 | | | | 20 | | |\n| 2022-2026 | | 949 | | | | 119 | | |\n\n","source":"TFC\/10-K\/0000092230-17-000021"} {"title":"Defined Benefit Retirement Plans","text":"Investments measured at fair value using the net asset value per share or equivalent as a practical expedient are not required to be classified in the fair value hierarchy. The pension plan held alternative investments valued using net asset values totaling $199 million and $115 million at December\u00a031,\u00a02016 and 2015, respectively.U.S. equity securities included 3.0 million shares of BB&T common stock valued at $113 million at December 31, 2015. International equity securities include a common\/commingled fund that consists of assets from several accounts, pooled together, to reduce management and administration costs. Total plan assets exclude accrued income of $21 million and $18 million at December\u00a031,\u00a02016 and 2015, respectively.","markdown_table":"\n\n| | | | | | | | | | | | | | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | | | | | | | | | | | | | | | | | | | | | | | |\n| | | December\u00a031, 2016 | | | | | | | | | | | | December\u00a031, 2015 | | | | | | | | | | |\n| | | Total | | | | Level 1 | | | | Level 2 | | | | Total | | | | Level 1 | | | | Level 2 | | |\n| | | (Dollars in millions) | | | | | | | | | | | | | | | | | | | | | | |\n| Cash and cash-equivalents | | $ | 179 | | | $ | 179 | | | $ | \u2014 | | | $ | 266 | | | $ | 266 | | | $ | \u2014 | |\n| U.S. equity securities | | 1,892 | | | | 1,018 | | | | 874 | | | | 1,627 | | | | 1,627 | | | | \u2014 | | |\n| International equity securities | | 839 | | | | 165 | | | | 674 | | | | 712 | | | | 614 | | | | 98 | | |\n| Fixed income securities | | 1,914 | | | | 10 | | | | 1,904 | | | | 1,631 | | | | 10 | | | | 1,621 | | |\n| Total | | $ | 4,824 | | | $ | 1,372 | | | $ | 3,452 | | | $ | 4,236 | | | $ | 2,517 | | | $ | 1,719 | |\n\n","source":"TFC\/10-K\/0000092230-17-000021"} {"title":"NOTE 14. Commitments and Contingencies","text":"Letters of credit and financial guarantees written are unconditional commitments issued by BB&T to guarantee the performance of a customer to a third party. These guarantees are primarily issued to support borrowing arrangements, including commercial paper issuance, bond financing and similar transactions, the majority of which are to tax exempt entities. The credit risk involved in the issuance of these guarantees is essentially the same as that involved in extending loans to clients and as such, the instruments are collateralized when necessary.BB&T invests in certain affordable housing and historic building rehabilitation projects throughout its market area as a means of supporting local communities. BB&T receives tax credits related to these investments. BB&T typically acts as a limited partner in these investments and does not exert control over the operating or financial policies of the partnerships. BB&T typically provides financing during the construction and development of the properties; however, permanent financing is generally obtained from independent third parties upon completion of a project. Tax credits are subject to recapture by taxing authorities based on compliance features required to be met at the project level. BB&T\u2019s maximum potential exposure to losses relative to investments in VIEs 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 and future funding commitments to certain private equity investments. The majority of these investments are private equity funds that are consolidated into BB&T's financial statements. The risk exposure relating to such commitments is generally limited to the amount of investments and future funding commitments made.BB&T has sold certain mortgage-related loans that contain recourse provisions. These provisions generally require BB&T to reimburse the investor for a share of any loss that is incurred after the disposal of the property. BB&T also issues standard representations and warranties related to mortgage loan sales to GSEs. Refer to the \"Loan Servicing\" note in the \"Notes to Consolidated Financial Statements\" for additional disclosures related to these exposures.In the ordinary course of business, BB&T indemnifies its officers and directors to the fullest extent permitted by law against liabilities arising from pending litigation. BB&T also issues standard representations and warranties in underwriting agreements, merger and acquisition agreements, loan sales, brokerage activities and other similar arrangements. Counterparties in many of these indemnification arrangements provide similar indemnifications to BB&T. Although these agreements often do not specify limitations, BB&T does not believe that any payments related to these guarantees would materially change the financial position or results of operations of BB&T.","markdown_table":"\n\n| | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | | | | | | | |\n| | | December\u00a031, | | | | | | |\n| | | 2016 | | | | 2015 | | |\n| | | (Dollars in millions) | | | | | | |\n| Letters of credit | | $ | 2,786 | | | $ | 3,033 | |\n| Carrying amount of the liability for letters of credit | | 27 | | | | 27 | | |\n| | | | | | | | | |\n| Investments in affordable housing and historic building rehabilitation projects: | | | | | | | | |\n| Carrying amount | | 1,719 | | | | 1,629 | | |\n| Amount of future funding commitments included in carrying amount | | 738 | | | | 654 | | |\n| Lending exposure | | 495 | | | | 292 | | |\n| Tax credits subject to recapture | | 413 | | | | 355 | | |\n| | | | | | | | | |\n| Private equity investments | | 362 | | | | 289 | | |\n| Future funding commitments to private equity investments | | 197 | | | | 231 | | |\n\n","source":"TFC\/10-K\/0000092230-17-000021"} {"title":"NOTE 15. Regulatory Requirements and Other Restrictions","text":"As an approved seller\/servicer, Branch Bank is required to maintain minimum levels of capital, as specified by various agencies, including the U.S. Department of Housing and Urban Development, GNMA, FHLMC and FNMA. At December\u00a031,\u00a02016 and 2015, Branch Bank\u2019s capital was above all required levels.","markdown_table":"\n\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | | December\u00a031, 2016 | | | | | | | | | | | | | | | December\u00a031, 2015 | | | | | | | | | | | | | |\n| | | Actual Capital | | | | | | | Capital Requirements | | | | | | | | Actual Capital | | | | | | | Capital Requirements | | | | | | |\n| | | Ratio | | | Amount | | | | Minimum | | | | Well-Capitalized | | | | Ratio | | | Amount | | | | Minimum | | | | Well-Capitalized | | |\n| | | (Dollars in millions) | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| CET1 Capital: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| BB&T | | 10.2 | % | | $ | 18,050 | | | $ | 7,926 | | | $ | 11,449 | | | 10.3 | % | | $ | 17,081 | | | $ | 7,497 | | | $ | 10,830 | |\n| Branch Bank | | 11.5 | | | 19,839 | | | | 7,730 | | | | 11,166 | | | | 11.3 | | | 18,382 | | | | 7,319 | | | | 10,572 | | |\n| Tier 1 Capital: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| BB&T | | 12.0 | | | 21,102 | | | | 10,568 | | | | 14,091 | | | | 11.8 | | | 19,682 | | | | 9,997 | | | | 13,329 | | |\n| Branch Bank | | 11.5 | | | 19,839 | | | | 10,307 | | | | 13,743 | | | | 11.3 | | | 18,382 | | | | 9,759 | | | | 13,012 | | |\n| Total Capital: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| BB&T | | 14.1 | | | 24,872 | | | | 14,091 | | | | 17,614 | | | | 14.3 | | | 23,753 | | | | 13,329 | | | | 16,661 | | |\n| Branch Bank | | 13.6 | | | 23,289 | | | | 13,743 | | | | 17,179 | | | | 13.4 | | | 21,859 | | | | 13,012 | | | | 16,265 | | |\n| Leverage Capital: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| BB&T | | 10.0 | | | 21,102 | | | | 8,460 | | | | 10,576 | | | | 9.8 | | | 19,682 | | | | 8,062 | | | | 10,077 | | |\n| Branch Bank | | 9.6 | | | 19,839 | | | | 8,249 | | | | 10,311 | | | | 9.3 | | | 18,382 | | | | 7,866 | | | | 9,833 | | |\n\n","source":"TFC\/10-K\/0000092230-17-000021"} {"title":"NOTE 16. Parent Company Financial Statements","text":"The transfer of funds in the form of dividends, loans or advances from bank subsidiaries to the Parent Company is restricted. Federal law requires loans to the Parent Company or its affiliates to be secured and at market terms and generally limits loans to the Parent Company or an individual affiliate to 10% of Branch Bank\u2019s unimpaired capital and surplus. In the aggregate, loans to the Parent Company and all affiliates cannot exceed 20% of the bank\u2019s unimpaired capital and surplus.Dividend payments to the Parent Company by Branch Bank are subject to regulatory review and statutory limitations and, in some instances, regulatory approval. In general, dividends from Branch Bank to the Parent Company are limited by rules which compare dividends to net income for regulatory-defined periods. Furthermore, dividends are restricted by regulatory minimum capital constraints.","markdown_table":"\n\n| | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | | | | | | | | | | | |\n| | | Year Ended December 31, | | | | | | | | | | |\n| Parent Company - Statements of Cash Flows | | 2016 | | | | 2015 | | | | 2014 | | |\n| | | (Dollars in millions) | | | | | | | | | | |\n| Cash Flows From Operating Activities: | | | | | | | | | | | | |\n| Net income | | $ | 2,442 | | | $ | 2,123 | | | $ | 2,206 | |\n| Adjustments to reconcile net income to net cash from operating activities: | | | | | | | | | | | | |\n| Equity in earnings of subsidiaries in excess of dividends from subsidiaries | | (1,188 | | ) | | (273 | | ) | | (585 | | ) |\n| Net change in operating assets and liabilities: | | | | | | | | | | | | |\n| Other assets | | 41 | | | | 88 | | | | 27 | | |\n| Accounts payable and other liabilities | | (42 | | ) | | (14 | | ) | | 40 | | |\n| Other, net | | (88 | | ) | | 32 | | | | (86 | | ) |\n| Net cash from operating activities | | 1,165 | | | | 1,956 | | | | 1,602 | | |\n| | | | | | | | | | | | | |\n| Cash Flows From Investing Activities: | | | | | | | | | | | | |\n| Proceeds from sales, calls and maturities of AFS securities | | 27 | | | | 49 | | | | 25 | | |\n| Purchases of AFS securities | | (31 | | ) | | (21 | | ) | | (124 | | ) |\n| Proceeds from maturities, calls and paydowns of HTM securities | | 2 | | | | 27 | | | | 16 | | |\n| Investment in subsidiaries | | (85 | | ) | | \u2014 | | | | (1 | | ) |\n| Advances to subsidiaries | | (7,719 | | ) | | (7,461 | | ) | | (7,145 | | ) |\n| Proceeds from repayment of advances to subsidiaries | | 6,975 | | | | 6,848 | | | | 7,060 | | |\n| Net cash from acquisitions and divestitures | | (254 | | ) | | (595 | | ) | | \u2014 | | |\n| Net cash from investing activities | | (1,085 | | ) | | (1,153 | | ) | | (169 | | ) |\n| | | | | | | | | | | | | |\n| Cash Flows From Financing Activities: | | | | | | | | | | | | |\n| Net change in short-term borrowings | | \u2014 | | | | (40 | | ) | | (34 | | ) |\n| Net change in long-term debt | | 476 | | | | (92 | | ) | | 1,085 | | |\n| Net cash from common stock transactions | | (293 | | ) | | 73 | | | | 298 | | |\n| Net proceeds from preferred stock issued | | 450 | | | | \u2014 | | | | \u2014 | | |\n| Cash dividends paid on common and preferred stock | | (1,092 | | ) | | (937 | | ) | | (814 | | ) |\n| Other, net | | 2 | | | | (6 | | ) | | (4 | | ) |\n| Net cash from financing activities | | (457 | | ) | | (1,002 | | ) | | 531 | | |\n| Net Change in Cash and Cash Equivalents | | (377 | | ) | | (199 | | ) | | 1,964 | | |\n| Cash and Cash Equivalents at Beginning of Period | | 7,492 | | | | 7,691 | | | | 5,727 | | |\n| Cash and Cash Equivalents at End of Period | | $ | 7,115 | | | $ | 7,492 | | | $ | 7,691 | |\n\n","source":"TFC\/10-K\/0000092230-17-000021"} {"title":"NOTE 17. Fair Value Disclosures","text":"The following discussion focuses on the valuation techniques and significant inputs for Level 2 and Level 3 assets and liabilities.A third-party pricing service is generally utilized in determining the fair value of the securities portfolio. Management independently evaluates the fair values provided by the pricing service through comparisons to other external pricing sources, review of additional information provided by the pricing service and other third party sources for selected securities and back-testing to compare the price realized on any security sales to the daily pricing information received from the pricing service. Fair value measurements are derived from market-based pricing matrices that were developed using observable inputs that include benchmark yields, benchmark securities, reported trades, offers, bids, issuer spreads and broker quotes. As described by security type below, additional inputs may be used, or some inputs may not be applicable. In the event that market observable data was not available, which would generally occur due to the lack of an active market for a given security, the valuation of the security would be subjective and may involve substantial judgment by management.Trading securities: Trading securities include various types of debt and equity securities, primarily consisting of debt securities issued by the U.S. Treasury, GSEs, or states and political subdivisions. The valuation techniques used for these investments are more fully discussed below.U.S. Treasury securities: Treasury securities are valued using quoted prices in active over the counter markets.GSE securities and agency MBS: GSE pass-through securities are valued using market-based pricing matrices that reference observable inputs including benchmark TBA security pricing and yield curves that were estimated based on U.S. Treasury yields and certain floating rate indices. The pricing matrices for these securities may also give consideration to pool-specific data supplied directly by the GSE. GSE CMOs are valued using market-based pricing matrices that are based on observable inputs including offers, bids, reported trades, dealer quotes and market research reports, the characteristics of a specific tranche, market convention prepayment speeds and benchmark yield curves as described above.States and political subdivisions: These securities are valued using market-based pricing matrices that reference observable inputs including MSRB reported trades, issuer spreads, material event notices and benchmark yield curves.Non-agency MBS: Pricing matrices for these securities are based on observable inputs including offers, bids, reported trades, dealer quotes and market research reports, the characteristics of a specific tranche, market convention prepayment speeds and benchmark yield curves as described above. Non-agency MBS also include investments in Re-REMIC trusts that primarily hold non-agency MBS, which are valued based on broker pricing models that use baseline securities yields and tranche-level yield adjustments to discount cash flows modeled using market convention prepayment speed and default assumptions.Other securities: These securities consist primarily of mutual funds and corporate bonds. These securities are valued based on a review of quoted market prices for assets as well as through the various other inputs discussed previously.LHFS: Certain mortgage loans are originated to be sold to investors, which are carried at fair value. The fair value is primarily based on quoted market prices for securities backed by similar types of loans. The changes in fair value of these assets are largely driven by changes in interest rates subsequent to loan funding and changes in the fair value of servicing associated with the mortgage LHFS.MSRs: Residential MSRs are valued using an OAS valuation model to project cash flows over multiple interest rate scenarios, which are then discounted at risk-adjusted rates. The model considers portfolio characteristics, contractually specified servicing fees, prepayment assumptions, delinquency rates, late charges, other ancillary revenue, costs to service and other economic factors. Fair value estimates and assumptions are compared to industry surveys, recent market activity, actual portfolio experience and, when available, other observable market data. Commercial MSRs are valued using a cash flow valuation model that calculates the present value of estimated future net servicing cash flows. BB&T considers actual and expected loan prepayment rates, discount rates, servicing costs and other economic factors that are determined based on current market conditions. Derivative assets and liabilities: The fair values of derivatives are determined based on quoted market prices and internal pricing models that use market observable data. The fair values of interest rate lock commitments, which are related to mortgage loan commitments and are categorized as Level 3, are based on quoted market prices adjusted for commitments that are not expected to fund and include the value attributable to the net servicing fees.Private equity investments: Private equity investments are measured at fair value based on the investment\u2019s net asset value. In many cases there are no observable market values for these investments and therefore management must estimate the fair value based on a comparison of the operating performance of the company to multiples in the marketplace for similar entities. This analysis requires significant judgment, and actual values in a sale could differ materially from those estimated.Securities sold short: Securities sold short represent debt securities sold short that are entered into as a hedging strategy for the purposes of supporting institutional and retail client trading activities.The following tables summarize activity for Level 3 assets and liabilities:","markdown_table":"\n\n| | | | | | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | | | | | | | | | | | | | | | |\n| December\u00a031, 2015 | | Total | | | | Level 1 | | | | Level 2 | | | | Level 3 | | |\n| | | (Dollars in millions) | | | | | | | | | | | | | | |\n| Assets: | | | | | | | | | | | | | | | | |\n| Trading securities | | $ | 1,180 | | | $ | 311 | | | $ | 869 | | | $ | \u2014 | |\n| AFS securities: | | | | | | | | | | | | | | | | |\n| U.S. Treasury | | 1,832 | | | | \u2014 | | | | 1,832 | | | | \u2014 | | |\n| GSE | | 51 | | | | \u2014 | | | | 51 | | | | \u2014 | | |\n| Agency MBS | | 20,046 | | | | \u2014 | | | | 20,046 | | | | \u2014 | | |\n| States and political subdivisions | | 2,375 | | | | \u2014 | | | | 2,375 | | | | \u2014 | | |\n| Non-agency MBS | | 989 | | | | \u2014 | | | | 363 | | | | 626 | | |\n| Other | | 4 | | | | 4 | | | | \u2014 | | | | \u2014 | | |\n| LHFS | | 1,035 | | | | \u2014 | | | | 1,035 | | | | \u2014 | | |\n| MSRs | | 880 | | | | \u2014 | | | | \u2014 | | | | 880 | | |\n| Derivative assets: | | | | | | | | | | | | | | | | |\n| Interest rate contracts | | 964 | | | | \u2014 | | | | 956 | | | | 8 | | |\n| Foreign exchange contracts | | 6 | | | | \u2014 | | | | 6 | | | | \u2014 | | |\n| Private equity investments | | 289 | | | | \u2014 | | | | \u2014 | | | | 289 | | |\n| Total assets | | $ | 29,651 | | | $ | 315 | | | $ | 27,533 | | | $ | 1,803 | |\n| | | | | | | | | | | | | | | | | |\n| Liabilities: | | | | | | | | | | | | | | | | |\n| Derivative liabilities: | | | | | | | | | | | | | | | | |\n| Interest rate contracts | | $ | 788 | | | $ | \u2014 | | | $ | 784 | | | $ | 4 | |\n| Foreign exchange contracts | | 4 | | | | \u2014 | | | | 4 | | | | \u2014 | | |\n| Securities sold short | | 147 | | | | \u2014 | | | | 147 | | | | \u2014 | | |\n| Total liabilities | | $ | 939 | | | $ | \u2014 | | | $ | 935 | | | $ | 4 | |\n\n","source":"TFC\/10-K\/0000092230-17-000021"} {"title":"NOTE 17. Fair Value Disclosures","text":"BB&T\u2019s policy is to recognize transfers between levels as of the end of a reporting period. Transfers in and out of Level 3 are shown in the preceding tables. There were no transfers between Level 1 and Level 2 during 2016, 2015 or 2014.The non-agency MBS categorized as Level 3 represent ownership interest in various tranches of Re-REMIC trusts. These securities are valued at a discount, which is unobservable in the market, to the fair value of the underlying securities owned by the trusts. The Re-REMIC tranches do not have an active market and therefore are categorized as Level 3. At December 31, 2016, the fair value of the Re-REMIC non-agency MBS represented a discount of 14.1% to the fair value of the underlying securities owned by the Re-REMIC trusts. \u00a0The majority of private equity investments are in SBIC qualified funds, which primarily focus on equity and subordinated debt investments in privately-held middle market companies. The majority of these VIE investments are not redeemable and distributions are received as the underlying assets of the funds liquidate. The timing of distributions, which are expected to occur on various dates through 2026, is uncertain and dependent on various events such as recapitalizations, refinance transactions and ownership changes, among others. Excluding the investment of future funds, BB&T estimates these investments have a weighted average remaining life of approximately two years; however, the timing and amount of distributions may vary significantly. As of December 31, 2016, restrictions on the ability to sell the investments include, but are not limited to, consent of a majority member or general partner approval for transfer of ownership. BB&T\u2019s investments are spread over numerous privately-held middle market companies, and thus the sensitivity to a change in fair value for any single investment is limited. The significant unobservable inputs for these investments are EBITDA multiples that ranged from 5x to 13x, with a weighted average of 8x, at December 31, 2016.The following table details the fair value and UPB of LHFS that were elected to be carried at fair value:\u00a0\u00a0December\u00a031, 2016\u00a0December\u00a031, 2015\u00a0\u00a0Fair Value\u00a0Aggregate UPB\u00a0Difference\u00a0Fair Value\u00a0Aggregate UPB\u00a0Difference\u00a0\u00a0(Dollars in millions)LHFS reported at fair value\u00a0$1,716\u00a0$1,736\u00a0$(20)\u00a0$1,035\u00a0$1,023\u00a0$12Excluding government guaranteed, LHFS that were in nonaccrual status or 90 days or more past due and still accruing interest were not material at December 31, 2016.The following table provides information about certain financial assets measured at fair value on a nonrecurring basis, which are primarily collateral dependent and may be subject to liquidity adjustments. The carrying values represent end of period values, which approximate the fair value measurements that occurred on the various measurement dates throughout the period. The valuation adjustments represent the amounts recorded during the period regardless of whether the asset is still held at period end. These assets are considered to be Level 3 assets (excludes PCI).","markdown_table":"\n\n| | | | | | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | | | | | | | | | | | | | | | |\n| Year Ended December 31, 2014 | | Non-agency MBS | | | | MSRs | | | | Net Derivatives | | | | Private Equity Investments | | |\n| | | (Dollars in millions) | | | | | | | | | | | | | | |\n| Balance at January 1, 2014 | | $ | 861 | | | $ | 1,047 | | | $ | (11 | ) | | $ | 291 | |\n| Total realized and unrealized gains (losses): | | | | | | | | | | | | | | | | |\n| Included in earnings: | | | | | | | | | | | | | | | | |\n| Interest income | | 33 | | | | \u2014 | | | | \u2014 | | | | \u2014 | | |\n| Mortgage banking income | | \u2014 | | | | (221 | | ) | | 94 | | | | \u2014 | | |\n| Other noninterest income | | \u2014 | | | | \u2014 | | | | (2 | | ) | | 27 | | |\n| Included in unrealized holding gains (losses) in OCI | | (38 | | ) | | \u2014 | | | | \u2014 | | | | \u2014 | | |\n| Purchases | | \u2014 | | | | \u2014 | | | | \u2014 | | | | 67 | | |\n| Issuances | | \u2014 | | | | 141 | | | | 75 | | | | \u2014 | | |\n| Sales | | \u2014 | | | | \u2014 | | | | \u2014 | | | | (50 | | ) |\n| Settlements | | (111 | | ) | | (123 | | ) | | (139 | | ) | | (7 | | ) |\n| Transfers into Level 3 | | \u2014 | | | | \u2014 | | | | \u2014 | | | | 1 | | |\n| Balance at December 31, 2014 | | $ | 745 | | | $ | 844 | | | $ | 17 | | | $ | 329 | |\n| | | | | | | | | | | | | | | | | |\n| Change in unrealized gains (losses) included in earnings for the period, attributable to assets and liabilities still held at December 31, 2014 | | $ | 33 | | | $ | (221 | ) | | $ | 17 | | | $ | 15 | |\n\n","source":"TFC\/10-K\/0000092230-17-000021"} {"title":"NOTE 17. Fair Value Disclosures","text":"Refer to the \"Acquisitions and Divestitures\" note for fair value measurements related to acquisitions.For financial instruments not recorded at fair value, estimates of fair value are based on relevant market data and information about the instrument. Values obtained relate to one trading unit without regard to any premium or discount that may result from concentrations of ownership, possible tax ramifications, estimated transaction costs that may result from bulk sales or the relationship between various instruments.An active market does not exist for certain financial instruments. Fair value estimates for these instruments are based on current economic conditions, currency and interest rate risk characteristics, loss experience and other factors. Many of these estimates involve uncertainties and matters of significant judgment and cannot be determined with precision. Therefore, the fair value estimates in many instances cannot be substantiated by comparison to independent markets and, in many cases, may not be realizable in a current sale of the instrument. In addition, changes in assumptions could significantly affect these fair value estimates. The following assumptions were used to estimate the fair value of these financial instruments.Cash and cash equivalents and restricted cash: For these short-term instruments, the carrying amounts are a reasonable estimate of fair values.HTM securities: The fair values of HTM securities are based on a market approach using observable inputs such as benchmark yields and securities, TBA prices, reported trades, issuer spreads, current bids and offers, monthly payment information and collateral performance.Loans receivable: The fair values for loans are estimated using discounted cash flow analyses, applying interest rates currently being offered for loans with similar terms and credit quality, which are deemed to be indicative of orderly transactions in the current market. For commercial loans and leases, discount rates may be adjusted to address additional credit risk on lower risk grade instruments. For residential mortgage and other consumer loans, internal prepayment risk models are used to adjust contractual cash flows. Loans are aggregated into pools of similar terms and credit quality and discounted using a LIBOR based rate. The carrying amounts of accrued interest approximate fair values.FDIC loss share receivable and payable: The fair values of the receivable and payable were estimated using discounted cash flow analyses, applying a risk free interest rate that was adjusted for the uncertainty in the timing and amount of the cash flows. The expected cash flows to\/from the FDIC related to loans were estimated using the same assumptions that were used in determining the accounting values for the related loans. The expected cash flows to\/from the FDIC related to securities were based upon the fair value of the related securities and the payment that would be required if the securities were sold for that amount. The loss share agreements were not transferable and, accordingly, there was no market for the receivable or payable.Deposit liabilities: The fair values for demand deposits are equal to the amount payable on demand. Fair values for CDs are estimated using a discounted cash flow calculation that applies current interest rates to aggregate expected maturities. BB&T has developed long-term relationships with its deposit customers, commonly referred to as CDIs, that have not been considered in the determination of the deposit liabilities\u2019 fair value.Short-term borrowings: The carrying amounts of short-term borrowings, excluding securities sold short, approximate their fair values.Long-term debt: The fair values of long-term debt instruments are estimated based on quoted market prices for the instrument if available, or for similar instruments if not available, or by using discounted cash flow analyses, based on current incremental borrowing rates for similar types of instruments.Contractual commitments: The fair values of commitments are estimated using the fees charged to enter into similar agreements, taking into account the remaining terms of the agreements and the present creditworthiness of the counterparties. The fair values of guarantees and letters of credit are estimated based on the counterparties\u2019 creditworthiness and average default rates for loan products with similar risks. These respective fair value measurements are categorized within Level 3 of the fair value hierarchy. Retail lending commitments are assigned no fair value as BB&T typically has the ability to cancel such commitments by providing notice to the borrower.Financial assets and liabilities not recorded at fair value are summarized below:","markdown_table":"\n\n| | | | | | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | | | | | | | | | | | | | | | |\n| | | As Of \/ For the Year Ended | | | | | | | | | | | | | | |\n| | | December\u00a031, 2016 | | | | | | | | December\u00a031, 2015 | | | | | | |\n| | | Carrying Value | | | | Valuation Adjustments | | | | Carrying Value | | | | Valuation Adjustments | | |\n| | | (Dollars in millions) | | | | | | | | | | | | | | |\n| Impaired loans | | $ | 278 | | | $ | (89 | ) | | $ | 149 | | | $ | (30 | ) |\n| Foreclosed real estate | | 50 | | | | (221 | | ) | | 82 | | | | (190 | | ) |\n\n","source":"TFC\/10-K\/0000092230-17-000021"} {"title":"NOTE 17. Fair Value Disclosures","text":"The following is a summary of selected information pertaining to off-balance sheet financial instruments:","markdown_table":"\n\n| | | | | | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | | | | | | | | | | | | | | | |\n| December\u00a031, 2015 | | Carrying Amount | | | | Total Fair Value | | | | Level 2 | | | | Level 3 | | |\n| | | (Dollars in millions) | | | | | | | | | | | | | | |\n| Financial assets: | | | | | | | | | | | | | | | | |\n| HTM securities | | $ | 18,530 | | | $ | 18,519 | | | $ | 18,519 | | | $ | \u2014 | |\n| Loans and leases HFI, net of ALLL | | 134,491 | | | | 134,728 | | | | \u2014 | | | | 134,728 | | |\n| FDIC loss share receivable | | 285 | | | | 11 | | | | \u2014 | | | | 11 | | |\n| | | | | | | | | | | | | | | | | |\n| Financial liabilities: | | | | | | | | | | | | | | | | |\n| Deposits | | 149,124 | | | | 149,300 | | | | 149,300 | | | | \u2014 | | |\n| FDIC loss share payable | | 685 | | | | 676 | | | | \u2014 | | | | 676 | | |\n| Long-term debt | | 23,769 | | | | 24,206 | | | | 24,206 | | | | \u2014 | | |\n\n","source":"TFC\/10-K\/0000092230-17-000021"} {"title":"NOTE 18. Derivative Financial Instruments","text":"The fair values of derivatives in a gain or loss position are presented on a gross basis in other assets or other liabilities, respectively, in the Consolidated Balance Sheets. Cash collateral posted for derivatives in a loss position is reported as restricted cash. Derivatives with dealer counterparties at both the bank and the parent company are governed by the terms of ISDA Master netting agreements and Credit Support Annexes. The ISDA Master agreements allow counterparties to offset trades in a gain against trades in a loss to determine net exposure and allows for the right of setoff in the event of either a default or an additional termination event. Credit Support Annexes govern the terms of daily collateral posting practices. Collateral practices mitigate the potential loss impact to affected parties by requiring liquid collateral to be posted on a scheduled basis to secure the aggregate net unsecured exposure. In addition to collateral, the right of setoff allows counterparties to offset net derivative values with a defaulting party against certain other contractual receivables from or obligations due to the defaulting party in determining the net termination amount. No portion of the change in fair value of derivatives designated as hedges has been excluded from effectiveness testing. The ineffective portion was immaterial for all periods presented. The following table presents the effect of hedging derivative instruments on the consolidated statements of income:","markdown_table":"\n\n| | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | | | | December\u00a031, 2016 | | | | | | | | | | | | December\u00a031, 2015 | | | | | | | | | | |\n| | | | | Notional Amount | | | | Fair Value | | | | | | | | Notional Amount | | | | Fair Value | | | | | | |\n| | | Hedged Item or Transaction | | | Gain | | | | Loss | | | | | Gain | | | | Loss | | |\n| | | | | (Dollars in millions) | | | | | | | | | | | | | | | | | | | | | | |\n| Cash flow hedges: | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Interest rate contracts: | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Pay fixed swaps | | 3 mo. LIBOR funding | | $ | 7,050 | | | $ | \u2014 | | | $ | (187 | ) | | $ | 9,300 | | | $ | \u2014 | | | $ | (214 | ) |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Fair value hedges: | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Interest rate contracts: | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Receive fixed swaps | | Long-term debt | | 12,099 | | | | 202 | | | | (100 | | ) | | 13,092 | | | | 329 | | | | (1 | | ) |\n| Options | | Long-term debt | | 2,790 | | | | \u2014 | | | | (1 | | ) | | \u2014 | | | | \u2014 | | | | \u2014 | | |\n| Pay fixed swaps | | Commercial loans | | 346 | | | | 4 | | | | (2 | | ) | | 207 | | | | \u2014 | | | | (2 | | ) |\n| Pay fixed swaps | | Municipal securities | | 231 | | | | \u2014 | | | | (83 | | ) | | 244 | | | | \u2014 | | | | (94 | | ) |\n| Total | | | | 15,466 | | | | 206 | | | | (186 | | ) | | 13,543 | | | | 329 | | | | (97 | | ) |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Not designated as hedges: | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Client-related and other risk management: | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Interest rate contracts: | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Receive fixed swaps | | | | 9,989 | | | | 235 | | | | (44 | | ) | | 8,827 | | | | 337 | | | | (1 | | ) |\n| Pay fixed swaps | | | | 10,263 | | | | 43 | | | | (252 | | ) | | 8,984 | | | | 1 | | | | (363 | | ) |\n| Other swaps | | | | 1,086 | | | | 2 | | | | (5 | | ) | | 1,005 | | | | 3 | | | | (6 | | ) |\n| Other | | | | 709 | | | | 2 | | | | (2 | | ) | | 601 | | | | 1 | | | | (2 | | ) |\n| Forward commitments | | | | 5,972 | | | | 29 | | | | (28 | | ) | | 4,403 | | | | 5 | | | | (4 | | ) |\n| Foreign exchange contracts | | | | 669 | | | | 8 | | | | (5 | | ) | | 513 | | | | 6 | | | | (4 | | ) |\n| Total | | | | 28,688 | | | | 319 | | | | (336 | | ) | | 24,333 | | | | 353 | | | | (380 | | ) |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Mortgage banking: | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Interest rate contracts: | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Interest rate lock commitments | | | | 2,219 | | | | 7 | | | | (20 | | ) | | 1,828 | | | | 8 | | | | (4 | | ) |\n| When issued securities, forward rate agreements and forward commitments | | | | 3,657 | | | | 51 | | | | (14 | | ) | | 2,725 | | | | 9 | | | | (5 | | ) |\n| Other | | | | 449 | | | | 2 | | | | (1 | | ) | | 677 | | | | 4 | | | | \u2014 | | |\n| Total | | | | 6,325 | | | | 60 | | | | (35 | | ) | | 5,230 | | | | 21 | | | | (9 | | ) |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| MSRs: | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Interest rate contracts: | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Receive fixed swaps | | | | 5,034 | | | | 18 | | | | (236 | | ) | | 2,343 | | | | 79 | | | | (7 | | ) |\n| Pay fixed swaps | | | | 3,768 | | | | 56 | | | | (7 | | ) | | 2,329 | | | | 4 | | | | (56 | | ) |\n| Options | | | | 5,710 | | | | 160 | | | | (8 | | ) | | 7,765 | | | | 184 | | | | (24 | | ) |\n| When issued securities, forward rate agreements and forward commitments | | | | 3,210 | | | | 3 | | | | (8 | | ) | | 2,682 | | | | \u2014 | | | | (5 | | ) |\n| Total | | | | 17,722 | | | | 237 | | | | (259 | | ) | | 15,119 | | | | 267 | | | | (92 | | ) |\n| Total derivatives not designated as hedges | | | | 52,735 | | | | 616 | | | | (630 | | ) | | 44,682 | | | | 641 | | | | (481 | | ) |\n| Total derivatives | | | | $ | 75,251 | | | 822 | | | | (1,003 | | ) | | $ | 67,525 | | | 970 | | | | (792 | | ) |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Gross amounts not offset in the Consolidated Balance Sheets: | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Amounts subject to master netting arrangements not offset due to policy election | | | | | | | | (443 | | ) | | 443 | | | | | | | | (391 | | ) | | 391 | | |\n| Cash collateral (received) posted | | | | | | | | (119 | | ) | | 450 | | | | | | | | (283 | | ) | | 368 | | |\n| Net amount | | | | | | | | $ | 260 | | | $ | (110 | ) | | | | | | $ | 296 | | | $ | (33 | ) |\n\n","source":"TFC\/10-K\/0000092230-17-000021"} {"title":"NOTE 18. Derivative Financial Instruments","text":"The following table provides a summary of derivative strategies and the related accounting treatment:","markdown_table":"\n\n| | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | | Effective Portion | | | | | | | | | | | | | | | | | | | | | | | | |\n| | | Pre-tax Gain (Loss) Recognized in\u00a0OCI | | | | | | | | | | | | Location of Amounts Reclassified from AOCI into Income | | Pre-tax Gain (Loss) Reclassified from AOCI into Income | | | | | | | | | | |\n| Year Ended December 31 | | 2016 | | | | 2015 | | | | 2014 | | | | | 2016 | | | | 2015 | | | | 2014 | | |\n| | | (Dollars in millions) | | | | | | | | | | | | | | | | | | | | | | | | |\n| Cash Flow Hedges: | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Interest rate contracts | | $ | (24 | ) | | $ | (130 | ) | | $ | (172 | ) | | Total interest expense | | $ | (11 | ) | | $ | (83 | ) | | $ | (82 | ) |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | Location of Amounts Recognized in Income | | Pre-tax Gain (Loss) Recognized in Income | | | | | | | | | | |\n| | | | | | | | | | | | | | | | 2016 | | | | 2015 | | | | 2014 | | |\n| | | | | | | | | | | | | | | | | (Dollars in millions) | | | | | | | | | | |\n| Fair Value Hedges: | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Interest rate contracts | | | | | | | | | | | | | | Total interest income | | $ | (18 | ) | | $ | (20 | ) | | $ | (22 | ) |\n| Interest rate contracts | | | | | | | | | | | | | | Total interest expense | | 226 | | | | 279 | | | | 233 | | |\n| Total | | | | | | | | | | | | | | | | $ | 208 | | | $ | 259 | | | $ | 211 | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Not Designated as Hedges: | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Client-related and other risk management: | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Interest rate contracts | | | | | | | | | | | | | | Other income | | $ | 52 | | | $ | 27 | | | $ | 18 | |\n| Foreign exchange contracts | | | | | | | | | | | | | | Other income | | 11 | | | | 21 | | | | 16 | | |\n| Mortgage Banking: | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Interest rate contracts | | | | | | | | | | | | | | Mortgage banking income | | 8 | | | | 7 | | | | (16 | | ) |\n| MSRs: | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Interest rate contracts | | | | | | | | | | | | | | Mortgage banking income | | 31 | | | | 32 | | | | 251 | | |\n| Total | | | | | | | | | | | | | | | | $ | 102 | | | $ | 87 | | | $ | 269 | |\n\n","source":"TFC\/10-K\/0000092230-17-000021"} {"title":"NOTE 18. Derivative Financial Instruments","text":"The following table presents information about BB&T's cash flow and fair value hedges:","markdown_table":"\n\n| | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- |\n| | | | | | | |\n| | | Cash Flow Hedges | | Fair Value Hedges | | Derivatives Not Designated as Hedges |\n| | | | | | | |\n| Risk exposure | | Variability in cash flows of interest payments on floating rate business loans, overnight funding and various LIBOR funding instruments. | | Losses in value on fixed rate long-term debt, CDs, FHLB advances, loans and state and political subdivision securities due to changes in interest rates. | | Risk associated with an asset or liability, including mortgage banking operations and MSRs, or for client needs. Includes exposure to changes in market rates and conditions subsequent to the interest rate lock and funding date for mortgage loans originated for sale. |\n| | | | | | | |\n| Risk management objective | | Hedge the variability in the interest payments and receipts on future cash flows for forecasted transactions related to the first unhedged payments and receipts of variable interest. | | Convert the fixed rate paid or received to a floating rate, primarily through the use of swaps. | | For interest rate lock commitment derivatives and LHFS, use mortgage-based derivatives such as forward commitments and options to mitigate market risk. For MSRs, mitigate the income statement effect of changes in the fair value of the MSRs. |\n| | | | | | | |\n| Treatment for portion that is highly effective | | Recognized in AOCI until the related cash flows from the hedged item are recognized in earnings. | | Recognized in current period income along with the corresponding changes in the fair value of the designated hedged item attributable to the risk being hedged. | | Entire change in fair value recognized in current period income. |\n| | | | | | | |\n| Treatment for portion that is ineffective | | Recognized in current period income. | | Recognized in current period income. | | Not applicable |\n| | | | | | | |\n| Treatment if hedge ceases to be highly effective or is terminated | | Hedge is dedesignated. Effective changes in value that are recorded in AOCI before dedesignation are amortized to yield over the period the forecasted hedged transactions impact earnings. | | If hedged item remains outstanding, termination proceeds are included in cash flows from financing activities and effective changes in value are reflected as part of the carrying value of the financial instrument and amortized to earnings over its estimated remaining life. | | Not applicable |\n| | | | | | | |\n| Treatment if transaction is no longer probable of occurring during forecast period or within a short period thereafter | | Hedge accounting is ceased and any gain or loss in AOCI is reported in earnings immediately. | | Not applicable | | Not applicable |\n\n","source":"TFC\/10-K\/0000092230-17-000021"} {"title":"Segment Realignment","text":"(1) Includes financial data from subsidiaries below the quantitative and qualitative thresholds requiring disclosure.","markdown_table":"\n\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | | Community Banking | | | | | | | | | | | | Residential Mortgage Banking | | | | | | | | | | | | Dealer Financial Services | | | | | | | | | | | | Specialized Lending | | | | | | | | | | |\n| Year Ended December 31, | | 2016 | | | | 2015 | | | | 2014 | | | | 2016 | | | | 2015 | | | | 2014 | | | | 2016 | | | | 2015 | | | | 2014 | | | | 2016 | | | | 2015 | | | | 2014 | | |\n| | | (Dollars in millions) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Net interest income (expense) | | $ | 2,208 | | | $ | 1,798 | | | $ | 1,726 | | | $ | 1,341 | | | $ | 1,357 | | | $ | 1,482 | | | $ | 930 | | | $ | 881 | | | $ | 835 | | | $ | 752 | | | $ | 648 | | | $ | 575 | |\n| Net intersegment interest income (expense) | | 1,589 | | | | 1,271 | | | | 1,188 | | | | (898 | | ) | | (905 | | ) | | (984 | | ) | | (161 | | ) | | (153 | | ) | | (160 | | ) | | (283 | | ) | | (235 | | ) | | (206 | | ) |\n| Segment net interest income | | 3,797 | | | | 3,069 | | | | 2,914 | | | | 443 | | | | 452 | | | | 498 | | | | 769 | | | | 728 | | | | 675 | | | | 469 | | | | 413 | | | | 369 | | |\n| Allocated provision for credit losses | | 36 | | | | 67 | | | | 123 | | | | 45 | | | | 9 | | | | (107 | | ) | | 296 | | | | 253 | | | | 237 | | | | 70 | | | | 43 | | | | 36 | | |\n| Noninterest income | | 1,227 | | | | 1,166 | | | | 1,184 | | | | 344 | | | | 355 | | | | 310 | | | | 2 | | | | \u2014 | | | | 2 | | | | 297 | | | | 260 | | | | 222 | | |\n| Intersegment net referral fees (expense) | | 153 | | | | 135 | | | | 120 | | | | 1 | | | | 2 | | | | 2 | | | | \u2014 | | | | \u2014 | | | | \u2014 | | | | \u2014 | | | | \u2014 | | | | \u2014 | | |\n| Noninterest expense | | 1,742 | | | | 1,516 | | | | 1,428 | | | | 211 | | | | 321 | | | | 498 | | | | 149 | | | | 151 | | | | 114 | | | | 300 | | | | 254 | | | | 210 | | |\n| Amortization of intangibles | | 74 | | | | 39 | | | | 29 | | | | \u2014 | | | | \u2014 | | | | \u2014 | | | | \u2014 | | | | \u2014 | | | | \u2014 | | | | 5 | | | | 4 | | | | 5 | | |\n| Allocated corporate expenses | | 1,337 | | | | 1,225 | | | | 1,204 | | | | 107 | | | | 93 | | | | 91 | | | | 45 | | | | 38 | | | | 31 | | | | 81 | | | | 63 | | | | 62 | | |\n| Income (loss) before income taxes | | 1,988 | | | | 1,523 | | | | 1,434 | | | | 425 | | | | 386 | | | | 328 | | | | 281 | | | | 286 | | | | 295 | | | | 310 | | | | 309 | | | | 278 | | |\n| Provision (benefit) for income taxes | | 724 | | | | 563 | | | | 524 | | | | 161 | | | | 146 | | | | 124 | | | | 107 | | | | 109 | | | | 112 | | | | 74 | | | | 74 | | | | 63 | | |\n| Segment net income (loss) | | $ | 1,264 | | | $ | 960 | | | $ | 910 | | | $ | 264 | | | $ | 240 | | | $ | 204 | | | $ | 174 | | | $ | 177 | | | $ | 183 | | | $ | 236 | | | $ | 235 | | | $ | 215 | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Identifiable assets (period end) | | $ | 73,640 | | | $ | 68,250 | | | $ | 55,495 | | | $ | 33,473 | | | $ | 33,407 | | | $ | 34,463 | | | $ | 16,556 | | | $ | 15,130 | | | $ | 12,821 | | | $ | 19,976 | | | $ | 18,243 | | | $ | 15,671 | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | | Insurance Holdings | | | | | | | | | | | | Financial Services | | | | | | | | | | | | Other, Treasury and Corporate (1) | | | | | | | | | | | | Total BB&T Corporation | | | | | | | | | | |\n| | | 2016 | | | | 2015 | | | | 2014 | | | | 2016 | | | | 2015 | | | | 2014 | | | | 2016 | | | | 2015 | | | | 2014 | | | | 2016 | | | | 2015 | | | | 2014 | | |\n| | | (Dollars in millions) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Net interest income (expense) | | $ | 3 | | | $ | 2 | | | $ | 2 | | | $ | 260 | | | $ | 219 | | | $ | 187 | | | $ | 827 | | | $ | 687 | | | $ | 567 | | | $ | 6,321 | | | $ | 5,592 | | | $ | 5,374 | |\n| Net intersegment interest income (expense) | | 4 | | | | 6 | | | | 6 | | | | 372 | | | | 314 | | | | 263 | | | | (623 | | ) | | (298 | | ) | | (107 | | ) | | \u2014 | | | | \u2014 | | | | \u2014 | | |\n| Segment net interest income | | 7 | | | | 8 | | | | 8 | | | | 632 | | | | 533 | | | | 450 | | | | 204 | | | | 389 | | | | 460 | | | | 6,321 | | | | 5,592 | | | | 5,374 | | |\n| Allocated provision for credit losses | | \u2014 | | | | \u2014 | | | | \u2014 | | | | 126 | | | | 66 | | | | 26 | | | | (1 | | ) | | (10 | | ) | | (64 | | ) | | 572 | | | | 428 | | | | 251 | | |\n| Noninterest income | | 1,726 | | | | 1,608 | | | | 1,663 | | | | 888 | | | | 850 | | | | 780 | | | | (12 | | ) | | (220 | | ) | | (305 | | ) | | 4,472 | | | | 4,019 | | | | 3,856 | | |\n| Intersegment net referral fees (expense) | | \u2014 | | | | \u2014 | | | | \u2014 | | | | 23 | | | | 22 | | | | 15 | | | | (177 | | ) | | (159 | | ) | | (137 | | ) | | \u2014 | | | | \u2014 | | | | \u2014 | | |\n| Noninterest expense | | 1,312 | | | | 1,190 | | | | 1,189 | | | | 753 | | | | 683 | | | | 637 | | | | 2,104 | | | | 2,046 | | | | 1,685 | | | | 6,571 | | | | 6,161 | | | | 5,761 | | |\n| Amortization of intangibles | | 60 | | | | 47 | | | | 53 | | | | 5 | | | | 3 | | | | 2 | | | | 6 | | | | 12 | | | | 2 | | | | 150 | | | | 105 | | | | 91 | | |\n| Allocated corporate expenses | | 111 | | | | 99 | | | | 86 | | | | 151 | | | | 136 | | | | 128 | | | | (1,832 | | ) | | (1,654 | | ) | | (1,602 | | ) | | \u2014 | | | | \u2014 | | | | \u2014 | | |\n| Income (loss) before income taxes | | 250 | | | | 280 | | | | 343 | | | | 508 | | | | 517 | | | | 452 | | | | (262 | | ) | | (384 | | ) | | (3 | | ) | | 3,500 | | | | 2,917 | | | | 3,127 | | |\n| Provision (benefit) for income taxes | | 96 | | | | 98 | | | | 110 | | | | 190 | | | | 195 | | | | 170 | | | | (294 | | ) | | (391 | | ) | | (182 | | ) | | 1,058 | | | | 794 | | | | 921 | | |\n| Segment net income (loss) | | $ | 154 | | | $ | 182 | | | $ | 233 | | | $ | 318 | | | $ | 322 | | | $ | 282 | | | $ | 32 | | | $ | 7 | | | $ | 179 | | | $ | 2,442 | | | $ | 2,123 | | | $ | 2,206 | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Identifiable assets (period end) | | $ | 3,463 | | | $ | 2,804 | | | $ | 2,965 | | | $ | 17,451 | | | $ | 16,650 | | | $ | 12,887 | | | $ | 54,717 | | | $ | 55,463 | | | $ | 52,532 | | | $ | 219,276 | | | $ | 209,947 | | | $ | 186,834 | |\n\n","source":"TFC\/10-K\/0000092230-17-000021"} {"title":"Net Interest Income and NIM","text":"(1)Yields are stated on a TE basis utilizing the marginal income tax rates. The change in interest not solely due to changes in rate or volume has been allocated on a pro-rata basis based on the absolute dollar amount of each. (2)Total securities include AFS and HTM securities. (3)Includes cash equivalents, interest-bearing deposits with banks, trading securities, FHLB stock and other earning assets. (4)Loan fees, which are not material for any of the periods shown, are included for rate calculation purposes. (5)NPLs are included in the average balances. (6)Excludes basis adjustments for fair value hedges.(7)Total deposit costs were 0.41%, 0.22% and 0.16% for the years ended December\u00a031,\u00a02018, 2017 and 2016, respectively.","markdown_table":"\n\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Table 4: TE Net Interest Income and Rate \/ Volume Analysis (1) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 2018 vs. 2017 | | | | | | | | | | | | 2017 vs. 2016 | | | | | | | | | | |\n| Year Ended December 31,(Dollars in millions) | Average Balances (6) | | | | | | | | | | | | Yield\/Rate | | | | | | | | | Income\/Expense | | | | | | | | | | | | Incr.(Decr.) | | | | Change due to | | | | | | | | Incr.(Decr.) | | | | Change due to | | | | | | |\n| 2018 | | | | 2017 | | | | 2016 | | | | 2018 | | | 2017 | | | 2016 | | | 2018 | | | | 2017 | | | | 2016 | | | | | Rate | | | | Volume | | | | | Rate | | | | Volume | | |\n| Assets | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Total securities, at amortized cost: (2) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| U.S. Treasury | $ | 3,800 | | | $ | 4,179 | | | $ | 3,061 | | | 1.89 | % | | 1.71 | % | | 1.67 | % | | $ | 72 | | | $ | 72 | | | $ | 51 | | | $ | \u2014 | | | $ | 7 | | | $ | (7 | ) | | $ | 21 | | | $ | 1 | | | $ | 20 | |\n| GSE | 2,394 | | | | 2,385 | | | | 3,601 | | | | 2.23 | | | 2.22 | | | 2.13 | | | 54 | | | | 53 | | | | 77 | | | | 1 | | | | 1 | | | | \u2014 | | | | (24 | | ) | | 3 | | | | (27 | | ) |\n| Agency MBS | 39,559 | | | | 37,250 | | | | 36,658 | | | | 2.45 | | | 2.26 | | | 2.05 | | | 969 | | | | 841 | | | | 750 | | | | 128 | | | | 74 | | | | 54 | | | | 91 | | | | 79 | | | | 12 | | |\n| States and political subdivisions | 958 | | | | 1,748 | | | | 2,361 | | | | 3.68 | | | 4.77 | | | 5.20 | | | 35 | | | | 83 | | | | 123 | | | | (48 | | ) | | (16 | | ) | | (32 | | ) | | (40 | | ) | | (10 | | ) | | (30 | | ) |\n| Non-agency MBS | 349 | | | | 411 | | | | 534 | | | | 11.93 | | | 18.80 | | | 14.56 | | | 42 | | | | 77 | | | | 78 | | | | (35 | | ) | | (25 | | ) | | (10 | | ) | | (1 | | ) | | 19 | | | | (20 | | ) |\n| Other | 40 | | | | 56 | | | | 64 | | | | 3.34 | | | 2.17 | | | 1.87 | | | 1 | | | | 1 | | | | \u2014 | | | | \u2014 | | | | \u2014 | | | | \u2014 | | | | 1 | | | | 1 | | | | \u2014 | | |\n| Total securities | 47,100 | | | | 46,029 | | | | 46,279 | | | | 2.49 | | | 2.45 | | | 2.33 | | | 1,173 | | | | 1,127 | | | | 1,079 | | | | 46 | | | | 41 | | | | 5 | | | | 48 | | | | 93 | | | | (45 | | ) |\n| Other earning assets (3) | 2,251 | | | | 3,484 | | | | 3,202 | | | | 2.96 | | | 1.53 | | | 1.64 | | | 67 | | | | 53 | | | | 53 | | | | 14 | | | | 38 | | | | (24 | | ) | | \u2014 | | | | (4 | | ) | | 4 | | |\n| Loans and leases, net of unearned income: (4)(5) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Commercial and industrial | 59,663 | | | | 57,994 | | | | 56,227 | | | | 3.98 | | | 3.59 | | | 3.40 | | | 2,374 | | | | 2,080 | | | | 1,914 | | | | 294 | | | | 233 | | | | 61 | | | | 166 | | | | 106 | | | | 60 | | |\n| CRE | 21,435 | | | | 20,497 | | | | 19,407 | | | | 4.70 | | | 4.08 | | | 3.75 | | | 1,007 | | | | 837 | | | | 727 | | | | 170 | | | | 130 | | | | 40 | | | | 110 | | | | 67 | | | | 43 | | |\n| Lease financing | 1,917 | | | | 1,726 | | | | 1,524 | | | | 3.19 | | | 2.82 | | | 3.01 | | | 61 | | | | 49 | | | | 45 | | | | 12 | | | | 6 | | | | 6 | | | | 4 | | | | (3 | | ) | | 7 | | |\n| Residential mortgage | 29,932 | | | | 29,140 | | | | 30,184 | | | | 4.05 | | | 4.02 | | | 4.05 | | | 1,212 | | | | 1,170 | | | | 1,224 | | | | 42 | | | | 9 | | | | 33 | | | | (54 | | ) | | (10 | | ) | | (44 | | ) |\n| Direct | 11,670 | | | | 11,968 | | | | 11,796 | | | | 5.22 | | | 4.60 | | | 4.27 | | | 610 | | | | 550 | | | | 503 | | | | 60 | | | | 74 | | | | (14 | | ) | | 47 | | | | 40 | | | | 7 | | |\n| Indirect | 17,111 | | | | 17,840 | | | | 17,072 | | | | 7.51 | | | 6.89 | | | 6.94 | | | 1,285 | | | | 1,230 | | | | 1,186 | | | | 55 | | | | 107 | | | | (52 | | ) | | 44 | | | | (9 | | ) | | 53 | | |\n| Revolving credit | 2,913 | | | | 2,662 | | | | 2,521 | | | | 9.25 | | | 8.88 | | | 8.77 | | | 269 | | | | 236 | | | | 221 | | | | 33 | | | | 10 | | | | 23 | | | | 15 | | | | 3 | | | | 12 | | |\n| PCI | 548 | | | | 784 | | | | 1,063 | | | | 19.64 | | | 18.86 | | | 19.55 | | | 108 | | | | 148 | | | | 208 | | | | (40 | | ) | | 6 | | | | (46 | | ) | | (60 | | ) | | (7 | | ) | | (53 | | ) |\n| Total loans and leases HFI | 145,189 | | | | 142,611 | | | | 139,794 | | | | 4.77 | | | 4.42 | | | 4.31 | | | 6,926 | | | | 6,300 | | | | 6,028 | | | | 626 | | | | 575 | | | | 51 | | | | 272 | | | | 187 | | | | 85 | | |\n| LHFS | 1,228 | | | | 1,464 | | | | 1,965 | | | | 4.13 | | | 3.62 | | | 3.34 | | | 50 | | | | 53 | | | | 66 | | | | (3 | | ) | | 7 | | | | (10 | | ) | | (13 | | ) | | 5 | | | | (18 | | ) |\n| Total loans and leases | 146,417 | | | | 144,075 | | | | 141,759 | | | | 4.77 | | | 4.41 | | | 4.30 | | | 6,976 | | | | 6,353 | | | | 6,094 | | | | 623 | | | | 582 | | | | 41 | | | | 259 | | | | 192 | | | | 67 | | |\n| Total earning assets | 195,768 | | | | 193,588 | | | | 191,240 | | | | 4.20 | | | 3.89 | | | 3.78 | | | 8,216 | | | | 7,533 | | | | 7,226 | | | | 683 | | | | 661 | | | | 22 | | | | 307 | | | | 281 | | | | 26 | | |\n| Nonearning assets | 26,505 | | | | 27,477 | | | | 27,705 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Total assets | $ | 222,273 | | | $ | 221,065 | | | $ | 218,945 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Liabilities and Shareholders' Equity | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Interest-bearing deposits: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Interest-checking | $ | 26,951 | | | $ | 28,033 | | | $ | 27,595 | | | 0.43 | | | 0.25 | | | 0.14 | | | 116 | | | | 70 | | | | 39 | | | | 46 | | | | 49 | | | | (3 | | ) | | 31 | | | | 30 | | | | 1 | | |\n| Money market and savings | 62,257 | | | | 63,061 | | | | 62,966 | | | | 0.62 | | | 0.30 | | | 0.20 | | | 387 | | | | 190 | | | | 123 | | | | 197 | | | | 199 | | | | (2 | | ) | | 67 | | | | 67 | | | | \u2014 | | |\n| Time deposits | 13,963 | | | | 14,133 | | | | 16,619 | | | | 0.94 | | | 0.51 | | | 0.51 | | | 132 | | | | 72 | | | | 85 | | | | 60 | | | | 61 | | | | (1 | | ) | | (13 | | ) | | \u2014 | | | | (13 | | ) |\n| Foreign deposits - interest-bearing | 494 | | | | 1,142 | | | | 1,034 | | | | 1.67 | | | 1.05 | | | 0.38 | | | 9 | | | | 12 | | | | 4 | | | | (3 | | ) | | 5 | | | | (8 | | ) | | 8 | | | | 8 | | | | \u2014 | | |\n| Total interest-bearing deposits (7) | 103,665 | | | | 106,369 | | | | 108,214 | | | | 0.62 | | | 0.32 | | | 0.23 | | | 644 | | | | 344 | | | | 251 | | | | 300 | | | | 314 | | | | (14 | | ) | | 93 | | | | 105 | | | | (12 | | ) |\n| Short-term borrowings | 5,955 | | | | 4,311 | | | | 2,554 | | | | 1.86 | | | 0.94 | | | 0.35 | | | 111 | | | | 41 | | | | 9 | | | | 70 | | | | 50 | | | | 20 | | | | 32 | | | | 23 | | | | 9 | | |\n| Long-term debt | 23,755 | | | | 21,660 | | | | 22,791 | | | | 2.88 | | | 2.10 | | | 2.13 | | | 683 | | | | 454 | | | | 485 | | | | 229 | | | | 182 | | | | 47 | | | | (31 | | ) | | (7 | | ) | | (24 | | ) |\n| Total interest-bearing liabilities | 133,375 | | | | 132,340 | | | | 133,559 | | | | 1.08 | | | 0.63 | | | 0.56 | | | 1,438 | | | | 839 | | | | 745 | | | | 599 | | | | 546 | | | | 53 | | | | 94 | | | | 121 | | | | (27 | | ) |\n| Noninterest-bearing deposits (7) | 53,818 | | | | 52,872 | | | | 49,255 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Other liabilities | 5,337 | | | | 5,852 | | | | 6,776 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Shareholders' equity | 29,743 | | | | 30,001 | | | | 29,355 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Total liabilities and shareholders' equity | $ | 222,273 | | | $ | 221,065 | | | $ | 218,945 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Average interest-rate spread | | | | | | | | | | | | | 3.12 | % | | 3.26 | % | | 3.22 | % | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| NIM\/net interest income | | | | | | | | | | | | | 3.46 | % | | 3.46 | % | | 3.39 | % | | $ | 6,778 | | | $ | 6,694 | | | $ | 6,481 | | | $ | 84 | | | $ | 115 | | | $ | (31 | ) | | $ | 213 | | | $ | 160 | | | $ | 53 | |\n| Taxable-equivalent adjustment | | | | | | | | | | | | | | | | | | | | | | $ | 96 | | | $ | 159 | | | $ | 160 | | | | | | | | | | | | | | | | | | | | | | | | | |\n\n","source":"TFC\/10-K\/0000092230-19-000017"} {"title":"Noninterest Income","text":"Noninterest income for the year ended December\u00a031,\u00a02018 was a record $4.9 billion, up $94 million compared to 2017.Income from BB&T's insurance agency\/brokerage operations was the largest source of noninterest income in\u00a02018. Insurance income was $1.9 billion, up $98 million compared to 2017, primarily due to the acquisition of Regions Insurance, which contributed $67 million, and higher production. Service charges on deposits were up slightly, but were negatively impacted due to fee waivers associated with the February system outage. Mortgage banking income was $358 million, down $57 million, primarily resulting from a decline in residential mortgage production revenue. Investment banking and brokerage fees and commissions were $477 million, up $67 million due to higher managed account fees and higher investment banking income. BB&T Corporation 34Other income was $420 million, down $47 million, primarily due to $56 million in lower income related to assets for certain post-employment benefits, which is primarily offset in other income\/expense categories. Noninterest income was a record\u00a0$4.8 billion\u00a0for\u00a02017, an increase of\u00a0$310 million\u00a0compared to\u00a02016. Insurance income totaled\u00a0$1.8 billion\u00a0for\u00a02017, an increase of\u00a0$41 million\u00a0compared to\u00a02016. The increase was largely due to the acquisition of Swett and Crawford on April 1, 2016. In addition, organic commissions and fees were higher, which was offset by lower performance based commissions.Service charges on deposits were $706 million for 2017, an increase of $42 million compared to 2016. The increase was due to changes in client behavior, pricing increases and the acquisition of National Penn on April 1, 2016.Mortgage banking income declined $48 million primarily due to a decline of $39 million in the net mortgage servicing rights valuation.Bankcard fees and merchant discounts increased $34 million due to higher volumes and a reduction in the accrual for rewards.Other income totaled\u00a0$467 million\u00a0for\u00a02017, an increase of\u00a0$247 million\u00a0from\u00a02016, primarily due to the termination of the loss sharing agreements during the third quarter of 2016, which resulted in a $142 million improvement compared to 2016. In addition, other income increased $34 million from SBIC investments and $50 million from income related to assets for certain post-employment benefits.","markdown_table":"\n\n| | | | | | | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | | | | | | | | | | | | | | | | |\n| Table 5: Noninterest Income | | | | | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | % Change | | | | |\n| Year Ended December 31,(Dollars in millions) | 2018 | | | | 2017 | | | | 2016 | | | | 2018 vs. 2017 | | | 2017 vs. 2016 | |\n| Insurance income | $ | 1,852 | | | $ | 1,754 | | | $ | 1,713 | | | 5.6 | % | | 2.4 | % |\n| Service charges on deposits | 712 | | | | 706 | | | | 664 | | | | 0.8 | | | 6.3 | |\n| Investment banking and brokerage fees and commissions | 477 | | | | 410 | | | | 408 | | | | 16.3 | | | 0.5 | |\n| Mortgage banking income | 358 | | | | 415 | | | | 463 | | | | (13.7 | ) | | (10.4 | ) |\n| Trust and investment advisory revenues | 285 | | | | 278 | | | | 266 | | | | 2.5 | | | 4.5 | |\n| Bankcard fees and merchant discounts | 287 | | | | 271 | | | | 237 | | | | 5.9 | | | 14.3 | |\n| Checkcard fees | 221 | | | | 214 | | | | 195 | | | | 3.3 | | | 9.7 | |\n| Operating lease income | 145 | | | | 146 | | | | 137 | | | | (0.7 | ) | | 6.6 | |\n| Income from bank-owned life insurance | 116 | | | | 122 | | | | 123 | | | | (4.9 | ) | | (0.8 | ) |\n| Securities gains (losses), net | 3 | | | | (1 | | ) | | 46 | | | | NM | | | (102.2 | ) |\n| Other income | 420 | | | | 467 | | | | 220 | | | | (10.1 | ) | | 112.3 | |\n| Total noninterest income | $ | 4,876 | | | $ | 4,782 | | | $ | 4,472 | | | 2.0 | | | 6.9 | |\n\n","source":"TFC\/10-K\/0000092230-19-000017"} {"title":"Noninterest Expense","text":"Noninterest expense totaled $6.9 billion for the year ended December\u00a031,\u00a02018, a decrease of $512 million, or 6.9%, from the prior year. This decrease was driven by the $392 million loss on early extinguishment of debt in 2017 and lower other expense. Personnel expense is the largest component of noninterest expense and includes salaries and incentives, as well as pension service costs and other employee benefit costs. Personnel expense was $4.3 billion for the year ended December\u00a031,\u00a02018, an increase of $87 million compared to the year ended December\u00a031,\u00a02017. This increase was driven by $43 million of personnel expense resulting from the Regions Insurance acquisition and $38 million in higher defined benefit pension plan service cost. In addition,\u00a0capitalized employee costs were $31 million lower due to efficiencies in the loan closing process, and incentive expense, excluding Regions Insurance, was $12 million higher primarily due to higher performance-based incentive expense, partially offset by the 2017 one-time bonus of $36 million paid to associates who do not generally receive incentives or commissions. These increases were partially offset by a $47 million decrease for certain post-employment benefits, which is offset by lower noninterest income.Occupancy and equipment expense decreased $26 million primarily related to cost savings from facilities.Software expense increased $30 million, primarily reflecting higher depreciation on recent investments and maintenance costs. Outside IT services decreased $28 million due to lower use of outside IT services in the current year compared to the prior year.Merger-related and restructuring expense was $146 million, an increase of $31 million. This includes higher charges as a result of restructuring initiatives in 2018, including $61 million of personnel costs for severance and other benefits and $63 million related to costs to exit facilities. These restructuring activities will enable continued investment in the company's digital strategy, while maintaining disciplined cost control.Other expense decreased $177 million primarily due to the prior year including a $100 million contribution to BB&T's philanthropic fund and a $61 million benefit primarily from higher income on pension plan assets. Noninterest expense totaled\u00a0$7.4 billion\u00a0for\u00a02017, an increase of\u00a0$723 million\u00a0from\u00a02016. The increase includes actions taken in the fourth quarter of 2017 in connection with the passage of tax reform legislation. This included a contribution of $100 million to BB&T's philanthropic fund and $36 million for a one-time bonus paid to associates who do not generally receive incentives or commissions. The increase also includes a $392 million charge in 2017 for the early extinguishment of $2.9 billion of higher cost FHLB advances.Personnel expense is the largest component of noninterest expense and includes salaries and incentives, as well as pension service costs and other employee benefit costs. Personnel expense totaled\u00a0$4.2 billion, a\u00a0$197 million\u00a0increase compared to\u00a02016. Salaries and incentives increased $120 million compared to the prior year, primarily due to higher incentives as a result of improved performance and the one-time bonus previously mentioned. Equity based compensation increased $14 million and benefit costs increased $63 million. The increase in benefit costs was primarily the result of an increase of $43 million for post-employment benefits that is primarily offset in other income. Software expense was higher $18 million compared to 2016, primarily reflecting higher depreciation on recent investments.Outside IT services expense decreased $26 million compared to the prior year, while professional services expense increased $21 million. These fluctuations are due to the volume of project related work in the current year compared to the prior year.\u00a0Loan-related expense totaled\u00a0$130 million\u00a0for\u00a02017, an increase of\u00a0$35 million\u00a0compared to the prior year. This increase is largely the result of a release of $31 million in reserves during the fourth quarter of 2016, which was primarily driven by lower anticipated loan repurchase requests.Merger-related and restructuring expense decreased $56 million compared to 2016. This includes a decrease in merger-related charges, partially offset by branch closures and other restructuring initiatives.Other expense increased $143 million primarily due to higher operating charge-offs and charitable contributions. Operating charge-offs increased $108 million due to a net benefit of $73 million recorded in 2016 related to the settlement of matters involving the origination of certain legacy mortgage loans insured by the FHA. Charitable contributions increased $44 million as the company made a $100 million contribution to its philanthropic fund in 2017 as noted above, compared to $50 million made in the third quarter of 2016.","markdown_table":"\n\n| | | | | | | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | | | | | | | | | | | | | | | | |\n| Table 6: Noninterest Expense | | | | | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | % Change | | | | |\n| Year Ended December 31,(Dollars in millions) | 2018 | | | | 2017 | | | | 2016 | | | | 2018 vs. 2017 | | | 2017 vs. 2016 | |\n| Personnel expense | $ | 4,313 | | | $ | 4,226 | | | $ | 4,029 | | | 2.1 | % | | 4.9 | % |\n| Occupancy and equipment expense | 758 | | | | 784 | | | | 786 | | | | (3.3 | ) | | (0.3 | ) |\n| Software expense | 272 | | | | 242 | | | | 224 | | | | 12.4 | | | 8.0 | |\n| Outside IT services | 132 | | | | 160 | | | | 186 | | | | (17.5 | ) | | (14.0 | ) |\n| Regulatory charges | 134 | | | | 153 | | | | 145 | | | | (12.4 | ) | | 5.5 | |\n| Amortization of intangibles | 131 | | | | 142 | | | | 150 | | | | (7.7 | ) | | (5.3 | ) |\n| Loan-related expense | 108 | | | | 130 | | | | 95 | | | | (16.9 | ) | | 36.8 | |\n| Professional services | 138 | | | | 123 | | | | 102 | | | | 12.2 | | | 20.6 | |\n| Merger-related and restructuring charges, net | 146 | | | | 115 | | | | 171 | | | | 27.0 | | | (32.7 | ) |\n| Loss (gain) on early extinguishment of debt | \u2014 | | | | 392 | | | | (1 | | ) | | (100.0 | ) | | NM | |\n| Other expense | 800 | | | | 977 | | | | 834 | | | | (18.1 | ) | | 17.1 | |\n| Total noninterest expense | $ | 6,932 | | | $ | 7,444 | | | $ | 6,721 | | | (6.9 | ) | | 10.8 | |\n\n","source":"TFC\/10-K\/0000092230-19-000017"} {"title":"Merger-Related and Restructuring Charges","text":"The 2018 costs primarily reflect higher charges as a result of restructuring initiatives, including costs for severance and other benefits and costs related to exiting facilities, while the 2017 costs primarily reflect branch closures and other restructuring initiatives.","markdown_table":"\n\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Table 7: Merger-Related and Restructuring Accrual Activity | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| (Dollars in millions) | Accrual at Jan 1, 2017 | | | | Expense | | | | Utilized | | | | Accrual at Dec 31, 2017 | | | | Expense | | | | Utilized | | | | Accrual at Dec 31, 2018 | | |\n| Severance and personnel-related | $ | 25 | | | $ | 40 | | | $ | (51 | ) | | $ | 14 | | | $ | 61 | | | $ | (32 | ) | | $ | 43 | |\n| Occupancy and equipment | 21 | | | | 43 | | | | (44 | | ) | | 20 | | | | 63 | | | | (60 | | ) | | 23 | | |\n| Professional services | 1 | | | | 2 | | | | (3 | | ) | | \u2014 | | | | 4 | | | | (3 | | ) | | 1 | | |\n| Systems conversion and related costs | 1 | | | | 26 | | | | (27 | | ) | | \u2014 | | | | 5 | | | | (5 | | ) | | \u2014 | | |\n| Other adjustments | 1 | | | | 4 | | | | (5 | | ) | | \u2014 | | | | 13 | | | | (13 | | ) | | \u2014 | | |\n| Total | $ | 49 | | | $ | 115 | | | $ | (130 | ) | | $ | 34 | | | $ | 146 | | | $ | (113 | ) | | $ | 67 | |\n\n","source":"TFC\/10-K\/0000092230-19-000017"} {"title":"Investment Activities","text":"The securities portfolio totaled $45.6 billion at December\u00a031,\u00a02018, compared to $47.6 billion at December\u00a031,\u00a02017, primarily driven by a $2.4 billion decrease in agency MBS and a $714 million decrease in securities issued by state and political subdivisions, partially offset by a $1.2 billion increase in U.S. Treasury securities.As of December\u00a031,\u00a02018, approximately 6.5% of the securities portfolio was variable rate, compared to 5.8% as of December\u00a031,\u00a02017. The effective duration of the securities portfolio was 4.8 years at December\u00a031,\u00a02018, compared to 4.7 years at December\u00a031,\u00a02017. The duration of the securities portfolio excludes certain non-agency MBS. U.S. Treasury, GSE and Agency MBS represented 97.3% of the total securities portfolio as of December\u00a031,\u00a02018, compared to 95.7% as of prior year end. The following table presents the securities portfolio at December\u00a031,\u00a02018, segregated by major category with ranges of maturities and average yields disclosed:","markdown_table":"\n\n| | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | | | | | | | | | | |\n| Table 9: Composition of Securities Portfolio | | | | | | | | | | | |\n| December\u00a031,(Dollars in millions) | 2018 | | | | 2017 | | | | 2016 | | |\n| AFS securities (at fair value): | | | | | | | | | | | |\n| U.S. Treasury | $ | 3,441 | | | $ | 2,291 | | | $ | 2,587 | |\n| GSE | 200 | | | | 179 | | | | 180 | | |\n| Agency MBS | 20,155 | | | | 20,101 | | | | 21,264 | | |\n| States and political subdivisions | 701 | | | | 1,392 | | | | 2,205 | | |\n| Non-agency MBS | 505 | | | | 576 | | | | 679 | | |\n| Other | 36 | | | | 8 | | | | 11 | | |\n| Total AFS securities | 25,038 | | | | 24,547 | | | | 26,926 | | |\n| HTM securities (at amortized cost): | | | | | | | | | | | |\n| U.S. Treasury | 1,099 | | | | 1,098 | | | | 1,098 | | |\n| GSE | 2,199 | | | | 2,198 | | | | 2,197 | | |\n| Agency MBS | 17,248 | | | | 19,660 | | | | 13,225 | | |\n| States and political subdivisions | 5 | | | | 28 | | | | 110 | | |\n| Other | 1 | | | | 43 | | | | 50 | | |\n| Total HTM securities | 20,552 | | | | 23,027 | | | | 16,680 | | |\n| Total securities | $ | 45,590 | | | $ | 47,574 | | | $ | 43,606 | |\n\n","source":"TFC\/10-K\/0000092230-19-000017"} {"title":"Investment Activities","text":"(1)Yields represent interest computed using the effective interest method on a TE basis using marginal income tax rates and the amortized cost of the securities.(2)For purposes of the maturity table, MBS, which are not due at a single maturity date, have been included in maturity groupings based on the contractual maturity. The expected life of MBS will differ from contractual maturities because borrowers may have the right to call or prepay the underlying mortgage loans.","markdown_table":"\n\n| | | | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | | | | | | | | | | | | | |\n| Table 10: Securities Yields By Major Category and Maturity | | | | | | | | | | | | | | |\n| December\u00a031,\u00a02018(Dollars in millions) | | AFS | | | | | | | HTM | | | | | |\n| | Fair Value | | | | Effective Yield (1) | | | Amortized Cost | | | | Effective Yield (1) | |\n| U.S. Treasury: | | | | | | | | | | | | | | |\n| Within one year | | $ | 408 | | | 1.95 | % | | $ | \u2014 | | | \u2014 | % |\n| One to five years | | 2,329 | | | | 1.98 | | | 1,099 | | | | 2.30 | |\n| Five to ten years | | 704 | | | | 2.95 | | | \u2014 | | | | \u2014 | |\n| Total | | 3,441 | | | | 2.18 | | | 1,099 | | | | 2.30 | |\n| GSE: | | | | | | | | | | | | | | |\n| One to five years | | 115 | | | | 1.50 | | | 2,189 | | | | 2.29 | |\n| Five to ten years | | 50 | | | | 1.68 | | | 10 | | | | 2.47 | |\n| After ten years | | 35 | | | | 3.11 | | | \u2014 | | | | \u2014 | |\n| Total | | 200 | | | | 1.82 | | | 2,199 | | | | 2.29 | |\n| Agency MBS: (2) | | | | | | | | | | | | | | |\n| One to five years | | 4 | | | | 2.96 | | | \u2014 | | | | \u2014 | |\n| Five to ten years | | 20 | | | | 2.89 | | | 615 | | | | 2.43 | |\n| After ten years | | 20,131 | | | | 2.41 | | | 16,633 | | | | 3.00 | |\n| Total | | 20,155 | | | | 2.41 | | | 17,248 | | | | 2.83 | |\n| States and political subdivisions: | | | | | | | | | | | | | | |\n| Within one year | | 16 | | | | 4.81 | | | \u2014 | | | | \u2014 | |\n| One to five years | | 139 | | | | 3.34 | | | 2 | | | | 1.67 | |\n| Five to ten years | | 269 | | | | 3.74 | | | 2 | | | | 3.59 | |\n| After ten years | | 277 | | | | 4.55 | | | 1 | | | | 1.26 | |\n| Total | | 701 | | | | 4.01 | | | 5 | | | | 2.60 | |\n| Non-agency MBS: (2) | | | | | | | | | | | | | | |\n| After ten years | | 505 | | | | 12.82 | | | \u2014 | | | | \u2014 | |\n| Other: | | | | | | | | | | | | | | |\n| Within one year | | \u2014 | | | | \u2014 | | | 1 | | | | 2.03 | |\n| After ten years | | 36 | | | | 4.25 | | | \u2014 | | | | \u2014 | |\n| Total | | 36 | | | | 4.25 | | | 1 | | | | 2.03 | |\n| Total securities | | $ | 25,038 | | | 2.63 | | | $ | 20,552 | | | 2.75 | |\n\n","source":"TFC\/10-K\/0000092230-19-000017"} {"title":"Lending Activities","text":"Loans and leases HFI were $149.0 billion at December\u00a031,\u00a02018, an increase of $5.3 billion compared to the prior year.Commercial and industrial loans were up $2.8 billion due to strong growth in corporate banking loans, while CRE loans were down $203 million. Residential mortgage loans increased $2.7 billion, primarily due to the retention of a portion of the conforming mortgage production.Indirect loans were up $190 million, primarily due to growth in power sports and other recreational lending. The PCI loan portfolio, which totaled $466 million at December\u00a031,\u00a02018, continued to run off during the year.Scheduled repayments are reported in the maturity category in which the payment is due. Determinations of maturities are based on contractual terms. BB&T's credit policy typically does not permit automatic renewal of loans. At the scheduled maturity date (including balloon payment date), the customer generally must request a new loan to replace the matured loan and execute either a new note or note modification with rate, terms and conditions negotiated at that time.","markdown_table":"\n\n| | | | | | | | | | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | | | | | | | | | | | | | | | | | | | |\n| Table 11: Composition of Loans and Leases as of Period End | | | | | | | | | | | | | | | | | | | | |\n| December\u00a031,(Dollars in millions) | | 2018 | | | | 2017 | | | | 2016 | | | | 2015 | | | | 2014 | | |\n| Commercial: | | | | | | | | | | | | | | | | | | | | |\n| Commercial and industrial | | $ | 61,935 | | | $ | 59,153 | | | $ | 57,739 | | | $ | 53,746 | | | $ | 46,110 | |\n| CRE | | 21,060 | | | | 21,263 | | | | 19,764 | | | | 18,312 | | | | 14,128 | | |\n| Lease financing | | 2,018 | | | | 1,911 | | | | 1,677 | | | | 1,535 | | | | 1,119 | | |\n| Retail: | | | | | | | | | | | | | | | | | | | | |\n| Residential mortgage | | 31,393 | | | | 28,725 | | | | 29,921 | | | | 30,533 | | | | 31,090 | | |\n| Direct | | 11,584 | | | | 11,891 | | | | 12,092 | | | | 11,140 | | | | 8,146 | | |\n| Indirect | | 17,425 | | | | 17,235 | | | | 18,564 | | | | 17,053 | | | | 15,616 | | |\n| Revolving credit | | 3,132 | | | | 2,872 | | | | 2,655 | | | | 2,510 | | | | 2,460 | | |\n| PCI | | 466 | | | | 651 | | | | 910 | | | | 1,122 | | | | 1,215 | | |\n| Total loans and leases HFI | | 149,013 | | | | 143,701 | | | | 143,322 | | | | 135,951 | | | | 119,884 | | |\n| LHFS | | 988 | | | | 1,099 | | | | 1,716 | | | | 1,035 | | | | 1,423 | | |\n| Total loans and leases | | $ | 150,001 | | | $ | 144,800 | | | $ | 145,038 | | | $ | 136,986 | | | $ | 121,307 | |\n\n","source":"TFC\/10-K\/0000092230-19-000017"} {"title":"Lending Activities","text":"The following table presents loans with variable interest rates:","markdown_table":"\n\n| | | | | | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | | | | | | | | | | | | | | | |\n| Table 12: Commercial Loan Maturities and Interest Sensitivity | | | | | | | | | | | | | | | | |\n| December\u00a031,\u00a02018(Dollars in millions) | | 1 Year or Less | | | | Over 1 to 5 Years | | | | After 5 Years | | | | Total | | |\n| Fixed rate: | | | | | | | | | | | | | | | | |\n| Commercial and industrial | | $ | 3,344 | | | $ | 7,551 | | | $ | 9,454 | | | $ | 20,349 | |\n| CRE | | 405 | | | | 2,552 | | | | 2,257 | | | | 5,214 | | |\n| Lease financing | | 92 | | | | 1,239 | | | | 582 | | | | 1,913 | | |\n| Total fixed rate | | 3,841 | | | | 11,342 | | | | 12,293 | | | | 27,476 | | |\n| Variable rate: | | | | | | | | | | | | | | | | |\n| Commercial and industrial | | 9,571 | | | | 21,424 | | | | 10,591 | | | | 41,586 | | |\n| CRE | | 2,231 | | | | 9,203 | | | | 4,412 | | | | 15,846 | | |\n| Lease financing | | 1 | | | | 59 | | | | 45 | | | | 105 | | |\n| Total variable rate | | 11,803 | | | | 30,686 | | | | 15,048 | | | | 57,537 | | |\n| Total commercial loans and leases | | $ | 15,644 | | | $ | 42,028 | | | $ | 27,341 | | | $ | 85,013 | |\n\n","source":"TFC\/10-K\/0000092230-19-000017"} {"title":"Lending Activities","text":"(1)Commercial and industrial loans and direct loans totaling $2.3 billion and $127 million, respectively, have been excluded from the weighted average remaining term because they are callable on demand. Certain residential mortgage loans have an initial period where the borrower is only required to pay the periodic interest. After the interest-only period, the loan will require the payment of both interest and principal over the remaining term. The outstanding balances of residential mortgage loans in the interest-only phase were approximately $64 million and $126 million at December\u00a031,\u00a02018 and December\u00a031,\u00a02017, respectively. At December\u00a031,\u00a02018, approximately 95.9% of the interest-only balances will begin amortizing within the next three years compared to 95.0% at December\u00a031,\u00a02017.Home equity lines, which are a component of the direct retail portfolio, generally require interest-only payments during the first 15 years after origination. After this initial period, the outstanding balance begins amortizing and requires the payment of both interest and principal. At\u00a0December\u00a031,\u00a02018, the direct retail lending portfolio includes $7.2 billion of variable rate home equity lines and $1.1 billion of variable rate other lines of credit. Approximately $5.7 billion of the variable rate home equity lines is currently in the interest-only phase and approximately 10.3% of these balances will begin amortizing within the next three years. Approximately $949 million of the outstanding balance of variable rate other lines of credit is in the interest-only phase and 15.9% of these balances will begin amortizing within the next three years. Variable rate home equity lines and other lines of credit typically reset on a monthly basis.\u00a0The following table presents the most recent composition of average loans and leases:","markdown_table":"\n\n| | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | | | | | | | | | | |\n| Table 13: Variable Rate Loans (Excluding PCI and LHFS) | | | | | | | | | | | |\n| December\u00a031,\u00a02018(Dollars in millions) | | Outstanding Balance | | | | Wtd. Avg. Contractual Rate | | | Wtd. Avg. Remaining Term (1) | | |\n| Commercial: | | | | | | | | | | | |\n| Commercial and industrial | | $ | 41,586 | | | 4.02 | % | | 4.2 | | yrs |\n| CRE | | 15,846 | | | | 4.85 | | | 3.9 | | |\n| Lease financing | | 105 | | | | 3.98 | | | 5.5 | | |\n| Retail: | | | | | | | | | | | |\n| Residential mortgage | | 4,451 | | | | 3.90 | | | 24.0 | | |\n| Direct | | 8,464 | | | | 5.41 | | | 7.7 | | |\n| Indirect | | 12 | | | | 5.04 | | | NM | | |\n| Revolving credit | | 2,870 | | | | 11.79 | | | NM | | |\n\n","source":"TFC\/10-K\/0000092230-19-000017"} {"title":"Lending Activities","text":"Average loans held for investment for the fourth quarter of 2018 were $147.5 billion, up $1.3 billion, or 3.6% annualized compared to the third quarter of 2018. Average commercial and industrial loans increased $653 million driven by strong growth in corporate banking and dealer floor plan, partially offset by a decline in mortgage warehouse lending. Average residential mortgage loans increased $603 million primarily due to the retention of a portion of the conforming mortgage production.Average indirect retail loans increased $154 million. This increase was primarily due to strong growth in automobile lending.Average revolving credit increased $123 million due to a new product launched early in the third quarter. BB&T made changes to its credit card products to offer more attractive features to existing clients and attract new clients. \u00a0BB&T Corporation 44","markdown_table":"\n\n| | | | | | | | | | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | | | | | | | | | | | | | | | | | | | |\n| Table 14: Composition of Average Loans and Leases | | | | | | | | | | | | | | | | | | | | |\n| For the Three Months Ended(Dollars in millions) | | Dec\u00a031, 2018 | | | | Sep\u00a030, 2018 | | | | Jun\u00a030, 2018 | | | | Mar\u00a031, 2018 | | | | Dec\u00a031, 2017 | | |\n| Commercial: | | | | | | | | | | | | | | | | | | | | |\n| Commercial and industrial | | $ | 60,553 | | | $ | 59,900 | | | $ | 59,548 | | | $ | 58,627 | | | $ | 58,478 | |\n| CRE | | 21,301 | | | | 21,496 | | | | 21,546 | | | | 21,398 | | | | 20,998 | | |\n| Lease financing | | 1,990 | | | | 1,941 | | | | 1,862 | | | | 1,872 | | | | 1,851 | | |\n| Retail: | | | | | | | | | | | | | | | | | | | | |\n| Residential mortgage | | 31,103 | | | | 30,500 | | | | 29,272 | | | | 28,824 | | | | 28,559 | | |\n| Direct | | 11,600 | | | | 11,613 | | | | 11,680 | | | | 11,791 | | | | 11,901 | | |\n| Indirect | | 17,436 | | | | 17,282 | | | | 16,804 | | | | 16,914 | | | | 17,426 | | |\n| Revolving credit | | 3,070 | | | | 2,947 | | | | 2,831 | | | | 2,798 | | | | 2,759 | | |\n| PCI | | 486 | | | | 518 | | | | 559 | | | | 631 | | | | 689 | | |\n| Total average loans and leases HFI | | $ | 147,539 | | | $ | 146,197 | | | $ | 144,102 | | | $ | 142,855 | | | $ | 142,661 | |\n\n","source":"TFC\/10-K\/0000092230-19-000017"} {"title":"Asset Quality","text":"Excludes loans held for sale. \u00a0\u00a0\u00a0\u00a0(1)During 2016, approximately $191 million of nonaccrual energy-related loans were sold.(2)During 2017, approximately $61 million of nonaccrual residential mortgage loans were sold.(3)During 2017, approximately $331 million of performing residential mortgage TDRs were sold.Asset quality continued to improve in 2018. Nonperforming assets totaled $585 million at December\u00a031, 2018, down $42 million compared to December\u00a031,\u00a02017. Nonperforming loans and leases represented 0.35% of loans and leases held for investment, a five basis point decrease compared to December\u00a031,\u00a02017. Performing TDRs were up $76 million during 2018 primarily in residential mortgage and indirect lending.Loans 90 days or more past due and still accruing totaled $462 million at December\u00a031, 2018, down $86 million compared to the prior year. The ratio of loans 90 days or more past due and still accruing as a percentage of loans and leases was 0.31% at December\u00a031, 2018, compared to 0.38% for the prior year. Excluding government guaranteed and PCI loans, the ratio of loans 90 days or more past due and still accruing as a percentage of loans and leases was 0.04% at December\u00a031, 2018, down one basis point compared to December\u00a031,\u00a02017.Loans 30-89 days past due and still accruing totaled $1.0 billion at December\u00a031, 2018, down slightly compared to the prior year. Problem loans include NPLs and loans that are 90 days or more past due and still accruing as disclosed in Table 15. In addition, for the commercial portfolio segment, loans that are rated special mention or substandard performing are closely monitored by management as potential problem loans. Refer to \"Note 3. Loans and ACL\" herein for additional disclosures related to these potential problem loans.","markdown_table":"\n\n| | | | | | | | | | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | | | | | | | | | | | | | | | | | | | |\n| Table 15: Asset Quality | | | | | | | | | | | | | | | | | | | | |\n| December 31,(Dollars in millions) | | 2018 | | | | 2017 | | | | 2016 | | | | 2015 | | | | 2014 | | |\n| NPAs: | | | | | | | | | | | | | | | | | | | | |\n| NPLs: | | | | | | | | | | | | | | | | | | | | |\n| Commercial and industrial | | $ | 200 | | | $ | 259 | | | $ | 369 | | | $ | 242 | | | $ | 243 | |\n| CRE | | 65 | | | | 45 | | | | 57 | | | | 51 | | | | 100 | | |\n| Lease financing | | 3 | | | | 1 | | | | 4 | | | | 1 | | | | \u2014 | | |\n| Residential mortgage | | 119 | | | | 129 | | | | 172 | | | | 173 | | | | 166 | | |\n| Direct | | 53 | | | | 64 | | | | 63 | | | | 43 | | | | 48 | | |\n| Indirect | | 82 | | | | 72 | | | | 71 | | | | 66 | | | | 59 | | |\n| Total NPLs HFI | | 522 | | | | 570 | | | | 736 | | | | 576 | | | | 616 | | |\n| Foreclosed real estate | | 35 | | | | 32 | | | | 50 | | | | 108 | | | | 143 | | |\n| Other foreclosed property | | 28 | | | | 25 | | | | 27 | | | | 28 | | | | 23 | | |\n| Total nonperforming assets (1)(2) | | $ | 585 | | | $ | 627 | | | $ | 813 | | | $ | 712 | | | $ | 782 | |\n| Performing TDRs: | | | | | | | | | | | | | | | | | | | | |\n| Commercial and industrial | | $ | 65 | | | $ | 50 | | | $ | 57 | | | $ | 50 | | | $ | 65 | |\n| CRE | | 10 | | | | 16 | | | | 25 | | | | 29 | | | | 57 | | |\n| Residential mortgage | | 656 | | | | 605 | | | | 769 | | | | 604 | | | | 621 | | |\n| Direct | | 55 | | | | 62 | | | | 67 | | | | 72 | | | | 84 | | |\n| Indirect | | 305 | | | | 281 | | | | 240 | | | | 194 | | | | 182 | | |\n| Revolving credit | | 28 | | | | 29 | | | | 29 | | | | 33 | | | | 41 | | |\n| Total performing TDRs (3) | | $ | 1,119 | | | $ | 1,043 | | | $ | 1,187 | | | $ | 982 | | | $ | 1,050 | |\n| Loans 90 days or more past due and still accruing: | | | | | | | | | | | | | | | | | | | | |\n| Commercial and industrial | | $ | \u2014 | | | $ | 1 | | | $ | \u2014 | | | $ | \u2014 | | | $ | \u2014 | |\n| CRE | | \u2014 | | | | 1 | | | | \u2014 | | | | \u2014 | | | | \u2014 | | |\n| Residential mortgage | | 405 | | | | 465 | | | | 522 | | | | 541 | | | | 731 | | |\n| Direct | | 7 | | | | 6 | | | | 6 | | | | 7 | | | | 12 | | |\n| Indirect | | 6 | | | | 6 | | | | 6 | | | | 5 | | | | 5 | | |\n| Revolving credit | | 14 | | | | 12 | | | | 12 | | | | 10 | | | | 9 | | |\n| PCI | | 30 | | | | 57 | | | | 90 | | | | 114 | | | | 188 | | |\n| Total loans 90 days or more past due and still accruing | | $ | 462 | | | $ | 548 | | | $ | 636 | | | $ | 677 | | | $ | 945 | |\n| Loans 30-89 days past due: | | | | | | | | | | | | | | | | | | | | |\n| Commercial and industrial | | $ | 34 | | | $ | 41 | | | $ | 44 | | | $ | 53 | | | $ | 37 | |\n| CRE | | 5 | | | | 8 | | | | 8 | | | | 22 | | | | 5 | | |\n| Lease financing | | 1 | | | | 4 | | | | 4 | | | | 1 | | | | \u2014 | | |\n| Residential mortgage | | 456 | | | | 472 | | | | 525 | | | | 475 | | | | 474 | | |\n| Direct | | 61 | | | | 65 | | | | 60 | | | | 58 | | | | 41 | | |\n| Indirect | | 436 | | | | 412 | | | | 377 | | | | 358 | | | | 285 | | |\n| Revolving credit | | 28 | | | | 23 | | | | 23 | | | | 22 | | | | 23 | | |\n| PCI | | 23 | | | | 27 | | | | 36 | | | | 42 | | | | 33 | | |\n| Total loans 30-89 days past due | | $ | 1,044 | | | $ | 1,052 | | | $ | 1,077 | | | $ | 1,031 | | | $ | 898 | |\n\n","source":"TFC\/10-K\/0000092230-19-000017"} {"title":"Asset Quality","text":"Applicable ratios are annualized.","markdown_table":"\n\n| | | | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | | | | | | | | | | | | | |\n| Table 16: Asset Quality Ratios | | | | | | | | | | | | | | |\n| As Of \/ For The Year Ended December 31, | 2018 | | | 2017 | | | 2016 | | | 2015 | | | 2014 | |\n| Loans 30-89 days past due and still accruing as a percentage of loans and leases HFI | 0.70 | % | | 0.73 | % | | 0.75 | % | | 0.76 | % | | 0.75 | % |\n| Loans 90 days or more past due and still accruing as a percentage of loans and leases HFI | 0.31 | | | 0.38 | | | 0.44 | | | 0.50 | | | 0.79 | |\n| NPLs as a percentage of loans and leases HFI | 0.35 | | | 0.40 | | | 0.51 | | | 0.42 | | | 0.51 | |\n| NPAs as a percentage of: | | | | | | | | | | | | | | |\n| Total assets | 0.26 | | | 0.28 | | | 0.37 | | | 0.34 | | | 0.42 | |\n| Loans and leases HFI plus foreclosed property | 0.39 | | | 0.44 | | | 0.57 | | | 0.52 | | | 0.65 | |\n| Net charge-offs as a percentage of average loans and leases HFI | 0.36 | | | 0.38 | | | 0.38 | | | 0.35 | | | 0.46 | |\n| ALLL as a percentage of loans and leases HFI | 1.05 | | | 1.04 | | | 1.04 | | | 1.07 | | | 1.23 | |\n| Ratio of ALLL to: | | | | | | | | | | | | | | |\n| Net charge-offs | 2.98x | | | 2.78x | | | 2.80x | | | 3.36x | | | 2.74x | |\n| NPLs | 2.99x | | | 2.62x | | | 2.03x | | | 2.53x | | | 2.39x | |\n| Loans 90 days or more past due and still accruing as a percentage of loans and leases HFI (1) | 0.04 | % | | 0.05 | % | | 0.07 | % | | 0.06 | % | | 0.09 | % |\n\n","source":"TFC\/10-K\/0000092230-19-000017"} {"title":"Asset Quality","text":"(1)\u00a0Includes charge-offs and losses recorded upon sale of $216 million and $236 million for the year ended December\u00a031,\u00a02018 and 2017, respectively.(2) Includes charge-offs and losses recorded upon sale of $31 million and $33 million for the year ended December\u00a031,\u00a02018 and 2017, respectively.TDRs occur when a borrower is experiencing, or is expected to experience, financial difficulties in the near-term and a concession has been granted to the borrower. As a result, BB&T will work with the borrower to prevent further difficulties and ultimately improve the likelihood of recovery on the loan. To facilitate this process, a concessionary modification that would not otherwise be considered may be granted, resulting in classification of the loan as a TDR.BB&T Corporation 46The following table provides a summary of performing TDR activity:","markdown_table":"\n\n| | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | | | | | | | |\n| Table 17: Rollforward of NPAs | | | | | | | | |\n| Year Ended December 31,(Dollars in millions) | | 2018 | | | | 2017 | | |\n| Balance, January 1 | | $ | 627 | | | $ | 813 | |\n| New NPAs | | 1,184 | | | | 1,297 | | |\n| Advances and principal increases | | 400 | | | | 328 | | |\n| Disposals of foreclosed assets (1) | | (459 | | ) | | (520 | | ) |\n| Disposals of NPLs (2) | | (95 | | ) | | (212 | | ) |\n| Charge-offs and losses | | (243 | | ) | | (251 | | ) |\n| Payments | | (673 | | ) | | (660 | | ) |\n| Transfers to performing status | | (155 | | ) | | (164 | | ) |\n| Other, net | | (1 | | ) | | (4 | | ) |\n| Ending balance, December\u00a031 | | $ | 585 | | | $ | 627 | |\n\n","source":"TFC\/10-K\/0000092230-19-000017"} {"title":"Asset Quality","text":"Payments and payoffs include scheduled principal payments, prepayments and payoffs of amounts outstanding. Transfers to nonperforming TDRs represent loans that no longer meet the requirements necessary to reflect the loan in accruing status.TDRs may be removed under certain conditions due to the passage of time. See additional disclosures included in \"Note 1. Basis of Presentation\". These loans were previously considered TDRs as a result of structural concessions such as extended interest-only terms or an amortization period that did not otherwise conform to normal underwriting guidelines.In addition, certain loans may be removed from classification as a TDR as a result of a subsequent non-concessionary re-modification. Non-concessionary re-modifications represent TDRs that did not contain concessionary terms at the date of a subsequent renewal\/modification and there was a reasonable expectation that the borrower would continue to comply with the terms of the loan subsequent to the date of the re-modification. A re-modification may be considered for such a re-classification if the loan has not had a forgiveness of principal or interest and the modified terms qualify as more than minor such that the re-modified loan is considered a new loan. Alternatively, such loans may be considered for reclassification in years subsequent to the date of the re-modification based on the passage of time as described in the preceding paragraph.In connection with consumer loan TDRs, a NPL will be returned to accruing status when current as to principal and interest and upon a sustained historical repayment performance (generally a minimum of six months).The following table provides further details regarding the payment status of TDRs outstanding at December\u00a031,\u00a02018:","markdown_table":"\n\n| | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | | | | | | | |\n| Table 18: Rollforward of Performing TDRs | | | | | | | | |\n| (Dollars in millions) | | 2018 | | | | 2017 | | |\n| Balance, January 1 | | $ | 1,043 | | | $ | 1,187 | |\n| Inflows | | 510 | | | | 635 | | |\n| Payments and payoffs | | (169 | | ) | | (253 | | ) |\n| Charge-offs | | (63 | | ) | | (55 | | ) |\n| Transfers to nonperforming TDRs, net | | (69 | | ) | | (78 | | ) |\n| Removal due to the passage of time | | (32 | | ) | | (46 | | ) |\n| Non-concessionary re-modifications | | (6 | | ) | | (3 | | ) |\n| Transferred to LHFS and\/or sold | | (95 | | ) | | (344 | | ) |\n| Balance, December\u00a031 | | $ | 1,119 | | | $ | 1,043 | |\n\n","source":"TFC\/10-K\/0000092230-19-000017"} {"title":"Asset Quality","text":"(1)Past due performing TDRs are included in past due disclosures and nonperforming TDRs are included in NPL disclosures.","markdown_table":"\n\n| | | | | | | | | | | | | | | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Table 19: Payment Status of TDRs (1) | | | | | | | | | | | | | | | | | | | | | | | | | |\n| December\u00a031,\u00a02018(Dollars in millions) | | Current | | | | | | | Past Due 30-89 Days | | | | | | | Past Due 90 Days Or More | | | | | | | Total | | |\n| Performing TDRs: | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Commercial: | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Commercial and industrial | | $ | 64 | | | 98.5 | % | | $ | 1 | | | 1.5 | % | | $ | \u2014 | | | \u2014 | % | | $ | 65 | |\n| CRE | | 10 | | | | 100.0 | | | \u2014 | | | | \u2014 | | | \u2014 | | | | \u2014 | | | 10 | | |\n| Retail: | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Residential mortgage | | 379 | | | | 57.8 | | | 116 | | | | 17.7 | | | 161 | | | | 24.5 | | | 656 | | |\n| Direct | | 53 | | | | 96.4 | | | 2 | | | | 3.6 | | | \u2014 | | | | \u2014 | | | 55 | | |\n| Indirect | | 245 | | | | 80.3 | | | 60 | | | | 19.7 | | | \u2014 | | | | \u2014 | | | 305 | | |\n| Revolving credit | | 24 | | | | 85.7 | | | 3 | | | | 10.7 | | | 1 | | | | 3.6 | | | 28 | | |\n| Total performing TDRs | | 775 | | | | 69.2 | | | 182 | | | | 16.3 | | | 162 | | | | 14.5 | | | 1,119 | | |\n| Nonperforming TDRs | | 81 | | | | 46.1 | | | 8 | | | | 4.5 | | | 87 | | | | 49.4 | | | 176 | | |\n| Total TDRs | | $ | 856 | | | 66.1 | | | $ | 190 | | | 14.7 | | | $ | 249 | | | 19.2 | | | $ | 1,295 | |\n\n","source":"TFC\/10-K\/0000092230-19-000017"} {"title":"ACL","text":"The ACL consists of the ALLL, which is presented separately on the Consolidated Balance Sheets, and the RUFC, which is included in other liabilities on the Consolidated Balance Sheets.\u00a0The ACL totaled $1.7 billion at December\u00a031,\u00a02018, up $42 million compared to December\u00a031,\u00a02017.The ALLL, excluding PCI, was $1.5 billion, up $87 million compared to December\u00a031,\u00a02017. The allowance for PCI loans was $9 million, down $19 million compared to December\u00a031,\u00a02017. As of December\u00a031,\u00a02018, the total allowance for loan and lease losses was 1.05% of loans and leases held for investment, compared to 1.04% at December\u00a031,\u00a02017. These amounts include acquired loans, which were marked to fair value and did not receive an ALLL at the acquisition date.The ALLL was 2.99 times NPLs held for investment, compared to 2.62 times at December\u00a031,\u00a02017. At December\u00a031, 2018, the ALLL was 2.98 times annual net charge-offs, compared to 2.78 times at December\u00a031, 2017.Net charge-offs during 2018 totaled $524 million, or 0.36% of average loans and leases, down two basis points compared to 2017.BB&T Corporation 48The following table presents an allocation of the ALLL at the periods shown. This allocation of the ALLL is calculated on an approximate basis and is not necessarily indicative of future losses or allocations. The entire amount of the allowance is available to absorb losses occurring in any category of loans and leases.","markdown_table":"\n\n| | | | | | | | | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | | | | | | | | | | | | | | | | | | |\n| Table 20: Activity in ACL | | | | | | | | | | | | | | | | | | | |\n| Year Ended December 31,(Dollars in millions) | 2018 | | | | 2017 | | | | 2016 | | | | 2015 | | | | 2014 | | |\n| Balance, beginning of period | $ | 1,609 | | | $ | 1,599 | | | $ | 1,550 | | | $ | 1,534 | | | $ | 1,821 | |\n| Provision for credit losses (excluding PCI loans) | 583 | | | | 562 | | | | 574 | | | | 430 | | | | 280 | | |\n| Provision (benefit) for PCI loans | (17 | | ) | | (15 | | ) | | (2 | | ) | | (2 | | ) | | (29 | | ) |\n| Charge-offs: | | | | | | | | | | | | | | | | | | | |\n| Commercial and industrial | (92 | | ) | | (95 | | ) | | (143 | | ) | | (90 | | ) | | (143 | | ) |\n| CRE | (13 | | ) | | (10 | | ) | | (9 | | ) | | (24 | | ) | | (42 | | ) |\n| Lease financing | (4 | | ) | | (5 | | ) | | (6 | | ) | | \u2014 | | | | \u2014 | | |\n| Residential mortgage | (21 | | ) | | (47 | | ) | | (40 | | ) | | (46 | | ) | | (84 | | ) |\n| Direct | (71 | | ) | | (61 | | ) | | (53 | | ) | | (54 | | ) | | (69 | | ) |\n| Indirect | (391 | | ) | | (402 | | ) | | (366 | | ) | | (303 | | ) | | (280 | | ) |\n| Revolving credit | (84 | | ) | | (76 | | ) | | (69 | | ) | | (70 | | ) | | (71 | | ) |\n| PCI | (2 | | ) | | (1 | | ) | | (15 | | ) | | (1 | | ) | | (21 | | ) |\n| Total charge-offs | (678 | | ) | | (697 | | ) | | (701 | | ) | | (588 | | ) | | (710 | | ) |\n| Recoveries: | | | | | | | | | | | | | | | | | | | |\n| Commercial and industrial | 39 | | | | 36 | | | | 44 | | | | 38 | | | | 45 | | |\n| CRE | 8 | | | | 16 | | | | 19 | | | | 18 | | | | 33 | | |\n| Lease financing | 1 | | | | 2 | | | | 2 | | | | \u2014 | | | | \u2014 | | |\n| Residential mortgage | 2 | | | | 2 | | | | 3 | | | | 3 | | | | 7 | | |\n| Direct | 23 | | | | 25 | | | | 26 | | | | 29 | | | | 29 | | |\n| Indirect | 62 | | | | 60 | | | | 55 | | | | 44 | | | | 39 | | |\n| Revolving credit | 19 | | | | 19 | | | | 20 | | | | 20 | | | | 19 | | |\n| Total recoveries | 154 | | | | 160 | | | | 169 | | | | 152 | | | | 172 | | |\n| Net charge-offs | (524 | | ) | | (537 | | ) | | (532 | | ) | | (436 | | ) | | (538 | | ) |\n| Other | \u2014 | | | | \u2014 | | | | 9 | | | | 24 | | | | \u2014 | | |\n| Balance, end of period | $ | 1,651 | | | $ | 1,609 | | | $ | 1,599 | | | $ | 1,550 | | | $ | 1,534 | |\n| ALLL (excluding PCI loans) | $ | 1,549 | | | $ | 1,462 | | | $ | 1,445 | | | $ | 1,399 | | | $ | 1,410 | |\n| ALLL for PCI loans | 9 | | | | 28 | | | | 44 | | | | 61 | | | | 64 | | |\n| RUFC | 93 | | | | 119 | | | | 110 | | | | 90 | | | | 60 | | |\n| Total ACL | $ | 1,651 | | | $ | 1,609 | | | $ | 1,599 | | | $ | 1,550 | | | $ | 1,534 | |\n\n","source":"TFC\/10-K\/0000092230-19-000017"} {"title":"ACL","text":"BB&T monitors the performance of its home equity loans and lines secured by second liens similarly to other consumer loans and utilizes assumptions specific to these loans in determining the necessary ALLL. BB&T also receives notification when the first lien holder, whether BB&T or another financial institution, has initiated foreclosure proceedings against the borrower. When notified that the first lien is in the process of foreclosure, BB&T obtains valuations to determine if any additional charge-offs or reserves are warranted. These valuations are updated at least annually thereafter.BB&T has limited ability to monitor the delinquency status of the first lien, unless the first lien is held or serviced by BB&T. As a result, using migration assumptions that are based on historical experience and adjusted for current trends, BB&T estimates the volume of second lien positions where the first lien is delinquent and adjusts the ALLL to reflect the increased risk of loss on these credits. Finally, BB&T also provides additional reserves for second lien positions when the estimated combined current loan to value ratio for the credit exceeds 100%. As of December\u00a031,\u00a02018, BB&T held or serviced the first lien on 29.8% of its second lien positions.","markdown_table":"\n\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Table 21: Allocation of ALLL by Category | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | | 2018 | | | | | | | 2017 | | | | | | | 2016 | | | | | | | 2015 | | | | | | | 2014 | | | | | |\n| December 31,(Dollars in millions) | | Amount | | | | % Loans in each category | | | Amount | | | | % Loans in each category | | | Amount | | | | % Loans in each category | | | Amount | | | | % Loans in each category | | | Amount | | | | % Loans in each category | |\n| Commercial and industrial | | $ | 546 | | | 41.5 | % | | $ | 522 | | | 41.1 | % | | $ | 530 | | | 40.3 | % | | $ | 488 | | | 39.6 | % | | $ | 445 | | | 38.5 | % |\n| CRE | | 190 | | | | 14.1 | | | 160 | | | | 14.8 | | | 145 | | | | 13.8 | | | 175 | | | | 13.5 | | | 212 | | | | 11.8 | |\n| Lease financing | | 11 | | | | 1.4 | | | 9 | | | | 1.3 | | | 7 | | | | 1.2 | | | 5 | | | | 1.1 | | | 4 | | | | 0.9 | |\n| Residential mortgage | | 232 | | | | 21.1 | | | 209 | | | | 20.0 | | | 227 | | | | 20.8 | | | 217 | | | | 22.4 | | | 253 | | | | 25.9 | |\n| Direct | | 97 | | | | 7.8 | | | 106 | | | | 8.3 | | | 103 | | | | 8.4 | | | 105 | | | | 8.2 | | | 110 | | | | 6.8 | |\n| Indirect | | 356 | | | | 11.7 | | | 348 | | | | 12.0 | | | 327 | | | | 13.0 | | | 305 | | | | 12.6 | | | 276 | | | | 13.0 | |\n| Revolving credit | | 117 | | | | 2.1 | | | 108 | | | | 2.0 | | | 106 | | | | 1.9 | | | 104 | | | | 1.8 | | | 110 | | | | 2.1 | |\n| PCI | | 9 | | | | 0.3 | | | 28 | | | | 0.5 | | | 44 | | | | 0.6 | | | 61 | | | | 0.8 | | | 64 | | | | 1.0 | |\n| Total ALLL | | 1,558 | | | | 100.0 | % | | 1,490 | | | | 100.0 | % | | 1,489 | | | | 100.0 | % | | 1,460 | | | | 100.0 | % | | 1,474 | | | | 100.0 | % |\n| RUFC | | 93 | | | | | | | 119 | | | | | | | 110 | | | | | | | 90 | | | | | | | 60 | | | | | |\n| Total ACL | | $ | 1,651 | | | | | | $ | 1,609 | | | | | | $ | 1,599 | | | | | | $ | 1,550 | | | | | | $ | 1,534 | | | | |\n\n","source":"TFC\/10-K\/0000092230-19-000017"} {"title":"Deposits","text":"Average deposits for the fourth quarter were $157.8 billion, up $571 million compared to the third quarter of 2018. Average noninterest-bearing deposits decreased $442 million, driven by decreases in commercial balances.Average interest checking increased $266 million primarily due to increases in commercial and public fund balances, partially offset by a decrease in personal balances. Average money market and savings deposits decreased $696 million primarily due to a decrease in commercial balances. Average time deposits increased $1.3 billion primarily due to increases in commercial balances. Average foreign office deposits increased $114 million due to changes in the overall funding mix.Noninterest-bearing deposits represented 34.0% of total average deposits for the fourth quarter, compared to 34.4% for the prior quarter and 34.4% a year ago. The cost of total deposits was 0.52% for the fourth quarter, up nine basis points compared to the prior quarter. The cost of interest-bearing deposits was 0.78% for the fourth quarter, up 12 basis points compared to the prior quarter.","markdown_table":"\n\n| | | | | | | | | | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | | | | | | | | | | | | | | | | | | | |\n| Table 22: Composition of Average Deposits | | | | | | | | | | | | | | | | | | | | |\n| Three Months Ended(Dollars in millions) | | Dec\u00a031, 2018 | | | | Sep\u00a030, 2018 | | | | Jun\u00a030, 2018 | | | | Mar\u00a031, 2018 | | | | Dec\u00a031, 2017 | | |\n| Noninterest-bearing deposits | | $ | 53,732 | | | $ | 54,174 | | | $ | 53,963 | | | $ | 53,396 | | | $ | 54,288 | |\n| Interest checking | | 26,921 | | | | 26,655 | | | | 26,969 | | | | 27,270 | | | | 26,746 | | |\n| Money market and savings | | 62,261 | | | | 62,957 | | | | 62,105 | | | | 61,690 | | | | 61,693 | | |\n| Time deposits | | 14,682 | | | | 13,353 | | | | 13,966 | | | | 13,847 | | | | 13,744 | | |\n| Foreign office deposits - interest-bearing | | 246 | | | | 132 | | | | 673 | | | | 935 | | | | 1,488 | | |\n| Total average deposits | | $ | 157,842 | | | $ | 157,271 | | | $ | 157,676 | | | $ | 157,138 | | | $ | 157,959 | |\n\n","source":"TFC\/10-K\/0000092230-19-000017"} {"title":"Borrowings","text":"At December\u00a031,\u00a02018, short-term borrowings totaled $5.2 billion, an increase of $240 million compared to December\u00a031,\u00a02017. Short-term borrowings fluctuate based on the Company's funding needs. Average short-term borrowings were $6.0 billion or 2.7% of total funding on average in 2018 as compared to $4.3 billion or 2.0% in 2017. BB&T Corporation 50Long-term debt provides funding and, to a lesser extent, regulatory capital, and primarily consists of senior and subordinated notes issued by BB&T and Branch Bank. Long-term debt totaled $23.7 billion at December\u00a031,\u00a02018, an increase of $61 million compared to December\u00a031,\u00a02017. The average cost of long-term debt was 2.88% in 2018, up 78 basis points compared to 2017. FHLB advances represented 7.4% of total outstanding long-term debt at December\u00a031,\u00a02018, compared to 10.5% at December\u00a031,\u00a02017. See \"Note 8. Long-Term Debt\" for additional disclosures.","markdown_table":"\n\n| | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | | | | | | | | | | | |\n| Table 24: Short-Term Borrowing | | | | | | | | | | | | |\n| As Of \/ For The Year Ended December 31,(Dollars in millions) | | 2018 | | | | 2017 | | | | 2016 | | |\n| Securities sold under agreements to repurchase: | | | | | | | | | | | | |\n| Maximum outstanding at any month-end during the year | | $ | 836 | | | $ | 1,923 | | | $ | 2,265 | |\n| Balance outstanding at end of year | | 251 | | | | 483 | | | | 970 | | |\n| Average outstanding during the year | | 446 | | | | 1,449 | | | | 1,600 | | |\n| Average interest rate during the year | | 1.35 | | % | | 0.70 | | % | | 0.37 | | % |\n| Average interest rate at end of year | | 1.59 | | | | 0.43 | | | | 0.52 | | |\n| Federal funds purchased and short-term borrowed funds: | | | | | | | | | | | | |\n| Maximum outstanding at any month-end during the year | | $ | 9,063 | | | $ | 6,859 | | | $ | 3,003 | |\n| Balance outstanding at end of year | | 4,927 | | | | 4,455 | | | | 436 | | |\n| Average outstanding during the year | | 5,509 | | | | 2,862 | | | | 954 | | |\n| Average interest rate during the year | | 1.92 | | % | | 1.06 | | % | | 0.30 | | % |\n| Average interest rate at end of year | | 2.49 | | | | 1.34 | | | | 0.71 | | |\n\n","source":"TFC\/10-K\/0000092230-19-000017"} {"title":"Risk Management","text":"The CRO leads the RMO, which designs, organizes and manages BB&T's risk management framework. The RMO is responsible for ensuring effective risk management oversight, measurement, monitoring, reporting and consistency. The CRO has direct access to the Board of Directors and Executive Management. The CRO is responsible for identifying and communicating in a timely manner to the CEO and the Board of Directors meaningful risks and significant instances when the RMO's assessment of risk differs from that of a BU, significant instances when a BU is not adhering to the risk governance framework, and BB&T's risk profile in relation to its risk appetite on at least a quarterly basis. In the event that the CRO and CEO's assessment of risk were to differ or if the CEO were to not adhere to the risk management framework, the CRO would have the responsibility to report such matters to the Board of Directors.The Executive Management-led enterprise risk committees provide oversight of the first and second lines of defense and communicate risk appetite and values to the RMO. The CRO and the enterprise risk committees approve policies, set risk limits and tolerances and monitor results.The RMC, CRMC, ORMC, CROC, MRLCC and CCRC are the enterprise risk committees and provide oversight of the risks as described in the common risk language. There is Executive Management representation in all six committees. The risk management framework is composed of specialized risk functions focused on specific types of risk. The MRLCC, CRMC, CROC, ORMC and CCRC provide oversight of market, liquidity, capital, credit, compliance, and operational risk while RMC provides a fully integrated view of all material risks across the company. The RMC provides oversight of all risks and its purpose is to review BB&T's aggregate risk exposure, evaluate risk appetite, and evaluate risks not reviewed by other risk committees.The RMC is responsible for taking a broad view of risk, incorporating information from all risk functions. This combination of broad and specific focus provides the most effective framework for the management of risk. The RMC is chaired by the CRO and its membership includes all members of Executive Management, the General Auditor (ex officio) and senior leaders from Financial Management, the RMO and other areas.The principal types of inherent risk include compliance, credit, liquidity, market, operational, reputation and strategic risks.","markdown_table":"\n\n| | | | | |\n| --- | --- | --- | --- | --- |\n| | | | | |\n| Risk Committees | Board of Directors | | | Executive Management |\n| | | |\n| 1st\u00a0Line of Defense | 2nd\u00a0Line of Defense | 3rd\u00a0Line of Defense |\n| Business Units | Risk Functions | Audit Services |\n| | | |\n| Chief Risk Officer | | |\n\n","source":"TFC\/10-K\/0000092230-19-000017"} {"title":"Interest Rate Market Risk (Other than Trading)","text":"The MRLCC has established parameters related to interest sensitivity that prescribe a maximum negative impact on net interest income under different interest rate scenarios. In the event the results of the Simulation model fall outside the established parameters, management will make recommendations to the MRLCC on the most appropriate response given the current economic forecast. The following parameters and interest rate scenarios are considered BB&T's primary measures of interest rate risk:\u2022Maximum negative impact on net interest income of 2% for the next 12 months assuming a 25 basis point change in interest rates each month for four months followed by a flat interest rate scenario for the remaining eight month period.\u2022Maximum negative impact on net interest income of 4% for the next 12 months assuming a 25 basis point change in interest rates each month for eight months followed by a flat interest rate scenario for the remaining four month period.If a parallel rate change of 200 basis points cannot be modeled due to a low level of rates, a proportional limit applies, and the maximum negative impact on net interest income is adjusted on a proportional basis. Regardless of the proportional limit, the negative risk exposure limit will be the greater of the 4% or the proportional limit.Management has also established a maximum negative impact on net interest income of 4% for an immediate 100 basis points parallel change in rates and 8% for an immediate 200 basis points parallel change in rates. These \"interest rate shock\" limits are designed to create an outer band of acceptable risk based upon a significant and immediate change in rates.Management has temporarily suspended its interest rate exposure limits to declining interest rates.\u00a0Although, the Federal Reserve has raised rates nine times beginning in December 2015, competitive pressure on deposit rates was slow to materialize. As a result, asset repricing in excess of liability repricing has caused the measured exposure to declining rates to increase. Management closely monitors its interest rate risk position.Management considers how the balance sheet and interest rate risk position could be impacted by changes in balance sheet mix. Liquidity in the banking industry has been very strong during the current economic cycle. Much of this liquidity increase has been due to a significant increase in noninterest-bearing demand deposits. Consistent with the industry, Branch Bank has seen a significant increase in this funding source. The behavior of these deposits is one of the most important assumptions used in determining the interest rate risk position of BB&T. A loss of these deposits in the future would reduce the asset sensitivity of BB&T's balance sheet as the Company increases interest-bearing funds to offset the loss of this advantageous funding source.Beta represents the correlation between overall market interest rates and the rates paid by BB&T on interest-bearing deposits. BB&T applies an average beta of approximately 55% to its non-maturity interest-bearing deposit accounts for determining its interest rate sensitivity. Non-maturity interest-bearing deposit accounts include interest checking accounts, savings accounts and money market accounts that do not have a contractual maturity. The actual deposit beta on non-maturity interest-bearing deposits has been less than 27% since rates began to rise in December 2015. However, BB&T expects the beta to increase as rates continue to rise as evidenced by the 39% beta on interest bearing-deposits related to the September 2018 federal funds rate increase. BB&T regularly conducts sensitivity on other key variables to determine the impact they could have on the interest rate risk position. This allows BB&T to evaluate the likely impact on its balance sheet management strategies due to a more extreme variation in a key assumption than expected.The following table shows the results of BB&T's interest-rate sensitivity position assuming the loss of demand deposits and an associated increase in managed rate deposits under various scenarios. For purposes of this analysis, BB&T modeled the incremental beta for the replacement of the lost demand deposits at 100%.","markdown_table":"\n\n| | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | | | | | | | | | | | |\n| Table 25: Interest Sensitivity Simulation Analysis | | | | | | | | | | | | |\n| Interest Rate Scenario | | | | | | | | Annualized Hypothetical Percentage Change in Net Interest Income | | | | |\n| Linear Change in Prime Rate | | Prime Rate | | | | | |\n| | Dec\u00a031, 2018 | | | Dec\u00a031, 2017 | | | Dec\u00a031, 2018 | | | Dec\u00a031, 2017 | |\n| Up 200 bps | | 7.50 | % | | 6.50 | % | | 1.80 | % | | 3.09 | % |\n| Up 100 | | 6.50 | | | 5.50 | | | 1.22 | | | 2.07 | |\n| No Change | | 5.50 | | | 4.50 | | | \u2014 | | | \u2014 | |\n| Down 100 | | 4.50 | | | 3.50 | | | (3.17 | ) | | (6.62 | ) |\n| Down 200 | | 4.00 | | | N\/A | | | (7.04 | ) | | N\/A | |\n\n","source":"TFC\/10-K\/0000092230-19-000017"} {"title":"Interest Rate Market Risk (Other than Trading)","text":"(1) The base scenario is equal to the annualized hypothetical percentage change in net interest income at December\u00a031,\u00a02018 as presented in the preceding table.If rates increased 200 basis points, BB&T could absorb the loss of $8.9 billion, or 16.7%, of noninterest-bearing deposits and replace them with managed rate deposits with a beta of 100% before becoming neutral to interest rate changes.The following table shows the effect that the indicated changes in interest rates would have on EVE. Key assumptions in the preparation of the table include prepayment speeds of mortgage-related and other assets, cash flows and maturities of derivative financial instruments, loan volumes and pricing and deposit sensitivity.","markdown_table":"\n\n| | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | | | | | | | | |\n| Table 26: Deposit Mix Sensitivity Analysis | | | | | | | | | |\n| Linear Change in Rates | | Base Scenario at December\u00a031,\u00a02018 (1) | | | Results Assuming a Decrease in Noninterest-Bearing Demand Deposits | | | | |\n| | |\n| | | $1 Billion | | | $5 Billion | |\n| Up 200 bps | | 1.80 | % | | 1.60 | % | | 0.79 | % |\n| Up 100 | | 1.22 | | | 1.09 | | | 0.59 | |\n\n","source":"TFC\/10-K\/0000092230-19-000017"} {"title":"Branch Bank","text":"1)In connection with the pending SunTrust merger, Moody's placed BB&T's credit ratings under review for possible downgrade. BB&T and Branch Bank have Contingency Funding Plans designed to ensure that liquidity sources are sufficient to meet their ongoing obligations and commitments, particularly in the event of a liquidity contraction. These plans are designed to examine and quantify the organization's liquidity under various \"stress\" scenarios. Additionally, the plans provide a framework for management and other critical personnel to follow in the event of a liquidity contraction or in anticipation of such an event. The plans address authority for activation and decision making, liquidity options and the responsibilities of key departments in the event of a liquidity contraction. The liquidity options available to management could include seeking secured funding, asset sales, and under the most extreme scenarios, curtailing new loan originations.Management believes current sources of liquidity are adequate to meet BB&T's current requirements and plans for continued growth. See \"Note 4. Premises and Equipment,\" \"Note 8. Long-Term Debt\" and \"Note 13. Commitments and Contingencies\" for additional information regarding outstanding balances of sources of liquidity and contractual commitments and obligations.","markdown_table":"\n\n| | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- |\n| | | | | | | | |\n| Table 28: Credit Ratings of BB&T Corporation and Branch Bank | | | | | | | |\n| | S&P | | Moody's (1) | | Fitch | | DBRS |\n| BB&T Corporation: | | | | | | | |\n| Commercial paper | A-2 | | N\/A | | F1 | | R-1(low) |\n| Issuer | A- | | A2 | | A+ | | A(high) |\n| LT\/senior debt | A- | | A2 | | A+ | | A(high) |\n| Subordinated debt | BBB+ | | A2 | | A | | A |\n| Preferred stock | BBB- | | Baa1(hyb) | | BBB- | | BBB(high) |\n| Branch Bank: | | | | | | | |\n| Long term deposits | N\/A | | Aa1 | | AA- | | AA(low) |\n| LT\/Senior unsecured bank notes | A | | A1 | | A+ | | AA(low) |\n| Other long term senior obligations | A | | N\/A | | A+ | | AA(low) |\n| Other short term senior obligations | A-1 | | N\/A | | F1 | | R-1(middle) |\n| Short term bank notes | A-1 | | P-1 | | F1 | | R-1(middle) |\n| Short term deposits | N\/A | | P-1 | | F1+ | | R-1(middle) |\n| Subordinated bank notes | A- | | A2 | | A | | A(high) |\n| Ratings outlook: | | | | | | | |\n| Credit trend | Stable | | Rating under review | | Stable | | Positive |\n\n","source":"TFC\/10-K\/0000092230-19-000017"} {"title":"Contractual Obligations, Commitments, Contingent Liabilities and Off-Balance Sheet Arrangements","text":"(1)Based on estimated payment dates.(2)Includes accrued interest, future contractual interest obligations and the impact of hedges in a loss position. Other derivatives are excluded. Variable rate payments are based upon the rate in effect at December\u00a031,\u00a02018.(3)Represents obligations to purchase goods or services that are enforceable and legally binding. Many of the purchase obligations have terms that are not fixed and determinable and are included in the table above based upon the estimated timing and amount of payment. In addition, certain of the purchase agreements contain clauses that would allow BB&T to cancel the agreement with specified notice; however, that impact is not included in the table above.(4)Although technically unfunded plans, Rabbi Trusts and insurance policies on the lives of certain of the covered employees are available to finance future benefit plan payments.BB&T Corporation 60BB&T's commitments include investments in affordable housing projects throughout its market area and private equity funds. Refer to \"Note 1. Basis of Presentation\" and \"Note 13. Commitments and Contingencies\" for further discussion of these commitments.In addition, BB&T enters into derivative contracts to manage various financial risks. A derivative is a financial instrument that derives its cash flows, and therefore its value, by reference to an underlying instrument, index or referenced interest rate. Derivative contracts are carried at fair value on the Consolidated Balance Sheets with the fair value representing the net present value of expected future cash receipts or payments based on market interest rates as of the balance sheet date. Derivative contracts are written in amounts referred to as notional amounts, which only provide the basis for calculating payments between counterparties and are not a measure of financial risk. Therefore, the derivative liabilities recorded on the balance sheet as of December\u00a031,\u00a02018 do not represent the amounts that may ultimately be paid under these contracts. Further discussion of derivative instruments is included in \"Note 1. Basis of Presentation\" and \"Note 17. Derivative Financial Instruments.\"In the ordinary course of business, BB&T indemnifies its officers and directors to the fullest extent permitted by law against liabilities arising from litigation. BB&T also issues standard representation and warranties in underwriting agreements, merger and acquisition agreements, loan sales, brokerage activities and other similar arrangements. Counterparties in many of these indemnifications provide similar indemnifications to BB&T. Although these agreements often do not specify limitations, BB&T does not believe that any payments related to these guarantees would materially change the financial condition or results of operations of BB&T.BB&T holds public funds in certain states that do not require 100% collateralization on public fund bank deposits. In these states, should the failure of another public fund depository institution result in a loss for the public entity, the resulting uncollateralized deposit shortfall would have to be absorbed on a pro-rata basis (based upon the public deposits held by each bank within the respective state) by the remaining financial institutions holding public funds in that state. BB&T monitors deposits levels relative to the total public deposits held by all depository institutions within these states. As a member of the FHLB, BB&T is required to maintain a minimum investment in capital stock. The board of directors of the FHLB can increase the minimum investment requirements in the event it has concluded that additional capital is required to allow it to meet its own regulatory capital requirements. Any increase in the minimum investment requirements outside of specified ranges requires the approval of the Federal Housing Finance Agency. Because the extent of any obligation to increase BB&T's investment in the FHLB depends entirely upon the occurrence of a future event, potential future payments to the FHLB are not determinable.In the normal course of business, BB&T is also a party to financial instruments to meet the financing needs of clients and to mitigate exposure to certain risks. Such financial instruments include commitments to extend credit and certain contractual agreements, including standby letters of credit and financial guarantee arrangements. Further discussion of BB&T's commitments is included in \"Note 13. Commitments and Contingencies\" and \"Note 16. Fair Value Disclosures.\"","markdown_table":"\n\n| | | | | | | | | | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | | | | | | | | | | | | | | | | | | | |\n| Table 29: Contractual Obligations and Other Commitments | | | | | | | | | | | | | | | | | | | | |\n| December\u00a031,\u00a02018(Dollars in millions) | | Total | | | | Less than 1 Year | | | | 1 to 3 Years | | | | 3 to 5 Years | | | | After 5 Years | | |\n| Long-term debt and capital leases | | $ | 23,802 | | | $ | 4,837 | | | $ | 10,015 | | | $ | 3,828 | | | $ | 5,122 | |\n| Operating leases | | 1,217 | | | | 217 | | | | 361 | | | | 260 | | | | 379 | | |\n| Commitments to fund affordable housing investments | | 919 | | | | 586 | | | | 277 | | | | 26 | | | | 30 | | |\n| Private equity and other investments commitments (1) | | 331 | | | | 74 | | | | 121 | | | | 93 | | | | 43 | | |\n| Time deposits | | 16,577 | | | | 12,308 | | | | 3,629 | | | | 636 | | | | 4 | | |\n| Contractual interest payments (2) | | 2,766 | | | | 849 | | | | 999 | | | | 520 | | | | 398 | | |\n| Purchase obligations (3) | | 1,238 | | | | 565 | | | | 578 | | | | 75 | | | | 20 | | |\n| Nonqualified benefit plan obligations (4) | | 1,153 | | | | 16 | | | | 33 | | | | 37 | | | | 1,067 | | |\n| Total contractual cash obligations | | $ | 48,003 | | | $ | 19,452 | | | $ | 16,013 | | | $ | 5,475 | | | $ | 7,063 | |\n\n","source":"TFC\/10-K\/0000092230-19-000017"} {"title":"Capital","text":"(1)BB&T's goal is to maintain capital levels above all regulatory minimums.While nonrecurring events or management decisions may result in the Company temporarily falling below its operating minimum guidelines for one or more of these ratios, it is management's intent to return to these targeted operating minimums within a reasonable period of time through capital planning. Such temporary decreases below the operating minimums shown above are not considered an infringement of BB&T's overall capital policy, provided a return above the minimums is forecasted to occur within a reasonable time period.Payments of cash dividends and repurchases of common shares are the methods used to manage any excess capital generated. In addition, management closely monitors the Parent Company's double leverage ratio (investments in subsidiaries as a percentage of shareholders' equity). The active management of the subsidiaries' equity capital, as described above, is the process used to manage this important driver of Parent Company liquidity and is a key element in the management of BB&T's capital position.Management intends to maintain capital at Branch Bank at levels that will result in classification as \"well-capitalized\" for regulatory purposes. Secondarily, it is management's intent to maintain Branch Bank's capital at levels that result in regulatory risk-based capital ratios that are generally comparable with peers of similar size, complexity and risk profile. If the capital levels of Branch Bank increase above these guidelines, excess capital may be transferred to the Parent Company in the form of special dividend payments, subject to regulatory and other operating considerations.BB&T regularly performs stress testing on its capital levels and is required to periodically submit the company's capital plans to the banking regulators. The FRB did not object to the Company's 2018 capital plan. On February 5, 2019, the FRB notified banks with less than $250 billion in assets that they will not need to participate in the 2019 supervisory stress test. However, BB&T may need to provide additional information as a result of the pending merger with SunTrust. Following the completion of the merger of equals with SunTrust, management's capital deployment plan in order of preference is to focus on 1) organic growth, 2) dividends and 3) strategic opportunities and\/or share repurchases depending on opportunities in the marketplace and BB&T's interest and ability to proceed with acquisitions. BB&T has suspended share repurchases as a result of the pending merger of equals with SunTrust.Branch Bank's capital ratios are presented in the following table:","markdown_table":"\n\n| | | | | | | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | | | | | | | | | | | | | | | | |\n| Table 30: Capital Requirements Under Basel III | | | | | | | | | | | | | | | | | |\n| | Minimum Capital | | | Well-Capitalized | | | Minimum Capital Plus Capital Conservation Buffer | | | | | | BB&T Targets | | | | |\n| | | | 2018 | | | 2019 | | | Operating (1) | | | Stressed | |\n| CET1 capital to risk-weighted assets | 4.5 | % | | 6.5 | % | | 6.375 | % | | 7.000 | % | | 8.5 | % | | 6.0 | % |\n| Tier 1 capital to risk-weighted assets | 6.0 | | | 8.0 | | | 7.875 | | | 8.500 | | | 10.0 | | | 7.5 | |\n| Total capital to risk-weighted assets | 8.0 | | | 10.0 | | | 9.875 | | | 10.500 | | | 12.0 | | | 9.5 | |\n| Leverage ratio | 4.0 | | | 5.0 | | | N\/A | | | N\/A | | | 8.0 | | | 5.5 | |\n\n","source":"TFC\/10-K\/0000092230-19-000017"} {"title":"Capital","text":"BB&T's capital ratios are presented in the following table:","markdown_table":"\n\n| | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- |\n| | | | | | | |\n| Table 31: Capital Ratios - Branch Bank | | | | | | |\n| December 31, | | 2018 | | | 2017 | |\n| CET1 to risk-weighted assets | | 11.2 | % | | 11.3 | % |\n| Tier 1 capital to risk-weighted assets | | 11.2 | | | 11.3 | |\n| Total capital to risk-weighted assets | | 13.2 | | | 13.3 | |\n| Leverage ratio | | 9.3 | | | 9.4 | |\n\n","source":"TFC\/10-K\/0000092230-19-000017"} {"title":"Capital","text":"(1)Tangible common equity and related measures are non-GAAP measures that exclude the impact of intangible assets and their related amortization. These measures are useful for evaluating the performance of a business consistently, whether acquired or developed internally. BB&T's management uses these measures to assess the quality of capital and returns relative to balance sheet risk and believes investors may find them useful in their analysis of the Corporation. These capital measures are not necessarily comparable to similar capital measures that may be presented by other companies.BB&T Corporation 62During 2018, BB&T completed $1.2 billion of stock repurchases and paid $1.2 billion in common stock dividends, which resulted in a total payout ratio of 78.7%for the year. BB&T's Board of Directors increased the dividend $0.075 during 2018, which increased the amount of the quarterly dividend to $0.405 per share. As of December\u00a031, 2018, the remaining stock repurchases authorized by the Board of Directors totaled $1.1 billion. BB&T has suspended share repurchases as a result of the pending merger of equals with SunTrust.","markdown_table":"\n\n| | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | | | | | | | |\n| Table 32: Capital Ratios - BB&T Corporation | | | | | | | | |\n| December\u00a031,(Dollars in millions, except per share data, shares in thousands) | | 2018 | | | | 2017 | | |\n| Risk-based: | | | | | | | | |\n| CET1 capital to risk-weighted assets | | 10.2 | | % | | 10.2 | | % |\n| Tier 1 capital to risk-weighted assets | | 11.8 | | | | 11.9 | | |\n| Total capital to risk-weighted assets | | 13.8 | | | | 13.9 | | |\n| Leverage ratio | | 9.9 | | | | 9.9 | | |\n| Non-GAAP capital measure (1): | | | | | | | | |\n| Tangible common equity per common share | | $ | 21.89 | | | $ | 21.07 | |\n| Calculation of tangible common equity (1): | | | | | | | | |\n| Total shareholders' equity | | $ | 30,178 | | | $ | 29,695 | |\n| Less: | | | | | | | | |\n| Preferred stock | | 3,053 | | | | 3,053 | | |\n| Noncontrolling interests | | 56 | | | | 47 | | |\n| Intangible assets, net of deferred taxes | | 10,360 | | | | 10,117 | | |\n| Tangible common equity | | $ | 16,709 | | | $ | 16,478 | |\n| Risk-weighted assets | | $ | 181,260 | | | $ | 177,217 | |\n| Common shares outstanding at end of period | | 763,326 | | | | 782,006 | | |\n\n","source":"TFC\/10-K\/0000092230-19-000017"} {"title":"Capital","text":"(1)Loans and leases are net of unearned income and include LHFS.","markdown_table":"\n\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Table 33: Quarterly Financial Summary \u2013 Unaudited | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | 2018 | | | | | | | | | | | | | | | | 2017 | | | | | | | | | | | | | | |\n| (Dollars in millions, except per share data) | Fourth Quarter | | | | Third Quarter | | | | Second Quarter | | | | First Quarter | | | | Fourth Quarter | | | | Third Quarter | | | | Second Quarter | | | | First Quarter | | |\n| Consolidated summary of operations: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Interest income | $ | 2,136 | | | $ | 2,069 | | | $ | 1,994 | | | $ | 1,921 | | | $ | 1,898 | | | $ | 1,877 | | | $ | 1,824 | | | $ | 1,775 | |\n| Interest expense | 431 | | | | 382 | | | | 337 | | | | 288 | | | | 254 | | | | 230 | | | | 189 | | | | 166 | | |\n| Provision for credit losses | 146 | | | | 135 | | | | 135 | | | | 150 | | | | 138 | | | | 126 | | | | 135 | | | | 148 | | |\n| Noninterest income | 1,235 | | | | 1,239 | | | | 1,222 | | | | 1,180 | | | | 1,225 | | | | 1,166 | | | | 1,220 | | | | 1,171 | | |\n| Noninterest expense | 1,784 | | | | 1,742 | | | | 1,720 | | | | 1,686 | | | | 1,855 | | | | 1,745 | | | | 1,742 | | | | 2,102 | | |\n| Provision for income taxes | 205 | | | | 210 | | | | 202 | | | | 186 | | | | 209 | | | | 294 | | | | 304 | | | | 104 | | |\n| Net income | 805 | | | | 839 | | | | 822 | | | | 791 | | | | 667 | | | | 648 | | | | 674 | | | | 426 | | |\n| Noncontrolling interest | 7 | | | | 7 | | | | 3 | | | | 3 | | | | 9 | | | | 8 | | | | (1 | | ) | | 5 | | |\n| Preferred stock dividends | 44 | | | | 43 | | | | 44 | | | | 43 | | | | 44 | | | | 43 | | | | 44 | | | | 43 | | |\n| Net income available to common shareholders | $ | 754 | | | $ | 789 | | | $ | 775 | | | $ | 745 | | | $ | 614 | | | $ | 597 | | | $ | 631 | | | $ | 378 | |\n| Basic EPS | $ | 0.99 | | | $ | 1.02 | | | $ | 1.00 | | | $ | 0.96 | | | $ | 0.78 | | | $ | 0.75 | | | $ | 0.78 | | | $ | 0.47 | |\n| Diluted EPS | $ | 0.97 | | | $ | 1.01 | | | $ | 0.99 | | | $ | 0.94 | | | $ | 0.77 | | | $ | 0.74 | | | $ | 0.77 | | | $ | 0.46 | |\n| Selected average balances: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Assets | $ | 223,625 | | | $ | 222,674 | | | $ | 221,344 | | | $ | 221,419 | | | $ | 222,525 | | | $ | 220,732 | | | $ | 221,018 | | | $ | 219,961 | |\n| Securities, at amortized cost | 46,610 | | | | 46,299 | | | | 47,145 | | | | 48,374 | | | | 48,093 | | | | 45,968 | | | | 45,410 | | | | 44,607 | | |\n| Loans and leases (1) | 148,457 | | | | 147,489 | | | | 145,752 | | | | 143,906 | | | | 144,089 | | | | 144,181 | | | | 144,327 | | | | 143,698 | | |\n| Total earning assets | 197,213 | | | | 196,200 | | | | 195,094 | | | | 194,530 | | | | 195,305 | | | | 193,073 | | | | 193,386 | | | | 192,564 | | |\n| Deposits | 157,842 | | | | 157,271 | | | | 157,676 | | | | 157,138 | | | | 157,959 | | | | 157,414 | | | | 160,263 | | | | 161,383 | | |\n| Short-term borrowings | 6,979 | | | | 6,023 | | | | 5,323 | | | | 5,477 | | | | 6,342 | | | | 5,983 | | | | 2,748 | | | | 2,105 | | |\n| Long-term debt | 23,488 | | | | 24,211 | | | | 23,639 | | | | 23,677 | | | | 22,639 | | | | 21,459 | | | | 21,767 | | | | 20,757 | | |\n| Total interest-bearing liabilities | 134,577 | | | | 133,331 | | | | 132,675 | | | | 132,896 | | | | 132,652 | | | | 131,367 | | | | 132,205 | | | | 133,150 | | |\n| Shareholders' equity | 29,965 | | | | 29,887 | | | | 29,585 | | | | 29,528 | | | | 29,853 | | | | 29,948 | | | | 30,302 | | | | 29,903 | | |\n\n","source":"TFC\/10-K\/0000092230-19-000017"} {"title":"ACL","text":"BB&T Corporation 64For collectively evaluated loans, the ALLL is determined by multiplying the loan exposure estimated at the time of default by the loss frequency and loss severity factors. For individually evaluated loans, the ALLL is determined through review of data specific to the borrower. For TDRs, default expectations and estimated slower prepayment speeds that are specific to each of the restructured loan populations are incorporated in the determination of the ALLL. Also included in management's estimates for loan and lease losses are considerations with respect to the impact of current economic events, the outcomes of which are uncertain. These events may include, but are not limited to, fluctuations in overall interest rates, political conditions, legislation that may directly or indirectly affect the banking industry and economic conditions affecting specific geographical areas and industries in which BB&T conducts business.The methodology used to determine an estimate for the RUFC is inherently similar to the methodology used in calculating the ALLL adjusted for factors specific to binding commitments, including the probability of funding and exposure at the time of funding. A detailed discussion of the methodology used in determining the ALLL and the RUFC is included in \"Note 1. Basis of Presentation.\"","markdown_table":"\n\n| | | |\n| --- | --- | --- |\n| | | |\n| Loss Estimate Factor | | Description |\n| Loss frequency | | Indicates the likelihood of a borrower defaulting on a loan |\n| Loss severity | | Indicates the amount of estimated loss at the time of default |\n\n","source":"TFC\/10-K\/0000092230-19-000017"} {"title":"NPAs","text":"(1)Loans may be returned to accrual status when they become current as to both principal and interest and concern no longer exists as to the collectability of principal and interest, generally indicated by 180 days of sustained performance.(2)Or when it is probable that principal or interest is not fully collectible, whichever occurs first.(3)Depends on product type, loss mitigation status and status of the government guaranty.When commercial loans are placed on nonperforming status, a charge-off is recorded, as applicable, to decrease the carrying value of such loans to the estimated recoverable amount. Retail loans are subject to mandatory charge-off at a specified delinquency date consistent with regulatory guidelines. As such, retail loans are subject to collateral valuation and charge-off, as applicable, when they are moved to nonperforming status.Certain past due loans may remain on accrual status if management determines that it does not have concern over the collectability of principal and interest. Generally, when loans are placed on nonperforming status, accrued interest receivable is reversed against interest income in the current period and amortization of deferred loan fees and expenses is suspended. Payments received for interest and lending fees thereafter are applied as a reduction to the remaining principal balance as long as concern exists as to the ultimate collection of the principal.Assets acquired as a result of foreclosure are subsequently carried at the lower of cost or net realizable value. Net realizable value equals fair value less estimated selling costs. Any excess of cost over net realizable value at the time of foreclosure is charged to the ALLL. NPAs are subject to periodic revaluations of the collateral underlying impaired loans and foreclosed real estate. The periodic revaluations are generally based on the appraised value of the property and may include additional liquidity adjustments based upon the expected retention period. BB&T's policies require that valuations be updated at least annually and that upon foreclosure, the valuation must not be more than six months old, otherwise an update is required.","markdown_table":"\n\n| | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | | | | | | | |\n| (number of days) | | Placed on Nonperforming (1) | | | | Charge-off | | |\n| Commercial: | | | | | | | | |\n| Commercial and industrial | | 90 | (2) | | | 90 | | |\n| CRE | | 90 | (2) | | | 90 | | |\n| Lease financing | | 90 | (2) | | | 90 | | |\n| Retail: | | | | | | | | |\n| Residential mortgage (3) | | 90 | to | 180 | | 90 | to | 210 |\n| Direct (3) | | 90 | to | 120 | | 90 | to | 120 |\n| Indirect (3) | | 90 | to | 120 | | 90 | to | 120 |\n| Revolving credit (3) | | NA | | | | 90 | to | 180 |\n\n","source":"TFC\/10-K\/0000092230-19-000017"} {"title":"Commercial","text":"For commercial clients with total credit exposure of $2 million or less, BB&T has developed an automated loan review system to identify and proactively manage accounts with a higher risk of loss. The \"score\" produced by this automated system is updated quarterly.To establish a reserve for loans individually evaluated for impairment, BB&T's policy is to review all commercial lending relationships with an outstanding nonperforming balance of $3 million or more. The amount of the reserve is based on the present value of expected cash flows discounted at the loan's effective interest rate and\/or the value of collateral, net of costs to sell. In addition, BB&T reviews other commercial relationships with collateral-dependent TDRs and nonperforming loans with balances of $1 million or more to establish a specific reserve based on the underlying collateral value, net of costs to sell.BB&T also has a review process related to all other TDRs and commercial nonperforming loans. In connection with this process, BB&T establishes reserves related to these loans that are calculated using an expected cash flow approach. These discounted cash flow analyses incorporate adjustments to future cash flows that reflect management's best estimate of the default risk related to these loans based on a combination of historical experience and management judgment.BB&T also maintains reserves for collective impairment that reflect an estimate of losses related to non-impaired commercial loans as of the balance sheet date. Embedded loss estimates for BB&T's commercial loan portfolio are based on estimated migration rates, which are based on historical experience, and current risk mix as indicated by the risk grading or scoring process described above. Embedded loss estimates may be adjusted to reflect current economic conditions and current portfolio trends including credit quality, concentrations, aging of the portfolio, and significant policy and underwriting changes.BB&T Corporation 78","markdown_table":"\n\n| | |\n| --- | --- |\n| | |\n| Risk Rating | Description |\n| Pass | Loans not considered to be problem credits |\n| Special Mention | Loans that have a potential weakness deserving management's close attention |\n| Substandard | Loans for which a well-defined weakness has been identified that may put full collection of contractual cash flows at risk |\n\n","source":"TFC\/10-K\/0000092230-19-000017"} {"title":"Changes in Accounting Principles and Effects of New Accounting Pronouncements","text":"BB&T Corporation 82","markdown_table":"\n\n| | | |\n| --- | --- | --- |\n| | | |\n| Standard\/Adoption\u00a0Date | Description | Effects on the Financial Statements |\n| Standards Adopted During the Current Year | | |\n| Revenue from Contracts with CustomersJan 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. |\n| Net Periodic Pension Cost and Net Periodic Postretirement Benefit CostJan 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 periods were reclassified to conform to the current presentation. See Note 12. Benefit Plans. |\n| Derivatives and HedgingJan 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 17. Derivative Financial Instruments. |\n| Standards Not Yet Adopted | | |\n| LeasesJan 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 to establish ROU assets of approximately $850 million and lease liabilities of approximately $1.0 billion. The net impact to equity is expected to be a reduction of approximately $40 million, with no material impact to its Consolidated Statements of Income. BB&T will adopt on a prospective basis. |\n| Credit LossesJan 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, which is highly dependent on existing and forecasted economic conditions at the time of adoption, has not yet been quantified. Model development and fit-for-purpose testing is substantially complete for most portfolios, and significant progress has been made on testing designed to evaluate the sensitivity of the models to economic forecasts, length of the reasonable and supportable period and reversion to historical loss information. A phased approach to parallel testing is expected, with limited parallel testing in the first and second quarters of 2019, with plans for a more comprehensive parallel testing program in the second half of the year that will include consideration of new or modified internal controls. |\n\n","source":"TFC\/10-K\/0000092230-19-000017"} {"title":"NOTE 2. Securities","text":"Certain securities issued by FNMA and FHLMC exceeded 10% of shareholders' equity at December\u00a031,\u00a02018. The FNMA investments had total amortized cost and fair value of $13.3 billion and $12.8 billion, respectively. The FHLMC investments had total amortized cost and fair value of $9.6 billion and $9.3 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.","markdown_table":"\n\n| | | | | | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | | | | | | | | | | | | | | | |\n| December\u00a031,\u00a02018(Dollars in millions) | | Amortized Cost | | | | Gross\u00a0Unrealized | | | | | | | | Fair Value | | |\n| | | Gains | | | | Losses | | | |\n| AFS securities: | | | | | | | | | | | | | | | | |\n| U.S. Treasury | | $ | 3,503 | | | $ | 22 | | | $ | 84 | | | $ | 3,441 | |\n| GSE | | 209 | | | | \u2014 | | | | 9 | | | | 200 | | |\n| Agency MBS | | 20,927 | | | | 15 | | | | 787 | | | | 20,155 | | |\n| States and political subdivisions | | 694 | | | | 25 | | | | 18 | | | | 701 | | |\n| Non-agency MBS | | 321 | | | | 184 | | | | \u2014 | | | | 505 | | |\n| Other | | 35 | | | | 1 | | | | \u2014 | | | | 36 | | |\n| Total AFS securities | | $ | 25,689 | | | $ | 247 | | | $ | 898 | | | $ | 25,038 | |\n| HTM securities: | | | | | | | | | | | | | | | | |\n| U.S. Treasury | | $ | 1,099 | | | $ | \u2014 | | | $ | 6 | | | $ | 1,093 | |\n| GSE | | 2,199 | | | | 4 | | | | 43 | | | | 2,160 | | |\n| Agency MBS | | 17,248 | | | | 27 | | | | 487 | | | | 16,788 | | |\n| States and political subdivisions | | 5 | | | | \u2014 | | | | \u2014 | | | | 5 | | |\n| Other | | 1 | | | | \u2014 | | | | \u2014 | | | | 1 | | |\n| Total HTM securities | | $ | 20,552 | | | $ | 31 | | | $ | 536 | | | $ | 20,047 | |\n| | | | | | | | | | | | | | | | | |\n| December\u00a031,\u00a02017(Dollars in millions) | | Amortized Cost | | | | Gross\u00a0Unrealized | | | | | | | | Fair Value | | |\n| | | Gains | | | | Losses | | | |\n| AFS securities: | | | | | | | | | | | | | | | | |\n| U.S. Treasury | | $ | 2,368 | | | $ | \u2014 | | | $ | 77 | | | $ | 2,291 | |\n| GSE | | 187 | | | | \u2014 | | | | 8 | | | | 179 | | |\n| Agency MBS | | 20,683 | | | | 8 | | | | 590 | | | | 20,101 | | |\n| States and political subdivisions | | 1,379 | | | | 37 | | | | 24 | | | | 1,392 | | |\n| Non-agency MBS | | 384 | | | | 192 | | | | \u2014 | | | | 576 | | |\n| Other | | 8 | | | | \u2014 | | | | \u2014 | | | | 8 | | |\n| Total AFS securities | | $ | 25,009 | | | $ | 237 | | | $ | 699 | | | $ | 24,547 | |\n| HTM securities: | | | | | | | | | | | | | | | | |\n| U.S. Treasury | | $ | 1,098 | | | $ | 8 | | | $ | \u2014 | | | $ | 1,106 | |\n| GSE | | 2,198 | | | | 11 | | | | 22 | | | | 2,187 | | |\n| Agency MBS | | 19,660 | | | | 33 | | | | 222 | | | | 19,471 | | |\n| States and political subdivisions | | 28 | | | | \u2014 | | | | \u2014 | | | | 28 | | |\n| Other | | 43 | | | | 2 | | | | \u2014 | | | | 45 | | |\n| Total HTM securities | | $ | 23,027 | | | $ | 54 | | | $ | 244 | | | $ | 22,837 | |\n\n","source":"TFC\/10-K\/0000092230-19-000017"} {"title":"NOTE 2. Securities","text":"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:","markdown_table":"\n\n| | | | | | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | | | | | | | | | | | | | | | |\n| | | AFS | | | | | | | | HTM | | | | | | |\n| December\u00a031,\u00a02018(Dollars in millions) | | Amortized Cost | | | | Fair Value | | | | Amortized Cost | | | | Fair Value | | |\n| Due in one year or less | | $ | 425 | | | $ | 424 | | | $ | 1 | | | $ | 1 | |\n| Due after one year through five years | | 2,660 | | | | 2,587 | | | | 3,290 | | | | 3,244 | | |\n| Due after five years through ten years | | 1,038 | | | | 1,043 | | | | 627 | | | | 611 | | |\n| Due after ten years | | 21,566 | | | | 20,984 | | | | 16,634 | | | | 16,191 | | |\n| Total debt securities | | $ | 25,689 | | | $ | 25,038 | | | $ | 20,552 | | | $ | 20,047 | |\n\n","source":"TFC\/10-K\/0000092230-19-000017"} {"title":"NOTE 2. Securities","text":"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.BB&T Corporation 84","markdown_table":"\n\n| | | | | | | | | | | | | | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | | | | | | | | | | | | | | | | | | | | | | | |\n| | | Less than 12 months | | | | | | | | 12 months or more | | | | | | | | Total | | | | | | |\n| December\u00a031,\u00a02018(Dollars in millions) | | Fair Value | | | | Unrealized Losses | | | | Fair Value | | | | Unrealized Losses | | | | Fair Value | | | | Unrealized Losses | | |\n| AFS securities: | | | | | | | | | | | | | | | | | | | | | | | | |\n| U.S. Treasury | | $ | 111 | | | $ | \u2014 | | | $ | 2,121 | | | $ | 84 | | | $ | 2,232 | | | $ | 84 | |\n| GSE | | 3 | | | | \u2014 | | | | 176 | | | | 9 | | | | 179 | | | | 9 | | |\n| Agency MBS | | 322 | | | | 2 | | | | 18,478 | | | | 785 | | | | 18,800 | | | | 787 | | |\n| States and political subdivisions | | 100 | | | | 1 | | | | 288 | | | | 17 | | | | 388 | | | | 18 | | |\n| Total | | $ | 536 | | | $ | 3 | | | $ | 21,063 | | | $ | 895 | | | $ | 21,599 | | | $ | 898 | |\n| HTM securities: | | | | | | | | | | | | | | | | | | | | | | | | |\n| U.S. Treasury | | $ | 698 | | | $ | 3 | | | $ | 395 | | | $ | 3 | | | $ | 1,093 | | | $ | 6 | |\n| GSE | | \u2014 | | | | \u2014 | | | | 1,749 | | | | 43 | | | | 1,749 | | | | 43 | | |\n| Agency MBS | | 264 | | | | 3 | | | | 14,976 | | | | 484 | | | | 15,240 | | | | 487 | | |\n| Total | | $ | 962 | | | $ | 6 | | | $ | 17,120 | | | $ | 530 | | | $ | 18,082 | | | $ | 536 | |\n| | | | | | | | | | | | | | | | | | | | | | | | | |\n| | | Less than 12 months | | | | | | | | 12 months or more | | | | | | | | Total | | | | | | |\n| December\u00a031,\u00a02017(Dollars in millions) | | Fair Value | | | | Unrealized Losses | | | | Fair Value | | | | Unrealized Losses | | | | Fair Value | | | | Unrealized Losses | | |\n| AFS securities: | | | | | | | | | | | | | | | | | | | | | | | | |\n| U.S. Treasury | | $ | 634 | | | $ | 4 | | | $ | 1,655 | | | $ | 73 | | | $ | 2,289 | | | $ | 77 | |\n| GSE | | 9 | | | | \u2014 | | | | 170 | | | | 8 | | | | 179 | | | | 8 | | |\n| Agency MBS | | 5,077 | | | | 64 | | | | 13,920 | | | | 526 | | | | 18,997 | | | | 590 | | |\n| States and political subdivisions | | 201 | | | | 1 | | | | 355 | | | | 23 | | | | 556 | | | | 24 | | |\n| Total | | $ | 5,921 | | | $ | 69 | | | $ | 16,100 | | | $ | 630 | | | $ | 22,021 | | | $ | 699 | |\n| HTM securities: | | | | | | | | | | | | | | | | | | | | | | | | |\n| GSE | | $ | 1,470 | | | $ | 12 | | | $ | 290 | | | $ | 10 | | | $ | 1,760 | | | $ | 22 | |\n| Agency MBS | | 10,880 | | | | 77 | | | | 4,631 | | | | 145 | | | | 15,511 | | | | 222 | | |\n| Total | | $ | 12,350 | | | $ | 89 | | | $ | 4,921 | | | $ | 155 | | | $ | 17,271 | | | $ | 244 | |\n\n","source":"TFC\/10-K\/0000092230-19-000017"} {"title":"NOTE 3. Loans and ACL","text":"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:","markdown_table":"\n\n| | | | | | | | | | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | | | | | | | | | | | | | | | | | | | |\n| | | Accruing | | | | | | | | | | | | | | | | | | |\n| December\u00a031,\u00a02018(Dollars in millions) | | Current | | | | 30-89 Days Past Due | | | | 90 Days Or More Past Due | | | | Nonperforming | | | | Total | | |\n| Commercial: | | | | | | | | | | | | | | | | | | | | |\n| Commercial and industrial | | $ | 61,701 | | | $ | 34 | | | $ | \u2014 | | | $ | 200 | | | $ | 61,935 | |\n| CRE | | 20,990 | | | | 5 | | | | \u2014 | | | | 65 | | | | 21,060 | | |\n| Lease financing | | 2,014 | | | | 1 | | | | \u2014 | | | | 3 | | | | 2,018 | | |\n| Retail: | | | | | | | | | | | | | | | | | | | | |\n| Residential mortgage | | 30,413 | | | | 456 | | | | 405 | | | | 119 | | | | 31,393 | | |\n| Direct | | 11,463 | | | | 61 | | | | 7 | | | | 53 | | | | 11,584 | | |\n| Indirect | | 16,901 | | | | 436 | | | | 6 | | | | 82 | | | | 17,425 | | |\n| Revolving credit | | 3,090 | | | | 28 | | | | 14 | | | | \u2014 | | | | 3,132 | | |\n| PCI | | 413 | | | | 23 | | | | 30 | | | | \u2014 | | | | 466 | | |\n| Total | | $ | 146,985 | | | $ | 1,044 | | | $ | 462 | | | $ | 522 | | | $ | 149,013 | |\n| | | | | | | | | | | | | | | | | | | | | |\n| | | Accruing | | | | | | | | | | | | | | | | | | |\n| December\u00a031,\u00a02017(Dollars in millions) | | Current | | | | 30-89 Days Past Due | | | | 90 Days Or More Past Due | | | | Nonperforming | | | | Total | | |\n| Commercial: | | | | | | | | | | | | | | | | | | | | |\n| Commercial and industrial | | $ | 58,852 | | | $ | 41 | | | $ | 1 | | | $ | 259 | | | $ | 59,153 | |\n| CRE | | 21,209 | | | | 8 | | | | 1 | | | | 45 | | | | 21,263 | | |\n| Lease financing | | 1,906 | | | | 4 | | | | \u2014 | | | | 1 | | | | 1,911 | | |\n| Retail: | | | | | | | | | | | | | | | | | | | | |\n| Residential mortgage | | 27,659 | | | | 472 | | | | 465 | | | | 129 | | | | 28,725 | | |\n| Direct | | 11,756 | | | | 65 | | | | 6 | | | | 64 | | | | 11,891 | | |\n| Indirect | | 16,745 | | | | 412 | | | | 6 | | | | 72 | | | | 17,235 | | |\n| Revolving credit | | 2,837 | | | | 23 | | | | 12 | | | | \u2014 | | | | 2,872 | | |\n| PCI | | 567 | | | | 27 | | | | 57 | | | | \u2014 | | | | 651 | | |\n| Total | | $ | 141,531 | | | $ | 1,052 | | | $ | 548 | | | $ | 570 | | | $ | 143,701 | |\n\n","source":"TFC\/10-K\/0000092230-19-000017"} {"title":"NOTE 3. Loans and ACL","text":"The following tables present activity in the ACL:","markdown_table":"\n\n| | | | | | | | | | | | | | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | | | | | | | | | | | | | | | | | | | | | | | |\n| | | 2018 | | | | | | | | | | | | 2017 | | | | | | | | | | |\n| December\u00a031,(Dollars in millions) | | Commercial & Industrial | | | | CRE | | | | Lease Financing | | | | Commercial & Industrial | | | | CRE | | | | Lease Financing | | |\n| Commercial: | | | | | | | | | | | | | | | | | | | | | | | | |\n| Pass | | $ | 60,655 | | | $ | 20,712 | | | $ | 2,012 | | | $ | 57,700 | | | $ | 20,862 | | | $ | 1,881 | |\n| Special mention | | 216 | | | | 61 | | | | \u2014 | | | | 268 | | | | 48 | | | | 6 | | |\n| Substandard-performing | | 864 | | | | 222 | | | | 3 | | | | 926 | | | | 308 | | | | 23 | | |\n| Nonperforming | | 200 | | | | 65 | | | | 3 | | | | 259 | | | | 45 | | | | 1 | | |\n| Total | | $ | 61,935 | | | $ | 21,060 | | | $ | 2,018 | | | $ | 59,153 | | | $ | 21,263 | | | $ | 1,911 | |\n| | | | | | | | | | | | | | | | | | | | | | | | | |\n| | | Residential Mortgage | | | | Direct | | | | Indirect | | | | Residential Mortgage | | | | Direct | | | | Indirect | | |\n| Retail: | | | | | | | | | | | | | | | | | | | | | | | | |\n| Performing | | $ | 31,274 | | | $ | 11,531 | | | $ | 17,343 | | | $ | 28,596 | | | $ | 11,827 | | | $ | 17,163 | |\n| Nonperforming | | 119 | | | | 53 | | | | 82 | | | | 129 | | | | 64 | | | | 72 | | |\n| Total | | $ | 31,393 | | | $ | 11,584 | | | $ | 17,425 | | | $ | 28,725 | | | $ | 11,891 | | | $ | 17,235 | |\n\n","source":"TFC\/10-K\/0000092230-19-000017"} {"title":"NOTE 3. Loans and ACL","text":"BB&T Corporation 86","markdown_table":"\n\n| | | | | | | | | | | | | | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | | | | | | | | | | | | | | | | | | | | | | | |\n| (Dollars in millions) | | Balance at Jan\u00a01,\u00a02016 | | | | Charge-Offs | | | | Recoveries | | | | Provision (Benefit) | | | | Other | | | | Balance at Dec\u00a031,\u00a02016 | | |\n| Commercial: | | | | | | | | | | | | | | | | | | | | | | | | |\n| Commercial and industrial | | $ | 488 | | | $ | (143 | ) | | $ | 44 | | | $ | 141 | | | $ | \u2014 | | | $ | 530 | |\n| CRE | | 175 | | | | (9 | | ) | | 19 | | | | (40 | | ) | | \u2014 | | | | 145 | | |\n| Lease financing | | 5 | | | | (6 | | ) | | 2 | | | | 6 | | | | \u2014 | | | | 7 | | |\n| Retail: | | | | | | | | | | | | | | | | | | | | | | | | |\n| Residential mortgage | | 217 | | | | (40 | | ) | | 3 | | | | 47 | | | | \u2014 | | | | 227 | | |\n| Direct | | 105 | | | | (53 | | ) | | 26 | | | | 25 | | | | \u2014 | | | | 103 | | |\n| Indirect | | 305 | | | | (366 | | ) | | 55 | | | | 333 | | | | \u2014 | | | | 327 | | |\n| Revolving credit | | 104 | | | | (69 | | ) | | 20 | | | | 51 | | | | \u2014 | | | | 106 | | |\n| PCI | | 61 | | | | (15 | | ) | | \u2014 | | | | (2 | | ) | | \u2014 | | | | 44 | | |\n| ALLL | | 1,460 | | | | (701 | | ) | | 169 | | | | 561 | | | | \u2014 | | | | 1,489 | | |\n| RUFC | | 90 | | | | \u2014 | | | | \u2014 | | | | 11 | | | | 9 | | | | 110 | | |\n| ACL | | $ | 1,550 | | | $ | (701 | ) | | $ | 169 | | | $ | 572 | | | $ | 9 | | | $ | 1,599 | |\n| | | | | | | | | | | | | | | | | | | | | | | | | |\n| (Dollars in millions) | | Balance at Jan\u00a01,\u00a02017 | | | | Charge-Offs | | | | Recoveries | | | | Provision (Benefit) | | | | Other | | | | Balance at Dec\u00a031,\u00a02017 | | |\n| Commercial: | | | | | | | | | | | | | | | | | | | | | | | | |\n| Commercial and industrial | | $ | 530 | | | $ | (95 | ) | | $ | 36 | | | $ | 51 | | | $ | \u2014 | | | $ | 522 | |\n| CRE | | 145 | | | | (10 | | ) | | 16 | | | | 9 | | | | \u2014 | | | | 160 | | |\n| Lease financing | | 7 | | | | (5 | | ) | | 2 | | | | 5 | | | | \u2014 | | | | 9 | | |\n| Retail: | | | | | | | | | | | | | | | | | | | | | | | | |\n| Residential mortgage | | 227 | | | | (47 | | ) | | 2 | | | | 27 | | | | \u2014 | | | | 209 | | |\n| Direct | | 103 | | | | (61 | | ) | | 25 | | | | 39 | | | | \u2014 | | | | 106 | | |\n| Indirect | | 327 | | | | (402 | | ) | | 60 | | | | 363 | | | | \u2014 | | | | 348 | | |\n| Revolving credit | | 106 | | | | (76 | | ) | | 19 | | | | 59 | | | | \u2014 | | | | 108 | | |\n| PCI | | 44 | | | | (1 | | ) | | \u2014 | | | | (15 | | ) | | \u2014 | | | | 28 | | |\n| ALLL | | 1,489 | | | | (697 | | ) | | 160 | | | | 538 | | | | \u2014 | | | | 1,490 | | |\n| RUFC | | 110 | | | | \u2014 | | | | \u2014 | | | | 9 | | | | \u2014 | | | | 119 | | |\n| ACL | | $ | 1,599 | | | $ | (697 | ) | | $ | 160 | | | $ | 547 | | | $ | \u2014 | | | $ | 1,609 | |\n| | | | | | | | | | | | | | | | | | | | | | | | | |\n| (Dollars in millions) | | Balance at Jan\u00a01,\u00a02018 | | | | Charge-Offs | | | | Recoveries | | | | Provision (Benefit) | | | | Other | | | | Balance at Dec\u00a031,\u00a02018 | | |\n| Commercial: | | | | | | | | | | | | | | | | | | | | | | | | |\n| Commercial and industrial | | $ | 522 | | | $ | (92 | ) | | $ | 39 | | | $ | 77 | | | $ | \u2014 | | | $ | 546 | |\n| CRE | | 160 | | | | (13 | | ) | | 8 | | | | 35 | | | | \u2014 | | | | 190 | | |\n| Lease financing | | 9 | | | | (4 | | ) | | 1 | | | | 5 | | | | \u2014 | | | | 11 | | |\n| Retail: | | | | | | | | | | | | | | | | | | | | | | | | |\n| Residential mortgage | | 209 | | | | (21 | | ) | | 2 | | | | 42 | | | | \u2014 | | | | 232 | | |\n| Direct | | 106 | | | | (71 | | ) | | 23 | | | | 39 | | | | \u2014 | | | | 97 | | |\n| Indirect | | 348 | | | | (391 | | ) | | 62 | | | | 337 | | | | \u2014 | | | | 356 | | |\n| Revolving credit | | 108 | | | | (84 | | ) | | 19 | | | | 74 | | | | \u2014 | | | | 117 | | |\n| PCI | | 28 | | | | (2 | | ) | | \u2014 | | | | (17 | | ) | | \u2014 | | | | 9 | | |\n| ALLL | | 1,490 | | | | (678 | | ) | | 154 | | | | 592 | | | | \u2014 | | | | 1,558 | | |\n| RUFC | | 119 | | | | \u2014 | | | | \u2014 | | | | (26 | | ) | | \u2014 | | | | 93 | | |\n| ACL | | $ | 1,609 | | | $ | (678 | ) | | $ | 154 | | | $ | 566 | | | $ | \u2014 | | | $ | 1,651 | |\n\n","source":"TFC\/10-K\/0000092230-19-000017"} {"title":"NOTE 3. Loans and ACL","text":"The following tables set forth certain information regarding impaired loans, excluding PCI and LHFS, that were individually evaluated for impairment:","markdown_table":"\n\n| | | | | | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | | | | | | | | | | | | | | | |\n| | | 2018 | | | | | | | | 2017 | | | | | | |\n| December\u00a031,(Dollars in millions) | | Recorded Investment | | | | Related ALLL | | | | Recorded Investment | | | | Related ALLL | | |\n| Commercial: | | | | | | | | | | | | | | | | |\n| Commercial and industrial | | $ | 61,629 | | | $ | 521 | | | $ | 58,804 | | | $ | 494 | |\n| CRE | | 20,960 | | | | 181 | | | | 21,173 | | | | 154 | | |\n| Lease financing | | 2,015 | | | | 11 | | | | 1,910 | | | | 9 | | |\n| Retail: | | | | | | | | | | | | | | | | |\n| Residential mortgage | | 30,539 | | | | 164 | | | | 27,914 | | | | 143 | | |\n| Direct | | 11,517 | | | | 92 | | | | 11,815 | | | | 98 | | |\n| Indirect | | 17,099 | | | | 299 | | | | 16,935 | | | | 296 | | |\n| Revolving credit | | 3,104 | | | | 106 | | | | 2,842 | | | | 97 | | |\n| PCI | | 466 | | | | 9 | | | | 651 | | | | 28 | | |\n| Total | | $ | 147,329 | | | $ | 1,383 | | | $ | 142,044 | | | $ | 1,319 | |\n\n","source":"TFC\/10-K\/0000092230-19-000017"} {"title":"NOTE 3. Loans and ACL","text":"The following table presents a summary of TDRs, all of which are considered impaired:","markdown_table":"\n\n| | | | | | | | | | | | | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | | | | | | | | | | | | | | | | | | | | | | |\n| | UPB | | | | Recorded Investment | | | | | | | | Related ALLL | | | | Average Recorded Investment | | | | Interest Income Recognized | | |\n| As of \/ For The Year Ended December\u00a031,\u00a02018(Dollars\u00a0in\u00a0millions) | | Without an ALLL | | | | With an ALLL | | | | | |\n| Commercial: | | | | | | | | | | | | | | | | | | | | | | | |\n| Commercial and industrial | $ | 318 | | | $ | 95 | | | $ | 211 | | | $ | 25 | | | $ | 343 | | | $ | 6 | |\n| CRE | 102 | | | | 29 | | | | 71 | | | | 9 | | | | 97 | | | | 2 | | |\n| Lease financing | 3 | | | | \u2014 | | | | 3 | | | | \u2014 | | | | 6 | | | | \u2014 | | |\n| Retail: | | | | | | | | | | | | | | | | | | | | | | | |\n| Residential mortgage | 904 | | | | 122 | | | | 732 | | | | 68 | | | | 841 | | | | 34 | | |\n| Direct | 86 | | | | 26 | | | | 41 | | | | 5 | | | | 72 | | | | 4 | | |\n| Indirect | 335 | | | | 6 | | | | 320 | | | | 57 | | | | 306 | | | | 46 | | |\n| Revolving credit | 28 | | | | \u2014 | | | | 28 | | | | 11 | | | | 29 | | | | 1 | | |\n| Total | $ | 1,776 | | | $ | 278 | | | $ | 1,406 | | | $ | 175 | | | $ | 1,694 | | | $ | 93 | |\n| | | | | | | | | | | | | | | | | | | | | | | | |\n| | UPB | | | | Recorded Investment | | | | | | | | Related ALLL | | | | Average Recorded Investment | | | | Interest Income Recognized | | |\n| As of \/ For The Year Ended December\u00a031,\u00a02017(Dollars\u00a0in\u00a0millions) | | Without an ALLL | | | | With an ALLL | | | | | |\n| Commercial: | | | | | | | | | | | | | | | | | | | | | | | |\n| Commercial and industrial | $ | 381 | | | $ | 136 | | | $ | 213 | | | $ | 28 | | | $ | 424 | | | $ | 6 | |\n| CRE | 91 | | | | 26 | | | | 64 | | | | 6 | | | | 109 | | | | 3 | | |\n| Lease financing | 1 | | | | \u2014 | | | | 1 | | | | \u2014 | | | | 3 | | | | \u2014 | | |\n| Retail: | | | | | | | | | | | | | | | | | | | | | | | |\n| Residential mortgage | 860 | | | | 132 | | | | 679 | | | | 67 | | | | 895 | | | | 37 | | |\n| Direct | 99 | | | | 22 | | | | 54 | | | | 8 | | | | 78 | | | | 4 | | |\n| Indirect | 308 | | | | 6 | | | | 294 | | | | 52 | | | | 269 | | | | 41 | | |\n| Revolving credit | 30 | | | | \u2014 | | | | 30 | | | | 10 | | | | 29 | | | | 1 | | |\n| Total | $ | 1,770 | | | $ | 322 | | | $ | 1,335 | | | $ | 171 | | | $ | 1,807 | | | $ | 92 | |\n\n","source":"TFC\/10-K\/0000092230-19-000017"} {"title":"NOTE 3. Loans and ACL","text":"The primary reason loan modifications were classified as TDRs is summarized below. Balances represent the recorded investment at the end of the quarter in which the modification was made. Rate modifications consist of TDRs made with below market interest rates, including those that also have modifications of loan structures.","markdown_table":"\n\n| | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | | | | | | | |\n| December\u00a031,(Dollars in millions) | | 2018 | | | | 2017 | | |\n| Performing TDRs: | | | | | | | | |\n| Commercial: | | | | | | | | |\n| Commercial and industrial | | $ | 65 | | | $ | 50 | |\n| CRE | | 10 | | | | 16 | | |\n| Retail: | | | | | | | | |\n| Residential mortgage | | 656 | | | | 605 | | |\n| Direct | | 55 | | | | 62 | | |\n| Indirect | | 305 | | | | 281 | | |\n| Revolving credit | | 28 | | | | 29 | | |\n| Total performing TDRs | | 1,119 | | | | 1,043 | | |\n| Nonperforming TDRs (also included in NPL disclosures) | | 176 | | | | 189 | | |\n| Total TDRs | | $ | 1,295 | | | $ | 1,232 | |\n| ALLL attributable to TDRs | | $ | 146 | | | $ | 142 | |\n\n","source":"TFC\/10-K\/0000092230-19-000017"} {"title":"NOTE 3. Loans and ACL","text":"Charge-offs and forgiveness of principal and interest for TDRs were immaterial for all periods presented.The pre-default balance for modifications that had been classified as TDRs during the previous 12 months that experienced a payment default was $76 million, $104 million and $73 million for the years ended December\u00a031,\u00a02018, 2017 and 2016, respectively. Payment default is defined as movement of the TDR to nonperforming status, foreclosure or charge-off, whichever occurs first. Unearned income, discounts and net deferred loan fees and costs were immaterial for all periods presented. Residential mortgage loans in the process of foreclosure were $253 million at December\u00a031,\u00a02018 and $288 million at December\u00a031,\u00a02017.BB&T Corporation 88","markdown_table":"\n\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | 2018 | | | | | | | | | | | | 2017 | | | | | | | | | | | | 2016 | | | | | | | | | | |\n| Year Ended December 31,(Dollars in millions) | Type of Modification | | | | | | | | ALLL Impact | | | | Type of Modification | | | | | | | | ALLL Impact | | | | Type of Modification | | | | | | | | ALLL Impact | | |\n| Rate | | | | Structure | | | | | Rate | | | | Structure | | | | | Rate | | | | Structure | | | |\n| Newly designated TDRs: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Commercial: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Commercial and industrial | $ | 74 | | | $ | 62 | | | $ | \u2014 | | | $ | 79 | | | $ | 101 | | | $ | 3 | | | $ | 105 | | | $ | 96 | | | $ | 3 | |\n| CRE | 32 | | | | 3 | | | | \u2014 | | | | 14 | | | | 10 | | | | 1 | | | | 12 | | | | 16 | | | | \u2014 | | |\n| Retail: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Residential mortgage | 250 | | | | 30 | | | | 16 | | | | 357 | | | | 46 | | | | 25 | | | | 431 | | | | 53 | | | | 28 | | |\n| Direct | 8 | | | | 2 | | | | \u2014 | | | | 10 | | | | 3 | | | | \u2014 | | | | 14 | | | | 1 | | | | \u2014 | | |\n| Indirect | 195 | | | | 4 | | | | 22 | | | | 192 | | | | 6 | | | | 21 | | | | 169 | | | | 7 | | | | 21 | | |\n| Revolving credit | 18 | | | | \u2014 | | | | 4 | | | | 19 | | | | \u2014 | | | | 4 | | | | 17 | | | | \u2014 | | | | 4 | | |\n| Re-modification of previously designated TDRs | 120 | | | | 15 | | | | \u2014 | | | | 176 | | | | 44 | | | | \u2014 | | | | 79 | | | | 46 | | | | \u2014 | | |\n\n","source":"TFC\/10-K\/0000092230-19-000017"} {"title":"NOTE 4. Premises and Equipment","text":"The following table excludes assets related to the lease financing business:","markdown_table":"\n\n| | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | | | | | | | | | | |\n| December\u00a031,(Dollars in millions) | Estimated Useful Life | | | | | | | | | | |\n| | 2018 | | | | 2017 | | |\n| Land and land improvements | | | | | $ | 567 | | | $ | 583 | |\n| Buildings and building improvements | 40 years | | | | 1,804 | | | | 1,660 | | |\n| Furniture and equipment | 3 | - | 15 | | 1,136 | | | | 1,146 | | |\n| Leasehold improvements | | | | | 719 | | | | 733 | | |\n| Construction in progress | | | | | 21 | | | | 52 | | |\n| Capitalized leases on premises and equipment | | | | | 54 | | | | 58 | | |\n| Total | | | | | 4,301 | | | | 4,232 | | |\n| Accumulated depreciation and amortization | | | | | (2,183 | | ) | | (2,177 | | ) |\n| Net premises and equipment | | | | | $ | 2,118 | | | $ | 2,055 | |\n\n","source":"TFC\/10-K\/0000092230-19-000017"} {"title":"NOTE 4. Premises and Equipment","text":"The following table excludes executory costs:","markdown_table":"\n\n| | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | | | | | | | | | | | |\n| Year Ended December 31,(Dollars in millions) | | | | | | | | | | | | |\n| | 2018 | | | | 2017 | | | | 2016 | | |\n| Rent expense applicable to operating leases | | $ | 235 | | | $ | 249 | | | $ | 250 | |\n| Rental income from owned properties and subleases | | 20 | | | | 12 | | | | 8 | | |\n\n","source":"TFC\/10-K\/0000092230-19-000017"} {"title":"NOTE 5. Goodwill and Other Intangible Assets","text":"The following table, which excludes fully amortized intangibles, presents information for identifiable intangible assets:","markdown_table":"\n\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Year Ended December 31,(Dollars in millions) | 2018 | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| CB-Retail | | | | CB-Commercial | | | | FS&CF | | | | IH | | | | Total | | | | 2017 | | | | 2016 | | |\n| Goodwill, beginning balance | $ | 3,724 | | | $ | 3,862 | | | $ | 259 | | | $ | 1,773 | | | $ | 9,618 | | | $ | 9,638 | | | $ | 8,548 | |\n| Acquisitions | \u2014 | | | | \u2014 | | | | \u2014 | | | | 201 | | | | 201 | | | | \u2014 | | | | 1,073 | | |\n| Adjustments | \u2014 | | | | \u2014 | | | | (1 | | ) | | \u2014 | | | | (1 | | ) | | (20 | | ) | | 17 | | |\n| Goodwill, ending balance | $ | 3,724 | | | $ | 3,862 | | | $ | 258 | | | $ | 1,974 | | | $ | 9,818 | | | $ | 9,618 | | | $ | 9,638 | |\n\n","source":"TFC\/10-K\/0000092230-19-000017"} {"title":"NOTE 5. Goodwill and Other Intangible Assets","text":"The estimated amortization expense for the next five years is presented as follows:","markdown_table":"\n\n| | | | | | | | | | | | | | | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | | | 2018 | | | | | | | | | | | | 2017 | | | | | | | | | | |\n| December\u00a031,(Dollars in millions) | Wtd. Avg. Remaining Life | | Gross Carrying Amount | | | | Accumulated Amortization | | | | Net Carrying Amount | | | | Gross Carrying Amount | | | | Accumulated Amortization | | | | Net Carrying Amount | | |\n| CDI | 6.2 years | | $ | 605 | | | $ | (460 | ) | | $ | 145 | | | $ | 605 | | | $ | (409 | ) | | $ | 196 | |\n| Other, primarily customer relationship intangibles | 11.8 | | 1,329 | | | | (716 | | ) | | 613 | | | | 1,211 | | | | (696 | | ) | | 515 | | |\n| Total | | | $ | 1,934 | | | $ | (1,176 | ) | | $ | 758 | | | $ | 1,816 | | | $ | (1,105 | ) | | $ | 711 | |\n\n","source":"TFC\/10-K\/0000092230-19-000017"} {"title":"Residential Mortgage Banking Activities","text":"During 2016, BB&T paid\u00a0$83 million\u00a0to settle certain FHA loan origination and quality control matters pursuant to an agreement with the Department of Justice. In addition, the Company separately received recoveries of\u00a0$71 million, resulting in a net benefit of\u00a0$73 million, which was included in other expense on the Consolidated Statements of Income. During 2016, BB&T released\u00a0$31 million\u00a0of mortgage repurchase reserves, which was primarily driven by lower anticipated loan repurchase requests. These adjustments were included in loan-related expense on the Consolidated Statements of Income.\u00a0Payments made to date for recourse exposure on residential mortgage loans sold with recourse liability have been immaterial.","markdown_table":"\n\n| | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | | | | | | | | | | | |\n| December 31,(Dollars in millions) | | 2018 | | | | 2017 | | | | 2016 | | |\n| UPB of residential mortgage loan servicing portfolio | | $ | 118,605 | | | $ | 118,424 | | | $ | 121,639 | |\n| UPB of residential mortgage loans serviced for others, primarily agency conforming fixed rate | | 87,270 | | | | 89,124 | | | | 90,325 | | |\n| Mortgage loans sold with recourse | | 419 | | | | 490 | | | | 578 | | |\n| Maximum recourse exposure from mortgage loans sold with recourse liability | | 223 | | | | 251 | | | | 282 | | |\n| Indemnification, recourse and repurchase reserves | | 24 | | | | 37 | | | | 40 | | |\n| | | | | | | | | | | | | |\n| As of \/ For the Year Ended December\u00a031, (Dollars in millions) | | 2018 | | | | 2017 | | | | 2016 | | |\n| UPB of residential mortgage loans sold from LHFS | | $ | 10,094 | | | $ | 12,423 | | | $ | 15,675 | |\n| Pre-tax gains recognized on mortgage loans sold and held for sale | | 116 | | | | 153 | | | | 139 | | |\n| Servicing fees recognized from mortgage loans serviced for others | | 256 | | | | 261 | | | | 268 | | |\n| Approximate weighted average servicing fee on the outstanding balance of residential mortgage loans serviced for others | | 0.28 | | % | | 0.28 | | % | | 0.28 | | % |\n| Weighted average interest rate on mortgage loans serviced for others | | 4.04 | | | | 4.00 | | | | 4.03 | | |\n\n","source":"TFC\/10-K\/0000092230-19-000017"} {"title":"Residential Mortgage Banking Activities","text":"BB&T Corporation 90","markdown_table":"\n\n| | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | | | | | | | | | | | |\n| Year Ended December 31,(Dollars in millions) | | 2018 | | | | 2017 | | | | 2016 | | |\n| Residential MSRs, carrying value, January 1 | | $ | 914 | | | $ | 915 | | | 880 | | |\n| Additions | | 116 | | | | 123 | | | | 146 | | |\n| Change in fair value due to changes in valuation inputs or assumptions: | | | | | | | | | | | | |\n| Prepayment speeds | | (12 | | ) | | (42 | | ) | | 13 | | |\n| OAS | | 57 | | | | 46 | | | | 10 | | |\n| Servicing costs | | 22 | | | | 9 | | | | 2 | | |\n| Realization of expected net servicing cash flows, passage of time and other | | (140 | | ) | | (137 | | ) | | (136 | | ) |\n| Residential MSRs, carrying value, December\u00a031 | | $ | 957 | | | $ | 914 | | | $ | 915 | |\n| Gains (losses) on derivative financial instruments used to mitigate the income statement effect of changes in residential MSR fair value | | $ | (63 | ) | | $ | \u2014 | | | 32 | | |\n\n","source":"TFC\/10-K\/0000092230-19-000017"} {"title":"Residential Mortgage Banking Activities","text":"The sensitivity calculations above are hypothetical and should not be considered to be predictive of future performance. As indicated, changes in fair value based on adverse changes in assumptions generally cannot be extrapolated because the relationship of the change in assumption to the change in fair value may not be linear. Also, in the above table, the effect of an adverse variation in one assumption on the fair value of the MSRs is calculated without changing any other assumption; while in reality, changes in one factor may result in changes in another, which may magnify or counteract the effect of the change.","markdown_table":"\n\n| | | | | | | | | | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | | | | | | | | | | | | | | | | | | | |\n| | | 2018 | | | | | | | | | | 2017 | | | | | | | | |\n| December 31,(Dollars in millions) | | Range | | | | | | Weighted Average | | | | Range | | | | | | Weighted Average | | |\n| | Min | | | Max | | | | Min | | | Max | | |\n| Prepayment speed | | 9.1 | % | | 10.5 | % | | 9.9 | | % | | 7.1 | % | | 10.1 | % | | 9.1 | | % |\n| Effect on fair value of a 10% increase | | | | | | | | $ | (34 | ) | | | | | | | | $ | (31 | ) |\n| Effect on fair value of a 20% increase | | | | | | | | (66 | | ) | | | | | | | | (60 | | ) |\n| OAS | | 6.6 | % | | 8.3 | % | | 7.0 | | % | | 8.4 | % | | 8.9 | % | | 8.5 | | % |\n| Effect on fair value of a 10% increase | | | | | | | | $ | (24 | ) | | | | | | | | $ | (28 | ) |\n| Effect on fair value of a 20% increase | | | | | | | | (47 | | ) | | | | | | | | (54 | | ) |\n| Composition of loans serviced for others: | | | | | | | | | | | | | | | | | | | | |\n| Fixed-rate residential mortgage loans | | | | | | | | 99.2 | | % | | | | | | | | 99.1 | | % |\n| Adjustable-rate residential mortgage loans | | | | | | | | 0.8 | | | | | | | | | | 0.9 | | |\n| Total | | | | | | | | 100.0 | | % | | | | | | | | 100.0 | | % |\n| Weighted average life | | | | | | | | 6.1 years | | | | | | | | | | 6.4 years | | |\n\n","source":"TFC\/10-K\/0000092230-19-000017"} {"title":"NOTE 8. Long-Term Debt","text":"(1)FHLB advances had a weighted average maturity of 4.0 years at December\u00a031,\u00a02018.The effective rates above reflect the impact of fair value hedges and debt issuance costs. Subordinated notes with a remaining maturity of one year or greater qualify under the risk-based capital guidelines as Tier 2 supplementary capital, subject to certain limitations.During 2017, Branch Bank terminated FHLB advances totaling $2.9 billion of par value, which resulted in a pre-tax loss on early extinguishment of debt totaling $392 million.","markdown_table":"\n\n| | | | | | | | | | | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | | | | | | | | | | | | | | | | | | | | |\n| | | 2018 | | | | | | | | | | | | | | | | | 2017 | | |\n| December\u00a031,(Dollars in millions) | | | | | | Stated Rate | | | | | | Effective Rate | | | Carrying Amount | | | | Carrying Amount | | |\n| | Maturity | | | | Min | | | Max | | | | |\n| BB&T Corporation: | | | | | | | | | | | | | | | | | | | | | |\n| Fixed rate senior notes | | 2019 | to | 2025 | | 2.05 | % | | 6.85 | % | | 3.50 | % | | $ | 10,408 | | | $ | 8,562 | |\n| Floating rate senior notes | | 2019 | | 2022 | | 2.76 | | | 3.36 | | | 3.23 | | | 2,398 | | | | 2,547 | | |\n| Fixed rate subordinated notes | | 2019 | | 2022 | | 3.95 | | | 5.25 | | | 2.47 | | | 903 | | | | 933 | | |\n| Branch Bank: | | | | | | | | | | | | | | | | | | | | | |\n| Fixed rate senior notes | | 2019 | | 2022 | | 1.45 | | | 2.85 | | | 3.14 | | | 4,895 | | | | 5,653 | | |\n| Floating rate senior notes | | 2019 | | 2020 | | 2.89 | | | 3.07 | | | 3.01 | | | 1,149 | | | | 1,149 | | |\n| Fixed rate subordinated notes | | 2025 | | 2026 | | 3.63 | | | 3.80 | | | 3.90 | | | 2,075 | | | | 2,119 | | |\n| FHLB advances (1) | | 2019 | | 2034 | | \u2014 | | | 5.50 | | | 2.79 | | | 1,749 | | | | 2,480 | | |\n| Other long-term debt | | | | | | | | | | | | | | | 132 | | | | 205 | | |\n| Total long-term debt | | | | | | | | | | | | | | | $ | 23,709 | | | $ | 23,648 | |\n\n","source":"TFC\/10-K\/0000092230-19-000017"} {"title":"Preferred Stock","text":"BB&T Corporation 92Dividends on the preferred stock, if declared, accrue and are payable quarterly, in arrears. For each issuance, BB&T issued depositary shares, each of which represents a fractional ownership interest in a share of the Company's preferred stock. The preferred stock has no stated maturity and redemption is solely at the option of the Company in whole, but not in part, upon the occurrence of a regulatory capital treatment event, as defined. In addition, the preferred stock may be redeemed in whole or in part, on any dividend payment date after five years from the date of issuance. Under current rules, any redemption of the preferred stock is subject to prior approval of the FRB. The preferred stock is not subject to any sinking fund or other obligations of the Company.","markdown_table":"\n\n| | | | | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | | | | | | | | | | | | | | |\n| Preferred Stock Issue(Dollars in millions) | | Issuance Date | | Earliest Redemption Date | | Liquidation Amount | | | | Carrying Amount | | | | Dividend Rate | |\n| Series D | | 5\/1\/2012 | | 5\/1\/2017 | | $ | 575 | | | $ | 559 | | | 5.850 | % |\n| Series E | | 7\/31\/2012 | | 8\/1\/2017 | | 1,150 | | | | 1,120 | | | | 5.625 | |\n| Series F | | 10\/31\/2012 | | 11\/1\/2017 | | 450 | | | | 437 | | | | 5.200 | |\n| Series G | | 5\/1\/2013 | | 6\/1\/2018 | | 500 | | | | 487 | | | | 5.200 | |\n| Series H | | 3\/9\/2016 | | 6\/1\/2021 | | 465 | | | | 450 | | | | 5.625 | |\n| Total | | | | | | $ | 3,140 | | | $ | 3,053 | | | | |\n\n","source":"TFC\/10-K\/0000092230-19-000017"} {"title":"Equity-Based Compensation Plans","text":"The fair value of RSUs and PSUs is based on the common stock price on the grant date less the present value of expected dividends that will be foregone during the vesting period. Substantially all awards are granted in February of each year. Grants to non-executive employees primarily consist of RSUs.","markdown_table":"\n\n| | | | |\n| --- | --- | --- | --- |\n| | | | |\n| December\u00a031,\u00a02018 | | | |\n| Shares available for future grants (in thousands) | | 16,366 | |\n| Vesting period, minimum | | 1.0 year | |\n| Vesting period, maximum | | 5.0 years | |\n\n","source":"TFC\/10-K\/0000092230-19-000017"} {"title":"Equity-Based Compensation Plans","text":"The following table presents the activity related to awards of RSUs, PSUs and restricted shares:","markdown_table":"\n\n| | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | | | | | | | | | | | |\n| As of \/ For the Year Ended December 31,(Dollars in millions) | | 2018 | | | | 2017 | | | | 2016 | | |\n| Equity-based compensation expense | | $ | 141 | | | $ | 132 | | | $ | 115 | |\n| Income tax benefit from equity-based compensation expense | | 34 | | | | 34 | | | | 43 | | |\n| Intrinsic value of options exercised, and RSUs and PSUs that vested during the year | | 260 | | | | 261 | | | | 159 | | |\n| Grant date fair value of equity-based awards that vested during the year | | 139 | | | | 116 | | | | 98 | | |\n| Unrecognized compensation cost related to equity-based awards | | 135 | | | | 132 | | | | 109 | | |\n| Weighted-average life over which compensation cost is expected to be recognized | | 2.4 years | | | | 2.4 years | | | | 2.3 years | | |\n\n","source":"TFC\/10-K\/0000092230-19-000017"} {"title":"NOTE 10. AOCI","text":"BB&T Corporation 94","markdown_table":"\n\n| | | | | | | | | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | | | | | | | | | | | | | | | | | | |\n| (Dollars in millions) | Pension and OPEB Costs | | | | Cash Flow Hedges | | | | AFS Securities | | | | Other, net | | | | Total | | |\n| AOCI balance, January 1, 2016 | $ | (723 | ) | | $ | (83 | ) | | $ | (34 | ) | | $ | (188 | ) | | $ | (1,028 | ) |\n| OCI before reclassifications, net of tax | (91 | | ) | | (16 | | ) | | (201 | | ) | | 149 | | | | (159 | | ) |\n| Amounts reclassified from AOCI: | | | | | | | | | | | | | | | | | | | |\n| Before tax | 80 | | | | 11 | | | | (39 | | ) | | 34 | | | | 86 | | |\n| Tax effect | 30 | | | | 4 | | | | (15 | | ) | | 12 | | | | 31 | | |\n| Amounts reclassified, net of tax | 50 | | | | 7 | | | | (24 | | ) | | 22 | | | | 55 | | |\n| Total OCI, net of tax | (41 | | ) | | (9 | | ) | | (225 | | ) | | 171 | | | | (104 | | ) |\n| AOCI balance, December 31, 2016 | (764 | | ) | | (92 | | ) | | (259 | | ) | | (17 | | ) | | (1,132 | | ) |\n| OCI before reclassifications, net of tax | (129 | | ) | | 7 | | | | (23 | | ) | | 5 | | | | (140 | | ) |\n| Amounts reclassified from AOCI: | | | | | | | | | | | | | | | | | | | |\n| Before tax | 72 | | | | 15 | | | | (7 | | ) | | \u2014 | | | | 80 | | |\n| Tax effect | 27 | | | | 4 | | | | (3 | | ) | | \u2014 | | | | 28 | | |\n| Amounts reclassified, net of tax | 45 | | | | 11 | | | | (4 | | ) | | \u2014 | | | | 52 | | |\n| Total OCI, net of tax | (84 | | ) | | 18 | | | | (27 | | ) | | 5 | | | | (88 | | ) |\n| Reclassification of certain tax effects | (156 | | ) | | (18 | | ) | | (70 | | ) | | (3 | | ) | | (247 | | ) |\n| AOCI balance, December\u00a031,\u00a02017 | (1,004 | | ) | | (92 | | ) | | (356 | | ) | | (15 | | ) | | (1,467 | | ) |\n| OCI before reclassifications, net of tax | (217 | | ) | | 52 | | | | (159 | | ) | | (6 | | ) | | (330 | | ) |\n| Amounts reclassified from AOCI: | | | | | | | | | | | | | | | | | | | |\n| Before tax | 75 | | | | 12 | | | | 20 | | | | 1 | | | | 108 | | |\n| Tax effect | 18 | | | | 3 | | | | 5 | | | | \u2014 | | | | 26 | | |\n| Amounts reclassified, net of tax | 57 | | | | 9 | | | | 15 | | | | 1 | | | | 82 | | |\n| Total OCI, net of tax | (160 | | ) | | 61 | | | | (144 | | ) | | (5 | | ) | | (248 | | ) |\n| AOCI balance, December\u00a031,\u00a02018 | $ | (1,164 | ) | | $ | (31 | ) | | $ | (500 | ) | | $ | (20 | ) | | $ | (1,715 | ) |\n| Primary income statement location of amounts reclassified from AOCI | Other expense | | | | Net interest income | | | | Net interest income | | | | Net interest income | | | | | | |\n\n","source":"TFC\/10-K\/0000092230-19-000017"} {"title":"NOTE 11. Income Taxes","text":"The reasons for the difference between the provision for income taxes and the amount computed by applying the statutory Federal income tax rate to income before income taxes were as follows:","markdown_table":"\n\n| | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | | | | | | | | | | | |\n| Year Ended December 31,(Dollars in millions) | | 2018 | | | | 2017 | | | | 2016 | | |\n| Current expense: | | | | | | | | | | | | |\n| Federal | | $ | 629 | | | $ | 539 | | | $ | 959 | |\n| State | | 151 | | | | 80 | | | | 97 | | |\n| Total current expense | | 780 | | | | 619 | | | | 1,056 | | |\n| Deferred expense: | | | | | | | | | | | | |\n| Federal | | 26 | | | | 253 | | | | (14 | | ) |\n| State | | (3 | | ) | | 39 | | | | 16 | | |\n| Total deferred expense | | 23 | | | | 292 | | | | 2 | | |\n| Provision for income taxes | | $ | 803 | | | $ | 911 | | | $ | 1,058 | |\n\n","source":"TFC\/10-K\/0000092230-19-000017"} {"title":"NOTE 11. Income Taxes","text":"The Tax Cuts and Jobs Act was signed into law on December 22, 2017. Amounts reflected in the above table as Federal tax reform impact for 2018 relate to the revaluation of deferred taxes on positions taken in the 2017 tax return filing, while amounts for 2017 relate to the net tax benefit recognized as a result of the revaluation of deferred taxes and investments in affordable housing projects.","markdown_table":"\n\n| | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | | | | | | | | | | | |\n| Year Ended December 31,(Dollars in millions) | | 2018 | | | | 2017 | | | | 2016 | | |\n| Federal income taxes at statutory rate | | $ | 853 | | | $ | 1,164 | | | $ | 1,225 | |\n| Increase (decrease) in provision for income taxes as a result of: | | | | | | | | | | | | |\n| State income taxes, net of federal tax benefit | | 117 | | | | 77 | | | | 73 | | |\n| Affordable housing projects proportional amortization | | 260 | | | | 236 | | | | 205 | | |\n| Affordable housing projects tax credits and other tax benefits | | (317 | | ) | | (319 | | ) | | (279 | | ) |\n| Tax-exempt income | | (90 | | ) | | (139 | | ) | | (151 | | ) |\n| Federal tax reform impact | | (27 | | ) | | (43 | | ) | | \u2014 | | |\n| Excess tax benefits for equity-based compensation | | (17 | | ) | | (52 | | ) | | \u2014 | | |\n| Other, net | | 24 | | | | (13 | | ) | | (15 | | ) |\n| Provision for income taxes | | $ | 803 | | | $ | 911 | | | $ | 1,058 | |\n| Effective income tax rate | | 19.8 | | % | | 27.4 | | % | | 30.2 | | % |\n| Statutory federal tax rate | | 21.0 | | % | | 35.0 | | % | | 35.0 | | % |\n\n","source":"TFC\/10-K\/0000092230-19-000017"} {"title":"NOTE 11. Income Taxes","text":"On a periodic basis, BB&T evaluates its income tax positions based on tax laws and regulations and financial reporting considerations, and records adjustments as appropriate. This evaluation takes into consideration the status of current taxing authorities' examinations of BB&T's tax returns, recent positions taken by the taxing authorities on similar transactions and the overall tax environment in relation to tax-advantaged transactions. The amounts of unrecognized tax benefits and accrued tax-related interest penalties were immaterial at December\u00a031,\u00a02018, 2017 and 2016. Further, the amount of net interest and penalties related to unrecognized tax benefits was immaterial for all periods presented. The Company's federal income tax returns are no longer subject to examination by the IRS for taxable years prior to 2015. With limited exceptions, the Company is no longer subject to examination by state and local taxing authorities for taxable years prior to 2014.","markdown_table":"\n\n| | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | | | | | | | |\n| December 31,(Dollars in millions) | | 2018 | | | | 2017 | | |\n| Deferred tax assets: | | | | | | | | |\n| ALLL | | $ | 374 | | | $ | 359 | |\n| Postretirement plans | | 360 | | | | 311 | | |\n| Net unrealized loss on AFS securities | | 156 | | | | 112 | | |\n| Equity-based compensation | | 82 | | | | 66 | | |\n| Reserves and expense accruals | | 203 | | | | 114 | | |\n| Partnerships | | 77 | | | | 70 | | |\n| Other | | 158 | | | | 160 | | |\n| Total deferred tax assets | | 1,410 | | | | 1,192 | | |\n| Deferred tax liabilities: | | | | | | | | |\n| Prepaid pension plan expense | | 453 | | | | 436 | | |\n| MSRs | | 248 | | | | 234 | | |\n| Lease financing | | 376 | | | | 366 | | |\n| Loan fees and expenses | | 169 | | | | 114 | | |\n| Identifiable intangible assets | | 183 | | | | 163 | | |\n| Other | | 82 | | | | 31 | | |\n| Total deferred tax liabilities | | 1,511 | | | | 1,344 | | |\n| Net deferred tax asset (liability) | | $ | (101 | ) | | $ | (152 | ) |\n\n","source":"TFC\/10-K\/0000092230-19-000017"} {"title":"Defined Benefit Retirement Plans","text":"The weighted average expected long-term rate of return on plan assets represents the average rate of return expected to be earned on plan assets over the period the benefits included in the benefit obligation are to be paid. In developing the expected rate of return, BB&T considers long-term compound annualized returns of historical market data for each asset category, as well as historical actual returns on the plan assets. Using this reference information, the Company develops forward-looking return expectations for each asset category and a weighted average expected long-term rate of return for the plan based on target asset allocations contained in BB&T's Investment Policy Statement. For 2019, the expected rate of return on plan assets is 7.0%.","markdown_table":" \n\n| | | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | | | | | | | | | | | | |\n| Year Ended December 31,(Dollars in millions) | Location | | 2018 | | | | 2017 | | | | 2016 | | |\n| Net periodic pension cost: | | | | | | | | | | | | | |\n| Service cost | Personnel expense | | $ | 238 | | | $ | 200 | | | $ | 186 | |\n| Interest cost | Other expense | | 201 | | | | 192 | | | | 181 | | |\n| Estimated return on plan assets | Other expense | | (448 | | ) | | (372 | | ) | | (326 | | ) |\n| Net amortization and other | Other expense | | 81 | | | | 75 | | | | 80 | | |\n| Net periodic benefit cost | | | 72 | | | | 95 | | | | 121 | | |\n| Pre-tax amounts recognized in OCI: | | | | | | | | | | | | | |\n| Prior service credit (cost) | | | \u2014 | | | | 30 | | | | \u2014 | | |\n| Net actuarial loss (gain) | | | 289 | | | | 137 | | | | 138 | | |\n| Net amortization | | | (81 | | ) | | (75 | | ) | | (80 | | ) |\n| Net amount recognized in OCI | | | 208 | | | | 92 | | | | 58 | | |\n| Total net periodic pension costs (income) recognized in total comprehensive income, pre-tax | | | $ | 280 | | | $ | 187 | | | $ | 179 | |\n| Weighted average assumptions used to determine net periodic pension cost: | | | | | | | | | | | | | |\n| Discount rate | | | 3.79 | | % | | 4.43 | | % | | 4.68 | | % |\n| Expected long-term rate of return on plan assets | | | 7.00 | | % | | 7.00 | | % | | 7.00 | | % |\n| Assumed long-term rate of annual compensation increases | | | 4.50 | | % | | 4.50 | | % | | 4.50 | | % |\n\n","source":"TFC\/10-K\/0000092230-19-000017"} {"title":"Defined Benefit Retirement Plans","text":"Effective December 31, 2017, the qualified defined benefit plan was amended and a portion of the accrued benefits of participants in the nonqualified plan were shifted to the qualified plan. Affected associates continue to participate in the nonqualified plan for benefits earned in 2017 and later. In conjunction with this shift, a minimum benefit was established under the qualified plan. Activity in plan assets is presented in the following table:","markdown_table":"\n\n| | | | | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | | | | | | | | | | | | | | |\n| Year Ended December 31,(Dollars in millions) | Qualified Plan | | | | | | | | Nonqualified Plans | | | | | | |\n| 2018 | | | | 2017 | | | | 2018 | | | | 2017 | | |\n| Projected benefit obligation, January 1 | $ | 4,939 | | | $ | 3,939 | | | $ | 387 | | | $ | 426 | |\n| Service cost | 222 | | | | 188 | | | | 16 | | | | 12 | | |\n| Interest cost | 186 | | | | 173 | | | | 15 | | | | 19 | | |\n| Actuarial (gain) loss | (537 | | ) | | 576 | | | | (19 | | ) | | 77 | | |\n| Benefits paid | (113 | | ) | | (102 | | ) | | (13 | | ) | | (12 | | ) |\n| Plan amendments | \u2014 | | | | 165 | | | | \u2014 | | | | (135 | | ) |\n| Projected benefit obligation, December 31 | $ | 4,697 | | | $ | 4,939 | | | $ | 386 | | | $ | 387 | |\n| Accumulated benefit obligation, December 31 | $ | 4,035 | | | $ | 4,198 | | | $ | 293 | | | $ | 288 | |\n| Weighted average assumptions used to determine projected benefit obligations: | | | | | | | | | | | | | | | |\n| Weighted average assumed discount rate | 4.43 | | % | | 3.79 | | % | | 4.43 | | % | | 3.79 | | % |\n| Assumed rate of annual compensation increases | 4.50 | | % | | 4.50 | | % | | 4.50 | | % | | 4.50 | | % |\n\n","source":"TFC\/10-K\/0000092230-19-000017"} {"title":"Defined Benefit Retirement Plans","text":"The following are the pre-tax amounts recognized in AOCI:","markdown_table":"\n\n| | | | | | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | | | | | | | | | | | | | | | |\n| Year Ended December 31,(Dollars in millions) | | Qualified Plan | | | | | | | | Nonqualified Plans | | | | | | |\n| | 2018 | | | | 2017 | | | | 2018 | | | | 2017 | | |\n| Fair value of plan assets, January 1 | | $ | 6,309 | | | $ | 5,044 | | | $ | \u2014 | | | $ | \u2014 | |\n| Actual return on plan assets | | (397 | | ) | | 888 | | | | \u2014 | | | | \u2014 | | |\n| Employer contributions | | 169 | | | | 479 | | | | 13 | | | | 13 | | |\n| Benefits paid | | (113 | | ) | | (102 | | ) | | (13 | | ) | | (13 | | ) |\n| Fair value of plan assets, December 31 | | $ | 5,968 | | | $ | 6,309 | | | $ | \u2014 | | | $ | \u2014 | |\n| Funded status, December 31 | | $ | 1,271 | | | $ | 1,370 | | | $ | (386 | ) | | $ | (387 | ) |\n\n","source":"TFC\/10-K\/0000092230-19-000017"} {"title":"Defined Benefit Retirement Plans","text":"The following table presents the amount expected to be amortized from AOCI into net periodic pension cost during 2019","markdown_table":"\n\n| | | | | | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | | | | | | | | | | | | | | | |\n| Year Ended December 31,(Dollars in millions) | | Qualified Plan | | | | | | | | Nonqualified Plans | | | | | | |\n| | 2018 | | | | 2017 | | | | 2018 | | | | 2017 | | |\n| Prior service credit (cost) | | $ | (140 | ) | | $ | (165 | ) | | $ | 115 | | | $ | 134 | |\n| Net actuarial loss | | (1,349 | | ) | | (1,092 | | ) | | (156 | | ) | | (198 | | ) |\n| Net amount recognized | | $ | (1,489 | ) | | $ | (1,257 | ) | | $ | (41 | ) | | $ | (64 | ) |\n\n","source":"TFC\/10-K\/0000092230-19-000017"} {"title":"Defined Benefit Retirement Plans","text":"BB&T makes contributions to the qualified pension plan in amounts between the minimum required for funding and the maximum amount deductible for federal income tax purposes. BB&T made discretionary contributions of $549 million during the first quarter of 2019. Management may make additional contributions in 2019. For the nonqualified plans, the employer contributions are based on benefit payments.The following table reflects the estimated benefit payments for the periods presented:","markdown_table":"\n\n| | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | | | | | | | |\n| (Dollars in millions) | | Qualified Plan | | | | Nonqualified Plans | | |\n| Net actuarial loss | | $ | (79 | ) | | $ | (17 | ) |\n| Prior service credit (cost) | | (25 | | ) | | $ | 19 | |\n| Net amount expected to be amortized | | $ | (104 | ) | | $ | 2 | |\n\n","source":"TFC\/10-K\/0000092230-19-000017"} {"title":"Defined Benefit Retirement Plans","text":"BB&T's primary total return objective is to achieve returns that, over the long term, will fund retirement liabilities and provide for the desired plan benefits in a manner that satisfies the fiduciary requirements of the Employee Retirement Income Security Act of 1974. The plan assets have a long-term time horizon that runs concurrent with the average life expectancy of the participants. As such, the Plan can assume a time horizon that extends well beyond a full market cycle, and can assume an above-average level of risk, as measured by the standard deviation of annual return. It is expected, however, that both professional investment management and sufficient portfolio diversification will smooth volatility and help to generate a reasonable consistency of return. The investments are broadly diversified among economic sector, industry, quality and size in order to reduce risk and to produce incremental return. Within approved guidelines and restrictions, investment managers have wide discretion over the timing and selection of individual investments.BB&T Corporation 98","markdown_table":"\n\n| | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | | | | | | | |\n| (Dollars in millions) | | Qualified Plan | | | | Nonqualified Plans | | |\n| 2019 | | $ | 126 | | | $ | 16 | |\n| 2020 | | 138 | | | | 16 | | |\n| 2021 | | 151 | | | | 17 | | |\n| 2022 | | 165 | | | | 18 | | |\n| 2023 | | 179 | | | | 19 | | |\n| 2024-2028 | | 1,126 | | | | 113 | | |\n\n","source":"TFC\/10-K\/0000092230-19-000017"} {"title":"Defined Benefit Retirement Plans","text":"(1)The plan may hold up to 10% of its assets in BB&T common stock.International equity securities include a common\/commingled fund that consists of assets from several accounts, pooled together, to reduce management and administration costs. Investments measured at fair value using the net asset value per share or equivalent as a practical expedient are not required to be classified in the fair value hierarchy. The plan held alternative investments valued using net asset values totaling $274 million and $105 million at December\u00a031,\u00a02018 and 2017, respectively.","markdown_table":"\n\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| December 31,(Dollars in millions) | Target Allocation | | | | | | 2018 | | | | | | | | | | | | 2017 | | | | | | | | | | |\n| Min | | | Max | | | Total | | | | Level 1 | | | | Level 2 | | | | Total | | | | Level 1 | | | | Level 2 | | |\n| Cash and cash-equivalents | | | | | | | $ | 21 | | | $ | 21 | | | $ | \u2014 | | | $ | 67 | | | $ | 67 | | | $ | \u2014 | |\n| U.S. equity securities (1) | 30 | % | | 50 | % | | 2,323 | | | | 1,204 | | | | 1,119 | | | | 2,503 | | | | 1,333 | | | | 1,170 | | |\n| International equity securities | 11 | | | 18 | | | 797 | | | | 161 | | | | 636 | | | | 1,130 | | | | 195 | | | | 935 | | |\n| Fixed income securities | 35 | | | 53 | | | 2,528 | | | | 11 | | | | 2,517 | | | | 2,452 | | | | 10 | | | | 2,442 | | |\n| Total | | | | | | | $ | 5,669 | | | $ | 1,397 | | | $ | 4,272 | | | $ | 6,152 | | | $ | 1,605 | | | $ | 4,547 | |\n\n","source":"TFC\/10-K\/0000092230-19-000017"} {"title":"NOTE 13. Commitments and Contingencies","text":"BB&T invests in certain affordable housing projects throughout its market area as a means of supporting local communities. BB&T receives tax credits related to these investments. BB&T typically acts as a limited partner in these investments and does not exert control over the operating or financial policies of the partnerships. BB&T typically provides financing during the construction and development of the properties; however, permanent financing is generally obtained from independent third parties upon completion of a project. Tax credits are subject to recapture by taxing authorities based on compliance features required to be met at the project level. BB&T's maximum potential exposure to losses relative to investments in VIEs 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 and future funding commitments to private equity and certain other equity method investments. The majority of these investments are private equity funds that are consolidated into BB&T's financial statements. The risk exposure relating to such commitments is generally limited to the amount of investments and future funding commitments made.Letters of credit and financial guarantees written are unconditional commitments issued by BB&T to guarantee the performance of a customer to a third party. These guarantees are primarily issued to support borrowing arrangements, including commercial paper issuance, bond financing and similar transactions, the majority of which are to tax exempt entities. The credit risk involved in the issuance of these guarantees is essentially the same as that involved in extending loans to clients and as such, the instruments are collateralized when necessary. Refer to \"Note 16. Fair Value Disclosures\" for additional disclosures related to off-balance sheet financial instruments.BB&T has sold certain mortgage-related loans that contain recourse provisions. These provisions generally require BB&T to reimburse the investor for a share of any loss that is incurred after the disposal of the property. BB&T also issues standard representations and warranties related to mortgage loan sales to GSEs. Refer to \"Note 6. Loan Servicing\" for additional disclosures related to these exposures.In the ordinary course of business, BB&T indemnifies its officers and directors to the fullest extent permitted by law against liabilities arising from pending litigation. BB&T also issues standard representations and warranties in underwriting agreements, merger and acquisition agreements, loan sales, brokerage activities and other similar arrangements. Counterparties in many of these indemnification arrangements provide similar indemnifications to BB&T. Although these agreements often do not specify limitations, BB&T does not believe that any payments related to these guarantees would materially change the financial position or results of operations of BB&T.","markdown_table":"\n\n| | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | | | | | | | |\n| December 31,(Dollars in millions) | | 2018 | | | | 2017 | | |\n| Investments in affordable housing projects: | | | | | | | | |\n| Carrying amount | | $ | 2,088 | | | $ | 1,948 | |\n| Amount of future funding commitments included in carrying amount | | 919 | | | | 928 | | |\n| Lending exposure | | 460 | | | | 561 | | |\n| Tax credits subject to recapture | | 523 | | | | 471 | | |\n| Private equity investments: | | | | | | | | |\n| Carrying amount | | 458 | | | | 471 | | |\n| Amount of future funding commitments not included in carrying amount | | 331 | | | | 143 | | |\n\n","source":"TFC\/10-K\/0000092230-19-000017"} {"title":"Pledged Assets","text":"BB&T Corporation 100","markdown_table":"\n\n| | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | | | | | | | |\n| December 31,(Dollars in millions) | | 2018 | | | | 2017 | | |\n| Pledged securities | | $ | 13,237 | | | $ | 14,636 | |\n| Pledged loans | | 77,847 | | | | 74,718 | | |\n\n","source":"TFC\/10-K\/0000092230-19-000017"} {"title":"NOTE 14. Regulatory Requirements and Other Restrictions","text":"As an approved seller\/servicer, Branch Bank is required to maintain minimum levels of capital, as specified by various agencies, including the U.S. Department of Housing and Urban Development, GNMA, FHLMC and FNMA. At December\u00a031,\u00a02018 and 2017, Branch Bank's capital was above all required levels.","markdown_table":"\n\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | | 2018 | | | | | | | | | | | | | | | 2017 | | | | | | | | | | | | | |\n| | | Actual Capital | | | | | | | Capital Requirements | | | | | | | | Actual Capital | | | | | | | Capital Requirements | | | | | | |\n| December 31,(Dollars in millions) | | Ratio | | | Amount | | | | Minimum | | | | Well-Capitalized | | | | Ratio | | | Amount | | | | Minimum | | | | Well-Capitalized | | |\n| CET1 capital: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| BB&T Corporation | | 10.2 | % | | $ | 18,405 | | | $ | 8,157 | | | $ | 11,782 | | | 10.2 | % | | $ | 18,051 | | | $ | 7,975 | | | $ | 11,519 | |\n| Branch Bank | | 11.2 | | | 19,571 | | | | 7,875 | | | | 11,375 | | | | 11.3 | | | 19,480 | | | | 7,752 | | | | 11,197 | | |\n| Tier 1 capital: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| BB&T Corporation | | 11.8 | | | 21,456 | | | | 10,876 | | | | 14,501 | | | | 11.9 | | | 21,102 | | | | 10,633 | | | | 14,177 | | |\n| Branch Bank | | 11.2 | | | 19,571 | | | | 10,500 | | | | 14,000 | | | | 11.3 | | | 19,480 | | | | 10,336 | | | | 13,781 | | |\n| Total capital: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| BB&T Corporation | | 13.8 | | | 24,963 | | | | 14,501 | | | | 18,126 | | | | 13.9 | | | 24,653 | | | | 14,177 | | | | 17,722 | | |\n| Branch Bank | | 13.2 | | | 23,049 | | | | 14,000 | | | | 17,500 | | | | 13.3 | | | 22,915 | | | | 13,781 | | | | 17,226 | | |\n| Leverage capital: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| BB&T Corporation | | 9.9 | | | 21,456 | | | | 8,635 | | | | 10,794 | | | | 9.9 | | | 21,102 | | | | 8,567 | | | | 10,708 | | |\n| Branch Bank | | 9.3 | | | 19,571 | | | | 8,378 | | | | 10,473 | | | | 9.4 | | | 19,480 | | | | 8,315 | | | | 10,394 | | |\n\n","source":"TFC\/10-K\/0000092230-19-000017"} {"title":"NOTE 15. Parent Company Financial Information","text":"BB&T Corporation 102","markdown_table":"\n\n| | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | | | | | | | | | | | |\n| Parent Company - Condensed Income and Comprehensive Income Statements(Dollars in millions) | | Year Ended December 31, | | | | | | | | | | |\n| | 2018 | | | | 2017 | | | | 2016 | | |\n| Income: | | | | | | | | | | | | |\n| Dividends from subsidiaries: | | | | | | | | | | | | |\n| Banking | | $ | 2,825 | | | $ | 1,950 | | | $ | 1,350 | |\n| Nonbank | | 147 | | | | 40 | | | | 6 | | |\n| Total dividends from subsidiaries | | 2,972 | | | | 1,990 | | | | 1,356 | | |\n| Interest and other income from subsidiaries | | 164 | | | | 112 | | | | 73 | | |\n| Other income | | 7 | | | | 2 | | | | 3 | | |\n| Total income | | 3,143 | | | | 2,104 | | | | 1,432 | | |\n| Expenses: | | | | | | | | | | | | |\n| Interest expense | | 364 | | | | 227 | | | | 160 | | |\n| Other expenses | | 82 | | | | 83 | | | | 56 | | |\n| Total expenses | | 446 | | | | 310 | | | | 216 | | |\n| Income before income taxes and equity in undistributed earnings of subsidiaries | | 2,697 | | | | 1,794 | | | | 1,216 | | |\n| Income tax benefit | | 52 | | | | 63 | | | | 38 | | |\n| Income before equity in undistributed earnings of subsidiaries | | 2,749 | | | | 1,857 | | | | 1,254 | | |\n| Equity in undistributed earnings of subsidiaries in excess of dividends from subsidiaries | | 508 | | | | 558 | | | | 1,188 | | |\n| Net income | | 3,257 | | | | 2,415 | | | | 2,442 | | |\n| Total OCI | | (248 | | ) | | (88 | | ) | | (104 | | ) |\n| Total comprehensive income | | $ | 3,009 | | | $ | 2,327 | | | $ | 2,338 | |\n\n","source":"TFC\/10-K\/0000092230-19-000017"} {"title":"NOTE 15. Parent Company Financial Information","text":"The transfer of funds in the form of dividends, loans or advances from bank subsidiaries to the Parent Company is restricted. Federal law requires loans to the Parent Company or its affiliates to be secured and at market terms and generally limits loans to the Parent Company or an individual affiliate to 10% of Branch Bank's unimpaired capital and surplus. In the aggregate, loans to the Parent Company and all affiliates cannot exceed 20% of the bank's unimpaired capital and surplus.Dividend payments to the Parent Company by Branch Bank are subject to regulatory review and statutory limitations and, in some instances, regulatory approval. In general, dividends from Branch Bank to the Parent Company are limited by rules which compare dividends to net income for regulatory-defined periods. Furthermore, dividends are restricted by regulatory minimum capital constraints.","markdown_table":"\n\n| | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | | | | | | | | | | | |\n| Parent Company - Statements of Cash Flows(Dollars in millions) | | Year Ended December 31, | | | | | | | | | | |\n| | 2018 | | | | 2017 | | | | 2016 | | |\n| Cash Flows From Operating Activities: | | | | | | | | | | | | |\n| Net income | | $ | 3,257 | | | $ | 2,415 | | | $ | 2,442 | |\n| Adjustments to reconcile net income to net cash from operating activities: | | | | | | | | | | | | |\n| Equity in earnings of subsidiaries in excess of dividends from subsidiaries | | (508 | | ) | | (558 | | ) | | (1,188 | | ) |\n| Other, net | | (28 | | ) | | \u2014 | | | | (14 | | ) |\n| Net cash from operating activities | | 2,721 | | | | 1,857 | | | | 1,240 | | |\n| Cash Flows From Investing Activities: | | | | | | | | | | | | |\n| Proceeds from maturities, calls, paydowns and sales of AFS securities | | 33 | | | | 29 | | | | 27 | | |\n| Purchases of AFS securities | | (28 | | ) | | (29 | | ) | | (31 | | ) |\n| Proceeds from maturities, calls and paydowns of HTM securities | | \u2014 | | | | \u2014 | | | | 2 | | |\n| Investment in subsidiaries | | \u2014 | | | | 1,100 | | | | (85 | | ) |\n| Advances to subsidiaries | | (4,639 | | ) | | (6,958 | | ) | | (7,719 | | ) |\n| Proceeds from repayment of advances to subsidiaries | | 3,665 | | | | 4,671 | | | | 6,975 | | |\n| Net cash from acquisitions and divestitures | | \u2014 | | | | \u2014 | | | | (254 | | ) |\n| Other, net | | (4 | | ) | | 1 | | | | \u2014 | | |\n| Net cash from investing activities | | (973 | | ) | | (1,186 | | ) | | (1,085 | | ) |\n| Cash Flows From Financing Activities: | | | | | | | | | | | | |\n| Net change in short-term borrowings | | (5 | | ) | | (39 | | ) | | (60 | | ) |\n| Net change in long-term debt | | 1,746 | | | | 1,319 | | | | 465 | | |\n| Repurchase of common stock | | (1,205 | | ) | | (1,613 | | ) | | (520 | | ) |\n| Net proceeds from preferred stock issued | | \u2014 | | | | \u2014 | | | | 450 | | |\n| Cash dividends paid on common and preferred stock | | (1,378 | | ) | | (1,179 | | ) | | (1,092 | | ) |\n| Other, net | | (52 | | ) | | 104 | | | | 225 | | |\n| Net cash from financing activities | | (894 | | ) | | (1,408 | | ) | | (532 | | ) |\n| Net Change in Cash, Cash Equivalents and Restricted Cash | | 854 | | | | (737 | | ) | | (377 | | ) |\n| Cash, Cash Equivalents and Restricted Cash at Beginning of Period | | 6,378 | | | | 7,115 | | | | 7,492 | | |\n| Cash, Cash Equivalents and Restricted Cash at End of Period | | $ | 7,232 | | | $ | 6,378 | | | $ | 7,115 | |\n\n","source":"TFC\/10-K\/0000092230-19-000017"} {"title":"NOTE 16. Fair Value Disclosures","text":"Accounting standards define fair value as the exchange price that would be received on the measurement date to sell an asset or the price paid to transfer a liability in the principal or most advantageous market available to the entity in an orderly transaction between market participants, with a three level valuation input hierarchy. The following discussion focuses on the valuation techniques and significant inputs for Level 2 and Level 3 assets and liabilities.BB&T Corporation 104A third-party pricing service is generally utilized in determining the fair value of the securities portfolio. Management independently evaluates the fair values provided by the pricing service through comparisons to other external pricing sources, review of additional information provided by the pricing service and other third party sources for selected securities and back-testing to compare the price realized on any security sales to the daily pricing information received from the pricing service. Fair value measurements are derived from market-based pricing matrices that were developed using observable inputs that include benchmark yields, benchmark securities, reported trades, offers, bids, issuer spreads and broker quotes. As described by security type below, additional inputs may be used, or some inputs may not be applicable. In the event that market observable data was not available, which would generally occur due to the lack of an active market for a given security, the valuation of the security would be subjective and may involve substantial judgment by management.U.S. Treasury securities: Treasury securities are valued using quoted prices in active over-the-counter markets.GSE securities and agency MBS: GSE pass-through securities are valued using market-based pricing matrices that reference observable inputs including benchmark TBA security pricing and yield curves that were estimated based on U.S. Treasury yields and certain floating rate indices. The pricing matrices for these securities may also give consideration to pool-specific data supplied directly by the GSE. GSE CMOs are valued using market-based pricing matrices that are based on observable inputs including offers, bids, reported trades, dealer quotes and market research reports, the characteristics of a specific tranche, market convention prepayment speeds and benchmark yield curves as described above.States and political subdivisions: These securities are valued using market-based pricing matrices that reference observable inputs including MSRB reported trades, issuer spreads, material event notices and benchmark yield curves.Non-agency MBS: Pricing matrices for these securities are based on observable inputs including offers, bids, reported trades, dealer quotes and market research reports, the characteristics of a specific tranche, market convention prepayment speeds and benchmark yield curves as described above. Non-agency MBS also include investments in Re-REMIC trusts that primarily hold non-agency MBS, which are valued based on broker pricing models that use baseline securities yields and tranche-level yield adjustments to discount cash flows modeled using market convention prepayment speed and default assumptions.Other securities: These securities consist primarily of corporate bonds. These securities are valued based on a review of quoted market prices for assets as well as through the various other inputs discussed previously.LHFS: Certain mortgage loans are originated to be sold to investors, which are carried at fair value. The fair value is primarily based on quoted market prices for securities backed by similar types of loans. The changes in fair value of these assets are largely driven by changes in interest rates subsequent to loan funding and changes in the fair value of servicing associated with the mortgage LHFS.MSRs: Residential MSRs are valued using an OAS valuation model to project cash flows over multiple interest rate scenarios, which are discounted at risk-adjusted rates. The model considers portfolio characteristics, contractually specified servicing fees, prepayment assumptions, delinquency rates, late charges, other ancillary revenue, costs to service and other economic factors. Fair value estimates and assumptions are compared to industry surveys, recent market activity, actual portfolio experience and, when available, other observable market data. Commercial MSRs are valued using a cash flow valuation model that calculates the present value of estimated future net servicing cash flows. BB&T considers actual and expected loan prepayment rates, discount rates, servicing costs and other economic factors that are determined based on current market conditions. Trading and equity securities: Trading and equity securities primarily consist of exchange traded equity securities, and debt securities issued by the U.S. Treasury, GSEs, or states and political subdivisions. The valuation techniques for debt securities are more fully discussed above.Derivative assets and liabilities: The fair values of derivatives are determined based on quoted market prices and internal pricing models that use market observable data. The fair values of interest rate lock commitments, which are related to mortgage loan commitments and are categorized as Level 3, are based on quoted market prices adjusted for commitments that are not expected to fund and include the value attributable to the net servicing fees.Private equity investments: In many cases there are no observable market values for these investments and therefore management must estimate the fair value based on a comparison of the operating performance of the company to multiples in the marketplace for similar entities. This analysis requires significant judgment, and actual values in a sale could differ materially from those estimated.Securities sold short: Securities sold short represent debt securities sold short that are entered into as a hedging strategy for the purposes of supporting institutional and retail client trading activities.Activity for Level 3 assets and liabilities is summarized below:","markdown_table":"\n\n| | | | | | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | | | | | | | | | | | | | | | |\n| December\u00a031,\u00a02018(Dollars in millions) | | Total | | | | Level 1 | | | | Level 2 | | | | Level 3 | | |\n| Assets: | | | | | | | | | | | | | | | | |\n| AFS securities: | | | | | | | | | | | | | | | | |\n| U.S. Treasury | | $ | 3,441 | | | $ | \u2014 | | | $ | 3,441 | | | $ | \u2014 | |\n| GSE | | 200 | | | | \u2014 | | | | 200 | | | | \u2014 | | |\n| Agency MBS | | 20,155 | | | | \u2014 | | | | 20,155 | | | | \u2014 | | |\n| States and political subdivisions | | 701 | | | | \u2014 | | | | 701 | | | | \u2014 | | |\n| Non-agency MBS | | 505 | | | | \u2014 | | | | 114 | | | | 391 | | |\n| Other | | 36 | | | | \u2014 | | | | 36 | | | | \u2014 | | |\n| Total AFS securities | | 25,038 | | | | \u2014 | | | | 24,647 | | | | 391 | | |\n| LHFS | | 988 | | | | \u2014 | | | | 988 | | | | \u2014 | | |\n| MSRs | | 1,108 | | | | \u2014 | | | | \u2014 | | | | 1,108 | | |\n| Other assets: | | | | | | | | | | | | | | | | |\n| Trading and equity securities | | 767 | | | | 374 | | | | 390 | | | | 3 | | |\n| Derivative assets | | 246 | | | | \u2014 | | | | 234 | | | | 12 | | |\n| Private equity investments | | 393 | | | | \u2014 | | | | \u2014 | | | | 393 | | |\n| Total assets | | $ | 28,540 | | | $ | 374 | | | $ | 26,259 | | | $ | 1,907 | |\n| Liabilities: | | | | | | | | | | | | | | | | |\n| Derivative liabilities | | $ | 247 | | | $ | 1 | | | $ | 246 | | | $ | \u2014 | |\n| Securities sold short | | 145 | | | | \u2014 | | | | 145 | | | | \u2014 | | |\n| Total liabilities | | $ | 392 | | | $ | 1 | | | $ | 391 | | | $ | \u2014 | |\n| | | | | | | | | | | | | | | | | |\n| December\u00a031,\u00a02017(Dollars in millions) | | Total | | | | Level 1 | | | | Level 2 | | | | Level 3 | | |\n| Assets: | | | | | | | | | | | | | | | | |\n| AFS securities: | | | | | | | | | | | | | | | | |\n| U.S. Treasury | | $ | 2,291 | | | $ | \u2014 | | | $ | 2,291 | | | $ | \u2014 | |\n| GSE | | 179 | | | | \u2014 | | | | 179 | | | | \u2014 | | |\n| Agency MBS | | 20,101 | | | | \u2014 | | | | 20,101 | | | | \u2014 | | |\n| States and political subdivisions | | 1,392 | | | | \u2014 | | | | 1,392 | | | | \u2014 | | |\n| Non-agency MBS | | 576 | | | | \u2014 | | | | 144 | | | | 432 | | |\n| Other | | 8 | | | | 6 | | | | 2 | | | | \u2014 | | |\n| Total AFS securities | | 24,547 | | | | 6 | | | | 24,109 | | | | 432 | | |\n| LHFS | | 1,099 | | | | \u2014 | | | | 1,099 | | | | \u2014 | | |\n| MSRs | | 1,056 | | | | \u2014 | | | | \u2014 | | | | 1,056 | | |\n| Other assets: | | | | | | | | | | | | | | | | |\n| Trading and equity securities | | 633 | | | | 363 | | | | 270 | | | | \u2014 | | |\n| Derivative assets | | 443 | | | | \u2014 | | | | 437 | | | | 6 | | |\n| Private equity investments | | 404 | | | | \u2014 | | | | \u2014 | | | | 404 | | |\n| Total assets | | $ | 28,182 | | | $ | 369 | | | $ | 25,915 | | | $ | 1,898 | |\n| Liabilities: | | | | | | | | | | | | | | | | |\n| Derivative liabilities | | $ | 714 | | | $ | \u2014 | | | $ | 711 | | | $ | 3 | |\n| Securities sold short | | 120 | | | | \u2014 | | | | 120 | | | | \u2014 | | |\n| Total liabilities | | $ | 834 | | | $ | \u2014 | | | $ | 831 | | | $ | 3 | |\n\n","source":"TFC\/10-K\/0000092230-19-000017"} {"title":"NOTE 16. Fair Value Disclosures","text":"The non-agency MBS categorized as Level 3 represent ownership interests in various tranches of Re-REMIC trusts. These securities are valued at a discount, which is unobservable in the market, to the fair value of the underlying securities owned by the trusts. The Re-REMIC tranches do not have an active market and therefore are categorized as Level 3. At December\u00a031,\u00a02018, the fair value of Re-REMIC non-agency MBS represented a discount of 18.6% to the fair value of the underlying securities owned by the Re-REMIC trusts.The majority of private equity investments are in SBIC qualified funds, which primarily focus on equity and subordinated debt investments in privately-held middle market companies. The majority of these VIE investments are not redeemable and distributions are received as the underlying assets of the funds liquidate. The timing of distributions, which are expected to occur on various dates on an approximately ratable basis through 2028, is uncertain and dependent on various events such as recapitalizations, refinance transactions and ownership changes among others. As of December\u00a031,\u00a02018, restrictions on the ability to sell the investments include, but are not limited to, consent of a majority member or general partner approval for transfer of ownership. These investments are spread over numerous privately-held middle market companies, and thus the sensitivity to a change in fair value for any single investment is limited. The significant unobservable inputs for these investments are EBITDA multiples that ranged from 6x to 14x, with a weighted average of 9x, at December\u00a031,\u00a02018.The following table details the fair value and UPB of LHFS that were elected to be carried at fair value:","markdown_table":"\n\n| | | | | | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | | | | | | | | | | | | | | | |\n| (Dollars in millions) | | Non-agency MBS | | | | MSRs | | | | Net Derivatives | | | | Private Equity Investments | | |\n| Balance at January 1, 2016 | | $ | 626 | | | $ | 880 | | | $ | 4 | | | $ | 289 | |\n| Total realized and unrealized gains (losses): | | | | | | | | | | | | | | | | |\n| Included in earnings | | 25 | | | | 63 | | | | 97 | | | | 20 | | |\n| Included in unrealized net holding gains (losses) in OCI | | (45 | | ) | | \u2014 | | | | \u2014 | | | | \u2014 | | |\n| Purchases | | \u2014 | | | | \u2014 | | | | \u2014 | | | | 106 | | |\n| Issuances | | \u2014 | | | | 146 | | | | 82 | | | | \u2014 | | |\n| Sales | | \u2014 | | | | \u2014 | | | | \u2014 | | | | (4 | | ) |\n| Settlements | | (99 | | ) | | (160 | | ) | | (196 | | ) | | (49 | | ) |\n| Adoption of fair value option for commercial MSRs | | \u2014 | | | | 123 | | | | \u2014 | | | | \u2014 | | |\n| Balance at December 31, 2016 | | 507 | | | | 1,052 | | | | (13 | | ) | | 362 | | |\n| Total realized and unrealized gains (losses): | | | | | | | | | | | | | | | | |\n| Included in earnings | | 36 | | | | 48 | | | | 38 | | | | 58 | | |\n| Included in unrealized net holding gains (losses) in OCI | | (40 | | ) | | \u2014 | | | | \u2014 | | | | \u2014 | | |\n| Purchases | | \u2014 | | | | \u2014 | | | | \u2014 | | | | 142 | | |\n| Issuances | | \u2014 | | | | 124 | | | | 43 | | | | \u2014 | | |\n| Sales | | \u2014 | | | | \u2014 | | | | \u2014 | | | | (119 | | ) |\n| Settlements | | (71 | | ) | | (168 | | ) | | (65 | | ) | | (26 | | ) |\n| Transfers out of Level 3 | | \u2014 | | | | \u2014 | | | | \u2014 | | | | (13 | | ) |\n| Balance at December\u00a031,\u00a02017 | | 432 | | | | 1,056 | | | | 3 | | | | 404 | | |\n| Total realized and unrealized gains (losses): | | | | | | | | | | | | | | | | |\n| Included in earnings | | 9 | | | | 71 | | | | 11 | | | | 66 | | |\n| Purchases | | \u2014 | | | | \u2014 | | | | \u2014 | | | | 91 | | |\n| Issuances | | \u2014 | | | | 152 | | | | 24 | | | | \u2014 | | |\n| Sales | | \u2014 | | | | \u2014 | | | | \u2014 | | | | (112 | | ) |\n| Settlements | | (50 | | ) | | (171 | | ) | | (26 | | ) | | (56 | | ) |\n| Balance at December\u00a031,\u00a02018 | | $ | 391 | | | $ | 1,108 | | | $ | 12 | | | $ | 393 | |\n| Change in unrealized gains (losses) included in earnings for the period, attributable to assets and liabilities still held at December\u00a031,\u00a02018 | | $ | 9 | | | $ | 71 | | | $ | 12 | | | $ | 11 | |\n| Primary income statement location of realized gains (losses) included in earnings | | Interest income | | | | Mortgage banking income | | | | Mortgage banking income | | | | Other income | | |\n\n","source":"TFC\/10-K\/0000092230-19-000017"} {"title":"NOTE 16. Fair Value Disclosures","text":"BB&T Corporation 106Excluding government guaranteed, LHFS that were nonperforming or 90 days or more past due and still accruing interest were not material at December\u00a031,\u00a02018.The following table provides information about certain assets measured at fair value on a nonrecurring basis, which are primarily collateral dependent and may be subject to liquidity adjustments. The carrying values represent end of period values, which approximate the fair value measurements that occurred on the various measurement dates throughout the period. The valuation adjustments represent the amounts recorded during the period regardless of whether the asset is still held at period end. These assets are considered to be Level 3 assets (excludes PCI).","markdown_table":"\n\n| | | | | | | | | | | | | | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | | | | | | | | | | | | | | | | | | | | | | | |\n| December 31,(Dollars in millions) | | 2018 | | | | | | | | | | | | 2017 | | | | | | | | | | |\n| | Fair Value | | | | UPB | | | | Difference | | | | Fair Value | | | | UPB | | | | Difference | | |\n| LHFS at fair value | | $ | 988 | | | $ | 975 | | | $ | 13 | | | $ | 1,099 | | | $ | 1,084 | | | $ | 15 | |\n\n","source":"TFC\/10-K\/0000092230-19-000017"} {"title":"NOTE 16. Fair Value Disclosures","text":"For financial instruments not recorded at fair value, estimates of fair value are based on relevant market data and information about the instrument. Values obtained relate to one trading unit without regard to any premium or discount that may result from concentrations of ownership, possible tax ramifications, estimated transaction costs that may result from bulk sales or the relationship between various instruments.An active market does not exist for certain financial instruments. Fair value estimates for these instruments are based on current economic conditions, currency and interest rate risk characteristics, loss experience and other factors. Many of these estimates involve uncertainties and matters of significant judgment and cannot be determined with precision. Therefore, the fair value estimates in many instances cannot be substantiated by comparison to independent markets and, in many cases, may not be realizable in a current sale of the instrument. In addition, changes in assumptions could significantly affect these fair value estimates. The following assumptions were used to estimate the fair value of these financial instruments.Cash and cash equivalents and restricted cash: For these short-term instruments, the carrying amounts are a reasonable estimate of fair values.HTM securities: The fair values of HTM securities are based on a market approach using observable inputs such as benchmark yields and securities, TBA prices, reported trades, issuer spreads, current bids and offers, monthly payment information and collateral performance.Loans receivable: The fair values for loans are estimated using discounted cash flow analyses, applying interest rates currently being offered for loans with similar terms and credit quality, which are deemed to be indicative of orderly transactions in the current market. For commercial loans and leases, discount rates may be adjusted to address additional credit risk on lower risk grade instruments. For residential mortgage and other consumer loans, internal prepayment risk models are used to adjust contractual cash flows. Loans are aggregated into pools of similar terms and credit quality and discounted using a LIBOR based rate. The carrying amounts of accrued interest approximate fair values.Deposit liabilities: The fair values for demand deposits are equal to the amount payable on demand. Fair values for CDs are estimated using a discounted cash flow calculation that applies current interest rates to aggregate expected maturities. BB&T has developed long-term relationships with its deposit customers, commonly referred to as CDIs, that have not been considered in the determination of the deposit liabilities' fair value.Short-term borrowings: The carrying amounts of short-term borrowings, excluding securities sold short, approximate their fair values.Long-term debt: The fair values of long-term debt instruments are estimated based on quoted market prices for the instrument if available, or for similar instruments if not available, or by using discounted cash flow analyses, based on current incremental borrowing rates for similar types of instruments.Contractual commitments: The fair values of commitments are estimated using the fees charged to enter into similar agreements, taking into account the remaining terms of the agreements and the present creditworthiness of the counterparties. The fair values of guarantees and letters of credit are estimated based on the counterparties' creditworthiness and average default rates for loan products with similar risks. These respective fair value measurements are categorized within Level 3 of the fair value hierarchy. Retail lending and revolving credit commitments have an immaterial fair value as BB&T typically has the ability to cancel such commitments.Financial assets and liabilities not recorded at fair value are summarized below:","markdown_table":"\n\n| | | | | | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | | | | | | | | | | | | | | | |\n| | | 2018 | | | | | | | | 2017 | | | | | | |\n| As of \/ For The Year Ended December 31,(Dollars in millions) | | Carrying Value | | | | Valuation Adjustments | | | | Carrying Value | | | | Valuation Adjustments | | |\n| Impaired loans | | $ | 167 | | | $ | (35 | ) | | $ | 163 | | | $ | (22 | ) |\n| Foreclosed real estate | | 35 | | | | (240 | | ) | | 32 | | | | (255 | | ) |\n\n","source":"TFC\/10-K\/0000092230-19-000017"} {"title":"NOTE 16. Fair Value Disclosures","text":"The following is a summary of selected information pertaining to off-balance sheet financial instruments:","markdown_table":"\n\n| | | | | | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | | | | | | | | | | | | | | | |\n| December 31,(Dollars in millions) | | 2018 | | | | | | | | 2017 | | | | | | |\n| Fair Value Hierarchy | Carrying Amount | | | | Fair Value | | | | Carrying Amount | | | | Fair Value | | |\n| Financial assets: | | | | | | | | | | | | | | | | |\n| HTM securities | Level 2 | $ | 20,552 | | | $ | 20,047 | | | $ | 23,027 | | | $ | 22,837 | |\n| Loans and leases HFI, net of ALLL | Level 3 | 147,455 | | | | 145,591 | | | | 142,211 | | | | 141,664 | | |\n| Financial liabilities: | | | | | | | | | | | | | | | | |\n| Time deposits | Level 2 | 16,577 | | | | 16,617 | | | | 13,170 | | | | 13,266 | | |\n| Long-term debt | Level 2 | 23,709 | | | | 23,723 | | | | 23,648 | | | | 23,885 | | |\n\n","source":"TFC\/10-K\/0000092230-19-000017"} {"title":"NOTE 16. Fair Value Disclosures","text":"BB&T Corporation 108","markdown_table":"\n\n| | | | | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | | | | | | | | | | | | | | |\n| | 2018 | | | | | | | | 2017 | | | | | | |\n| December 31,(Dollars in millions) | Notional\/Contract Amount | | | | Fair Value | | | | Notional\/Contract Amount | | | | Fair Value | | |\n| Commitments to extend, originate or purchase credit | $ | 72,435 | | | $ | 140 | | | $ | 67,860 | | | $ | 259 | |\n| Residential mortgage loans sold with recourse | 419 | | | | 3 | | | | 490 | | | | 5 | | |\n| CRE mortgages serviced for others covered by recourse provisions | 4,699 | | | | 6 | | | | 4,153 | | | | 5 | | |\n| Letters of credit | 2,389 | | | | 18 | | | | 2,466 | | | | 21 | | |\n\n","source":"TFC\/10-K\/0000092230-19-000017"} {"title":"Impact of Derivatives on the Consolidated Balance Sheets","text":"The following table presents additional information for fair value hedging relationships:","markdown_table":"\n\n| | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | | | | 2018 | | | | | | | | | | | | 2017 | | | | | | | | | | |\n| December 31,(Dollars in millions) | | Hedged Item or Transaction | | Notional Amount | | | | Fair Value | | | | | | | | Notional Amount | | | | Fair Value | | | | | | |\n| | | | Gain | | | | Loss | | | | | Gain | | | | Loss | | |\n| Cash flow hedges: | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Interest rate contracts: | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Pay fixed swaps | | 3 mo. LIBOR funding | | $ | 6,500 | | | $ | \u2014 | | | $ | \u2014 | | | $ | 6,500 | | | $ | \u2014 | | | $ | (126 | ) |\n| Fair value hedges: | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Interest rate contracts: | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Receive fixed swaps | | Long-term debt | | 12,908 | | | | 5 | | | | (74 | | ) | | 15,538 | | | | 118 | | | | (166 | | ) |\n| Options | | Long-term debt | | 4,785 | | | | \u2014 | | | | (2 | | ) | | 6,087 | | | | \u2014 | | | | (1 | | ) |\n| Pay fixed swaps | | Commercial loans | | 505 | | | | 2 | | | | \u2014 | | | | 416 | | | | 5 | | | | (1 | | ) |\n| Pay fixed swaps | | Municipal securities | | 259 | | | | \u2014 | | | | \u2014 | | | | 231 | | | | \u2014 | | | | (76 | | ) |\n| Total | | | | 18,457 | | | | 7 | | | | (76 | | ) | | 22,272 | | | | 123 | | | | (244 | | ) |\n| Not designated as hedges: | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Client-related and other risk management: | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Interest rate contracts: | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Receive fixed swaps | | | | 11,577 | | | | 128 | | | | (98 | | ) | | 10,880 | | | | 141 | | | | (61 | | ) |\n| Pay fixed swaps | | | | 11,523 | | | | 19 | | | | (32 | | ) | | 10,962 | | | | 59 | | | | (155 | | ) |\n| Other | | | | 1,143 | | | | 2 | | | | (3 | | ) | | 1,658 | | | | 4 | | | | (4 | | ) |\n| Forward commitments | | | | 2,883 | | | | 11 | | | | (13 | | ) | | 3,549 | | | | 3 | | | | (2 | | ) |\n| Foreign exchange contracts | | | | 529 | | | | 5 | | | | (2 | | ) | | 470 | | | | 3 | | | | (6 | | ) |\n| Total | | | | 27,655 | | | | 165 | | | | (148 | | ) | | 27,519 | | | | 210 | | | | (228 | | ) |\n| Mortgage banking: | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Interest rate contracts: | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Interest rate lock commitments | | | | 702 | | | | 12 | | | | \u2014 | | | | 1,308 | | | | 7 | | | | (3 | | ) |\n| When issued securities, forward rate agreements and forward commitments | | | | 1,753 | | | | 2 | | | | (20 | | ) | | 3,124 | | | | 4 | | | | (3 | | ) |\n| Other | | | | 271 | | | | 2 | | | | (1 | | ) | | 182 | | | | 1 | | | | \u2014 | | |\n| Total | | | | 2,726 | | | | 16 | | | | (21 | | ) | | 4,614 | | | | 12 | | | | (6 | | ) |\n| MSRs: | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Interest rate contracts: | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Receive fixed swaps | | | | 4,328 | | | | \u2014 | | | | \u2014 | | | | 4,498 | | | | 15 | | | | (86 | | ) |\n| Pay fixed swaps | | | | 3,224 | | | | \u2014 | | | | \u2014 | | | | 3,418 | | | | 32 | | | | (13 | | ) |\n| Options | | | | 3,155 | | | | 48 | | | | (2 | | ) | | 4,535 | | | | 50 | | | | (11 | | ) |\n| When issued securities, forward rate agreements and forward commitments | | | | 1,590 | | | | 10 | | | | \u2014 | | | | 1,813 | | | | 1 | | | | \u2014 | | |\n| Other | | | | 103 | | | | \u2014 | | | | \u2014 | | | | 3 | | | | \u2014 | | | | \u2014 | | |\n| Total | | | | 12,400 | | | | 58 | | | | (2 | | ) | | 14,267 | | | | 98 | | | | (110 | | ) |\n| Total derivatives not designated as hedges | | | | 42,781 | | | | 239 | | | | (171 | | ) | | 46,400 | | | | 320 | | | | (344 | | ) |\n| Total derivatives | | | | $ | 67,738 | | | 246 | | | | (247 | | ) | | $ | 75,172 | | | 443 | | | | (714 | | ) |\n| Gross amounts not offset in the Consolidated Balance Sheets: | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Amounts subject to master netting arrangements not offset due to policy election | | | | | | | | (47 | | ) | | 47 | | | | | | | | (297 | | ) | | 297 | | |\n| Cash collateral (received) posted | | | | | | | | (53 | | ) | | 82 | | | | | | | | (20 | | ) | | 344 | | |\n| Net amount | | | | | | | | $ | 146 | | | $ | (118 | ) | | | | | | $ | 126 | | | $ | (73 | ) |\n\n","source":"TFC\/10-K\/0000092230-19-000017"} {"title":"Impact of Derivatives on the Consolidated Balance Sheets","text":"BB&T Corporation 110","markdown_table":"\n\n| | | | | | | | | | | | | | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | | | | | | | | | | | | | | | | | | | | | | | |\n| | | 2018 | | | | | | | | | | | | 2017 | | | | | | | | | | |\n| | | | | | | Hedge Basis Adjustment | | | | | | | | | | | | Hedge Basis Adjustment | | | | | | |\n| December 31,(Dollars in millions) | | Hedged Asset \/ Liability Basis | | | | Items Currently Designated | | | | Items No Longer Designated | | | | Hedged Asset \/ Liability Basis | | | | Items Currently Designated | | | | Items No Longer Designated | | |\n| AFS securities | | $ | 493 | | | $ | 5 | | | $ | 54 | | | $ | 533 | | | $ | 64 | | | $ | 10 | |\n| Loans and leases | | 562 | | | | \u2014 | | | | (3 | | ) | | 511 | | | | (5 | | ) | | \u2014 | | |\n| Long-term debt | | 15,397 | | | | (98 | | ) | | 12 | | | | 16,917 | | | | (49 | | ) | | 140 | | |\n\n","source":"TFC\/10-K\/0000092230-19-000017"} {"title":"Impact of Derivatives on the Consolidated Statements of Income and Comprehensive Income","text":"The following table summarizes the impact on net interest income related to fair value hedges, which consist of interest rate contracts. Prior period amounts and presentation were not conformed to new hedge accounting guidance that was adopted in 2018.","markdown_table":"\n\n| | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | | | | | | | | | | |\n| Year Ended December 31,(Dollars in millions) | 2018 | | | | 2017 | | | | 2016 | | |\n| Pre-tax gain (loss) recognized in\u00a0OCI: | | | | | | | | | | | |\n| Deposits | $ | 15 | | | | | | | | | |\n| Short-term borrowings | (3 | | ) | | | | | | | | |\n| Long-term debt | 57 | | | | | | | | | | |\n| Total | 69 | | | | $ | 10 | | | $ | (24 | ) |\n| Pre-tax gain (loss) reclassified from AOCI into interest expense: | | | | | | | | | | | |\n| Deposits | (1 | | ) | | | | | | | | |\n| Short-term borrowings | 1 | | | | | | | | | | |\n| Long-term debt | (12 | | ) | | | | | | | | |\n| Total | $ | (12 | ) | | $ | (15 | ) | | $ | (11 | ) |\n\n","source":"TFC\/10-K\/0000092230-19-000017"} {"title":"Impact of Derivatives on the Consolidated Statements of Income and Comprehensive Income","text":"The following table presents pre-tax gain (loss) recognized in income for derivative instruments not designated as hedges:","markdown_table":"\n\n| | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | | | | | | | | | | |\n| Year Ended December 31,(Dollars in millions) | 2018 | | | | 2017 | | | | 2016 | | |\n| AFS securities: | | | | | | | | | | | |\n| Amounts related to interest settlements | $ | (5 | ) | | | | | | | | |\n| Recognized on derivatives | 12 | | | | | | | | | | |\n| Recognized on hedged items | (15 | | ) | | | | | | | | |\n| Net income (expense) recognized | (8 | | ) | | $ | (16 | ) | | $ | (16 | ) |\n| Loans and leases: | | | | | | | | | | | |\n| Amounts related to interest settlements | (2 | | ) | | | | | | | | |\n| Recognized on derivatives | (1 | | ) | | | | | | | | |\n| Recognized on hedged items | 2 | | | | | | | | | | |\n| Net income (expense) recognized | (1 | | ) | | (3 | | ) | | (2 | | ) |\n| Long-term debt: | | | | | | | | | | | |\n| Amounts related to interest settlements | (30 | | ) | | | | | | | | |\n| Recognized on derivatives | (122 | | ) | | | | | | | | |\n| Recognized on hedged items | 165 | | | | | | | | | | |\n| Net income (expense) recognized | 13 | | | | 148 | | | | 226 | | |\n| Net income (expense) recognized, total | $ | 4 | | | $ | 129 | | | $ | 208 | |\n\n","source":"TFC\/10-K\/0000092230-19-000017"} {"title":"Impact of Derivatives on the Consolidated Statements of Income and Comprehensive Income","text":"The following table presents information about BB&T's cash flow and fair value hedges:","markdown_table":"\n\n| | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | | | | | | | | | | | |\n| Year Ended December 31,(Dollars in millions) | Location | 2018 | | | | 2017 | | | | 2016 | | |\n| Client-related and other risk management: | | | | | | | | | | | | |\n| Interest rate contracts | Other noninterest income | $ | 40 | | | $ | 50 | | | $ | 52 | |\n| Foreign exchange contracts | Other noninterest income | 21 | | | | 1 | | | | 11 | | |\n| Mortgage banking: | | | | | | | | | | | | |\n| Interest rate contracts | Mortgage banking income | (5 | | ) | | (12 | | ) | | 8 | | |\n| MSRs: | | | | | | | | | | | | |\n| Interest rate contracts | Mortgage banking income | (65 | | ) | | \u2014 | | | | 31 | | |\n| Total | | $ | (9 | ) | | $ | 39 | | | $ | 102 | |\n\n","source":"TFC\/10-K\/0000092230-19-000017"} {"title":"Derivatives Credit Risk \u2013 Central Clearing Parties","text":"BB&T Corporation 112","markdown_table":"\n\n| | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- |\n| | | | | | | | |\n| December 31,(Dollars in millions) | 2018 | | | | 2017 | | |\n| Dealer counterparties: | | | | | | | |\n| Cash collateral received from dealer counterparties | $ | 56 | | | $ | 21 | |\n| Derivatives in a net gain position secured by collateral received | 55 | | | | 22 | | |\n| Unsecured positions in a net gain with dealer counterparties after collateral postings | 2 | | | | 2 | | |\n| Cash collateral posted to dealer counterparties | 75 | | | | 172 | | |\n| Derivatives in a net loss position secured by collateral received | 76 | | | | 171 | | |\n| Additional collateral that would have been posted had BB&T's credit ratings dropped below investment grade | 1 | | | | \u2014 | | |\n| Central clearing parties: | | | | | | | |\n| Cash collateral, including initial margin, posted to central clearing parties | 17 | | | | 177 | | |\n| Derivatives in a net loss position | 8 | | | | 176 | | |\n| Securities pledged to central clearing parties | 124 | | | | 91 | | |\n\n\u00a0","source":"TFC\/10-K\/0000092230-19-000017"} {"title":"Other, Treasury & Corporate","text":"(1)Includes financial data from business units below the quantitative and qualitative thresholds requiring disclosure.","markdown_table":"\n\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Year Ended December 31,(Dollars in millions) | CB-Retail | | | | | | | | | | | CB-Commercial | | | | | | | | | | | | FS&CF | | | | | | | | | | | |\n| 2018 | | | | 2017 | | | | 2016 | | | | 2018 | | | | 2017 | | | | 2016 | | | | 2018 | | | | 2017 | | | | 2016 | | |\n| Net interest income (expense) | $ | 3,451 | | | $ | 3,415 | | | $ | 3,290 | | | $ | 2,000 | | | $ | 1,741 | | | $ | 1,604 | | | $ | 689 | | | $ | 583 | | | $ | 511 | |\n| Net intersegment interest income (expense) | 280 | | | | 146 | | | | 113 | | | | 241 | | | | 379 | | | | 404 | | | | 84 | | | | 127 | | | | 142 | | |\n| Segment net interest income | 3,731 | | | | 3,561 | | | | 3,403 | | | | 2,241 | | | | 2,120 | | | | 2,008 | | | | 773 | | | | 710 | | | | 653 | | |\n| Allocated provision for credit losses | 504 | | | | 502 | | | | 475 | | | | 112 | | | | 68 | | | | (41 | | ) | | 1 | | | | (15 | | ) | | 128 | | |\n| Segment net interest income after provision | 3,227 | | | | 3,059 | | | | 2,928 | | | | 2,129 | | | | 2,052 | | | | 2,049 | | | | 772 | | | | 725 | | | | 525 | | |\n| Noninterest income | 1,394 | | | | 1,408 | | | | 1,358 | | | | 437 | | | | 427 | | | | 397 | | | | 1,235 | | | | 1,181 | | | | 1,148 | | |\n| Noninterest expense | 2,654 | | | | 2,724 | | | | 2,480 | | | | 1,036 | | | | 1,206 | | | | 1,330 | | | | 1,259 | | | | 1,190 | | | | 1,141 | | |\n| Income (loss) before income taxes | 1,967 | | | | 1,743 | | | | 1,806 | | | | 1,530 | | | | 1,273 | | | | 1,116 | | | | 748 | | | | 716 | | | | 532 | | |\n| Provision (benefit) for income taxes | 483 | | | | 650 | | | | 684 | | | | 342 | | | | 441 | | | | 394 | | | | 155 | | | | 225 | | | | 156 | | |\n| Segment net income (loss) | $ | 1,484 | | | $ | 1,093 | | | $ | 1,122 | | | $ | 1,188 | | | $ | 832 | | | $ | 722 | | | $ | 593 | | | $ | 491 | | | $ | 376 | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Identifiable assets (period end) | $ | 73,793 | | | $ | 71,263 | | | $ | 74,747 | | | $ | 57,044 | | | $ | 56,566 | | | $ | 55,038 | | | $ | 31,740 | | | $ | 29,144 | | | $ | 26,795 | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | IH | | | | | | | | | | | OT&C (1) | | | | | | | | | | | | Total | | | | | | | | | | | |\n| | 2018 | | | | 2017 | | | | 2016 | | | | 2018 | | | | 2017 | | | | 2016 | | | | 2018 | | | | 2017 | | | | 2016 | | |\n| Net interest income (expense) | $ | 119 | | | $ | 98 | | | $ | 86 | | | $ | 423 | | | $ | 698 | | | $ | 830 | | | $ | 6,682 | | | $ | 6,535 | | | $ | 6,321 | |\n| Net intersegment interest income (expense) | (32 | | ) | | (21 | | ) | | (19 | | ) | | (573 | | ) | | (631 | | ) | | (640 | | ) | | \u2014 | | | | \u2014 | | | | \u2014 | | |\n| Segment net interest income | 87 | | | | 77 | | | | 67 | | | | (150 | | ) | | 67 | | | | 190 | | | | 6,682 | | | | 6,535 | | | | 6,321 | | |\n| Allocated provision for credit losses | 2 | | | | 4 | | | | 3 | | | | (53 | | ) | | (12 | | ) | | 7 | | | | 566 | | | | 547 | | | | 572 | | |\n| Segment net interest income after provision | 85 | | | | 73 | | | | 64 | | | | (97 | | ) | | 79 | | | | 183 | | | | 6,116 | | | | 5,988 | | | | 5,749 | | |\n| Noninterest income | 1,871 | | | | 1,777 | | | | 1,731 | | | | (61 | | ) | | (11 | | ) | | (162 | | ) | | 4,876 | | | | 4,782 | | | | 4,472 | | |\n| Noninterest expense | 1,614 | | | | 1,590 | | | | 1,524 | | | | 369 | | | | 734 | | | | 246 | | | | 6,932 | | | | 7,444 | | | | 6,721 | | |\n| Income (loss) before income taxes | 342 | | | | 260 | | | | 271 | | | | (527 | | ) | | (666 | | ) | | (225 | | ) | | 4,060 | | | | 3,326 | | | | 3,500 | | |\n| Provision (benefit) for income taxes | 87 | | | | 99 | | | | 105 | | | | (264 | | ) | | (504 | | ) | | (281 | | ) | | 803 | | | | 911 | | | | 1,058 | | |\n| Segment net income (loss) | $ | 255 | | | $ | 161 | | | $ | 166 | | | $ | (263 | ) | | $ | (162 | ) | | $ | 56 | | | $ | 3,257 | | | $ | 2,415 | | | $ | 2,442 | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Identifiable assets (period end) | $ | 6,622 | | | $ | 6,024 | | | $ | 5,943 | | | $ | 56,498 | | | $ | 58,645 | | | $ | 56,753 | | | $ | 225,697 | | | $ | 221,642 | | | $ | 219,276 | |\n\n","source":"TFC\/10-K\/0000092230-19-000017"} {"title":"ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES","text":"BB&T Corporation 118","markdown_table":"\n\n| | | | | |\n| --- | --- | --- | --- | --- |\n| | | | | |\n| Exhibit No. | | Description | | Location |\n| 10.3\\* | | BB&T Corporation 2012 Incentive Plan, as amended | | [Incorporated herein by reference to Exhibit 10.1 of the Registration Statement on Form S-8, filed May 25, 2017.](http:\/\/www.sec.gov\/Archives\/edgar\/data\/92230\/000009223017000046\/ex101-incentiveplan_517.htm) |\n| 10.4\\* | | Form of Restricted Stock Unit Agreement (Non-Employee Directors) for the BB&T 2012 Incentive Plan. | | [Incorporated herein by reference to Exhibit 10.1 of the Quarterly Report on Form 10-Q, filed April 27, 2015.](http:\/\/www.sec.gov\/Archives\/edgar\/data\/92230\/000009223015000035\/exhibit101.htm) |\n| 10.5\\* | | Form of Non-Employee Director Nonqualified Stock Option Agreement for the BB&T Corporation Amended and Restated 2004 Stock Incentive Plan (5-Year Vesting). | | [Incorporated herein by reference to Exhibit 10.7 of the Annual Report on Form 10-K, filed February 28, 2008.](http:\/\/www.sec.gov\/Archives\/edgar\/data\/92230\/000119312508041900\/dex107.htm) |\n| 10.6\\* | | Form of Non-Employee Director Nonqualified Stock Option Agreement for the BB&T Corporation Amended and Restated 2004 Stock Incentive Plan (4-Year Vesting). | | [Incorporated herein by reference to Exhibit 10.3 of the Quarterly Report on Form 10-Q, filed May 7, 2010.](http:\/\/www.sec.gov\/Archives\/edgar\/data\/92230\/000119312510112881\/dex103.htm) |\n| 10.7\\* | | Form of Employee Nonqualified Stock Option Agreement for the BB&T Corporation Amended and Restated 2004 Stock Incentive Plan (5-Year Vesting). | | [Incorporated herein by reference to Exhibit 10.8 of the Annual Report on Form 10-K, filed February 28, 2008.](http:\/\/www.sec.gov\/Archives\/edgar\/data\/92230\/000119312508041900\/dex108.htm) |\n| 10.8\\* | | Form of Employee Nonqualified Stock Option Agreement for the BB&T Corporation Amended and Restated 2004 Stock Incentive Plan (4-Year Vesting). | | [Incorporated herein by reference to Exhibit 10.5 of the Quarterly Report on Form 10-Q, filed May 7, 2010.](http:\/\/www.sec.gov\/Archives\/edgar\/data\/92230\/000119312510112881\/dex105.htm) |\n| 10.9\\* | | Southern National Deferred Compensation Plan for Key Executives including amendments. | | [Incorporated herein by reference to Exhibit 10.21 of the Annual Report on Form 10-K, filed February 25, 2011.](http:\/\/www.sec.gov\/Archives\/edgar\/data\/92230\/000119312511047405\/dex1021.htm) |\n| 10.10\\* | | BB&T Non-Qualified Defined Benefit Plan (January 1, 2012 Restatement). | | [Incorporated herein by reference to Exhibit 10.11 of the Annual Report on Form 10-K, filed February 25, 2016.](http:\/\/www.sec.gov\/Archives\/edgar\/data\/92230\/000009223016000125\/exhibit1011.htm) |\n| 10.11\\* | | First Amendment to the BB&T Non-Qualified Defined Benefit Plan (January 1, 2012 Restatement). | | [Incorporated herein by reference to Exhibit 10.12 of the Annual Report on Form 10-K, filed February 25, 2016.](http:\/\/www.sec.gov\/Archives\/edgar\/data\/92230\/000009223016000125\/exhibit1012.htm) |\n| 10.12\\* | | Second Amendment to the BB&T Non-Qualified Defined Benefit Plan (January 1, 2012 Restatement). | | [Incorporated herein by reference to Exhibit 10.13 of the Annual Report on Form 10-K, filed February 25, 2016.](http:\/\/www.sec.gov\/Archives\/edgar\/data\/92230\/000009223016000125\/exhibit1013.htm) |\n| 10.13\\* | | BB&T Non-Qualified Defined Contribution Plan (January 1, 2012 Restatement). | | [Incorporated herein by reference to Exhibit 10.14 of the Annual Report on Form 10-K, filed February 25, 2016.](http:\/\/www.sec.gov\/Archives\/edgar\/data\/92230\/000009223016000125\/exhibit1014.htm) |\n| 10.14\\* | | BB&T Corporation Non-Qualified Deferred Compensation Trust (Amended and Restated Effective January 1, 2012). | | [Incorporated herein by reference to Exhibit 10.15 of the Annual Report on Form 10-K, filed February 25, 2016.](http:\/\/www.sec.gov\/Archives\/edgar\/data\/92230\/000009223016000125\/exhibit1015.htm) |\n| 10.15\\* | | Form of Employee Nonqualified Stock Option Agreement for the BB&T Corporation Amended and Restated 2004 Stock Incentive Plan (4-Year Vesting with Clawback Provision). | | [Incorporated herein by reference to Exhibit 10.1 of the Quarterly Report on Form 10-Q, filed May 4, 2012.](http:\/\/www.sec.gov\/Archives\/edgar\/data\/92230\/000119312512212084\/d343887dex101.htm) |\n| 10.16\\* | | Form of Employee Nonqualified Stock Option Agreement for the BB&T Corporation 2012 Incentive Plan. | | [Incorporated herein by reference to Exhibit 10.1 of the Quarterly Report on Form 10-Q, filed May 2, 2013.](http:\/\/www.sec.gov\/Archives\/edgar\/data\/92230\/000009223013000043\/exhibit101.htm) |\n| 10.17\\* | | Form of Nonqualified Option Agreement (Senior Executive) for the BB&T Corporation 2012 Incentive Plan. | | [Incorporated herein by reference to Exhibit 10.4 of the Quarterly Report on Form 10-Q, filed April 30, 2014.](http:\/\/www.sec.gov\/Archives\/edgar\/data\/92230\/000009223014000026\/exhibit104.htm) |\n| 10.18\\* | | Form of Director Restricted Stock Unit Agreement for the BB&T Corporation 2012 Incentive Plan. | | [Incorporated herein by reference to Exhibit 10.2 of the Quarterly Report on Form 10-Q, filed May 2, 2013.](http:\/\/www.sec.gov\/Archives\/edgar\/data\/92230\/000009223013000043\/exhibit102.htm) |\n\n","source":"TFC\/10-K\/0000092230-19-000017"} {"title":"ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES","text":"BB&T Corporation 120","markdown_table":"\n\n| | | | | |\n| --- | --- | --- | --- | --- |\n| | | | | |\n| Exhibit No. | | Description | | Location |\n| 10.35\\* | | 2016 Employment Agreement by and among BB&T Corporation, Branch Banking and Trust Company and Brant J. Standridge. | | [Incorporated herein by reference to Exhibit 10.2 of the Quarterly Report on Form 10-Q, filed October 24, 2016.](http:\/\/www.sec.gov\/Archives\/edgar\/data\/92230\/000009223016000202\/exh102standridgeagreement.htm) |\n| 10.36\\* | | 2016 Employment Agreement by and among BB&T Corporation, Branch Banking and Trust Company and Dont\u00e1 L. Wilson. | | [Incorporated herein by reference to Exhibit 10.3 of the Quarterly Report on Form 10-Q, filed October 24, 2016.](http:\/\/www.sec.gov\/Archives\/edgar\/data\/92230\/000009223016000202\/exh103wilsonagreement.htm) |\n| 10.37\\* | | Amended and Restated Employment Agreement by and among BB&T Corporation, Branch Banking and Trust Co. and Kelly S. King dated as of February 7, 2019. | | [Incorporated herein by reference to Exhibit 10.1 of the Current Report on Form 8-K, filed February 13, 2019.](http:\/\/www.sec.gov\/Archives\/edgar\/data\/92230\/000119312519036824\/d704920dex101.htm) |\n| 11 | | Statement re computation of earnings per share. | | [Filed herewith as Computation of EPS note to the consolidated financial statements.](#s10FFD23AB2D053F7A3C6D1335044C90B) |\n| 21\u2020 | | Subsidiaries of the Registrant. | | [Filed herewith.](ex21-subsidiaries_4q18.htm) |\n| 23\u2020 | | Consent of Independent Registered Public Accounting Firm. | | [Filed herewith.](ex23-consent_4q18.htm) |\n| 31.1 | | Certification of Chief Executive Officer pursuant to Rule 13a-14(a) or 15d-14(a) of the Exchange Act, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | | [Filed herewith.](ex311-certification_4q18.htm) |\n| 31.2 | | Certification of Chief Financial Officer pursuant to Rule 13a-14(a) or 15d-14(a) of the Exchange Act, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | | [Filed herewith.](ex312-certification_4q18.htm) |\n| 32 | | Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | | [Filed herewith.](ex32-certification_4q18.htm) |\n| 101.INS | | XBRL Instance Document. | | Filed herewith. |\n| 101.SCH | | XBRL Taxonomy Extension Schema. | | Filed herewith. |\n| 101.CAL | | XBRL Taxonomy Extension Calculation Linkbase. | | Filed herewith. |\n| 101.LAB | | XBRL Taxonomy Extension Label Linkbase. | | Filed herewith. |\n| 101.PRE | | XBRL Taxonomy Extension Presentation Linkbase. | | Filed herewith. |\n| 101.DEF | | XBRL Taxonomy Definition Linkbase. | | Filed herewith. |\n| \u2020\u00a0\u00a0\u00a0\u00a0Exhibit filed with the SEC and available upon request. | | | | |\n| \\*\u00a0\u00a0\u00a0\u00a0Management compensatory plan or arrangement. | | | | |\n| \\*\\*\u00a0\u00a0\u00a0\u00a0Pursuant to Item 601(b)(2) of Regulation\u00a0S-K,\u00a0certain schedules and similar attachments have been omitted. The registrant hereby agrees to furnish a copy of any omitted schedule or similar attachment to the SEC upon request. | | | | |\n\n","source":"TFC\/10-K\/0000092230-19-000017"} {"title":"Net Interest Income and NIM","text":"(1)Yields are stated on a TE basis utilizing the marginal income tax rates for the periods presented. The change in interest not solely due to changes in yield\/rate or volume has been allocated on a pro-rata basis based on the absolute dollar amount of each. (2)Total securities include AFS and HTM securities. (3)Includes cash equivalents, interest-bearing deposits with banks, trading securities, FHLB stock and other earning assets. (4)Loan fees, which are not material for any of the periods shown, are included for rate calculation purposes. (5)NPLs are included in the average balances.(6)Excludes basis adjustments for fair value hedges.","markdown_table":"\n\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Table 5 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| TE Net Interest Income and Rate \/ Volume Analysis (1) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Year Ended December 31, 2017, 2016 and 2015 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 2017 vs. 2016 | | | | | | | | | | | | 2016 vs. 2015 | | | | | | | | | | |\n| | | Average Balances (6) | | | | | | | | | | | | Yield\/Rate | | | | | | | | | Income\/Expense | | | | | | | | | | | | Incr. | | | | Change due to | | | | | | | | Incr. | | | | Change due to | | | | | | |\n| (Dollars in millions) | | 2017 | | | | 2016 | | | | 2015 | | | | 2017 | | | 2016 | | | 2015 | | | 2017 | | | | 2016 | | | | 2015 | | | | (Decr.) | | | | Rate | | | | Vol. | | | | (Decr.) | | | | Rate | | | | Vol. | | |\n| Assets | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Total securities, at amortized cost: (2) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| U.S. Treasury | | $ | 4,179 | | | $ | 3,061 | | | $ | 2,650 | | | 1.71 | % | | 1.67 | % | | 1.58 | % | | $ | 72 | | | $ | 51 | | | $ | 42 | | | $ | 21 | | | $ | 1 | | | $ | 20 | | | $ | 9 | | | $ | 2 | | | $ | 7 | |\n| GSE | | 2,385 | | | | 3,601 | | | | 5,338 | | | | 2.22 | | | 2.13 | | | 2.13 | | | 53 | | | | 77 | | | | 113 | | | | (24 | | ) | | 3 | | | | (27 | | ) | | (36 | | ) | | \u2014 | | | | (36 | | ) |\n| Agency MBS | | 37,250 | | | | 36,658 | | | | 30,683 | | | | 2.26 | | | 2.05 | | | 1.98 | | | 841 | | | | 750 | | | | 605 | | | | 91 | | | | 79 | | | | 12 | | | | 145 | | | | 22 | | | | 123 | | |\n| States and political subdivisions | | 1,748 | | | | 2,361 | | | | 2,204 | | | | 4.77 | | | 5.20 | | | 5.65 | | | 83 | | | | 123 | | | | 125 | | | | (40 | | ) | | (10 | | ) | | (30 | | ) | | (2 | | ) | | (11 | | ) | | 9 | | |\n| Non-agency MBS | | 411 | | | | 534 | | | | 751 | | | | 18.80 | | | 14.56 | | | 13.51 | | | 77 | | | | 78 | | | | 102 | | | | (1 | | ) | | 19 | | | | (20 | | ) | | (24 | | ) | | 7 | | | | (31 | | ) |\n| Other | | 56 | | | | 64 | | | | 477 | | | | 2.17 | | | 1.87 | | | 1.31 | | | 1 | | | | \u2014 | | | | 7 | | | | 1 | | | | 1 | | | | \u2014 | | | | (7 | | ) | | 1 | | | | (8 | | ) |\n| Total securities | | 46,029 | | | | 46,279 | | | | 42,103 | | | | 2.45 | | | 2.33 | | | 2.36 | | | 1,127 | | | | 1,079 | | | | 994 | | | | 48 | | | | 93 | | | | (45 | | ) | | 85 | | | | 21 | | | | 64 | | |\n| Other earning assets (3) | | 3,484 | | | | 3,202 | | | | 2,768 | | | | 1.53 | | | 1.64 | | | 1.39 | | | 53 | | | | 53 | | | | 38 | | | | \u2014 | | | | (4 | | ) | | 4 | | | | 15 | | | | 8 | | | | 7 | | |\n| Loans and leases, net of unearned income: (4)(5) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Commercial: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Commercial and industrial | | 57,994 | | | | 56,227 | | | | 49,518 | | | | 3.59 | | | 3.40 | | | 3.25 | | | 2,080 | | | | 1,914 | | | | 1,612 | | | | 166 | | | | 106 | | | | 60 | | | | 302 | | | | 77 | | | | 225 | | |\n| CRE | | 20,497 | | | | 19,407 | | | | 15,840 | | | | 4.08 | | | 3.75 | | | 3.67 | | | 837 | | | | 727 | | | | 581 | | | | 110 | | | | 67 | | | | 43 | | | | 146 | | | | 13 | | | | 133 | | |\n| Lease financing | | 1,726 | | | | 1,524 | | | | 1,183 | | | | 2.82 | | | 3.01 | | | 2.82 | | | 49 | | | | 45 | | | | 33 | | | | 4 | | | | (3 | | ) | | 7 | | | | 12 | | | | 2 | | | | 10 | | |\n| Retail: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Residential mortgage | | 29,140 | | | | 30,184 | | | | 30,252 | | | | 4.02 | | | 4.05 | | | 4.15 | | | 1,170 | | | | 1,224 | | | | 1,255 | | | | (54 | | ) | | (10 | | ) | | (44 | | ) | | (31 | | ) | | (28 | | ) | | (3 | | ) |\n| Direct | | 11,968 | | | | 11,796 | | | | 9,375 | | | | 4.60 | | | 4.27 | | | 4.07 | | | 550 | | | | 503 | | | | 381 | | | | 47 | | | | 40 | | | | 7 | | | | 122 | | | | 20 | | | | 102 | | |\n| Indirect | | 17,840 | | | | 17,072 | | | | 16,443 | | | | 6.89 | | | 6.94 | | | 6.86 | | | 1,230 | | | | 1,186 | | | | 1,127 | | | | 44 | | | | (9 | | ) | | 53 | | | | 59 | | | | 13 | | | | 46 | | |\n| Revolving credit | | 2,662 | | | | 2,521 | | | | 2,406 | | | | 8.88 | | | 8.77 | | | 8.76 | | | 236 | | | | 221 | | | | 211 | | | | 15 | | | | 3 | | | | 12 | | | | 10 | | | | \u2014 | | | | 10 | | |\n| PCI | | 784 | | | | 1,063 | | | | 1,083 | | | | 18.86 | | | 19.55 | | | 16.57 | | | 148 | | | | 208 | | | | 179 | | | | (60 | | ) | | (7 | | ) | | (53 | | ) | | 29 | | | | 32 | | | | (3 | | ) |\n| Total loans and leases HFI | | 142,611 | | | | 139,794 | | | | 126,100 | | | | 4.42 | | | 4.31 | | | 4.27 | | | 6,300 | | | | 6,028 | | | | 5,379 | | | | 272 | | | | 187 | | | | 85 | | | | 649 | | | | 129 | | | | 520 | | |\n| LHFS | | 1,464 | | | | 1,965 | | | | 1,702 | | | | 3.62 | | | 3.34 | | | 3.63 | | | 53 | | | | 66 | | | | 62 | | | | (13 | | ) | | 5 | | | | (18 | | ) | | 4 | | | | (5 | | ) | | 9 | | |\n| Total loans and leases | | 144,075 | | | | 141,759 | | | | 127,802 | | | | 4.41 | | | 4.30 | | | 4.26 | | | 6,353 | | | | 6,094 | | | | 5,441 | | | | 259 | | | | 192 | | | | 67 | | | | 653 | | | | 124 | | | | 529 | | |\n| Total earning assets | | 193,588 | | | | 191,240 | | | | 172,673 | | | | 3.89 | | | 3.78 | | | 3.75 | | | 7,533 | | | | 7,226 | | | | 6,473 | | | | 307 | | | | 281 | | | | 26 | | | | 753 | | | | 153 | | | | 600 | | |\n| Nonearning assets | | 27,477 | | | | 27,705 | | | | 24,674 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Total assets | | $ | 221,065 | | | $ | 218,945 | | | $ | 197,347 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Liabilities and Shareholders\u2019 Equity | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Interest-bearing deposits: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Interest checking | | $ | 28,033 | | | $ | 27,595 | | | $ | 22,092 | | | 0.25 | | | 0.14 | | | 0.08 | | | $ | 70 | | | $ | 39 | | | $ | 18 | | | $ | 31 | | | $ | 30 | | | $ | 1 | | | $ | 21 | | | $ | 16 | | | $ | 5 | |\n| Money market and savings | | 63,061 | | | | 62,966 | | | | 56,592 | | | | 0.30 | | | 0.20 | | | 0.19 | | | 190 | | | | 123 | | | | 107 | | | | 67 | | | | 67 | | | | \u2014 | | | | 16 | | | | 5 | | | | 11 | | |\n| Time deposits | | 14,133 | | | | 16,619 | | | | 16,405 | | | | 0.51 | | | 0.51 | | | 0.66 | | | 72 | | | | 85 | | | | 107 | | | | (13 | | ) | | \u2014 | | | | (13 | | ) | | (22 | | ) | | (23 | | ) | | 1 | | |\n| Foreign office deposits - interest-bearing | | 1,142 | | | | 1,034 | | | | 593 | | | | 1.05 | | | 0.38 | | | 0.12 | | | 12 | | | | 4 | | | | 1 | | | | 8 | | | | 8 | | | | \u2014 | | | | 3 | | | | 2 | | | | 1 | | |\n| Total interest-bearing deposits | | 106,369 | | | | 108,214 | | | | 95,682 | | | | 0.32 | | | 0.23 | | | 0.24 | | | 344 | | | | 251 | | | | 233 | | | | 93 | | | | 105 | | | | (12 | | ) | | 18 | | | | \u2014 | | | | 18 | | |\n| Short-term borrowings | | 4,311 | | | | 2,554 | | | | 3,221 | | | | 0.94 | | | 0.35 | | | 0.15 | | | 41 | | | | 9 | | | | 4 | | | | 32 | | | | 23 | | | | 9 | | | | 5 | | | | 6 | | | | (1 | | ) |\n| Long-term debt | | 21,660 | | | | 22,791 | | | | 23,343 | | | | 2.10 | | | 2.13 | | | 2.13 | | | 454 | | | | 485 | | | | 498 | | | | (31 | | ) | | (7 | | ) | | (24 | | ) | | (13 | | ) | | \u2014 | | | | (13 | | ) |\n| Total interest-bearing liabilities | | 132,340 | | | | 133,559 | | | | 122,246 | | | | 0.63 | | | 0.56 | | | 0.60 | | | 839 | | | | 745 | | | | 735 | | | | 94 | | | | 121 | | | | (27 | | ) | | 10 | | | | 6 | | | | 4 | | |\n| Noninterest-bearing deposits | | 52,872 | | | | 49,255 | | | | 42,816 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Other liabilities | | 5,852 | | | | 6,776 | | | | 6,414 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Shareholders\u2019 equity | | 30,001 | | | | 29,355 | | | | 25,871 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Total liabilities and shareholders\u2019 equity | | $ | 221,065 | | | $ | 218,945 | | | $ | 197,347 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Average interest rate spread | | | | | | | | | | | | | | 3.26 | % | | 3.22 | % | | 3.15 | % | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| NIM \/ net interest income | | | | | | | | | | | | | | 3.46 | % | | 3.39 | % | | 3.32 | % | | $ | 6,694 | | | $ | 6,481 | | | $ | 5,738 | | | $ | 213 | | | $ | 160 | | | $ | 53 | | | $ | 743 | | | $ | 147 | | | $ | 596 | |\n| TE adjustment | | | | | | | | | | | | | | | | | | | | | | | $ | 159 | | | $ | 160 | | | $ | 146 | | | | | | | | | | | | | | | | | | | | | | | | | |\n\n","source":"TFC\/10-K\/0000092230-18-000021"} {"title":"Noninterest Income","text":"Noninterest income was a record $4.8 billion for 2017, an increase of $310 million compared to 2016. The increase was broad based across almost all major categories of noninterest income. Income from BB&T\u2019s insurance agency\/brokerage operations was the largest source of noninterest income in 2017. Insurance income totaled $1.8 billion for 2017, an increase of $41 million compared to 2016. The increase was largely due to the acquisition of Swett and Crawford on April 1, 2016. In addition, organic commissions and fees were higher, which was offset by lower performance based commissions.Service charges on deposits were $706 million for 2017, an increase of $42 million compared to 2016. The increase was due to changes in client behavior, pricing increases and the acquisition of National Penn on April 1, 2016.Mortgage banking income declined $48 million primarily due to a decline of $39 million in the net mortgage servicing rights valuation.Bankcard fees and merchant discounts increased $34 million due to higher volumes and a reduction in the accrual for rewards.FDIC loss share income improved by $142 million due to the termination of the loss sharing agreements during the third quarter of 2016. Other income totaled $467 million for 2017, an increase of $105 million from 2016, primarily due to a $34 million increase in income from SBIC investments and a $50 million increase driven by income related to assets for certain post-employment benefits. Noninterest income was $4.5 billion for 2016, an increase of $453 million compared to 2015. This increase was across all categories and primarily reflects the impact from acquisitions.Income from BB&T\u2019s insurance agency\/brokerage operations was the largest source of noninterest income in 2016. Insurance income totaled $1.7 billion for 2016, an increase of $117 million compared to 2015. The increase was largely the result of the acquisition of Swett and Crawford, which was partially offset by the impact from selling American Coastal in 2015.FDIC loss share income improved by $111 million, primarily due to the termination of the loss sharing agreements during the third quarter of 2016. Other income totaled $362 million for 2016, an increase of $36 million from 2015. This increase is primarily due to the $26 million loss on sale of American Coastal during the second quarter of 2015, $19 million for client derivatives revenues and $10 million of trading gains. These increases were partially offset by lower partnerships and other investment income, which was the result of an opportunistic sale that resulted in a $28 million gain during the third quarter of 2015.","markdown_table":"\n\n| | | | | | | | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | | | | | | | | | | | | | | | | | |\n| Table 6 | | | | | | | | | | | | | | | | | | |\n| Noninterest Income | | | | | | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | | | | | |\n| | | Year Ended December 31, | | | | | | | | | | | | % Change | | | | |\n| | | | 2017 vs. 2016 | | | 2016 vs. 2015 | |\n| (Dollars in millions) | | 2017 | | | | 2016 | | | | 2015 | | | | |\n| Insurance income | | $ | 1,754 | | | $ | 1,713 | | | $ | 1,596 | | | 2.4 | % | | 7.3 | % |\n| Service charges on deposits | | 706 | | | | 664 | | | | 631 | | | | 6.3 | | | 5.2 | |\n| Mortgage banking income | | 415 | | | | 463 | | | | 455 | | | | (10.4 | ) | | 1.8 | |\n| Investment banking and brokerage fees and commissions | | 410 | | | | 408 | | | | 398 | | | | 0.5 | | | 2.5 | |\n| Trust and investment advisory revenues | | 278 | | | | 266 | | | | 240 | | | | 4.5 | | | 10.8 | |\n| Bankcard fees and merchant discounts | | 271 | | | | 237 | | | | 218 | | | | 14.3 | | | 8.7 | |\n| Checkcard fees | | 214 | | | | 195 | | | | 174 | | | | 9.7 | | | 12.1 | |\n| Operating lease income | | 146 | | | | 137 | | | | 124 | | | | 6.6 | | | 10.5 | |\n| Income from bank-owned life insurance | | 122 | | | | 123 | | | | 113 | | | | (0.8 | ) | | 8.8 | |\n| FDIC loss share income, net | | \u2014 | | | | (142 | | ) | | (253 | | ) | | (100.0 | ) | | (43.9 | ) |\n| Securities gains (losses), net | | (1 | | ) | | 46 | | | | (3 | | ) | | (102.2 | ) | | NM | |\n| Other income | | 467 | | | | 362 | | | | 326 | | | | 29.0 | | | 11.0 | |\n| Total noninterest income | | $ | 4,782 | | | $ | 4,472 | | | $ | 4,019 | | | 6.9 | | | 11.3 | |\n\n","source":"TFC\/10-K\/0000092230-18-000021"} {"title":"Noninterest Expense","text":"Noninterest expense totaled $7.4 billion for 2017, an increase of $723 million from 2016. The increase includes actions taken in the fourth quarter of 2017 in connection with the passage of tax reform legislation. This included a contribution of $100 million to BB&T's philanthropic fund and $36 million for a one-time bonus paid to associates who do not generally receive incentives or commissions. The increase also includes a $392 million charge in 2017 for the early extinguishment of $2.9 billion of higher cost FHLB advances. Personnel expense is the largest component of noninterest expense and includes salaries and incentives, as well as pension and other employee benefit costs. Personnel expense totaled $4.1 billion, a $157 million increase compared to 2016. Salaries and incentives increased $120 million compared to the prior year, primarily due to higher incentives as a result of improved performance and the one-time bonus previously mentioned. Equity based compensation increased $14 million and benefit costs increased $23 million. The increase in benefit costs was primarily the result of an increase of $43 million for post-employment benefits that is primarily offset in other income. This was partially offset by a decline of $26 million for pension expense. Software expense was higher $18 million compared to 2016, primarily reflecting higher depreciation on recent investments.Outside IT services expense decreased $26 million compared to the prior year, while professional services expense increased $21 million. These fluctuations are due to the volume of project related work in the current year compared to the prior year.Loan-related expense totaled $130 million for 2017, an increase of $35 million compared to the prior year. This increase is largely the result of a release of $31 million in reserves during the fourth quarter of 2016, which was primarily driven by lower anticipated loan repurchase requests.Merger-related and restructuring expense decreased $56 million compared to 2016. This includes a decrease in merger-related charges, partially offset by branch closures and other restructuring initiatives.Other expense increased $183 million primarily due to higher operating charge-offs and charitable contributions. Operating charge-offs increased $108 million due to a net benefit of $73 million recorded in 2016 related to the settlement of matters involving the origination of certain legacy mortgage loans insured by the FHA. Charitable contributions increased $44 million as the company made a $100 million contribution to its philanthropic fund in 2017 as noted above, compared to $50 million made in the third quarter of 2016.Noninterest expense totaled $6.7 billion for 2016, an increase of $455 million from 2015. This increase was primarily driven by higher personnel expense. Personnel expense is the largest component of noninterest expense and includes salaries, wages and incentives, as well as pension and other employee benefit costs. Personnel expense totaled $4.0 billion, a $495 million increase compared to 2015. This increase was driven by a $284 million increase in salaries, which was primarily due to additional headcount from acquisitions. Incentives expense was higher $110 million due to performance against targets and acquisitions. Personnel expense also increased due to a $48 million increase in pension expense that reflects higher amortization, service and interest costs. Additionally, personnel expense reflects a $26 million increase in payroll taxes as a result of higher salaries and incentives.Loss on early extinguishment of debt was down $173 million for 2016, as the prior year included a loss of $172 million, compared to a small gain for 2016.Occupancy and equipment expense totaled $786 million for 2016, compared to $708 million for 2015. The increase reflects the acquisition activity. Software expense was higher $32 million compared to 2015, primarily reflecting higher depreciation on recent investments.Outside IT services expense totaled $186 million for 2016, compared to $135 million in the prior year. This increase was due to higher costs related to projects.Loan-related expense totaled $95 million for 2016, a decrease of $55 million compared to the prior year. This decrease is largely the result of a release of $31 million in reserves during the fourth quarter of 2016, which was primarily driven by lower anticipated loan repurchase requests.Regulatory charges totaled $145 million for 2016, an increase of $44 million compared to the prior year. This increase reflects the impact from acquisitions and the surcharge assessed to large banks, which was implemented in the third quarter of 2016.Other expense decreased $40 million primarily due to a net benefit of $73 million in the third quarter related to the settlement of certain legacy mortgage matters involving the origination of mortgage loans insured by the FHA. In addition, business referral expense decreased $16 million primarily due to the sale of American Coastal in the prior year. Partially offsetting these decreases was a $50 million charitable contribution that was also made in the third quarter.","markdown_table":"\n\n| | | | | | | | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | | | | | | | | | | | | | | | | | |\n| Table 7 | | | | | | | | | | | | | | | | | | |\n| Noninterest Expense | | | | | | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | | | | | |\n| | | Year Ended December 31, | | | | | | | | | | | | % Change | | | | |\n| | | | 2017 vs. 2016 | | | 2016 vs. 2015 | |\n| (Dollars in millions) | | 2017 | | | | 2016 | | | | 2015 | | | | |\n| Personnel expense | | $ | 4,121 | | | $ | 3,964 | | | $ | 3,469 | | | 4.0 | % | | 14.3 | % |\n| Occupancy and equipment expense | | 784 | | | | 786 | | | | 708 | | | | (0.3 | ) | | 11.0 | |\n| Software expense | | 242 | | | | 224 | | | | 192 | | | | 8.0 | | | 16.7 | |\n| Outside IT services | | 160 | | | | 186 | | | | 135 | | | | (14.0 | ) | | 37.8 | |\n| Regulatory charges | | 153 | | | | 145 | | | | 101 | | | | 5.5 | | | 43.6 | |\n| Amortization of intangibles | | 142 | | | | 150 | | | | 105 | | | | (5.3 | ) | | 42.9 | |\n| Loan-related expense | | 130 | | | | 95 | | | | 150 | | | | 36.8 | | | (36.7 | ) |\n| Professional services | | 123 | | | | 102 | | | | 130 | | | | 20.6 | | | (21.5 | ) |\n| Merger-related and restructuring charges, net | | 115 | | | | 171 | | | | 165 | | | | (32.7 | ) | | 3.6 | |\n| Loss (gain) on early extinguishment of debt | | 392 | | | | (1 | | ) | | 172 | | | | NM | | | (100.6 | ) |\n| Other expense | | 1,082 | | | | 899 | | | | 939 | | | | 20.4 | | | (4.3 | ) |\n| Total noninterest expense | | $ | 7,444 | | | $ | 6,721 | | | $ | 6,266 | | | 10.8 | | | 7.3 | |\n\n","source":"TFC\/10-K\/0000092230-18-000021"} {"title":"Merger-Related and Restructuring Charges","text":"(1) Includes asset impairment charges.The 2017 costs primarily reflect branch closures and other restructuring initiatives, while the 2016 costs primarily reflect the acquisitions of National Penn and Swett & Crawford.","markdown_table":"\n\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Table 8 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Merger-related and Restructuring Accrual Activity | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | | Year Ended December\u00a031,\u00a02017 | | | | | | | | | | | | | | | | Year Ended December\u00a031,\u00a02016 | | | | | | | | | | | | | | |\n| (Dollars in millions) | | Beginning Balance | | | | Expense | | | | Utilized | | | | Ending Balance | | | | Beginning Balance | | | | Expense | | | | Utilized | | | | Ending Balance | | |\n| Severance and personnel-related | | $ | 25 | | | $ | 40 | | | $ | (51 | ) | | $ | 14 | | | $ | 26 | | | $ | 51 | | | $ | (52 | ) | | $ | 25 | |\n| Occupancy and equipment (1) | | 21 | | | | 43 | | | | (44 | | ) | | 20 | | | | 11 | | | | 49 | | | | (39 | | ) | | 21 | | |\n| Professional services | | 1 | | | | 2 | | | | (3 | | ) | | \u2014 | | | | 13 | | | | 14 | | | | (26 | | ) | | 1 | | |\n| Systems conversion and related costs (1) | | 1 | | | | 26 | | | | (27 | | ) | | \u2014 | | | | \u2014 | | | | 27 | | | | (26 | | ) | | 1 | | |\n| Other adjustments | | 1 | | | | 4 | | | | (5 | | ) | | \u2014 | | | | 2 | | | | 30 | | | | (31 | | ) | | 1 | | |\n| Total | | $ | 49 | | | $ | 115 | | | $ | (130 | ) | | $ | 34 | | | $ | 52 | | | $ | 171 | | | $ | (174 | ) | | $ | 49 | |\n\n","source":"TFC\/10-K\/0000092230-18-000021"} {"title":"Investment Activities","text":"The securities portfolio totaled $47.6 billion at December\u00a031,\u00a02017, compared to $43.6 billion at December\u00a031,\u00a02016. The increase in the overall portfolio was due to new purchases and reinvestments in the HTM portfolio. A change in the mix between AFS and HTM also contributed to the increase in HTM securities. As of December\u00a031,\u00a02017, approximately 5.8% of the securities portfolio was variable rate, compared to 7.5% as of December\u00a031,\u00a02016. The effective duration of the securities portfolio was 4.7 years at December\u00a031,\u00a02017, compared to 4.8 years at the end of 2016. The duration of the securities portfolio excludes equity securities and certain non-agency MBS acquired from the FDIC.Agency MBS represented 83.6% of the total securities portfolio at year-end 2017, compared to 79.1% as of prior year end. Refer to \"Note 2. Securities\" for additional disclosures related to the evaluation of securities for OTTI.The following table presents the securities portfolio at December\u00a031,\u00a02017, segregated by major category with ranges of maturities and average yields disclosed:","markdown_table":"\n\n| | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | | | | | | | | | | | |\n| Table 9 | | | | | | | | | | | | |\n| Composition of Securities Portfolio | | | | | | | | | | | | |\n| | | | | | | | | | | | | |\n| | | December 31, | | | | | | | | | | |\n| (Dollars in millions) | | 2017 | | | | 2016 | | | | 2015 | | |\n| AFS securities (at fair value): | | | | | | | | | | | | |\n| U.S. Treasury | | $ | 2,291 | | | $ | 2,587 | | | $ | 1,832 | |\n| GSE | | 179 | | | | 180 | | | | 51 | | |\n| Agency MBS | | 20,101 | | | | 21,264 | | | | 20,046 | | |\n| States and political subdivisions | | 1,392 | | | | 2,205 | | | | 2,375 | | |\n| Non-agency MBS | | 576 | | | | 679 | | | | 989 | | |\n| Other | | 8 | | | | 11 | | | | 4 | | |\n| Total AFS securities | | 24,547 | | | | 26,926 | | | | 25,297 | | |\n| HTM securities (at amortized cost): | | | | | | | | | | | | |\n| U.S. Treasury | | 1,098 | | | | 1,098 | | | | 1,097 | | |\n| GSE | | 2,198 | | | | 2,197 | | | | 5,045 | | |\n| Agency MBS | | 19,660 | | | | 13,225 | | | | 12,267 | | |\n| States and political subdivisions | | 28 | | | | 110 | | | | 63 | | |\n| Other | | 43 | | | | 50 | | | | 58 | | |\n| Total HTM securities | | 23,027 | | | | 16,680 | | | | 18,530 | | |\n| Total securities | | $ | 47,574 | | | $ | 43,606 | | | $ | 43,827 | |\n\n","source":"TFC\/10-K\/0000092230-18-000021"} {"title":"Investment Activities","text":"(1)Yields represent interest computed using the effective interest method on a TE basis using marginal income tax rates and the amortized cost of the securities.(2)For purposes of the maturity table, MBS, which are not due at a single maturity date, have been included in maturity groupings based on the contractual maturity. The expected life of MBS will differ from contractual maturities because borrowers may have the right to call or prepay the underlying mortgage loans.(3)Weighted-average yield excludes the effect of pay-fixed swaps hedging municipal securities.","markdown_table":"\n\n| | | | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | | | | | | | | | | | | | |\n| Table 10 | | | | | | | | | | | | | | |\n| Securities Yields By Major Category and Maturity | | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | |\n| | | December\u00a031,\u00a02017 | | | | | | | | | | | | |\n| | | AFS | | | | | | | HTM | | | | | |\n| (Dollars in millions) | | Fair Value | | | | Effective Yield (1) | | | Amortized Cost | | | | Effective Yield (1) | |\n| U.S. Treasury: | | | | | | | | | | | | | | |\n| Within one year | | $ | 307 | | | 1.21 | % | | $ | \u2014 | | | \u2014 | % |\n| One to five years | | 246 | | | | 1.53 | | | 1,098 | | | | 2.30 | |\n| Five to ten years | | 1,738 | | | | 1.52 | | | \u2014 | | | | \u2014 | |\n| Total | | 2,291 | | | | 1.48 | | | 1,098 | | | | 2.30 | |\n| GSE: | | | | | | | | | | | | | | |\n| One to five years | | 26 | | | | 1.45 | | | 1,136 | | | | 2.35 | |\n| Five to ten years | | 141 | | | | 1.55 | | | 1,062 | | | | 2.21 | |\n| After ten years | | 12 | | | | 2.69 | | | \u2014 | | | | \u2014 | |\n| Total | | 179 | | | | 1.61 | | | 2,198 | | | | 2.29 | |\n| Agency MBS: (2) | | | | | | | | | | | | | | |\n| One to five years | | 1 | | | | 2.09 | | | \u2014 | | | | \u2014 | |\n| Five to ten years | | 16 | | | | 2.64 | | | 31 | | | | 2.09 | |\n| After ten years | | 20,084 | | | | 2.23 | | | 19,629 | | | | 2.56 | |\n| Total | | 20,101 | | | | 2.23 | | | 19,660 | | | | 2.56 | |\n| States and political subdivisions: (3) | | | | | | | | | | | | | | |\n| Within one year | | 20 | | | | 4.96 | | | \u2014 | | | | \u2014 | |\n| One to five years | | 223 | | | | 5.05 | | | 2 | | | | 1.72 | |\n| Five to ten years | | 446 | | | | 4.45 | | | 18 | | | | 1.28 | |\n| After ten years | | 703 | | | | 6.03 | | | 8 | | | | 1.59 | |\n| Total | | 1,392 | | | | 5.35 | | | 28 | | | | 1.40 | |\n| Non-agency MBS: (2) | | | | | | | | | | | | | | |\n| After ten years | | 576 | | | | 18.96 | | | \u2014 | | | | \u2014 | |\n| Total | | 576 | | | | 18.96 | | | \u2014 | | | | \u2014 | |\n| Other: | | | | | | | | | | | | | | |\n| Within one year | | 8 | | | | 1.09 | | | \u2014 | | | | \u2014 | |\n| One to five years | | \u2014 | | | | \u2014 | | | 1 | | | | 2.03 | |\n| After ten years | | \u2014 | | | | \u2014 | | | 42 | | | | 2.79 | |\n| Total | | 8 | | | | 1.09 | | | 43 | | | | 2.78 | |\n| Total securities | | $ | 24,547 | | | 2.73 | | | $ | 23,027 | | | 2.52 | |\n\n","source":"TFC\/10-K\/0000092230-18-000021"} {"title":"Lending Activities","text":"Average loans held for investment for the fourth quarter of 2017 were $142.7 billion, down $30 million, or 0.1 percent annualized compared to the third quarter of 2017.Average commercial and industrial loans increased $267 million, while average CRE increased $222 million. Average lease financing increased $119 million due to strong production from our leasing businesses. Average revolving credit increased $91 million, primarily due to seasonal spending.Average residential mortgage loans decreased $365 million as the majority of conforming loans continue to be sold in the secondary market. In addition, average indirect loans decreased $252 million, primarily due to strategic optimization and directing investments toward higher-yielding assets. The following table presents loans with variable interest rates:","markdown_table":"\n\n| | | | | | | | | | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | | | | | | | | | | | | | | | | | | | |\n| Table 11 | | | | | | | | | | | | | | | | | | | | |\n| Quarterly Average Balances of Loans and Leases | | | | | | | | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | | | | | | | |\n| | | For the Three Months Ended | | | | | | | | | | | | | | | | | | |\n| (Dollars in millions) | | 12\/31\/2017 | | | | 9\/30\/2017 | | | | 6\/30\/2017 | | | | 3\/31\/2017 | | | | 12\/31\/2016 | | |\n| Commercial: | | | | | | | | | | | | | | | | | | | | |\n| Commercial and industrial | | $ | 58,478 | | | $ | 58,211 | | | $ | 58,150 | | | $ | 57,125 | | | $ | 57,226 | |\n| CRE | | 20,998 | | | | 20,776 | | | | 20,304 | | | | 19,892 | | | | 19,830 | | |\n| Lease financing | | 1,851 | | | | 1,732 | | | | 1,664 | | | | 1,653 | | | | 1,570 | | |\n| Retail: | | | | | | | | | | | | | | | | | | | | |\n| Residential mortgage | | 28,559 | | | | 28,924 | | | | 29,392 | | | | 29,701 | | | | 30,044 | | |\n| Direct | | 11,901 | | | | 11,960 | | | | 12,000 | | | | 12,014 | | | | 12,046 | | |\n| Indirect | | 17,426 | | | | 17,678 | | | | 18,127 | | | | 18,137 | | | | 18,041 | | |\n| Revolving credit | | 2,759 | | | | 2,668 | | | | 2,612 | | | | 2,607 | | | | 2,608 | | |\n| PCI | | 689 | | | | 742 | | | | 825 | | | | 883 | | | | 974 | | |\n| Total loans and leases HFI | | 142,661 | | | | 142,691 | | | | 143,074 | | | | 142,012 | | | | 142,339 | | |\n| LHFS | | 1,428 | | | | 1,490 | | | | 1,253 | | | | 1,686 | | | | 2,230 | | |\n| Total loans and leases | | $ | 144,089 | | | $ | 144,181 | | | $ | 144,327 | | | $ | 143,698 | | | $ | 144,569 | |\n\n","source":"TFC\/10-K\/0000092230-18-000021"} {"title":"Lending Activities","text":"(1)Commercial and industrial loans and direct loans totaling $1.7 billion and $100 million, respectively, have been excluded from the weighted average remaining term because they are callable on demand. As of December\u00a031,\u00a02017, approximately $126 million of variable rate residential mortgage loans are currently in an interest-only phase. Approximately 95.0% of these balances will begin amortizing within the next three years. Variable rate residential mortgage loans typically reset every 12 months beginning after a 3 to 10 year fixed period, with an annual cap on rate changes ranging from 2.0% to 6.0%.As of December\u00a031,\u00a02017, the direct lending portfolio includes $8.5 billion of variable rate home equity lines, $1.0 billion of variable rate other lines of credit and $255 million of variable rate loans. Approximately $6.5 billion of the variable rate home equity lines is currently in the interest-only phase and approximately 9.4% of these balances will begin amortizing within the next three years. Approximately $911 million of the outstanding balance of variable rate other lines of credit is in the interest-only phase and 17.0% of these balances will begin amortizing within the next three years. Variable rate home equity lines and other lines of credit typically reset on a monthly basis. BB&T monitors the performance of its home equity loans and lines secured by second liens similarly to other consumer loans and utilizes assumptions specific to these loans in determining the necessary ALLL. BB&T also receives notification when the first lien holder, whether BB&T or another financial institution, has initiated foreclosure proceedings against the borrower. When notified that the first lien is in the process of foreclosure, BB&T obtains valuations to determine if any additional charge-offs or reserves are warranted. These valuations are updated at least annually thereafter.BB&T has limited ability to monitor the delinquency status of the first lien, unless the first lien is held or serviced by BB&T. As a result, using migration assumptions that are based on historical experience and adjusted for current trends, BB&T estimates the volume of second lien positions where the first lien is delinquent and adjusts the ALLL to reflect the increased risk of loss on these credits. Finally, BB&T also provides additional reserves to second lien positions when the estimated combined current loan to value ratio for the credit exceeds 100%. As of December\u00a031,\u00a02017, BB&T held or serviced the first lien on 30.4% of its second lien positions.BB&T lends to a diverse customer base that is substantially located within the Company\u2019s primary market area. At the same time, the loan portfolio is geographically dispersed throughout BB&T\u2019s branch network to mitigate concentration risk arising from local and regional economic downturns. Refer to the \"Risk Management\" section for a discussion of each of the loan portfolios and the credit risk management policies used to manage the portfolios.The following table summarizes the loan portfolio:","markdown_table":"\n\n| | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | | | | | | | | | | |\n| Table 12 | | | | | | | | | | | |\n| Variable Rate Loans (Excluding PCI and LHFS) | | | | | | | | | | | |\n| | | | | | | | | | | | |\n| December\u00a031,\u00a02017 | | Outstanding Balance | | | | Wtd. Avg. Contractual Rate | | | Wtd. Avg. Remaining Term (1) | | |\n| (Dollars in millions) | | | |\n| Commercial: | | | | | | | | | | | |\n| Commercial and industrial | | $ | 38,562 | | | 3.13 | % | | 4.1 | | yrs |\n| CRE | | 16,046 | | | | 3.94 | | | 4.0 | | |\n| Lease financing | | 133 | | | | 3.22 | | | 5.6 | | |\n| Retail: | | | | | | | | | | | |\n| Residential mortgage | | 5,148 | | | | 3.62 | | | 24.4 | | |\n| Direct | | 9,777 | | | | 4.43 | | | 8.0 | | |\n| Indirect | | 20 | | | | 4.06 | | | NM | | |\n| Revolving credit | | 2,552 | | | | 10.86 | | | NM | | |\n\n","source":"TFC\/10-K\/0000092230-18-000021"} {"title":"Lending Activities","text":"(1) During the first quarter of 2014, $8.3 billion of loans were transferred from direct lending to residential mortgage.Loans and leases HFI were $143.7 billion at December\u00a031,\u00a02017, an increase of $379 million compared to the prior year.Commercial and industrial loans were up $1.4 billion and CRE loans were up $1.5 billion. Residential mortgage loans declined $1.2 billion as the majority of conforming loan production continues to be sold in the secondary market. Indirect loans were down $1.3 billion, primarily due to strategic optimization and directing investments into higher yielding assets. The PCI loan portfolio, which totaled $651 million at December\u00a031,\u00a02017, continued to run off during the year.The majority of loans are with clients in domestic market areas, which are primarily concentrated in the Southeastern United States. International loans were immaterial as of December\u00a031,\u00a02017 and 2016.Scheduled repayments are reported in the maturity category in which the payment is due. Determinations of maturities are based on contract terms. BB&T\u2019s credit policy typically does not permit automatic renewal of loans. At the scheduled maturity date (including balloon payment date), the customer generally must request a new loan to replace the matured loan and execute either a new note or note modification with rate, terms and conditions negotiated at that time.","markdown_table":"\n\n| | | | | | | | | | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | | | | | | | | | | | | | | | | | | | |\n| Table 13 | | | | | | | | | | | | | | | | | | | | |\n| Composition of Loan and Lease Portfolio | | | | | | | | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | | | | | | | |\n| | | December 31, | | | | | | | | | | | | | | | | | | |\n| (Dollars in millions) | | 2017 | | | | 2016 | | | | 2015 | | | | 2014 | | | | 2013 | | |\n| Commercial: | | | | | | | | | | | | | | | | | | | | |\n| Commercial and industrial | | $ | 59,153 | | | $ | 57,739 | | | $ | 53,746 | | | $ | 46,110 | | | $ | 42,954 | |\n| CRE | | 21,263 | | | | 19,764 | | | | 18,312 | | | | 14,128 | | | | 13,042 | | |\n| Lease financing | | 1,911 | | | | 1,677 | | | | 1,535 | | | | 1,119 | | | | 1,125 | | |\n| Retail: | | | | | | | | | | | | | | | | | | | | |\n| Residential mortgage (1) | | 28,725 | | | | 29,921 | | | | 30,533 | | | | 31,090 | | | | 24,648 | | |\n| Direct (1) | | 11,891 | | | | 12,092 | | | | 11,140 | | | | 8,146 | | | | 15,869 | | |\n| Indirect | | 17,235 | | | | 18,564 | | | | 17,053 | | | | 15,616 | | | | 13,841 | | |\n| Revolving credit | | 2,872 | | | | 2,655 | | | | 2,510 | | | | 2,460 | | | | 2,403 | | |\n| PCI | | 651 | | | | 910 | | | | 1,122 | | | | 1,215 | | | | 2,035 | | |\n| Total loans and leases HFI | | 143,701 | | | | 143,322 | | | | 135,951 | | | | 119,884 | | | | 115,917 | | |\n| LHFS | | 1,099 | | | | 1,716 | | | | 1,035 | | | | 1,423 | | | | 1,222 | | |\n| Total loans and leases | | $ | 144,800 | | | $ | 145,038 | | | $ | 136,986 | | | $ | 121,307 | | | $ | 117,139 | |\n\n","source":"TFC\/10-K\/0000092230-18-000021"} {"title":"Asset Quality","text":"(1)Includes charge-offs and losses recorded upon sale of $236 million and $210 million for the year ended December\u00a031,\u00a02017 and\u00a02016, respectively.(2)Includes charge-offs and losses recorded upon sale of $33 million and $30 million for the year ended December\u00a031,\u00a02017 and 2016, respectively.NPAs, which include foreclosed real estate, repossessions and NPLs, totaled $627 million at December\u00a031,\u00a02017 compared to $813 million at December\u00a031,\u00a02016. This decrease consisted of a $166 million decrease in NPLs and a $20 million decrease in foreclosed real estate and other property.The decrease in NPLs is primarily due to a $110 million decline in commercial and industrial NPLs primarily resulting from payoffs, sales and writedowns. In addition, residential mortgage NPLs were down $43 million largely due to sales.NPAs as a percentage of loans and leases plus foreclosed property were 0.44% at December\u00a031,\u00a02017 compared with 0.57% at December\u00a031,\u00a02016.The following tables summarize asset quality information for the past five years:","markdown_table":"\n\n| | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | | | | | | | |\n| Table 15 | | | | | | | | |\n| Rollforward of NPAs | | | | | | | | |\n| | | | | | | | | |\n| | | Year Ended December 31, | | | | | | |\n| (Dollars in millions) | | 2017 | | | | 2016 | | |\n| Balance at beginning of year | | $ | 813 | | | $ | 686 | |\n| New NPAs | | 1,297 | | | | 1,716 | | |\n| Advances and principal increases | | 328 | | | | 253 | | |\n| Disposals of foreclosed assets (1) | | (520 | | ) | | (516 | | ) |\n| Disposals of NPLs (2) | | (212 | | ) | | (302 | | ) |\n| Charge-offs and losses | | (251 | | ) | | (279 | | ) |\n| Payments | | (660 | | ) | | (586 | | ) |\n| Transfers to performing status | | (164 | | ) | | (179 | | ) |\n| Foreclosed real estate, included as a result of loss share termination | | \u2014 | | | | 17 | | |\n| Other, net | | (4 | | ) | | 3 | | |\n| Balance at end of year | | $ | 627 | | | $ | 813 | |\n\n","source":"TFC\/10-K\/0000092230-18-000021"} {"title":"Asset Quality","text":"(1)During 2016, approximately $191 million of nonaccrual energy-related loans were sold.(2)During 2017 and 2014, approximately $61 million and $121 million, respectively, of nonaccrual residential mortgage loans were sold.(3)During 2017 and 2014, approximately $331 million and $540 million, respectively, of performing residential mortgage TDRs were sold.(4)During 2014, approximately $94 million of performing TDRs were transferred from direct lending to residential mortgage.Asset quality continued to improve in 2017 with declines across almost all loan categories. NPAs declined $186 million driven by commercial and industrial loans and its reduction in the energy-related portfolio. Performing TDRs declined $144 million driven by the sale of $199 million of performing residential mortgage TDRs. Delinquent loans still accruing interest declined $113 million driven by residential mortgage loans, which reflects general improvements in credit quality within that portfolio.","markdown_table":"\n\n| | | | | | | | | | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | | | | | | | | | | | | | | | | | | | |\n| Table 16 | | | | | | | | | | | | | | | | | | | | |\n| Asset Quality | | | | | | | | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | | | | | | | |\n| | | December 31, | | | | | | | | | | | | | | | | | | |\n| (Dollars in millions) | | 2017 | | | | 2016 | | | | 2015 | | | | 2014 | | | | 2013 | | |\n| Nonaccrual loans and leases: | | | | | | | | | | | | | | | | | | | | |\n| Commercial and industrial (1) | | $ | 259 | | | $ | 369 | | | $ | 242 | | | $ | 243 | | | $ | 364 | |\n| CRE | | 45 | | | | 57 | | | | 51 | | | | 100 | | | | 164 | | |\n| Lease financing | | 1 | | | | 4 | | | | 1 | | | | \u2014 | | | | \u2014 | | |\n| Residential mortgage (2) | | 129 | | | | 172 | | | | 173 | | | | 166 | | | | 243 | | |\n| Direct | | 64 | | | | 63 | | | | 43 | | | | 48 | | | | 109 | | |\n| Indirect | | 72 | | | | 71 | | | | 66 | | | | 59 | | | | 55 | | |\n| Total nonaccrual loans and leases (1)(2) | | 570 | | | | 736 | | | | 576 | | | | 616 | | | | 935 | | |\n| Foreclosed real estate | | 32 | | | | 50 | | | | 108 | | | | 143 | | | | 192 | | |\n| Other foreclosed property | | 25 | | | | 27 | | | | 28 | | | | 23 | | | | 47 | | |\n| Total NPAs (1)(2) | | $ | 627 | | | $ | 813 | | | $ | 712 | | | $ | 782 | | | $ | 1,174 | |\n| | | | | | | | | | | | | | | | | | | | | |\n| Performing TDRs: | | | | | | | | | | | | | | | | | | | | |\n| Commercial and industrial | | $ | 50 | | | $ | 57 | | | $ | 50 | | | $ | 65 | | | $ | 78 | |\n| CRE | | 16 | | | | 25 | | | | 29 | | | | 57 | | | | 89 | | |\n| Residential mortgage (3)(4) | | 605 | | | | 769 | | | | 604 | | | | 621 | | | | 1,161 | | |\n| Direct (4) | | 62 | | | | 67 | | | | 72 | | | | 84 | | | | 187 | | |\n| Indirect | | 281 | | | | 240 | | | | 194 | | | | 182 | | | | 142 | | |\n| Revolving credit | | 29 | | | | 29 | | | | 33 | | | | 41 | | | | 48 | | |\n| Total performing TDRs (3)(4) | | $ | 1,043 | | | $ | 1,187 | | | $ | 982 | | | $ | 1,050 | | | $ | 1,705 | |\n| | | | | | | | | | | | | | | | | | | | | |\n| Loans 90 days or more past due and still accruing: | | | | | | | | | | | | | | | | | | | | |\n| Commercial and industrial | | $ | 1 | | | $ | \u2014 | | | $ | \u2014 | | | $ | \u2014 | | | $ | 5 | |\n| CRE | | 1 | | | | \u2014 | | | | \u2014 | | | | \u2014 | | | | \u2014 | | |\n| Residential mortgage | | 465 | | | | 522 | | | | 541 | | | | 731 | | | | 876 | | |\n| Direct | | 6 | | | | 6 | | | | 7 | | | | 12 | | | | 33 | | |\n| Indirect | | 6 | | | | 6 | | | | 5 | | | | 5 | | | | 5 | | |\n| Revolving credit | | 12 | | | | 12 | | | | 10 | | | | 9 | | | | 10 | | |\n| PCI | | 57 | | | | 90 | | | | 114 | | | | 188 | | | | 304 | | |\n| Total loans 90 days or more past due and still accruing | | $ | 548 | | | $ | 636 | | | $ | 677 | | | $ | 945 | | | $ | 1,233 | |\n| | | | | | | | | | | | | | | | | | | | | |\n| Loans 30-89 days past due and still accruing: | | | | | | | | | | | | | | | | | | | | |\n| Commercial and industrial | | $ | 41 | | | $ | 44 | | | $ | 53 | | | $ | 37 | | | $ | 50 | |\n| CRE | | 8 | | | | 8 | | | | 22 | | | | 5 | | | | 10 | | |\n| Lease financing | | 4 | | | | 4 | | | | 1 | | | | \u2014 | | | | \u2014 | | |\n| Residential mortgage | | 472 | | | | 525 | | | | 475 | | | | 474 | | | | 546 | | |\n| Direct | | 65 | | | | 60 | | | | 58 | | | | 41 | | | | 132 | | |\n| Indirect | | 412 | | | | 377 | | | | 358 | | | | 285 | | | | 262 | | |\n| Revolving credit | | 23 | | | | 23 | | | | 22 | | | | 23 | | | | 23 | | |\n| PCI | | 27 | | | | 36 | | | | 42 | | | | 33 | | | | 88 | | |\n| Total loans 30-89 days past due and still accruing | | $ | 1,052 | | | $ | 1,077 | | | $ | 1,031 | | | $ | 898 | | | $ | 1,111 | |\n\n","source":"TFC\/10-K\/0000092230-18-000021"} {"title":"Asset Quality","text":"(1)These asset quality ratios have been adjusted to remove the impact of government guaranteed and PCI assets. Appropriate adjustments to the numerator and denominator have been reflected in the calculation of these ratios.The following table provides a summary of performing TDR activity:","markdown_table":"\n\n| | | | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | | | | | | | | | | | | | |\n| Table 17 | | | | | | | | | | | | | | |\n| Asset Quality Ratios | | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | |\n| | As Of \/ For The Year Ended December 31, | | | | | | | | | | | | | |\n| | 2017 | | | 2016 | | | 2015 | | | 2014 | | | 2013 | |\n| Asset Quality Ratios: | | | | | | | | | | | | | | |\n| Loans 30-89 days past due and still accruing as a percentage of loans and leases HFI | 0.73 | % | | 0.75 | % | | 0.76 | % | | 0.75 | % | | 0.96 | % |\n| Loans 90 days or more past due and still accruing as a percentage of loans and leases HFI | 0.38 | | | 0.44 | | | 0.50 | | | 0.79 | | | 1.06 | |\n| NPLs as a percentage of loans and leases HFI | 0.40 | | | 0.51 | | | 0.42 | | | 0.51 | | | 0.81 | |\n| NPAs as a percentage of: | | | | | | | | | | | | | | |\n| Total assets | 0.28 | | | 0.37 | | | 0.34 | | | 0.42 | | | 0.64 | |\n| Loans and leases HFI plus foreclosed property | 0.44 | | | 0.57 | | | 0.52 | | | 0.65 | | | 1.01 | |\n| Net charge-offs as a percentage of average loans and leases HFI | 0.38 | | | 0.38 | | | 0.35 | | | 0.46 | | | 0.69 | |\n| ALLL as a percentage of loans and leases HFI | 1.04 | | | 1.04 | | | 1.07 | | | 1.23 | | | 1.49 | |\n| Ratio of ALLL to: | | | | | | | | | | | | | | |\n| Net charge-offs | 2.78 | x | | 2.80 | x | | 3.36 | x | | 2.74 | x | | 2.19 | x |\n| NPLs | 2.62 | | | 2.03 | | | 2.53 | | | 2.39 | | | 1.85 | |\n| | | | | | | | | | | | | | | |\n| Asset Quality Ratios (Excluding Government Guaranteed and PCI): (1) | | | | | | | | | | | | | | |\n| Loans 90 days or more past due and still accruing as a percentage of loans and leases HFI | 0.05 | % | | 0.07 | % | | 0.06 | % | | 0.09 | % | | 0.11 | % |\n\n","source":"TFC\/10-K\/0000092230-18-000021"} {"title":"Asset Quality","text":"Payments and payoffs include scheduled principal payments, prepayments and payoffs of amounts outstanding. Transfers to nonperforming TDRs represent loans that no longer meet the requirements necessary to reflect the loan in accruing status.TDRs may be removed due to the passage of time if they: (1) did not include a forgiveness of principal or interest, (2) have performed in accordance with the modified terms (generally a minimum of six months), (3) were reported as a TDR over a year end reporting period, and (4) reflected an interest rate on the modified loan that was no less than a market rate at the date of modification. These loans were previously considered TDRs as a result of structural concessions such as extended interest-only terms or an amortization period that did not otherwise conform to normal underwriting guidelines.In addition, certain loans may be removed from classification as a TDR as a result of a subsequent non-concessionary re-modification. Non-concessionary re-modifications represent TDRs that did not contain concessionary terms at the date of a subsequent renewal\/modification and there was a reasonable expectation that the borrower would continue to comply with the terms of the loan subsequent to the date of the re-modification. A re-modification may be considered for such a re-classification if the loan has not had a forgiveness of principal or interest and the modified terms qualify as more than minor such that the re-modified loan is considered a new loan. Alternatively, such loans may be considered for reclassification in years subsequent to the date of the re-modification based on the passage of time as described in the preceding paragraph.In connection with consumer loan TDRs, a NPL will be returned to accruing status when current as to principal and interest and upon a sustained historical repayment performance (generally a minimum of six months).","markdown_table":"\n\n| | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | | | | | | | |\n| Table 18 | | | | | | | | |\n| Rollforward of Performing TDRs | | | | | | | | |\n| | | | | | | | | |\n| | | Year Ended December 31, | | | | | | |\n| (Dollars in millions) | | 2017 | | | | 2016 | | |\n| Balance at beginning of year | | $ | 1,187 | | | $ | 982 | |\n| Inflows | | 635 | | | | 699 | | |\n| Payments and payoffs | | (253 | | ) | | (217 | | ) |\n| Charge-offs | | (55 | | ) | | (41 | | ) |\n| Transfers to nonperforming TDRs, net | | (78 | | ) | | (68 | | ) |\n| Removal due to the passage of time | | (46 | | ) | | (54 | | ) |\n| Non-concessionary re-modifications | | (3 | | ) | | \u2014 | | |\n| Sold and transferred to LHFS | | (344 | | ) | | (114 | | ) |\n| Balance at end of year | | $ | 1,043 | | | $ | 1,187 | |\n\n","source":"TFC\/10-K\/0000092230-18-000021"} {"title":"Asset Quality","text":"(1)Past due performing TDRs are included in past due disclosures.(2)Nonperforming TDRs are included in NPL disclosures.","markdown_table":"\n\n| | | | | | | | | | | | | | | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Table 19 | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Payment Status of TDRs | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | | December\u00a031,\u00a02017 | | | | | | | | | | | | | | | | | | | | | | | |\n| (Dollars in millions) | | Current | | | | | | | Past Due 30-89 Days | | | | | | | Past Due 90 Days Or More | | | | | | | Total | | |\n| Performing TDRs (1): | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Commercial: | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Commercial and industrial | | $ | 50 | | | 100.0 | % | | $ | \u2014 | | | \u2014 | % | | $ | \u2014 | | | \u2014 | % | | $ | 50 | |\n| CRE | | 16 | | | | 100.0 | | | \u2014 | | | | \u2014 | | | \u2014 | | | | \u2014 | | | 16 | | |\n| Retail: | | | | | | | | | | | | | | | | | | | | | | | \u2014 | | |\n| Residential mortgage | | 315 | | | | 52.1 | | | 111 | | | | 18.3 | | | 179 | | | | 29.6 | | | 605 | | |\n| Direct | | 58 | | | | 93.5 | | | 4 | | | | 6.5 | | | \u2014 | | | | \u2014 | | | 62 | | |\n| Indirect | | 229 | | | | 81.5 | | | 52 | | | | 18.5 | | | \u2014 | | | | \u2014 | | | 281 | | |\n| Revolving credit | | 24 | | | | 82.8 | | | 4 | | | | 13.8 | | | 1 | | | | 3.4 | | | 29 | | |\n| Total performing TDRs | | 692 | | | | 66.3 | | | 171 | | | | 16.4 | | | 180 | | | | 17.3 | | | 1,043 | | |\n| Nonperforming TDRs (2) | | 88 | | | | 46.6 | | | 29 | | | | 15.3 | | | 72 | | | | 38.1 | | | 189 | | |\n| Total TDRs | | $ | 780 | | | 63.3 | | | $ | 200 | | | 16.2 | | | $ | 252 | | | 20.5 | | | $ | 1,232 | |\n\n","source":"TFC\/10-K\/0000092230-18-000021"} {"title":"ACL","text":"(1)During the first quarter of 2014, $8.3 billion of loans were transferred from direct lending to residential mortgage. Charge-offs and recoveries have been reflected in these line items based upon the date the loans were transferred.The ACL consists of the ALLL, which is presented separately on the Consolidated Balance Sheets, and the RUFC, which is included in other liabilities on the Consolidated Balance Sheets. The ACL totaled $1.6 billion at December\u00a031,\u00a02017, an increase of $10 million compared to the prior year.The ALLL amounted to 1.04% of loans and leases held for investment at December\u00a031,\u00a02017 and 2016. The ratio of the ALLL to NPLs held for investment was 2.62x at December\u00a031,\u00a02017 compared to 2.03x at December\u00a031,\u00a02016.Net charge-offs totaled $537 million for 2017, compared to $532 million in 2016. Net charge-offs as a percentage of average loans and leases HFI were 0.38% for 2017, flat compared to 2016. Refer to \"Note 3. Loans and ACL\" for additional disclosures.The following table presents an allocation of the ALLL at the end of each of the last five years. This allocation of the ALLL is calculated on an approximate basis and is not necessarily indicative of future losses or allocations. The entire amount of the allowance is available to absorb losses occurring in any category of loans and leases. During 2013, the balance in the unallocated ALLL was incorporated into the loan portfolio segments.","markdown_table":"\n\n| | | | | | | | | | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | | | | | | | | | | | | | | | | | | | |\n| Table 20 | | | | | | | | | | | | | | | | | | | | |\n| Analysis of ACL | | | | | | | | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | | | | | | | |\n| | | Year Ended December 31, | | | | | | | | | | | | | | | | | | |\n| (Dollars in millions) | | 2017 | | | | 2016 | | | | 2015 | | | | 2014 | | | | 2013 | | |\n| Beginning balance | | $ | 1,599 | | | $ | 1,550 | | | $ | 1,534 | | | $ | 1,821 | | | $ | 2,048 | |\n| Provision for credit losses (excluding PCI) | | 562 | | | | 574 | | | | 430 | | | | 280 | | | | 587 | | |\n| Provision for PCI loans | | (15 | | ) | | (2 | | ) | | (2 | | ) | | (29 | | ) | | 5 | | |\n| Charge-offs: | | | | | | | | | | | | | | | | | | | | |\n| Commercial and industrial | | (95 | | ) | | (143 | | ) | | (90 | | ) | | (143 | | ) | | (257 | | ) |\n| CRE | | (10 | | ) | | (9 | | ) | | (24 | | ) | | (42 | | ) | | (132 | | ) |\n| Lease financing | | (5 | | ) | | (6 | | ) | | \u2014 | | | | \u2014 | | | | \u2014 | | |\n| Residential mortgage (1) | | (47 | | ) | | (40 | | ) | | (46 | | ) | | (84 | | ) | | (81 | | ) |\n| Direct (1) | | (61 | | ) | | (53 | | ) | | (54 | | ) | | (69 | | ) | | (148 | | ) |\n| Indirect | | (402 | | ) | | (366 | | ) | | (303 | | ) | | (280 | | ) | | (269 | | ) |\n| Revolving credit | | (76 | | ) | | (69 | | ) | | (70 | | ) | | (71 | | ) | | (85 | | ) |\n| PCI | | (1 | | ) | | (15 | | ) | | (1 | | ) | | (21 | | ) | | (19 | | ) |\n| Total charge-offs | | (697 | | ) | | (701 | | ) | | (588 | | ) | | (710 | | ) | | (991 | | ) |\n| Recoveries: | | | | | | | | | | | | | | | | | | | | |\n| Commercial and industrial | | 36 | | | | 44 | | | | 38 | | | | 45 | | | | 49 | | |\n| CRE | | 16 | | | | 19 | | | | 18 | | | | 33 | | | | 51 | | |\n| Lease financing | | 2 | | | | 2 | | | | \u2014 | | | | \u2014 | | | | 1 | | |\n| Residential mortgage (1) | | 2 | | | | 3 | | | | 3 | | | | 7 | | | | 3 | | |\n| Direct (1) | | 25 | | | | 26 | | | | 29 | | | | 29 | | | | 38 | | |\n| Indirect | | 60 | | | | 55 | | | | 44 | | | | 39 | | | | 40 | | |\n| Revolving credit | | 19 | | | | 20 | | | | 20 | | | | 19 | | | | 17 | | |\n| Total recoveries | | 160 | | | | 169 | | | | 152 | | | | 172 | | | | 199 | | |\n| Net charge-offs | | (537 | | ) | | (532 | | ) | | (436 | | ) | | (538 | | ) | | (792 | | ) |\n| Other changes, net | | \u2014 | | | | 9 | | | | 24 | | | | \u2014 | | | | (27 | | ) |\n| Ending balance | | $ | 1,609 | | | $ | 1,599 | | | $ | 1,550 | | | $ | 1,534 | | | $ | 1,821 | |\n| | | | | | | | | | | | | | | | | | | | | |\n| ALLL (excluding PCI loans) | | $ | 1,462 | | | $ | 1,445 | | | $ | 1,399 | | | $ | 1,410 | | | $ | 1,618 | |\n| Allowance for PCI loans | | 28 | | | | 44 | | | | 61 | | | | 64 | | | | 114 | | |\n| RUFC | | 119 | | | | 110 | | | | 90 | | | | 60 | | | | 89 | | |\n| Total ACL | | $ | 1,609 | | | $ | 1,599 | | | $ | 1,550 | | | $ | 1,534 | | | $ | 1,821 | |\n\n","source":"TFC\/10-K\/0000092230-18-000021"} {"title":"ACL","text":"(1) During the first quarter of 2014, $8.3 billion in loans were transferred from direct to residential mortgage.","markdown_table":"\n\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Table 21 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Allocation of ALLL by Category | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | | December 31, | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | | 2017 | | | | | | | 2016 | | | | | | | 2015 | | | | | | | 2014 | | | | | | | 2013 | | | | | |\n| (Dollars in millions) | | Amount | | | | % Loans in each category | | | Amount | | | | % Loans in each category | | | Amount | | | | % Loans in each category | | | Amount | | | | % Loans in each category | | | Amount | | | | % Loans in each category | |\n| Balances at end of period applicable to: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Commercial and industrial | | $ | 522 | | | 41.1 | % | | $ | 530 | | | 40.3 | % | | $ | 488 | | | 39.6 | % | | $ | 445 | | | 38.5 | % | | $ | 475 | | | 37.0 | % |\n| CRE | | 160 | | | | 14.8 | | | 145 | | | | 13.8 | | | 175 | | | | 13.5 | | | 212 | | | | 11.8 | | | 227 | | | | 11.3 | |\n| Lease financing | | 9 | | | | 1.3 | | | 7 | | | | 1.2 | | | 5 | | | | 1.1 | | | 4 | | | | 0.9 | | | 7 | | | | 1.0 | |\n| Residential mortgage (1) | | 209 | | | | 20.0 | | | 227 | | | | 20.8 | | | 217 | | | | 22.4 | | | 253 | | | | 25.9 | | | 331 | | | | 21.3 | |\n| Direct (1) | | 106 | | | | 8.3 | | | 103 | | | | 8.4 | | | 105 | | | | 8.2 | | | 110 | | | | 6.8 | | | 209 | | | | 13.7 | |\n| Indirect | | 348 | | | | 12.0 | | | 327 | | | | 13.0 | | | 305 | | | | 12.6 | | | 276 | | | | 13.0 | | | 254 | | | | 11.9 | |\n| Revolving credit | | 108 | | | | 2.0 | | | 106 | | | | 1.9 | | | 104 | | | | 1.8 | | | 110 | | | | 2.1 | | | 115 | | | | 2.1 | |\n| PCI | | 28 | | | | 0.5 | | | 44 | | | | 0.6 | | | 61 | | | | 0.8 | | | 64 | | | | 1.0 | | | 114 | | | | 1.7 | |\n| Total ALLL | | 1,490 | | | | 100.0 | % | | 1,489 | | | | 100.0 | % | | 1,460 | | | | 100.0 | % | | 1,474 | | | | 100.0 | % | | 1,732 | | | | 100.0 | % |\n| RUFC | | 119 | | | | | | | 110 | | | | | | | 90 | | | | | | | 60 | | | | | | | 89 | | | | | |\n| Total ACL | | $ | 1,609 | | | | | | $ | 1,599 | | | | | | $ | 1,550 | | | | | | $ | 1,534 | | | | | | $ | 1,821 | | | | |\n\n","source":"TFC\/10-K\/0000092230-18-000021"} {"title":"Deposits","text":"Average deposits for the fourth quarter of 2017 were $158.0 billion, up $545 million compared to the prior quarter.Average noninterest-bearing deposits increased $799 million, primarily due to increases in commercial, public funds and personal balances.Interest checking decreased $254 million, primarily due to decreases in public funds, personal and commercial balances.Money market and savings increased $243 million primarily due to commercial balances partially offset by decreased personal and public funds balances.Average time deposits decreased $50 million as decreases in personal balances and IRAs were partially offset by higher commercial balances.Average foreign office deposits decreased $193 million due to lower overall funding needs.Noninterest-bearing deposits represented 34.4% of total average deposits for the fourth quarter, compared to 34.0% for the prior quarter and 32.1% a year ago. The cost of interest-bearing deposits was 0.40% for the fourth quarter, up five basis points compared to the prior quarter.","markdown_table":"\n\n| | | | | | | | | | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | | | | | | | | | | | | | | | | | | | |\n| Table 22 | | | | | | | | | | | | | | | | | | | | |\n| Quarterly Composition of Average Deposits | | | | | | | | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | | | | | | | |\n| | | For the Three Months Ended | | | | | | | | | | | | | | | | | | |\n| (Dollars in millions) | | 12\/31\/2017 | | | | 9\/30\/2017 | | | | 6\/30\/2017 | | | | 3\/31\/2017 | | | | 12\/31\/2016 | | |\n| Noninterest-bearing deposits | | $ | 54,288 | | | $ | 53,489 | | | $ | 52,573 | | | $ | 51,095 | | | $ | 51,421 | |\n| Interest checking | | 26,746 | | | | 27,000 | | | | 28,849 | | | | 29,578 | | | | 28,634 | | |\n| Money market and savings | | 61,693 | | | | 61,450 | | | | 64,294 | | | | 64,857 | | | | 63,884 | | |\n| Time deposits | | 13,744 | | | | 13,794 | | | | 14,088 | | | | 14,924 | | | | 15,693 | | |\n| Foreign office deposits - interest-bearing | | 1,488 | | | | 1,681 | | | | 459 | | | | 929 | | | | 486 | | |\n| Total average deposits | | $ | 157,959 | | | $ | 157,414 | | | $ | 160,263 | | | $ | 161,383 | | | $ | 160,118 | |\n\n","source":"TFC\/10-K\/0000092230-18-000021"} {"title":"Risk Management","text":"The CRO leads the RMO, which designs, organizes and manages BB&T\u2019s risk management framework. The RMO is responsible for ensuring effective risk management oversight, measurement, monitoring, reporting and consistency. The CRO has direct access to the Board of Directors and Executive Management. The CRO is responsible for identifying and communicating in a timely manner to the CEO and the Board of Directors meaningful risks and significant instances when the RMO\u2019s assessment of risk differs from that of a BU, significant instances when a BU is not adhering to the risk governance framework, and BB&T\u2019s risk profile in relation to its risk appetite on at least a quarterly basis. In the event that the CRO and CEO\u2019s assessment of risk were to differ or if the CEO were to not adhere to the risk management framework, the CRO would have the responsibility to report such matters to the Board of Directors.The Executive Management-led enterprise risk committees provide oversight of the first and second lines of defense and communicate risk appetite and values to the RMO. The CRO and the enterprise risk committees approve policies, set risk limits and tolerances and monitor results.The RMC, CRMC, ORMC, CROC and the MRLCC are the enterprise risk committees and provide oversight of the risks as described in the common risk language. There is Executive Management representation in all five committees. The risk management framework is composed of specialized risk functions focused on specific types of risk. The MRLCC, CRMC, CROC and ORMC provide oversight of market, liquidity, capital, credit, compliance, and operational risk while RMC provides a fully integrated view of all material risks across the company. The RMC provides oversight of all risks and its purpose is to review BB&T\u2019s aggregate risk exposure, evaluate risk appetite, and evaluate risks not reviewed by other risk committees.The RMC is responsible for taking a broad view of risk, incorporating information from all risk functions. This combination of broad and specific focus provides the most effective framework for the management of risk. The RMC is chaired by the CRO and its membership includes all members of Executive Management, the General Auditor (ex officio) and senior leaders from Financial Management, the RMO and other areas.The principal types of inherent risk include compliance, credit, liquidity, market, operational, reputation and strategic risks.","markdown_table":"\n\n| | | | | |\n| --- | --- | --- | --- | --- |\n| | | | | |\n| Risk Committees | Board of Directors | | | Executive Management |\n| | | |\n| 1st\u00a0Line of Defense | 2nd\u00a0Line of Defense | 3rd\u00a0Line of Defense |\n| Business Units | Risk Functions | Audit Services |\n| | | |\n| Chief Risk Officer | | |\n\n","source":"TFC\/10-K\/0000092230-18-000021"} {"title":"Interest Rate Market Risk (Other than Trading)","text":"The MRLCC has established parameters related to interest sensitivity that prescribe a maximum negative impact on net interest income under different interest rate scenarios. In the event the results of the Simulation model fall outside the established parameters, management will make recommendations to the MRLCC on the most appropriate response given the current economic forecast. The following parameters and interest rate scenarios are considered BB&T\u2019s primary measures of interest rate risk:\u2022Maximum negative impact on net interest income of 2% for the next 12 months assuming a 25 basis point change in interest rates each month for four months followed by a flat interest rate scenario for the remaining eight month period.\u2022Maximum negative impact on net interest income of 4% for the next 12 months assuming a 25 basis point change in interest rates each month for eight months followed by a flat interest rate scenario for the remaining four month period.If a parallel rate change of 200 basis points cannot be modeled due to a low level of rates, a proportional limit applies, and the maximum negative impact on net interest income is adjusted on a proportional basis. Regardless of the proportional limit, the negative risk exposure limit will be the greater of the 4% or the proportional limit.Management has also established a maximum negative impact on net interest income of 4% for an immediate 100 basis points parallel change in rates and 8% for an immediate 200 basis points parallel change in rates. Management currently only models up to a negative 100 basis point decline, and the maximum negative impact on net interest income is adjusted on a proportional basis. Regardless of the proportional limit, the negative risk exposure limit will be the greater of 4% or the proportional limit. These \"interest rate shock\" limits are designed to create an outer band of acceptable risk based upon a significant and immediate change in rates.Management has temporarily suspended its interest rate exposure limits to declining interest rates.\u00a0As the Federal Reserve has started to raise rates, competitive pressure on deposit rates has not materialized. As a result, asset repricing in excess of liability repricing is causing the measured exposure to declining rates to increase. Management evaluates its interest rate risk position each month.Management must also consider how the balance sheet and interest rate risk position could be impacted by changes in balance sheet mix. Liquidity in the banking industry has been very strong during the current economic cycle. Much of this liquidity increase has been due to a significant increase in noninterest-bearing demand deposits. Consistent with the industry, Branch Bank has seen a significant increase in this funding source. The behavior of these deposits is one of the most important assumptions used in determining the interest rate risk position of BB&T. A loss of these deposits in the future would reduce the asset sensitivity of BB&T\u2019s balance sheet as the Company increases interest-bearing funds to offset the loss of this advantageous funding source.Beta represents the correlation between overall market interest rates and the rates paid by BB&T on interest-bearing deposits. BB&T applies an average beta of approximately 50% to its non-maturity interest bearing deposit accounts for determining its interest rate sensitivity. Non-maturity interest bearing deposit accounts include interest checking accounts, savings accounts, and money market accounts that do not have a contractual maturity. Due to current market conditions the actual deposit beta on non-maturity interest bearing deposits has been less than 15%; however, BB&T expects the beta to increase as rates continue to rise.\u00a0BB&T regularly conducts sensitivity on other key variables to determine the impact they could have on the interest rate risk position. This allows BB&T to evaluate the likely impact on its balance sheet management strategies due to a more extreme variation in a key assumption than expected.The following table shows the effect that the loss of demand deposits and an associated increase in managed rate deposits would have on BB&T\u2019s interest-rate sensitivity position. For purposes of this analysis, BB&T modeled the incremental beta for the replacement of the lost demand deposits at 100%.","markdown_table":"\n\n| | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | | | | | | | | | | | |\n| Table 25 | | | | | | | | | | | | |\n| Interest Sensitivity Simulation Analysis | | | | | | | | | | | | |\n| | | | | | | | | | | | | |\n| Interest Rate Scenario | | | | | | | | Annualized Hypothetical Percentage Change in Net Interest Income | | | | |\n| | | Prime Rate | | | | | |\n| Linear Change in Prime Rate | | December 31, | | | | | | December 31, | | | | |\n| | 2017 | | | 2016 | | | 2017 | | | 2016 | |\n| Up 200 bps | | 6.50 | % | | 5.75 | % | | 3.09 | % | | 3.13 | % |\n| Up 100 | | 5.50 | | | 4.75 | | | 2.07 | | | 2.14 | |\n| No Change | | 4.50 | | | 3.75 | | | \u2014 | | | \u2014 | |\n| Down 25 | | 4.25 | | | 3.50 | | | (1.06 | ) | | (0.93 | ) |\n| Down 100 | | 3.50 | | | 2.75 | | | (6.62 | ) | | NA | |\n\n","source":"TFC\/10-K\/0000092230-18-000021"} {"title":"Interest Rate Market Risk (Other than Trading)","text":"(1)\u00a0The base scenario is equal to the annualized hypothetical percentage change in net interest income at December\u00a031,\u00a02017 as presented in the preceding table.If rates increased 200 basis points, BB&T could absorb the loss of $14.8 billion, or 27.5%, of noninterest-bearing demand deposits and replace them with managed rate deposits with a beta of 100% before becoming neutral to interest rate changes.The following table shows the effect that the indicated changes in interest rates would have on EVE. Key assumptions in the preparation of the table include prepayment speeds of mortgage-related and other assets, cash flows and maturities of derivative financial instruments, loan volumes and pricing and deposit sensitivity.","markdown_table":"\n\n| | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | | | | | | | | |\n| Table 26 | | | | | | | | | |\n| Deposit Mix Sensitivity Analysis | | | | | | | | | |\n| | | | | | | | | | |\n| Increase in Rates | | Base Scenario at December 31, 2017 (1) | | | Results Assuming a Decrease in Noninterest-Bearing Demand Deposits | | | | |\n| | | $1 Billion | | | $5 Billion | |\n| Up 200 bps | | 3.09 | % | | 2.88 | % | | 2.04 | % |\n| Up 100 | | 2.07 | | | 1.94 | | | 1.42 | |\n\n","source":"TFC\/10-K\/0000092230-18-000021"} {"title":"Branch Bank","text":"BB&T and Branch Bank have Contingency Funding Plans designed to ensure that liquidity sources are sufficient to meet their ongoing obligations and commitments, particularly in the event of a liquidity contraction. These plans are designed to examine and quantify the organization\u2019s liquidity under various \"stress\" scenarios. Additionally, the plans provide a framework for management and other critical personnel to follow in the event of a liquidity contraction or in anticipation of such an event. The plans address authority for activation and decision making, liquidity options and the responsibilities of key departments in the event of a liquidity contraction. The liquidity options available to management could include seeking secured funding, asset sales, and under the most extreme scenarios, curtailing new loan originations.Management believes current sources of liquidity are adequate to meet BB&T\u2019s current requirements and plans for continued growth. See \"Note 4. Premises and Equipment,\" \"Note 8. Long-Term Debt\" and \"Note 13. Commitments and Contingencies\" for additional information regarding outstanding balances of sources of liquidity and contractual commitments and obligations.","markdown_table":"\n\n| | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- |\n| | | | | | | | |\n| Table 28 | | | | | | | |\n| Credit Ratings of BB&T Corporation and Branch Bank | | | | | | | |\n| December\u00a031,\u00a02017 | | | | | | | |\n| | | | | | | | |\n| | S&P | | Moody's | | Fitch | | DBRS |\n| BB&T Corporation: | | | | | | | |\n| Commercial Paper | A-2 | | N\/A | | F1 | | R-1(low) |\n| Issuer | A- | | A2 | | A+ | | A(high) |\n| LT\/Senior debt | A- | | A2 | | A+ | | A(high) |\n| Subordinated debt | BBB+ | | A2 | | A | | A |\n| Preferred stock | BBB- | | Baa1(hyb) | | BBB- | | BBB(high) |\n| | | | | | | | |\n| Branch Bank: | | | | | | | |\n| Long term deposits | N\/A | | Aa1 | | AA- | | AA(low) |\n| LT\/Senior unsecured bank notes | A | | A1 | | A+ | | AA(low) |\n| Other long term senior obligations | A | | N\/A | | A+ | | AA(low) |\n| Other short term senior obligations | A-1 | | N\/A | | F1 | | R-1(middle) |\n| Short term bank notes | A-1 | | P-1 | | F1 | | R-1(middle) |\n| Short term deposits | N\/A | | P-1 | | F1+ | | R-1(middle) |\n| Subordinated bank notes | A- | | A2 | | A | | A(high) |\n| | | | | | | | |\n| Ratings Outlook: | | | | | | | |\n| Credit Trend | Stable | | Stable | | Stable | | Stable |\n\n","source":"TFC\/10-K\/0000092230-18-000021"} {"title":"Contractual Obligations, Commitments, Contingent Liabilities, Off-Balance Sheet Arrangements and Related Party Transactions","text":"(1)Based on estimated payment dates.(2)Includes accrued interest, future contractual interest obligations and the impact of hedges in a loss position. Other derivatives are excluded. Variable rate payments are based upon the rate in effect at December\u00a031,\u00a02017.(3)Represents obligations to purchase goods or services that are enforceable and legally binding. Many of the purchase obligations have terms that are not fixed and determinable and are included in the table above based upon the estimated timing and amount of payment. In addition, certain of the purchase agreements contain clauses that would allow BB&T to cancel the agreement with specified notice; however, that impact is not included in the table above.(4)Although technically unfunded plans, Rabbi Trusts and insurance policies on the lives of certain of the covered employees are available to finance future benefit plan payments.BB&T\u2019s commitments include investments in affordable housing projects throughout its market area and private equity funds. Refer to \"Note 1. Summary of Significant Accounting Policies\" and \"Note 13. Commitments and Contingencies\" for further discussion of these commitments.In addition, BB&T enters into derivative contracts to manage various financial risks. A derivative is a financial instrument that derives its cash flows, and therefore its value, by reference to an underlying instrument, index or referenced interest rate. Derivative contracts are carried at fair value on the Consolidated Balance Sheets with the fair value representing the net present value of expected future cash receipts or payments based on market interest rates as of the balance sheet date. Derivative contracts are written in amounts referred to as notional amounts, which only provide the basis for calculating payments between counterparties and are not a measure of financial risk. Therefore, the derivative liabilities recorded on the balance sheet as of December\u00a031,\u00a02017 do not represent the amounts that may ultimately be paid under these contracts. Further discussion of derivative instruments is included in \"Note 1. Summary of Significant Accounting Policies\" and \"Note 17. Derivative Financial Instruments.\"In the ordinary course of business, BB&T indemnifies its officers and directors to the fullest extent permitted by law against liabilities arising from litigation. BB&T also issues standard representation and warranties in underwriting agreements, merger and acquisition agreements, loan sales, brokerage activities and other similar arrangements. Counterparties in many of these indemnifications provide similar indemnifications to BB&T. Although these agreements often do not specify limitations, BB&T does not believe that any payments related to these guarantees would materially change the financial condition or results of operations of BB&T.BB&T holds public funds in certain states that do not require 100% collateralization on public fund bank deposits. In these states, should the failure of another public fund depository institution result in a loss for the public entity, the resulting uncollateralized deposit shortfall would have to be absorbed on a pro-rata basis (based upon the public deposits held by each bank within the respective state) by the remaining financial institutions holding public funds in that state. BB&T monitors deposits levels relative to the total public deposits held by all depository institutions within these states. As a member of the FHLB, BB&T is required to maintain a minimum investment in capital stock. The board of directors of the FHLB can increase the minimum investment requirements in the event it has concluded that additional capital is required to allow it to meet its own regulatory capital requirements. Any increase in the minimum investment requirements outside of specified ranges requires the approval of the Federal Housing Finance Agency. Because the extent of any obligation to increase BB&T\u2019s investment in the FHLB depends entirely upon the occurrence of a future event, potential future payments to the FHLB are not determinable.In the normal course of business, BB&T is also a party to financial instruments to meet the financing needs of clients and to mitigate exposure to certain risks. Such financial instruments include commitments to extend credit and certain contractual agreements, including standby letters of credit and financial guarantee arrangements. Further discussion of BB&T\u2019s commitments is included in \"Note 13. Commitments and Contingencies\" and \"Note 16. Fair Value Disclosures.\"","markdown_table":"\n\n| | | | | | | | | | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | | | | | | | | | | | | | | | | | | | |\n| Table 29 | | | | | | | | | | | | | | | | | | | | |\n| Contractual Obligations and Other Commitments | | | | | | | | | | | | | | | | | | | | |\n| December\u00a031,\u00a02017 | | | | | | | | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | | | | | | | |\n| (Dollars in millions) | | Total | | | | Less than 1 Year | | | | 1 to 3 Years | | | | 3 to 5 Years | | | | After 5 Years | | |\n| Long-term debt and capital leases | | $ | 23,559 | | | $ | 2,446 | | | $ | 10,845 | | | $ | 6,107 | | | $ | 4,161 | |\n| Operating leases | | 1,511 | | | | 255 | | | | 427 | | | | 320 | | | | 509 | | |\n| Commitments to fund affordable housing investments | | 928 | | | | 536 | | | | 349 | | | | 20 | | | | 23 | | |\n| Private equity and other investments commitments (1) | | 143 | | | | 39 | | | | 69 | | | | 28 | | | | 7 | | |\n| Time deposits | | 13,170 | | | | 8,379 | | | | 3,804 | | | | 970 | | | | 17 | | |\n| Contractual interest payments (2) | | 3,004 | | | | 751 | | | | 1,113 | | | | 560 | | | | 580 | | |\n| Purchase obligations (3) | | 1,335 | | | | 608 | | | | 544 | | | | 160 | | | | 23 | | |\n| Nonqualified benefit plan obligations (4) | | 1,020 | | | | 15 | | | | 31 | | | | 33 | | | | 941 | | |\n| Total contractual cash obligations | | $ | 44,670 | | | $ | 13,029 | | | $ | 17,182 | | | $ | 8,198 | | | $ | 6,261 | |\n\n","source":"TFC\/10-K\/0000092230-18-000021"} {"title":"Contractual Obligations, Commitments, Contingent Liabilities, Off-Balance Sheet Arrangements and Related Party Transactions","text":"(1)Excludes the FHA-insured mortgage loan reserve of $85 million established during 2014 and settled in 2016.","markdown_table":"\n\n| | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | | | | | | | | | | | |\n| Table 30 | | | | | | | | | | | | |\n| Mortgage Indemnification, Recourse and Repurchase Reserves Activity (1) | | | | | | | | | | | | |\n| | | | | | | | | | | | | |\n| | | Year Ended December 31, | | | | | | | | | | |\n| (Dollars in millions) | | 2017 | | | | 2016 | | | | 2015 | | |\n| Balance, at beginning of period | | $ | 40 | | | $ | 79 | | | $ | 94 | |\n| Payments | | \u2014 | | | | (2 | | ) | | (5 | | ) |\n| Expense | | (3 | | ) | | (37 | | ) | | (15 | | ) |\n| Acquisitions | | \u2014 | | | | \u2014 | | | | 5 | | |\n| Balance, at end of period | | $ | 37 | | | $ | 40 | | | $ | 79 | |\n\n","source":"TFC\/10-K\/0000092230-18-000021"} {"title":"Capital","text":"(1) BB&T's goal is to maintain capital levels above the 2019 requirements.Payments of cash dividends and repurchases of common shares are the methods used to manage any excess capital generated. In addition, management closely monitors the Parent Company\u2019s double leverage ratio (investments in subsidiaries as a percentage of shareholders\u2019 equity). The active management of the subsidiaries\u2019 equity capital, as described above, is the process used to manage this important driver of Parent Company liquidity and is a key element in the management of BB&T\u2019s capital position.Management intends to maintain capital at Branch Bank at levels that will result in classification as \"well-capitalized\" for regulatory purposes. Secondarily, it is management\u2019s intent to maintain Branch Bank\u2019s capital at levels that result in regulatory risk-based capital ratios that are generally comparable with peers of similar size, complexity and risk profile. If the capital levels of Branch Bank increase above these guidelines, excess capital may be transferred to the Parent Company in the form of special dividend payments, subject to regulatory and other operating considerations.While nonrecurring events or management decisions may result in the Company temporarily falling below its operating minimum guidelines for one or more of these ratios, it is management\u2019s intent through capital planning to return to these targeted operating minimums within a reasonable period of time. Such temporary decreases below the operating minimums shown above are not considered an infringement of BB&T\u2019s overall capital policy, provided a return above the minimums is forecast to occur within a reasonable time period.BB&T regularly performs stress testing on its capital levels and is required to periodically submit the company\u2019s capital plans to the banking regulators. The FRB did not object to the Company\u2019s 2017 capital plan, and the 2018 capital plan is expected to be submitted during April 2018. Management\u2019s capital deployment plan in order of preference is to focus on 1) organic growth, 2) dividends and 3) acquisitions and\/or share repurchases depending on opportunities in the marketplace and our interest and ability to proceed with acquisitions.Risk-based capital ratios, which include Tier 1 Capital, Total Capital and Tier 1 Common Equity, are calculated based on regulatory guidance related to the measurement of capital and risk-weighted assets. Branch Bank's capital ratios are presented in the following table:","markdown_table":"\n\n| | | | | | | | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | | | | | | | | | | | | | | | | | |\n| Table 32 | | | | | | | | | | | | | | | | | | |\n| Capital Requirements Under Basel III | | | | | | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | | | | | |\n| | | Minimum Capital | | | Well-Capitalized | | | Minimum Capital Plus Capital Conservation Buffer | | | | | | | | | BB&T Target | |\n| | | | | 2017 | | | 2018 | | | 2019 (1) | | |\n| CET1 to risk-weighted assets | | 4.5 | % | | 6.5 | % | | 5.750 | % | | 6.375 | % | | 7.000 | % | | 8.5 | % |\n| Tier 1 capital to risk-weighted assets | | 6.0 | | | 8.0 | | | 7.250 | | | 7.875 | | | 8.500 | | | 10.0 | |\n| Total capital to risk-weighted assets | | 8.0 | | | 10.0 | | | 9.250 | | | 9.875 | | | 10.500 | | | 12.0 | |\n| Leverage ratio | | 4.0 | | | 5.0 | | | N\/A | | | N\/A | | | N\/A | | | 8.0 | |\n\n","source":"TFC\/10-K\/0000092230-18-000021"} {"title":"Capital","text":"BB&T's capital ratios are presented in the following table:","markdown_table":"\n\n| | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- |\n| | | | | | | |\n| Table 33 | | | | | | |\n| Capital Ratios - Branch Bank | | | | | | |\n| | | | | | | |\n| | | December 31, | | | | |\n| | | 2017 | | | 2016 | |\n| CET1 to risk-weighted assets | | 11.3 | % | | 11.5 | % |\n| Tier 1 capital to risk-weighted assets | | 11.3 | | | 11.5 | |\n| Total capital to risk-weighted assets | | 13.3 | | | 13.6 | |\n| Leverage ratio | | 9.4 | | | 9.6 | |\n\n","source":"TFC\/10-K\/0000092230-18-000021"} {"title":"Capital","text":"(1)Tangible common equity and related ratios are non-GAAP measures. Management uses these measures to assess the quality of capital and believes that investors may find them useful in their analysis of the Company. These capital measures are not necessarily comparable to similar capital measures that may be presented by other companies.During 2017, BB&T completed $1.6 billion of stock repurchases and paid $1.0 billion in common stock dividends, which resulted in a total payout ratio of 117.9% for the year. Effective December 31, 2017, BB&T adopted new accounting guidance related to tax reform legislation passed in 2017, and reclassified deferred income taxes from AOCI and increased retained earnings $247 million, which also increased regulatory capital and the related ratios.During July 2017, BB&T's Board of Directors approved a $0.03 increase in the quarterly dividend, which increased the amount of the quarterly dividend to $0.33 per share. As of December 31, 2017, the remaining stock repurchases authorized by the Board of Directors totaled $640 million. During the first quarter of 2018, the Company repurchased approximately 5.9 million shares of common stock totaling $320 million.","markdown_table":"\n\n| | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | | | | | | | |\n| Table 34 | | | | | | | | |\n| Capital Ratios - BB&T Corporation | | | | | | | | |\n| | | | | | | | | |\n| | | December 31, | | | | | | |\n| (Dollars in millions, except per share data, shares in thousands) | | 2017 | | | | 2016 | | |\n| Risk-based: | | | | | | | | |\n| CET1 | | 10.2 | | % | | 10.2 | | % |\n| Tier 1 | | 11.9 | | | | 12.0 | | |\n| Total | | 13.9 | | | | 14.1 | | |\n| Leverage capital | | 9.9 | | | | 10.0 | | |\n| | | | | | | | | |\n| Non-GAAP capital measures (1): | | | | | | | | |\n| Tangible common equity per common share | | $ | 20.80 | | | $ | 20.18 | |\n| | | | | | | | | |\n| Calculations of tangible common equity (1): | | | | | | | | |\n| Total shareholders' equity | | $ | 29,695 | | | $ | 29,926 | |\n| Less: | | | | | | | | |\n| Preferred stock | | 3,053 | | | | 3,053 | | |\n| Noncontrolling interests | | 47 | | | | 45 | | |\n| Intangible assets | | 10,329 | | | | 10,492 | | |\n| Tangible common equity | | $ | 16,266 | | | $ | 16,336 | |\n| | | | | | | | | |\n| Risk-weighted assets | | $ | 177,217 | | | $ | 176,138 | |\n| Common shares outstanding at end of period | | 782,006 | | | | 809,475 | | |\n\n","source":"TFC\/10-K\/0000092230-18-000021"} {"title":"Capital","text":"(1)Loans and leases are net of unearned income and include LHFS.","markdown_table":"\n\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Table 35 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Quarterly Financial Summary \u2013 Unaudited | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | | 2017 | | | | | | | | | | | | | | | | 2016 | | | | | | | | | | | | | | |\n| (Dollars in millions, except per share data) | | Fourth Quarter | | | | Third Quarter | | | | Second Quarter | | | | First Quarter | | | | Fourth Quarter | | | | Third Quarter | | | | Second Quarter | | | | First Quarter | | |\n| Consolidated Summary of Operations: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Interest income | | $ | 1,898 | | | $ | 1,877 | | | $ | 1,824 | | | $ | 1,775 | | | $ | 1,745 | | | $ | 1,795 | | | $ | 1,805 | | | $ | 1,721 | |\n| Interest expense | | 254 | | | | 230 | | | | 189 | | | | 166 | | | | 180 | | | | 185 | | | | 188 | | | | 192 | | |\n| Provision for credit losses | | 138 | | | | 126 | | | | 135 | | | | 148 | | | | 129 | | | | 148 | | | | 111 | | | | 184 | | |\n| Noninterest income | | 1,225 | | | | 1,166 | | | | 1,220 | | | | 1,171 | | | | 1,162 | | | | 1,164 | | | | 1,130 | | | | 1,016 | | |\n| Noninterest expense | | 1,855 | | | | 1,745 | | | | 1,742 | | | | 2,102 | | | | 1,668 | | | | 1,711 | | | | 1,797 | | | | 1,545 | | |\n| Provision for income taxes | | 209 | | | | 294 | | | | 304 | | | | 104 | | | | 287 | | | | 273 | | | | 252 | | | | 246 | | |\n| Net income | | 667 | | | | 648 | | | | 674 | | | | 426 | | | | 643 | | | | 642 | | | | 587 | | | | 570 | | |\n| Noncontrolling interest | | 9 | | | | 8 | | | | (1 | | ) | | 5 | | | | 7 | | | | \u2014 | | | | 3 | | | | 6 | | |\n| Preferred stock dividends | | 44 | | | | 43 | | | | 44 | | | | 43 | | | | 44 | | | | 43 | | | | 43 | | | | 37 | | |\n| Net income available to common shareholders | | $ | 614 | | | $ | 597 | | | $ | 631 | | | $ | 378 | | | $ | 592 | | | $ | 599 | | | $ | 541 | | | $ | 527 | |\n| Basic EPS | | $ | 0.78 | | | $ | 0.75 | | | $ | 0.78 | | | $ | 0.47 | | | $ | 0.73 | | | $ | 0.74 | | | $ | 0.67 | | | $ | 0.67 | |\n| Diluted EPS | | $ | 0.77 | | | $ | 0.74 | | | $ | 0.77 | | | $ | 0.46 | | | $ | 0.72 | | | $ | 0.73 | | | $ | 0.66 | | | $ | 0.67 | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Selected Average Balances: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Assets | | $ | 222,525 | | | $ | 220,732 | | | $ | 221,018 | | | $ | 219,961 | | | $ | 220,165 | | | $ | 222,065 | | | $ | 223,399 | | | $ | 210,102 | |\n| Securities, at amortized cost | | 48,093 | | | | 45,968 | | | | 45,410 | | | | 44,607 | | | | 44,881 | | | | 47,152 | | | | 48,510 | | | | 44,580 | | |\n| Loans and leases (1) | | 144,089 | | | | 144,181 | | | | 144,327 | | | | 143,698 | | | | 144,569 | | | | 143,689 | | | | 143,097 | | | | 135,628 | | |\n| Total earning assets | | 195,305 | | | | 193,073 | | | | 193,386 | | | | 192,564 | | | | 192,574 | | | | 193,909 | | | | 194,822 | | | | 183,612 | | |\n| Deposits | | 157,959 | | | | 157,414 | | | | 160,263 | | | | 161,383 | | | | 160,118 | | | | 159,503 | | | | 160,338 | | | | 149,867 | | |\n| Short-term borrowings | | 6,342 | | | | 5,983 | | | | 2,748 | | | | 2,105 | | | | 2,373 | | | | 2,128 | | | | 2,951 | | | | 2,771 | | |\n| Long-term debt | | 22,639 | | | | 21,459 | | | | 21,767 | | | | 20,757 | | | | 21,563 | | | | 23,428 | | | | 23,272 | | | | 22,907 | | |\n| Total interest-bearing liabilities | | 132,652 | | | | 131,367 | | | | 132,205 | | | | 133,150 | | | | 132,633 | | | | 134,500 | | | | 137,760 | | | | 129,342 | | |\n| Shareholders' equity | | 29,853 | | | | 29,948 | | | | 30,302 | | | | 29,903 | | | | 30,054 | | | | 29,916 | | | | 29,610 | | | | 27,826 | | |\n\n","source":"TFC\/10-K\/0000092230-18-000021"} {"title":"ACL","text":"For collectively evaluated loans, the ALLL is determined by multiplying the loan exposure estimated at the time of default by the loss frequency and loss severity factors. For individually evaluated loans, the ALLL is determined through review of data specific to the borrower. For TDRs, default expectations and estimated slower prepayment speeds that are specific to each of the restructured loan populations are incorporated in the determination of the ALLL. Also included in management\u2019s estimates for loan and lease losses are considerations with respect to the impact of current economic events, the outcomes of which are uncertain. These events may include, but are not limited to, fluctuations in overall interest rates, political conditions, legislation that may directly or indirectly affect the banking industry and economic conditions affecting specific geographical areas and industries in which BB&T conducts business.The methodology used to determine an estimate for the RUFC is inherently similar to the methodology used in calculating the ALLL adjusted for factors specific to binding commitments, including the probability of funding and exposure at the time of funding. A detailed discussion of the methodology used in determining the ALLL and the RUFC is included in \"Note 1. Summary of Significant Accounting Policies.\"","markdown_table":"\n\n| | | |\n| --- | --- | --- |\n| | | |\n| Loss Estimate Factor | | Description |\n| Loss Frequency | | Indicates the likelihood of a borrower defaulting on a loan |\n| Loss Severity | | Indicates the amount of estimated loss at the time of default |\n\n","source":"TFC\/10-K\/0000092230-18-000021"} {"title":"Reclassifications","text":"Certain other amounts reported in prior periods\u2019 consolidated financial statements have been reclassified to conform to the current presentation.","markdown_table":"\n\n| | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | | | | | | | |\n| (dollars in millions) | | 2016 | | | | 2015 | | |\n| Net cash from operating activities | | $ | 443 | | | $ | 216 | |\n| Net cash from investing activities | | (326 | | ) | | (211 | | ) |\n| Net cash from financing activities | | (117 | | ) | | (5 | | ) |\n| Net change in cash and cash equivalents | | $ | \u2014 | | | $ | \u2014 | |\n\n","source":"TFC\/10-K\/0000092230-18-000021"} {"title":"NPAs","text":"(1)Loans may be returned to accrual status when they become current as to both principal and interest and concern no longer exists as to the collectability of principal and interest, generally indicated by 180 days of sustained performance.(2)Or when it is probable that principal or interest is not fully collectible, whichever occurs first.(3)Depends on product type, loss mitigation status and status of the government guaranty.When commercial loans are placed on nonaccrual status, a charge-off is recorded, as applicable, to decrease the carrying value of such loans to the estimated recoverable amount. Retail loans are subject to mandatory charge-off at a specified delinquency date consistent with regulatory guidelines. As such, retail loans are subject to collateral valuation and charge-off, as applicable, when they are moved to nonaccrual status.Certain past due loans may remain on accrual status if management determines that it does not have concern over the collectability of principal and interest. Generally, when loans are placed on nonaccrual status, accrued interest receivable is reversed against interest income in the current period and amortization of deferred loan fees and expenses is suspended. Payments received for interest and lending fees thereafter are applied as a reduction to the remaining principal balance as long as concern exists as to the ultimate collection of the principal.Assets acquired as a result of foreclosure are subsequently carried at the lower of cost or net realizable value. Net realizable value equals fair value less estimated selling costs. Any excess of cost over net realizable value at the time of foreclosure is charged to the ALLL. NPAs are subject to periodic revaluations of the collateral underlying impaired loans and foreclosed real estate. The periodic revaluations are generally based on the appraised value of the property and may include additional liquidity adjustments based upon the expected retention period. BB&T\u2019s policies require that valuations be updated at least annually and that upon foreclosure, the valuation must not be more than six months old, otherwise an update is required.","markdown_table":"\n\n| | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | | | | | | | |\n| (number of days) | | Placed on Nonaccrual (1) | | | | Charge-off | | |\n| Commercial: | | | | | | | | |\n| Commercial and industrial | | 90 | (2) | | | 90 | | |\n| CRE | | 90 | (2) | | | 90 | | |\n| Lease financing | | 90 | (2) | | | 90 | | |\n| Retail: | | | | | | | | |\n| Residential mortgage (3) | | 90 | to | 180 | | 90 | to | 210 |\n| Direct (3) | | 90 | to | 120 | | 90 | to | 120 |\n| Indirect (3) | | 90 | to | 120 | | 90 | to | 120 |\n| Revolving credit (3) | | NA | | | | 90 | to | 180 |\n\n","source":"TFC\/10-K\/0000092230-18-000021"} {"title":"Commercial","text":"For commercial clients with total credit exposure of $2 million or less, BB&T has developed an automated loan review system to identify and proactively manage accounts with a higher risk of loss. The \"score\" produced by this automated system is updated quarterly.To establish a reserve, BB&T's policy is to review all commercial lending relationships with an outstanding nonaccrual balance of $3 million or more. While this review is largely focused on the borrower\u2019s ability to repay the loan, BB&T also considers the capacity and willingness of a loan\u2019s guarantors to support the debt service on the loan as a secondary source of repayment. When a guarantor exhibits the documented capacity and willingness to support the loan, BB&T may consider extending the loan maturity and\/or temporarily deferring principal payments if the ultimate collection of both principal and interest is not in question. In these cases, BB&T may deem the loan to not be impaired due to the documented capacity and willingness of the guarantor to repay the loan. Loans are considered impaired when the borrower (or guarantor in certain circumstances) does not have the cash flow capacity or willingness to service the debt according to contractual terms, or it does not appear reasonable to assume that the borrower will continue to pay according to the contractual agreement. BB&T establishes a specific reserve for each loan that has been deemed impaired based on the criteria outlined above. The amount of the reserve is based on the present value of expected cash flows discounted at the loan\u2019s effective interest rate and\/or the value of collateral, net of costs to sell. In addition, BB&T reviews collateral-dependent commercial loan balances between $1 million and $3 million to establish a specific reserve based on the underlying collateral value, net of costs to sell.BB&T also has a review process related to TDRs and other commercial impaired loans. In connection with this process, BB&T establishes reserves related to these loans that are calculated using an expected cash flow approach. These discounted cash flow analyses incorporate adjustments to future cash flows that reflect management\u2019s best estimate of the default risk related to TDRs based on a combination of historical experience and management judgment.BB&T also maintains reserves for collective impairment that reflect an estimate of losses related to non-impaired commercial loans as of the balance sheet date. Embedded loss estimates for BB&T\u2019s commercial loan portfolio are based on estimated migration rates, which are based on historical experience, and current risk mix as indicated by the risk grading or scoring process described above. Embedded loss estimates may be adjusted to reflect current economic conditions and current portfolio trends including credit quality, concentrations, aging of the portfolio, and significant policy and underwriting changes.","markdown_table":"\n\n| | | |\n| --- | --- | --- |\n| | | |\n| Risk Rating | | Description |\n| Pass | | Loans not considered to be problem credits |\n| Special Mention | | Loans that have a potential weakness deserving management\u2019s close attention |\n| Substandard | | Loans for which a well-defined weakness has been identified that may put full collection of contractual cash flows at risk |\n\n","source":"TFC\/10-K\/0000092230-18-000021"} {"title":"NOTE 2. Securities","text":"Certain investments in marketable debt securities and MBS issued by FNMA and FHLMC exceeded 10% of shareholders\u2019 equity at December\u00a031,\u00a02017. The FNMA investments had total amortized cost and fair value of $14.7 billion and $14.4 billion, respectively. The FHLMC investments had total amortized cost and fair value of $10.2 billion and $10.0 billion, respectively.The change in credit losses on securities with OTTI where a portion of the unrealized loss was recognized in OCI was immaterial for all periods presented.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 with or without prepayment penalties.","markdown_table":"\n\n| | | | | | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | | | | | | | | | | | | | | | |\n| December\u00a031,\u00a02016 | | Amortized Cost | | | | Gross\u00a0Unrealized | | | | | | | | Fair Value | | |\n| (Dollars in millions) | | | Gains | | | | Losses | | | |\n| AFS securities: | | | | | | | | | | | | | | | | |\n| U.S. Treasury | | $ | 2,669 | | | $ | 2 | | | $ | 84 | | | $ | 2,587 | |\n| GSE | | 190 | | | | \u2014 | | | | 10 | | | | 180 | | |\n| Agency MBS | | 21,819 | | | | 13 | | | | 568 | | | | 21,264 | | |\n| States and political subdivisions | | 2,198 | | | | 56 | | | | 49 | | | | 2,205 | | |\n| Non-agency MBS | | 446 | | | | 233 | | | | \u2014 | | | | 679 | | |\n| Other | | 11 | | | | \u2014 | | | | \u2014 | | | | 11 | | |\n| Total AFS securities | | $ | 27,333 | | | $ | 304 | | | $ | 711 | | | $ | 26,926 | |\n| | | | | | | | | | | | | | | | | |\n| HTM securities: | | | | | | | | | | | | | | | | |\n| U.S. Treasury | | $ | 1,098 | | | $ | 20 | | | $ | \u2014 | | | $ | 1,118 | |\n| GSE | | 2,197 | | | | 14 | | | | 30 | | | | 2,181 | | |\n| Agency MBS | | 13,225 | | | | 40 | | | | 180 | | | | 13,085 | | |\n| States and political subdivisions | | 110 | | | | \u2014 | | | | \u2014 | | | | 110 | | |\n| Other | | 50 | | | | 2 | | | | \u2014 | | | | 52 | | |\n| Total HTM securities | | $ | 16,680 | | | $ | 76 | | | $ | 210 | | | $ | 16,546 | |\n\n","source":"TFC\/10-K\/0000092230-18-000021"} {"title":"NOTE 2. Securities","text":"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:","markdown_table":"\n\n| | | | | | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | | | | | | | | | | | | | | | |\n| | | AFS | | | | | | | | HTM | | | | | | |\n| December\u00a031,\u00a02017 | | Amortized Cost | | | | Fair Value | | | | Amortized Cost | | | | Fair Value | | |\n| (Dollars in millions) | | | | |\n| Due in one year or less | | $ | 336 | | | $ | 335 | | | $ | \u2014 | | | $ | \u2014 | |\n| Due after one year through five years | | 498 | | | | 496 | | | | 2,237 | | | | 2,242 | | |\n| Due after five years through ten years | | 2,419 | | | | 2,341 | | | | 1,111 | | | | 1,103 | | |\n| Due after ten years | | 21,756 | | | | 21,375 | | | | 19,679 | | | | 19,492 | | |\n| Total debt securities | | $ | 25,009 | | | $ | 24,547 | | | $ | 23,027 | | | $ | 22,837 | |\n\n","source":"TFC\/10-K\/0000092230-18-000021"} {"title":"NOTE 2. Securities","text":"Periodic reviews are conducted to identify and evaluate each investment with an unrealized loss for OTTI. 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 AOCI for AFS securities. The unrealized losses on U.S. Treasury securities, GSE securities and agency MBS were the result of increases in market interest rates compared to the date the securities were acquired rather than the credit quality of the issuers.Cash flow modeling is used to evaluate non-agency MBS in an unrealized loss position for potential credit impairment. These models give consideration to long-term macroeconomic factors applied to current security default rates, prepayment rates and recovery rates and security-level performance. At December\u00a031,\u00a02017, there were no non-agency MBS with other than temporary credit impairment.At December\u00a031,\u00a02017, the majority of the unrealized loss on municipal securities was the result of fair value hedge basis adjustments that are a component of amortized cost. Municipal securities in an unrealized loss position are evaluated for credit impairment through a qualitative analysis of issuer performance and the primary source of repayment. At December\u00a031,\u00a02017, the evaluation of municipal securities did not indicate any municipal securities with other than temporary credit impairment.","markdown_table":"\n\n| | | | | | | | | | | | | | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | | | | | | | | | | | | | | | | | | | | | | | |\n| | | Less than 12 months | | | | | | | | 12 months or more | | | | | | | | Total | | | | | | |\n| December\u00a031,\u00a02016 | | Fair Value | | | | Unrealized Losses | | | | Fair Value | | | | Unrealized Losses | | | | Fair Value | | | | Unrealized Losses | | |\n| (Dollars in millions) | | | | | | |\n| AFS securities: | | | | | | | | | | | | | | | | | | | | | | | | |\n| U.S. Treasury | | $ | 2,014 | | | $ | 84 | | | $ | \u2014 | | | $ | \u2014 | | | $ | 2,014 | | | $ | 84 | |\n| GSE | | 180 | | | | 10 | | | | \u2014 | | | | \u2014 | | | | 180 | | | | 10 | | |\n| Agency MBS | | 14,842 | | | | 342 | | | | 5,138 | | | | 226 | | | | 19,980 | | | | 568 | | |\n| States and political subdivisions | | 365 | | | | 7 | | | | 314 | | | | 42 | | | | 679 | | | | 49 | | |\n| Total | | $ | 17,401 | | | $ | 443 | | | $ | 5,452 | | | $ | 268 | | | $ | 22,853 | | | $ | 711 | |\n| | | | | | | | | | | | | | | | | | | | | | | | | |\n| HTM securities: | | | | | | | | | | | | | | | | | | | | | | | | |\n| GSE | | $ | 1,762 | | | $ | 30 | | | $ | \u2014 | | | $ | \u2014 | | | $ | 1,762 | | | $ | 30 | |\n| Agency MBS | | 7,717 | | | | 178 | | | | 305 | | | | 2 | | | | 8,022 | | | | 180 | | |\n| Total | | $ | 9,479 | | | $ | 208 | | | $ | 305 | | | $ | 2 | | | $ | 9,784 | | | $ | 210 | |\n\n","source":"TFC\/10-K\/0000092230-18-000021"} {"title":"NOTE 3. Loans and ACL","text":"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 and not reclassified to nonperforming.","markdown_table":"\n\n| | | | | | | | | | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | | | | | | | | | | | | | | | | | | | |\n| | | Accruing | | | | | | | | | | | | | | | | | | |\n| December 31, 2016 | | Current | | | | 30-89 Days Past Due | | | | 90 Days Or More Past Due | | | | Nonaccrual | | | | Total | | |\n| (Dollars in millions) | | | | | |\n| Commercial: | | | | | | | | | | | | | | | | | | | | |\n| Commercial and industrial | | $ | 57,326 | | | $ | 44 | | | $ | \u2014 | | | $ | 369 | | | $ | 57,739 | |\n| CRE | | 19,699 | | | | 8 | | | | \u2014 | | | | 57 | | | | 19,764 | | |\n| Lease financing | | 1,669 | | | | 4 | | | | \u2014 | | | | 4 | | | | 1,677 | | |\n| Retail: | | | | | | | | | | | | | | | | | | | | |\n| Residential mortgage | | 28,702 | | | | 525 | | | | 522 | | | | 172 | | | | 29,921 | | |\n| Direct | | 11,963 | | | | 60 | | | | 6 | | | | 63 | | | | 12,092 | | |\n| Indirect | | 18,110 | | | | 377 | | | | 6 | | | | 71 | | | | 18,564 | | |\n| Revolving credit | | 2,620 | | | | 23 | | | | 12 | | | | \u2014 | | | | 2,655 | | |\n| PCI | | 784 | | | | 36 | | | | 90 | | | | \u2014 | | | | 910 | | |\n| Total | | $ | 140,873 | | | $ | 1,077 | | | $ | 636 | | | $ | 736 | | | $ | 143,322 | |\n\n","source":"TFC\/10-K\/0000092230-18-000021"} {"title":"NOTE 3. Loans and ACL","text":"The following tables present a summary of activity in the ACL:","markdown_table":"\n\n| | | | | | | | | | | | | | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | | | | | | | | | | | | | | | | | | | | | | | |\n| | | December\u00a031,\u00a02017 | | | | | | | | | | | | December\u00a031,\u00a02016 | | | | | | | | | | |\n| | | Commercial & Industrial | | | | CRE | | | | Lease financing | | | | Commercial & Industrial | | | | CRE | | | | Lease financing | | |\n| (Dollars in millions) | | | | | | |\n| Commercial: | | | | | | | | | | | | | | | | | | | | | | | | |\n| Pass | | $ | 57,700 | | | $ | 20,862 | | | $ | 1,881 | | | $ | 55,881 | | | $ | 19,186 | | | $ | 1,641 | |\n| Special mention | | 268 | | | | 48 | | | | 6 | | | | 343 | | | | 162 | | | | 4 | | |\n| Substandard-performing | | 926 | | | | 308 | | | | 23 | | | | 1,146 | | | | 359 | | | | 28 | | |\n| Nonperforming | | 259 | | | | 45 | | | | 1 | | | | 369 | | | | 57 | | | | 4 | | |\n| Total | | $ | 59,153 | | | $ | 21,263 | | | $ | 1,911 | | | $ | 57,739 | | | $ | 19,764 | | | $ | 1,677 | |\n| | | | | | | | | | | | | | | | | | | | | | | | | |\n| | | Residential Mortgage | | | | Direct | | | | Indirect | | | | Residential Mortgage | | | | Direct | | | | Indirect | | |\n| Retail: | | | | | | | | | | | | | | | | | | | | | | | | |\n| Performing | | $ | 28,596 | | | $ | 11,827 | | | $ | 17,163 | | | $ | 29,749 | | | $ | 12,029 | | | $ | 18,493 | |\n| Nonperforming | | 129 | | | | 64 | | | | 72 | | | | 172 | | | | 63 | | | | 71 | | |\n| Total | | $ | 28,725 | | | $ | 11,891 | | | $ | 17,235 | | | $ | 29,921 | | | $ | 12,092 | | | $ | 18,564 | |\n\n","source":"TFC\/10-K\/0000092230-18-000021"} {"title":"NOTE 3. Loans and ACL","text":"The following table provides a summary of loans that are collectively evaluated for impairment:","markdown_table":"\n\n| | | | | | | | | | | | | | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | | | | | | | | | | | | | | | | | | | | | | | |\n| Year Ended December\u00a031,\u00a02015 | | Beginning Balance | | | | Charge-Offs | | | | Recoveries | | | | Provision (Benefit) | | | | Other | | | | Ending Balance | | |\n| (Dollars in millions) | | | | | | |\n| Commercial: | | | | | | | | | | | | | | | | | | | | | | | | |\n| Commercial and industrial | | $ | 446 | | | $ | (90 | ) | | $ | 40 | | | $ | 92 | | | $ | \u2014 | | | $ | 488 | |\n| CRE | | 212 | | | | (24 | | ) | | 18 | | | | (31 | | ) | | \u2014 | | | | 175 | | |\n| Lease financing | | 4 | | | | \u2014 | | | | \u2014 | | | | 1 | | | | \u2014 | | | | 5 | | |\n| Retail: | | | | | | | | | | | | | | | | | | | | | | | | |\n| Residential mortgage | | 253 | | | | (46 | | ) | | 3 | | | | 7 | | | | \u2014 | | | | 217 | | |\n| Direct | | 110 | | | | (54 | | ) | | 29 | | | | 20 | | | | \u2014 | | | | 105 | | |\n| Indirect | | 275 | | | | (303 | | ) | | 42 | | | | 291 | | | | \u2014 | | | | 305 | | |\n| Revolving credit | | 110 | | | | (70 | | ) | | 20 | | | | 44 | | | | \u2014 | | | | 104 | | |\n| PCI | | 64 | | | | (1 | | ) | | \u2014 | | | | (2 | | ) | | \u2014 | | | | 61 | | |\n| ALLL | | 1,474 | | | | (588 | | ) | | 152 | | | | 422 | | | | \u2014 | | | | 1,460 | | |\n| RUFC | | 60 | | | | \u2014 | | | | \u2014 | | | | 6 | | | | 24 | | | | 90 | | |\n| ACL | | $ | 1,534 | | | $ | (588 | ) | | $ | 152 | | | $ | 428 | | | $ | 24 | | | $ | 1,550 | |\n\n","source":"TFC\/10-K\/0000092230-18-000021"} {"title":"NOTE 3. Loans and ACL","text":"The following tables set forth certain information regarding impaired loans, excluding PCI and LHFS, that were individually evaluated for reserves:","markdown_table":"\n\n| | | | | | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | | | | | | | | | | | | | | | |\n| | | December\u00a031,\u00a02017 | | | | | | | | December\u00a031,\u00a02016 | | | | | | |\n| (Dollars in millions) | | Recorded Investment | | | | Related ALLL | | | | Recorded Investment | | | | Related ALLL | | |\n| Commercial: | | | | | | | | | | | | | | | | |\n| Commercial and industrial | | $ | 58,804 | | | $ | 494 | | | $ | 57,265 | | | $ | 492 | |\n| CRE | | 21,173 | | | | 154 | | | | 19,649 | | | | 136 | | |\n| Lease financing | | 1,910 | | | | 9 | | | | 1,672 | | | | 7 | | |\n| Retail: | | | | | | | | | | | | | | | | |\n| Residential mortgage | | 27,914 | | | | 143 | | | | 28,954 | | | | 144 | | |\n| Direct | | 11,815 | | | | 98 | | | | 12,011 | | | | 93 | | |\n| Indirect | | 16,935 | | | | 296 | | | | 18,308 | | | | 286 | | |\n| Revolving credit | | 2,842 | | | | 97 | | | | 2,626 | | | | 95 | | |\n| PCI | | 651 | | | | 28 | | | | 910 | | | | 44 | | |\n| Total | | $ | 142,044 | | | $ | 1,319 | | | $ | 141,395 | | | $ | 1,297 | |\n\n","source":"TFC\/10-K\/0000092230-18-000021"} {"title":"NOTE 3. Loans and ACL","text":"The following table provides a summary of TDRs, all of which are considered impaired:","markdown_table":"\n\n| | | | | | | | | | | | | | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | | | | | | | | | | | | | | | | | | | | | | | |\n| As Of \/ For The Year Ended December\u00a031,\u00a02016 | | UPB | | | | Recorded Investment | | | | | | | | Related ALLL | | | | Average Recorded Investment | | | | Interest Income Recognized | | |\n| (Dollars in millions) | | | Without an ALLL | | | | With an ALLL | | | | | |\n| Commercial: | | | | | | | | | | | | | | | | | | | | | | | | |\n| Commercial and industrial | | $ | 505 | | | $ | 204 | | | $ | 271 | | | $ | 38 | | | $ | 483 | | | $ | 6 | |\n| CRE | | 121 | | | | 35 | | | | 80 | | | | 9 | | | | 114 | | | | 3 | | |\n| Lease financing | | 4 | | | | 1 | | | | 3 | | | | \u2014 | | | | 4 | | | | \u2014 | | |\n| Retail: | | | | | | | | | | | | | | | | | | | | | | | | |\n| Residential mortgage | | 1,026 | | | | 97 | | | | 870 | | | | 83 | | | | 843 | | | | 34 | | |\n| Direct | | 107 | | | | 13 | | | | 68 | | | | 10 | | | | 83 | | | | 5 | | |\n| Indirect | | 265 | | | | 5 | | | | 251 | | | | 41 | | | | 227 | | | | 33 | | |\n| Revolving credit | | 29 | | | | \u2014 | | | | 29 | | | | 11 | | | | 31 | | | | 1 | | |\n| Total | | $ | 2,057 | | | $ | 355 | | | $ | 1,572 | | | $ | 192 | | | $ | 1,785 | | | $ | 82 | |\n\n","source":"TFC\/10-K\/0000092230-18-000021"} {"title":"NOTE 3. Loans and ACL","text":"The following table summarizes the primary reason loan modifications were classified as TDRs and includes newly designated TDRs as well as modifications made to existing TDRs. Balances represent the recorded investment at the end of the quarter in which the modification was made. Rate modifications in this table include TDRs made with below market interest rates that also include modifications of loan structures.","markdown_table":"\n\n| | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | | | | | | | |\n| | | December 31, | | | | | | |\n| (Dollars in millions) | | 2017 | | | | 2016 | | |\n| Performing TDRs: | | | | | | | | |\n| Commercial: | | | | | | | | |\n| Commercial and industrial | | $ | 50 | | | $ | 57 | |\n| CRE | | 16 | | | | 25 | | |\n| Lease financing | | \u2014 | | | | \u2014 | | |\n| Retail: | | | | | | | | |\n| Residential mortgage | | 605 | | | | 769 | | |\n| Direct | | 62 | | | | 67 | | |\n| Indirect | | 281 | | | | 240 | | |\n| Revolving credit | | 29 | | | | 29 | | |\n| Total performing TDRs | | 1,043 | | | | 1,187 | | |\n| Nonperforming TDRs (also included in NPL disclosures) | | 189 | | | | 184 | | |\n| Total TDRs | | $ | 1,232 | | | $ | 1,371 | |\n| ALLL attributable to TDRs | | $ | 142 | | | $ | 146 | |\n\n","source":"TFC\/10-K\/0000092230-18-000021"} {"title":"NOTE 3. Loans and ACL","text":"The pre-default balance for modifications that experienced a payment default that had been classified as TDRs during the previous 12 months was $104 million, $73 million and $81 million for the twelve months ended December\u00a031,\u00a02017, 2016 and 2015, respectively. Payment default is defined as movement of the TDR to nonaccrual status, foreclosure or charge-off, whichever occurs first.The following table presents additional information about BB&T\u2019s loans and leases:","markdown_table":"\n\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | | Year Ended December 31, | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | | 2017 | | | | | | | | | | | | 2016 | | | | | | | | | | | | 2015 | | | | | | | | | | |\n| | | Type of Modification | | | | | | | | ALLL Impact | | | | Type of Modification | | | | | | | | ALLL Impact | | | | Type of Modification | | | | | | | | ALLL Impact | | |\n| (Dollars in millions) | | Rate | | | | Structure | | | | | Rate | | | | Structure | | | | | Rate | | | | Structure | | | |\n| Newly Designated TDRs: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Commercial: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Commercial and industrial | | $ | 79 | | | $ | 101 | | | $ | 3 | | | $ | 105 | | | $ | 96 | | | $ | 3 | | | $ | 68 | | | $ | 31 | | | $ | 2 | |\n| CRE | | 14 | | | | 10 | | | | 1 | | | | 12 | | | | 16 | | | | \u2014 | | | | 11 | | | | 26 | | | | 1 | | |\n| Retail: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Residential mortgage | | 357 | | | | 46 | | | | 25 | | | | 431 | | | | 53 | | | | 28 | | | | 230 | | | | 34 | | | | 16 | | |\n| Direct | | 10 | | | | 3 | | | | \u2014 | | | | 14 | | | | 1 | | | | \u2014 | | | | 12 | | | | 2 | | | | 4 | | |\n| Indirect | | 192 | | | | 6 | | | | 21 | | | | 169 | | | | 7 | | | | 21 | | | | 129 | | | | 9 | | | | 18 | | |\n| Revolving credit | | 19 | | | | \u2014 | | | | 4 | | | | 17 | | | | \u2014 | | | | 4 | | | | 16 | | | | \u2014 | | | | 4 | | |\n| Re-Modification of Previously Designated TDRs | | 176 | | | | 44 | | | | \u2014 | | | | 79 | | | | 46 | | | | \u2014 | | | | 88 | | | | 34 | | | | \u2014 | | |\n\n","source":"TFC\/10-K\/0000092230-18-000021"} {"title":"NOTE 4. Premises and Equipment","text":"The following table excludes assets related to the lease financing business:","markdown_table":"\n\n| | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | | | | | | | | | | |\n| | Estimated Useful Life | | | | December 31, | | | | | | |\n| (Dollars in millions) | | 2017 | | | | 2016 | | |\n| Land and land improvements | | | | | $ | 583 | | | $ | 611 | |\n| Buildings and building improvements | 40 years | | | | 1,660 | | | | 1,628 | | |\n| Furniture and equipment | 3 | - | 15 | | 1,146 | | | | 1,121 | | |\n| Leasehold improvements | | | | | 733 | | | | 791 | | |\n| Construction in progress | | | | | 52 | | | | 62 | | |\n| Capitalized leases on premises and equipment | | | | | 58 | | | | 66 | | |\n| Total | | | | | 4,232 | | | | 4,279 | | |\n| Accumulated depreciation and amortization | | | | | (2,177 | | ) | | (2,172 | | ) |\n| Net premises and equipment | | | | | $ | 2,055 | | | $ | 2,107 | |\n\n","source":"TFC\/10-K\/0000092230-18-000021"} {"title":"NOTE 5. Goodwill and Other Intangible Assets","text":"During 2016, the purchase price allocation for Susquehanna was finalized. During 2017, the purchase price allocations for National Penn and Swett & Crawford were finalized. The related effects of these finalizations are included in other adjustments in the above table. The following table, which excludes fully amortized intangibles, presents information for identifiable intangible assets:","markdown_table":"\n\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| (Dollars in millions) | | Community Banking | | | | Residential Mortgage Banking | | | | Dealer Financial Services | | | | Specialized Lending | | | | Insurance Holdings | | | | Financial Services | | | | Total | | |\n| Goodwill, January 1, 2015 | | $ | 4,634 | | | $ | 326 | | | $ | 111 | | | $ | 88 | | | $ | 1,518 | | | $ | 192 | | | $ | 6,869 | |\n| Acquired goodwill, net | | 1,501 | | | | 43 | | | | \u2014 | | | | 155 | | | | 16 | | | | 11 | | | | 1,726 | | |\n| American Coastal sale | | \u2014 | | | | \u2014 | | | | \u2014 | | | | \u2014 | | | | (49 | | ) | | \u2014 | | | | (49 | | ) |\n| Other adjustments | | 5 | | | | \u2014 | | | | \u2014 | | | | \u2014 | | | | (3 | | ) | | \u2014 | | | | 2 | | |\n| Goodwill, December 31, 2015 | | 6,140 | | | | 369 | | | | 111 | | | | 243 | | | | 1,482 | | | | 203 | | | | 8,548 | | |\n| Acquired goodwill, net | | 753 | | | | 39 | | | | \u2014 | | | | 2 | | | | 270 | | | | 9 | | | | 1,073 | | |\n| Other adjustments | | 139 | | | | 8 | | | | \u2014 | | | | (132 | | ) | | \u2014 | | | | 2 | | | | 17 | | |\n| Goodwill, December 31, 2016 | | 7,032 | | | | 416 | | | | 111 | | | | 113 | | | | 1,752 | | | | 214 | | | | 9,638 | | |\n| Other adjustments | | (12 | | ) | | 6 | | | | \u2014 | | | | (9 | | ) | | (5 | | ) | | \u2014 | | | | (20 | | ) |\n| Goodwill, prior to reorganization | | $ | 7,020 | | | $ | 422 | | | $ | 111 | | | $ | 104 | | | $ | 1,747 | | | $ | 214 | | | $ | 9,618 | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Goodwill, after reorganization | | | | | | | | | | CB-Retail | | | | CB-Commercial | | | | FS&CF | | | | IH&PF | | | | Total | | |\n| Goodwill, December 31, 2017 | | | | | | | | | | $ | 3,724 | | | $ | 3,862 | | | $ | 259 | | | $ | 1,773 | | | $ | 9,618 | |\n\n","source":"TFC\/10-K\/0000092230-18-000021"} {"title":"NOTE 5. Goodwill and Other Intangible Assets","text":"The estimated amortization expense for the next five years is presented as follows:","markdown_table":"\n\n| | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | | | | December\u00a031,\u00a02017 | | | | | | | | | | | | December\u00a031,\u00a02016 | | | | | | | | | | |\n| (Dollars in millions) | | Wtd. Avg. Remaining Life | | Gross Carrying Amount | | | | Accumulated Amortization | | | | Net Carrying Amount | | | | Gross Carrying Amount | | | | Accumulated Amortization | | | | Net Carrying Amount | | |\n| CDI | | 7.0 years | | $ | 605 | | | $ | (409 | ) | | $ | 196 | | | $ | 825 | | | $ | (565 | ) | | $ | 260 | |\n| Other, primarily customer relationship intangibles | | 12.0 | | 1,211 | | | | (696 | | ) | | 515 | | | | 1,249 | | | | (655 | | ) | | 594 | | |\n| Total | | | | $ | 1,816 | | | $ | (1,105 | ) | | $ | 711 | | | $ | 2,074 | | | $ | (1,220 | ) | | $ | 854 | |\n\n","source":"TFC\/10-K\/0000092230-18-000021"} {"title":"Residential Mortgage Banking Activities","text":"During 2016, BB&T paid $83 million to settle certain FHA loan origination and quality control matters pursuant to an agreement with the Department of Justice. In addition, the Company separately received recoveries of $71 million, resulting in a net benefit of $73 million, which was included in other expense on the Consolidated Statements of Income. During 2016, BB&T released $31 million of mortgage repurchase reserves, which was primarily driven by lower anticipated loan repurchase requests. These adjustments were included in loan-related expense on the Consolidated Statements of Income.\u00a0Payments made to date for recourse exposure on residential mortgage loans sold with recourse liability have been immaterial.The following table presents a roll forward of the carrying value of residential MSRs recorded at fair value:","markdown_table":"\n\n| | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | | | | | | | | | | | |\n| | | As Of \/ For The Year Ended December 31, | | | | | | | | | | |\n| (Dollars in millions) | | 2017 | | | | 2016 | | | | 2015 | | |\n| UPB of residential mortgage and home equity loan servicing portfolio | | $ | 118,424 | | | $ | 121,639 | | | $ | 122,169 | |\n| UPB of residential mortgage loans serviced for others, primarily agency conforming fixed rate | | 89,124 | | | | 90,325 | | | | 91,132 | | |\n| Mortgage loans sold with recourse | | 490 | | | | 578 | | | | 702 | | |\n| Maximum recourse exposure from mortgage loans sold with recourse liability | | 251 | | | | 282 | | | | 326 | | |\n| Indemnification, recourse and repurchase reserves | | 37 | | | | 40 | | | | 79 | | |\n| UPB of residential mortgage loans sold | | 12,423 | | | | 15,675 | | | | 14,764 | | |\n| Pre-tax gains recognized on mortgage loans sold and held for sale | | 153 | | | | 139 | | | | 148 | | |\n| Servicing fees recognized from mortgage loans serviced for others | | 261 | | | | 268 | | | | 273 | | |\n| Approximate weighted average servicing fee on the outstanding balance of residential mortgage loans serviced for others | | 0.28 | | % | | 0.28 | | % | | 0.29 | | % |\n| Weighted average interest rate on mortgage loans serviced for others | | 4.00 | | | | 4.03 | | | | 4.12 | | |\n\n","source":"TFC\/10-K\/0000092230-18-000021"} {"title":"Residential Mortgage Banking Activities","text":"The sensitivity of the fair value of the residential MSRs to changes in key assumptions is included in the accompanying table:","markdown_table":"\n\n| | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | | | | | | | | | | | |\n| | | Year Ended December 31, | | | | | | | | | | |\n| (Dollars in millions) | | 2017 | | | | 2016 | | | | 2015 | | |\n| Carrying value, beginning of year | | $ | 915 | | | $ | 880 | | | $ | 844 | |\n| Additions | | 123 | | | | 146 | | | | 156 | | |\n| Change in fair value due to changes in valuation inputs or assumptions: | | | | | | | | | | | | |\n| Prepayment speeds | | (42 | | ) | | 13 | | | | 91 | | |\n| Weighted average OAS | | 46 | | | | 10 | | | | (52 | | ) |\n| Servicing costs | | 9 | | | | 2 | | | | (25 | | ) |\n| Realization of expected net servicing cash flows, passage of time and other | | (137 | | ) | | (136 | | ) | | (134 | | ) |\n| Carrying value, end of year | | $ | 914 | | | $ | 915 | | | $ | 880 | |\n| | | | | | | | | | | | | |\n| Gains (losses) on derivative financial instruments used to mitigate the income statement effect of changes in fair value | | $ | \u2014 | | | $ | 32 | | | $ | 32 | |\n\n","source":"TFC\/10-K\/0000092230-18-000021"} {"title":"Residential Mortgage Banking Activities","text":"The sensitivity calculations above are hypothetical and should not be considered to be predictive of future performance. As indicated, changes in fair value based on adverse changes in assumptions generally cannot be extrapolated because the relationship of the change in assumption to the change in fair value may not be linear. Also, in the above table, the effect of an adverse variation in a particular assumption on the fair value of the MSRs is calculated without changing any other assumption; while in reality, changes in one factor may result in changes in another, which may magnify or counteract the effect of the change.","markdown_table":"\n\n| | | | | | | | | | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | | | | | | | | | | | | | | | | | | | |\n| | | December\u00a031,\u00a02017 | | | | | | | | | | December\u00a031,\u00a02016 | | | | | | | | |\n| | | Range | | | | | | Weighted Average | | | | Range | | | | | | Weighted Average | | |\n| (Dollars in millions) | | Min | | | Max | | | | Min | | | Max | | |\n| Prepayment speed | | 7.1 | % | | 10.1 | % | | 9.1 | | % | | 7.5 | % | | 8.4 | % | | 8.1 | | % |\n| Effect on fair value of a 10% increase | | | | | | | | $ | (31 | ) | | | | | | | | $ | (28 | ) |\n| Effect on fair value of a 20% increase | | | | | | | | (60 | | ) | | | | | | | | (54 | | ) |\n| | | | | | | | | | | | | | | | | | | | | |\n| OAS | | 8.4 | % | | 8.9 | % | | 8.5 | | % | | 9.8 | % | | 10.2 | % | | 10.0 | | % |\n| Effect on fair value of a 10% increase | | | | | | | | $ | (28 | ) | | | | | | | | $ | (33 | ) |\n| Effect on fair value of a 20% increase | | | | | | | | (54 | | ) | | | | | | | | (64 | | ) |\n| | | | | | | | | | | | | | | | | | | | | |\n| Composition of loans serviced for others: | | | | | | | | | | | | | | | | | | | | |\n| Fixed-rate residential mortgage loans | | | | | | | | 99.1 | | % | | | | | | | | 99.1 | | % |\n| Adjustable-rate residential mortgage loans | | | | | | | | 0.9 | | | | | | | | | | 0.9 | | |\n| Total | | | | | | | | 100.0 | | % | | | | | | | | 100.0 | | % |\n| | | | | | | | | | | | | | | | | | | | | |\n| Weighted average life | | | | | | | | 6.4 years | | | | | | | | | | 7.0 years | | |\n\n","source":"TFC\/10-K\/0000092230-18-000021"} {"title":"NOTE 8. Long-Term Debt","text":"(1)FHLB advances had a weighted average maturity of 3.8 years at December\u00a031,\u00a02017.The effective rates above reflect the impact of hedges and issuance costs. Subordinated notes with a remaining maturity of one year or greater qualify under the risk-based capital guidelines as Tier 2 supplementary capital, subject to certain limitations.During 2017, BB&T terminated FHLB advances totaling $2.9 billion of par value, which resulted in a pre-tax loss on early extinguishment of debt totaling $392 million. During 2015, BB&T terminated FHLB advances totaling $931 million, which resulted in a pre-tax loss on early extinguishment of debt totaling $172 million.The following table presents future debt maturities:","markdown_table":"\n\n| | | | | | | | | | | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | | | | | | | | | | | | | | | | | | | | |\n| | | December\u00a031, 2017 | | | | | | | | | | | | | | | | | December\u00a031, 2016 | | |\n| | | | | | | Stated Rate | | | | | | Effective Rate | | | Carrying | | | | Carrying | | |\n| (Dollars in millions) | | Maturity | | | | Min | | | Max | | | | Amount | | | | Amount | | |\n| BB&T Corporation: | | | | | | | | | | | | | | | | | | | | | |\n| Fixed rate senior notes | | 2018 | to | 2024 | | 2.05 | % | | 6.85 | % | | 2.89 | % | | $ | 8,562 | | | $ | 7,600 | |\n| Floating rate senior notes | | 2018 | | 2022 | | 1.60 | | | 2.45 | | | 2.13 | | | 2,547 | | | | 1,898 | | |\n| Fixed rate subordinated notes | | 2019 | | 2022 | | 3.95 | | | 5.25 | | | 1.98 | | | 933 | | | | 1,338 | | |\n| Branch Bank: | | | | | | | | | | | | | | | | | | | | | |\n| Fixed rate senior notes | | 2018 | | 2022 | | 1.45 | | | 2.85 | | | 2.56 | | | 5,653 | | | | 4,209 | | |\n| Floating rate senior notes | | 2019 | | 2020 | | 1.74 | | | 1.91 | | | 2.10 | | | 1,149 | | | | 250 | | |\n| Fixed rate subordinated notes | | 2025 | | 2026 | | 3.63 | | | 3.80 | | | 3.58 | | | 2,119 | | | | 2,138 | | |\n| Floating rate subordinated notes | | | | | | | | | | | | | | | \u2014 | | | | 262 | | |\n| FHLB advances (1) | | 2018 | | 2034 | | \u2014 | | | 5.50 | | | 1.49 | | | 2,480 | | | | 4,118 | | |\n| Other long-term debt | | | | | | | | | | | | | | | 205 | | | | 152 | | |\n| Total long-term debt | | | | | | | | | | | | | | | $ | 23,648 | | | $ | 21,965 | |\n\n","source":"TFC\/10-K\/0000092230-18-000021"} {"title":"Preferred Stock","text":"Dividends on the preferred stock, if declared, accrue and are payable quarterly, in arrears. For each issuance, BB&T issued depositary shares, each of which represents a fractional ownership interest in a share of the Company\u2019s preferred stock. The preferred stock has no stated maturity and redemption is solely at the option of the Company in whole, but not in part, upon the occurrence of a regulatory capital treatment event, as defined. In addition, the preferred stock may be redeemed in whole or in part, on any dividend payment date after five years from the date of issuance. Under current rules, any redemption of the preferred stock is subject to prior approval of the FRB. The preferred stock is not subject to any sinking fund or other obligations of the Company.","markdown_table":"\n\n| | | | | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | | | | | | | | | | | | | | |\n| Preferred Stock Issue | | Issuance Date | | Earliest Redemption Date | | Liquidation Amount | | | | Carrying Amount | | | | Dividend Rate | |\n| (Dollars in millions) | | | | | |\n| Series D | | 5\/1\/2012 | | 5\/1\/2017 | | $ | 575 | | | $ | 559 | | | 5.850 | % |\n| Series E | | 7\/31\/2012 | | 8\/1\/2017 | | 1,150 | | | | 1,120 | | | | 5.625 | |\n| Series F | | 10\/31\/2012 | | 11\/1\/2017 | | 450 | | | | 437 | | | | 5.200 | |\n| Series G | | 5\/1\/2013 | | 6\/1\/2018 | | 500 | | | | 487 | | | | 5.200 | |\n| Series H | | 3\/9\/2016 | | 6\/1\/2021 | | 465 | | | | 450 | | | | 5.625 | |\n| Total | | | | | | $ | 3,140 | | | $ | 3,053 | | | | |\n\n","source":"TFC\/10-K\/0000092230-18-000021"} {"title":"Equity-Based Compensation Plans","text":"The fair value of RSUs and PSUs is based on the common stock price on the grant date less the present value of expected dividends that will be foregone during the vesting period. Substantially all awards are granted in February of each year. Grants to non-executive employees primarily consist of RSUs.A summary of selected data related to equity-based compensation costs follows:","markdown_table":"\n\n| | | | | |\n| --- | --- | --- | --- | --- |\n| | | | | |\n| | | December\u00a031,\u00a02017 | | |\n| Shares available for future grants (in thousands) | | 19,408 | | |\n| Vesting period, minimum | | 1.0 | | years |\n| Vesting period, maximum | | 5.0 | | |\n| Option term | | 10.0 | | |\n\n","source":"TFC\/10-K\/0000092230-18-000021"} {"title":"Equity-Based Compensation Plans","text":"The following table presents the activity during 2017 related to awards of RSUs, PSUs and restricted shares:","markdown_table":"\n\n| | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | | | | | | | | | | | |\n| | | As of \/ For the Year Ended December 31, | | | | | | | | | | |\n| (Dollars in millions) | | 2017 | | | | 2016 | | | | 2015 | | |\n| Equity-based compensation expense | | $ | 132 | | | $ | 115 | | | $ | 106 | |\n| Income tax benefit from equity-based compensation expense | | 34 | | | | 43 | | | | 40 | | |\n| Intrinsic value of options exercised, and RSUs and PSUs that vested during the year | | 261 | | | | 159 | | | | 170 | | |\n| Grant date fair value of equity-based awards that vested during the year | | 116 | | | | 98 | | | | 115 | | |\n| Unrecognized compensation cost related to equity-based awards | | 132 | | | | 109 | | | | 103 | | |\n| Weighted-average life over which compensation cost is expected to be recognized (years) | | 2.4 | | | | 2.3 | | | | 2.2 | | |\n\n","source":"TFC\/10-K\/0000092230-18-000021"} {"title":"NOTE 10. AOCI","text":"(1)Amounts related to unrecognized net pension and postretirement costs are included in personnel expense, amounts related to unrealized net gains (losses) on cash flow hedges are included in net interest income, amounts related to unrealized net gains (losses) on AFS securities are included in net interest income or securities gains\/losses when realized, amounts related to FDIC's share of unrealized gains (losses) on AFS securities are included in FDIC loss share income, net and amounts related to other, net are primarily included in net interest income in the Consolidated Statements of Income.","markdown_table":"\n\n| | | | | | | | | | | | | | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | | | | | | | | | | | | | | | | | | | | | | | |\n| (Dollars in millions) | | Unrecognized Net Pension and Postretirement Costs | | | | Unrealized Net Gains (Losses) on Cash Flow Hedges | | | | Unrealized Net Gains (Losses) on AFS Securities | | | | FDIC's Share of Unrealized (Gains) Losses on AFS Securities | | | | Other, net | | | | Total | | |\n| AOCI balance, January 1, 2015 | | $ | (626 | ) | | $ | (54 | ) | | $ | 152 | | | $ | (207 | ) | | $ | (16 | ) | | $ | (751 | ) |\n| OCI before reclassifications, net of tax | | (139 | | ) | | (81 | | ) | | (206 | | ) | | 19 | | | | (9 | | ) | | (416 | | ) |\n| Amounts reclassified from AOCI: | | | | | | | | | | | | | | | | | | | | | | | | |\n| Before tax (1) | | 67 | | | | 83 | | | | 32 | | | | 31 | | | | 9 | | | | 222 | | |\n| Tax effect | | 25 | | | | 31 | | | | 12 | | | | 12 | | | | 3 | | | | 83 | | |\n| Amounts reclassified, net of tax | | 42 | | | | 52 | | | | 20 | | | | 19 | | | | 6 | | | | 139 | | |\n| Total OCI, net of tax | | (97 | | ) | | (29 | | ) | | (186 | | ) | | 38 | | | | (3 | | ) | | (277 | | ) |\n| AOCI balance, December 31, 2015 | | (723 | | ) | | (83 | | ) | | (34 | | ) | | (169 | | ) | | (19 | | ) | | (1,028 | | ) |\n| OCI before reclassifications, net of tax | | (91 | | ) | | (16 | | ) | | (201 | | ) | | 148 | | | | 1 | | | | (159 | | ) |\n| Amounts reclassified from AOCI: | | | | | | | | | | | | | | | | | | | | | | | | |\n| Before tax (1) | | 80 | | | | 11 | | | | (39 | | ) | | 33 | | | | 1 | | | | 86 | | |\n| Tax effect | | 30 | | | | 4 | | | | (15 | | ) | | 12 | | | | \u2014 | | | | 31 | | |\n| Amounts reclassified, net of tax | | 50 | | | | 7 | | | | (24 | | ) | | 21 | | | | 1 | | | | 55 | | |\n| Total OCI, net of tax | | (41 | | ) | | (9 | | ) | | (225 | | ) | | 169 | | | | 2 | | | | (104 | | ) |\n| AOCI balance, December 31, 2016 | | (764 | | ) | | (92 | | ) | | (259 | | ) | | \u2014 | | | | (17 | | ) | | (1,132 | | ) |\n| OCI before reclassifications, net of tax | | (129 | | ) | | 7 | | | | (23 | | ) | | \u2014 | | | | 5 | | | | (140 | | ) |\n| Amounts reclassified from AOCI: | | | | | | | | | | | | | | | | | | | | | | | | |\n| Before tax (1) | | 72 | | | | 15 | | | | (7 | | ) | | \u2014 | | | | \u2014 | | | | 80 | | |\n| Tax effect | | 27 | | | | 4 | | | | (3 | | ) | | \u2014 | | | | \u2014 | | | | 28 | | |\n| Amounts reclassified, net of tax | | 45 | | | | 11 | | | | (4 | | ) | | \u2014 | | | | \u2014 | | | | 52 | | |\n| Total OCI, net of tax | | (84 | | ) | | 18 | | | | (27 | | ) | | \u2014 | | | | 5 | | | | (88 | | ) |\n| Reclassification of certain tax effects | | (156 | | ) | | (18 | | ) | | (70 | | ) | | \u2014 | | | | (3 | | ) | | (247 | | ) |\n| AOCI balance, December 31, 2017 | | $ | (1,004 | ) | | $ | (92 | ) | | $ | (356 | ) | | $ | \u2014 | | | $ | (15 | ) | | $ | (1,467 | ) |\n\n","source":"TFC\/10-K\/0000092230-18-000021"} {"title":"NOTE 11. Income Taxes","text":"The reasons for the difference between the provision for income taxes and the amount computed by applying the statutory Federal income tax rate to income before income taxes were as follows:","markdown_table":"\n\n| | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | | | | | | | | | | | |\n| | | Year Ended December 31, | | | | | | | | | | |\n| (Dollars in millions) | | 2017 | | | | 2016 | | | | 2015 | | |\n| Current expense: | | | | | | | | | | | | |\n| Federal | | $ | 539 | | | $ | 959 | | | $ | 585 | |\n| State | | 80 | | | | 97 | | | | 99 | | |\n| Total current expense | | 619 | | | | 1,056 | | | | 684 | | |\n| Deferred expense: | | | | | | | | | | | | |\n| Federal | | 253 | | | | (14 | | ) | | 99 | | |\n| State | | 39 | | | | 16 | | | | 11 | | |\n| Total deferred expense | | 292 | | | | 2 | | | | 110 | | |\n| Provision for income taxes | | $ | 911 | | | $ | 1,058 | | | $ | 794 | |\n\n","source":"TFC\/10-K\/0000092230-18-000021"} {"title":"NOTE 11. Income Taxes","text":"The Tax Cuts and Jobs Act was signed into law December 22, 2017. The net tax benefit recognized as a result of the revaluation of deferred taxes and investment in affordable housing projects is presented as Federal tax reform impact in the above table. The tax effects of temporary differences that gave rise to deferred tax assets and liabilities are reflected in the table below:","markdown_table":"\n\n| | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | | | | | | | | | | | |\n| | | Year Ended December 31, | | | | | | | | | | |\n| (Dollars in millions) | | 2017 | | | | 2016 | | | | 2015 | | |\n| Federal income taxes at statutory rate of 35% | | $ | 1,164 | | | $ | 1,225 | | | $ | 1,021 | |\n| Increase (decrease) in provision for income taxes as a result of: | | | | | | | | | | | | |\n| State income taxes, net of federal tax benefit | | 77 | | | | 73 | | | | 72 | | |\n| Affordable housing projects proportional amortization | | 236 | | | | 205 | | | | 181 | | |\n| Affordable housing projects tax credits and other tax benefits | | (319 | | ) | | (279 | | ) | | (249 | | ) |\n| Tax exempt income | | (139 | | ) | | (151 | | ) | | (129 | | ) |\n| Federal tax reform impact | | (43 | | ) | | \u2014 | | | | \u2014 | | |\n| Excess tax benefits for equity-based compensation | | (52 | | ) | | \u2014 | | | | \u2014 | | |\n| Adjustments for uncertain tax positions | | \u2014 | | | | (6 | | ) | | (107 | | ) |\n| Other, net | | (13 | | ) | | (9 | | ) | | 5 | | |\n| Provision for income taxes | | $ | 911 | | | $ | 1,058 | | | $ | 794 | |\n| Effective income tax rate | | 27.4 | | % | | 30.2 | | % | | 27.2 | | % |\n\n","source":"TFC\/10-K\/0000092230-18-000021"} {"title":"NOTE 11. Income Taxes","text":"On a periodic basis, BB&T evaluates its income tax positions based on tax laws and regulations and financial reporting considerations, and records adjustments as appropriate. This evaluation takes into consideration the status of current taxing authorities\u2019 examinations of BB&T\u2019s tax returns, recent positions taken by the taxing authorities on similar transactions and the overall tax environment in relation to tax-advantaged transactions. The following table presents changes in unrecognized tax benefits:","markdown_table":"\n\n| | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | | | | | | | |\n| | | December 31, | | | | | | |\n| (Dollars in millions) | | 2017 | | | | 2016 | | |\n| Deferred tax assets: | | | | | | | | |\n| ALLL | | $ | 359 | | | $ | 564 | |\n| Postretirement plans | | 311 | | | | 451 | | |\n| Net unrealized loss on AFS securities | | 112 | | | | 155 | | |\n| Equity-based compensation | | 66 | | | | 124 | | |\n| Reserves and expense accruals | | 114 | | | | 238 | | |\n| Partnerships | | 70 | | | | 116 | | |\n| Other | | 160 | | | | 317 | | |\n| Total deferred tax assets | | 1,192 | | | | 1,965 | | |\n| Deferred tax liabilities: | | | | | | | | |\n| Prepaid pension plan expense | | 436 | | | | 558 | | |\n| MSRs | | 234 | | | | 358 | | |\n| Lease financing | | 366 | | | | 587 | | |\n| Loan fees and expenses | | 114 | | | | 103 | | |\n| Identifiable intangible assets | | 163 | | | | 224 | | |\n| Other | | 31 | | | | 45 | | |\n| Total deferred tax liabilities | | 1,344 | | | | 1,875 | | |\n| Net deferred tax asset (liability) | | $ | (152 | ) | | $ | 90 | |\n\n","source":"TFC\/10-K\/0000092230-18-000021"} {"title":"NOTE 11. Income Taxes","text":"During 2015, the U.S. Court of Appeals for the Federal Circuit overturned a portion of an earlier ruling pertaining to the disallowance of foreign tax credits and other deductions claimed by a subsidiary in connection with a financing transaction, which resulted in the recognition of a $107 million income tax benefit. During 2016, the U.S. Supreme Court declined to hear the case, which preserved the earlier ruling and effectively concluded this matter.The Company had immaterial amounts accrued for tax-related interest and penalties at December\u00a031,\u00a02017 and 2016. The amount of net interest and penalties related to unrecognized tax benefits recognized in the Consolidated Statements of Income was immaterial for all periods presented. The IRS has completed its Federal income tax examinations of BB&T through 2013. Various years remain subject to examination by state taxing authorities.","markdown_table":"\n\n| | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | | | | | | | | | | | |\n| | | As of\/ For the Year Ended December 31, | | | | | | | | | | |\n| (Dollars in millions) | | 2017 | | | | 2016 | | | | 2015 | | |\n| Beginning balance of unrecognized tax benefits | | $ | 1 | | | $ | 426 | | | $ | 503 | |\n| Additions based on tax positions related to current year | | \u2014 | | | | \u2014 | | | | \u2014 | | |\n| Additions (reductions) for tax positions of prior years | | \u2014 | | | | (5 | | ) | | (76 | | ) |\n| Settlements | | \u2014 | | | | (420 | | ) | | (1 | | ) |\n| Lapse of statute of limitations | | \u2014 | | | | \u2014 | | | | (1 | | ) |\n| Unrecognized deferred tax benefits from acquisitions | | \u2014 | | | | \u2014 | | | | 1 | | |\n| Ending balance of unrecognized tax benefits | | $ | 1 | | | $ | 1 | | | $ | 426 | |\n| | | | | | | | | | | | | |\n| Unrecognized tax benefits that would have impacted effective rate if recognized | | | | | | | | | | | | |\n| Federal | | $ | \u2014 | | | $ | \u2014 | | | $ | 422 | |\n| State | | 1 | | | | 1 | | | | 3 | | |\n\n","source":"TFC\/10-K\/0000092230-18-000021"} {"title":"Defined Benefit Retirement Plans","text":"The weighted average expected long-term rate of return on plan assets represents the average rate of return expected to be earned on plan assets over the period the benefits included in the benefit obligation are to be paid. In developing the expected rate of return, BB&T considers long-term compound annualized returns of historical market data for each asset category, as well as historical actual returns on the plan assets. Using this reference information, the Company develops forward-looking return expectations for each asset category and a weighted average expected long-term rate of return for the plan based on target asset allocations contained in BB&T's Investment Policy Statement. For 2018, the expected rate of return on plan assets is 7.0%.Financial data relative to qualified and nonqualified defined benefit pension plans is summarized in the following tables for the years indicated. On the Consolidated Balance Sheets, the qualified pension plan prepaid asset is recorded as a component of other assets and the nonqualified pension plans accrued liability is recorded as a component of other liabilities. The data is calculated using an actuarial measurement date of December 31.","markdown_table":"\n\n| | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | | | | | | | | |\n| | | December 31, | | | | | | | |\n| | | 2017 | | | 2016 | | | 2015 | |\n| Weighted average assumed discount rate | | 4.43 | % | | 4.68 | % | | 4.27 | % |\n| Weighted average expected long-term rate of return on plan assets | | 7.00 | | | 7.00 | | | 7.50 | |\n| Assumed long-term rate of annual compensation increases | | 4.50 | | | 4.50 | | | 4.50 | |\n\n","source":"TFC\/10-K\/0000092230-18-000021"} {"title":"Defined Benefit Retirement Plans","text":"The following actuarial assumptions were used to determine benefit obligations:","markdown_table":"\n\n| | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | | | | | | | | | | | |\n| | | Year Ended December 31, | | | | | | | | | | |\n| (Dollars in millions) | | 2017 | | | | 2016 | | | | 2015 | | |\n| Net Periodic Pension Cost: | | | | | | | | | | | | |\n| Service cost | | $ | 200 | | | $ | 186 | | | $ | 176 | |\n| Interest cost | | 192 | | | | 181 | | | | 157 | | |\n| Estimated return on plan assets | | (372 | | ) | | (326 | | ) | | (327 | | ) |\n| Net amortization and other | | 75 | | | | 80 | | | | 67 | | |\n| Net periodic benefit cost | | 95 | | | | 121 | | | | 73 | | |\n| Pre-Tax Amounts Recognized in OCI: | | | | | | | | | | | | |\n| Prior service credit (cost) | | 30 | | | | \u2014 | | | | \u2014 | | |\n| Net actuarial loss (gain) | | 137 | | | | 138 | | | | 230 | | |\n| Net amortization | | (75 | | ) | | (80 | | ) | | (67 | | ) |\n| Net amount recognized in OCI | | 92 | | | | 58 | | | | 163 | | |\n| Total net periodic pension costs (income) recognized in total comprehensive income, pre-tax | | $ | 187 | | | $ | 179 | | | $ | 236 | |\n\n","source":"TFC\/10-K\/0000092230-18-000021"} {"title":"Defined Benefit Retirement Plans","text":"Activity in the projected benefit obligation is presented in the following table:","markdown_table":"\n\n| | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- |\n| | | | | | | |\n| | | December 31, | | | | |\n| | | 2017 | | | 2016 | |\n| Weighted average assumed discount rate | | 3.79 | % | | 4.43 | % |\n| Assumed rate of annual compensation increases | | 4.50 | | | 4.50 | |\n\n","source":"TFC\/10-K\/0000092230-18-000021"} {"title":"Defined Benefit Retirement Plans","text":"Effective December 31, 2017, the qualified defined benefit plan was amended and a portion of the accrued benefits of participants in the nonqualified plan were shifted to the qualified plan. Affected associates continue to participate in the nonqualified plan for benefits earned in 2017 and later. In conjunction with this shift, a minimum benefit was established under the qualified plan. Activity in plan assets is presented in the following table:","markdown_table":"\n\n| | | | | | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | | | | | | | | | | | | | | | |\n| | | Qualified Plan | | | | | | | | Nonqualified Plans | | | | | | |\n| | | Year Ended December 31, | | | | | | | | Year Ended December 31, | | | | | | |\n| (Dollars in millions) | | 2017 | | | | 2016 | | | | 2017 | | | | 2016 | | |\n| Projected benefit obligation, beginning of year | | $ | 3,939 | | | $ | 3,473 | | | $ | 426 | | | $ | 392 | |\n| Service cost | | 188 | | | | 174 | | | | 12 | | | | 12 | | |\n| Interest cost | | 173 | | | | 163 | | | | 19 | | | | 18 | | |\n| Actuarial (gain) loss | | 576 | | | | 152 | | | | 77 | | | | 15 | | |\n| Benefits paid | | (102 | | ) | | (94 | | ) | | (12 | | ) | | (11 | | ) |\n| Plan amendments | | 165 | | | | \u2014 | | | | (135 | | ) | | \u2014 | | |\n| Acquisitions | | \u2014 | | | | 71 | | | | \u2014 | | | | \u2014 | | |\n| Projected benefit obligation, end of year | | $ | 4,939 | | | $ | 3,939 | | | $ | 387 | | | $ | 426 | |\n| Accumulated benefit obligation, end of year | | $ | 4,198 | | | $ | 3,403 | | | $ | 288 | | | $ | 363 | |\n\n","source":"TFC\/10-K\/0000092230-18-000021"} {"title":"Defined Benefit Retirement Plans","text":"The following are the pre-tax amounts recognized in AOCI:","markdown_table":"\n\n| | | | | | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | | | | | | | | | | | | | | | |\n| | | Qualified Plan | | | | | | | | Nonqualified Plans | | | | | | |\n| | | Year Ended December 31, | | | | | | | | Year Ended December 31, | | | | | | |\n| (Dollars in millions) | | 2017 | | | | 2016 | | | | 2017 | | | | 2016 | | |\n| Fair value of plan assets, beginning of year | | $ | 5,044 | | | $ | 4,369 | | | $ | \u2014 | | | $ | \u2014 | |\n| Actual return on plan assets | | 888 | | | | 356 | | | | \u2014 | | | | \u2014 | | |\n| Employer contributions | | 479 | | | | 360 | | | | 13 | | | | 11 | | |\n| Benefits paid | | (102 | | ) | | (94 | | ) | | (13 | | ) | | (11 | | ) |\n| Acquisitions | | \u2014 | | | | 53 | | | | \u2014 | | | | \u2014 | | |\n| Fair value of plan assets, end of year | | $ | 6,309 | | | $ | 5,044 | | | $ | \u2014 | | | $ | \u2014 | |\n| Funded status at end of year | | $ | 1,370 | | | $ | 1,105 | | | $ | (387 | ) | | $ | (426 | ) |\n\n","source":"TFC\/10-K\/0000092230-18-000021"} {"title":"Defined Benefit Retirement Plans","text":"The following table presents the amount expected to be amortized from AOCI into net periodic pension cost during 2018:","markdown_table":"\n\n| | | | | | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | | | | | | | | | | | | | | | |\n| | | Qualified Plan | | | | | | | | Nonqualified Plans | | | | | | |\n| | | Year Ended December 31, | | | | | | | | Year Ended December 31, | | | | | | |\n| (Dollars in millions) | | 2017 | | | | 2016 | | | | 2017 | | | | 2016 | | |\n| Prior service credit (cost) | | $ | (165 | ) | | $ | \u2014 | | | $ | 134 | | | $ | (1 | ) |\n| Net actuarial loss | | (1,092 | | ) | | (1,095 | | ) | | (198 | | ) | | (135 | | ) |\n| Net amount recognized | | $ | (1,257 | ) | | $ | (1,095 | ) | | $ | (64 | ) | | $ | (136 | ) |\n\n","source":"TFC\/10-K\/0000092230-18-000021"} {"title":"Defined Benefit Retirement Plans","text":"BB&T makes contributions to the qualified pension plan in amounts between the minimum required for funding and the maximum amount deductible for federal income tax purposes. BB&T made discretionary contributions of $144 million during the first quarter of 2018. Management may make additional contributions in 2018. For the nonqualified plans, the employer contributions are based on benefit payments.The following table reflects the estimated benefit payments for the periods presented:","markdown_table":"\n\n| | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | | | | | | | |\n| (Dollars in millions) | | Qualified Plan | | | | Nonqualified Plans | | |\n| Net actuarial loss | | $ | (49 | ) | | $ | (22 | ) |\n| Prior service credit (cost) | | (25 | | ) | | $ | 19 | |\n| Net amount expected to be amortized in 2018 | | $ | (74 | ) | | $ | (3 | ) |\n\n","source":"TFC\/10-K\/0000092230-18-000021"} {"title":"Defined Benefit Retirement Plans","text":"BB&T's primary total return objective is to achieve returns that, over the long term, will fund retirement liabilities and provide for the desired plan benefits in a manner that satisfies the fiduciary requirements of the Employee Retirement Income Security Act of 1974. The plan assets have a long-term time horizon that runs concurrent with the average life expectancy of the participants. As such, the Plan can assume a time horizon that extends well beyond a full market cycle, and can assume an above-average level of risk, as measured by the standard deviation of annual return. It is expected, however, that both professional investment management and sufficient portfolio diversification will smooth volatility and help to generate a reasonable consistency of return. The investments are broadly diversified among economic sector, industry, quality and size in order to reduce risk and to produce incremental return. Within approved guidelines and restrictions, investment managers have wide discretion over the timing and selection of individual investments.BB&T periodically reviews its asset allocation and investment policy and makes changes to its target asset allocation. BB&T has established guidelines within each asset category to ensure the appropriate balance of risk and reward. For the year ended December\u00a031,\u00a02017, the target asset allocations for the plan assets included a range of 30% to 50% for U.S. equity securities, 11% to 18% for international equity securities, 35% to 53% for fixed income securities, and 0% to 14% for alternative investments, which include real estate, hedge funds and private equities. The plan may hold up to 10% of its assets in BB&T common stock.The fair values of certain pension plan assets by asset category are reflected in the following table:","markdown_table":"\n\n| | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | | | | | | | |\n| (Dollars in millions) | | Qualified Plan | | | | Nonqualified Plans | | |\n| 2018 | | $ | 114 | | | $ | 15 | |\n| 2019 | | 125 | | | | 15 | | |\n| 2020 | | 137 | | | | 16 | | |\n| 2021 | | 150 | | | | 16 | | |\n| 2022 | | 164 | | | | 17 | | |\n| 2023-2027 | | 1,042 | | | | 101 | | |\n\n","source":"TFC\/10-K\/0000092230-18-000021"} {"title":"Defined Benefit Retirement Plans","text":"International equity securities include a common\/commingled fund that consists of assets from several accounts, pooled together, to reduce management and administration costs. Investments measured at fair value using the net asset value per share or equivalent as a practical expedient are not required to be classified in the fair value hierarchy. The pension plan held alternative investments valued using net asset values totaling $105 million and $199 million at December\u00a031,\u00a02017 and 2016, respectively.","markdown_table":"\n\n| | | | | | | | | | | | | | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | | | | | | | | | | | | | | | | | | | | | | | |\n| | | December\u00a031,\u00a02017 | | | | | | | | | | | | December\u00a031,\u00a02016 | | | | | | | | | | |\n| (Dollars in millions) | | Total | | | | Level 1 | | | | Level 2 | | | | Total | | | | Level 1 | | | | Level 2 | | |\n| Cash and cash-equivalents | | $ | 67 | | | $ | 67 | | | $ | \u2014 | | | $ | 179 | | | $ | 179 | | | $ | \u2014 | |\n| U.S. equity securities | | 2,503 | | | | 1,333 | | | | 1,170 | | | | 1,892 | | | | 1,018 | | | | 874 | | |\n| International equity securities | | 1,130 | | | | 195 | | | | 935 | | | | 839 | | | | 165 | | | | 674 | | |\n| Fixed income securities | | 2,452 | | | | 10 | | | | 2,442 | | | | 1,914 | | | | 10 | | | | 1,904 | | |\n| Total | | $ | 6,152 | | | $ | 1,605 | | | $ | 4,547 | | | $ | 4,824 | | | $ | 1,372 | | | $ | 3,452 | |\n\n","source":"TFC\/10-K\/0000092230-18-000021"} {"title":"NOTE 13. Commitments and Contingencies","text":"Letters of credit and financial guarantees written are unconditional commitments issued by BB&T to guarantee the performance of a customer to a third party. These guarantees are primarily issued to support borrowing arrangements, including commercial paper issuance, bond financing and similar transactions, the majority of which are to tax exempt entities. The credit risk involved in the issuance of these guarantees is essentially the same as that involved in extending loans to clients and as such, the instruments are collateralized when necessary.BB&T invests in certain affordable housing projects throughout its market area as a means of supporting local communities. BB&T receives tax credits related to these investments. BB&T typically acts as a limited partner in these investments and does not exert control over the operating or financial policies of the partnerships. BB&T typically provides financing during the construction and development of the properties; however, permanent financing is generally obtained from independent third parties upon completion of a project. Tax credits are subject to recapture by taxing authorities based on compliance features required to be met at the project level. BB&T\u2019s maximum potential exposure to losses relative to investments in VIEs 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 and future funding commitments to private equity and certain other equity method investments. The majority of these investments are private equity funds that are consolidated into BB&T's financial statements. The risk exposure relating to such commitments is generally limited to the amount of investments and future funding commitments made.BB&T has sold certain mortgage-related loans that contain recourse provisions. These provisions generally require BB&T to reimburse the investor for a share of any loss that is incurred after the disposal of the property. BB&T also issues standard representations and warranties related to mortgage loan sales to GSEs. Refer to \"Note 6. Loan Servicing\" for additional disclosures related to these exposures.In the ordinary course of business, BB&T indemnifies its officers and directors to the fullest extent permitted by law against liabilities arising from pending litigation. BB&T also issues standard representations and warranties in underwriting agreements, merger and acquisition agreements, loan sales, brokerage activities and other similar arrangements. Counterparties in many of these indemnification arrangements provide similar indemnifications to BB&T. Although these agreements often do not specify limitations, BB&T does not believe that any payments related to these guarantees would materially change the financial position or results of operations of BB&T.","markdown_table":"\n\n| | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | | | | | | | |\n| | | December\u00a031, | | | | | | |\n| (Dollars in millions) | | 2017 | | | | 2016 | | |\n| Letters of credit | | $ | 2,466 | | | $ | 2,786 | |\n| Carrying amount of the liability for letters of credit | | 21 | | | | 27 | | |\n| Investments in affordable housing projects: | | | | | | | | |\n| Carrying amount | | 1,948 | | | | 1,719 | | |\n| Amount of future funding commitments included in carrying amount | | 928 | | | | 738 | | |\n| Lending exposure | | 561 | | | | 495 | | |\n| Tax credits subject to recapture | | 471 | | | | 413 | | |\n| Private equity investments | | 471 | | | | 417 | | |\n| Future funding commitments to private equity investments | | 143 | | | | 199 | | |\n\n","source":"TFC\/10-K\/0000092230-18-000021"} {"title":"NOTE 14. Regulatory Requirements and Other Restrictions","text":"As an approved seller\/servicer, Branch Bank is required to maintain minimum levels of capital, as specified by various agencies, including the U.S. Department of Housing and Urban Development, GNMA, FHLMC and FNMA. At December\u00a031,\u00a02017 and 2016, Branch Bank\u2019s capital was above all required levels.","markdown_table":"\n\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | | December\u00a031,\u00a02017 | | | | | | | | | | | | | | | December\u00a031,\u00a02016 | | | | | | | | | | | | | |\n| | | Actual Capital | | | | | | | Capital Requirements | | | | | | | | Actual Capital | | | | | | | Capital Requirements | | | | | | |\n| (Dollars in millions) | | Ratio | | | Amount | | | | Minimum | | | | Well-Capitalized | | | | Ratio | | | Amount | | | | Minimum | | | | Well-Capitalized | | |\n| CET1 Capital: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| BB&T Corporation | | 10.2 | % | | $ | 18,051 | | | $ | 7,975 | | | $ | 11,519 | | | 10.2 | % | | $ | 18,050 | | | $ | 7,926 | | | $ | 11,449 | |\n| Branch Bank | | 11.3 | | | 19,480 | | | | 7,752 | | | | 11,197 | | | | 11.5 | | | 19,839 | | | | 7,730 | | | | 11,166 | | |\n| Tier 1 Capital: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| BB&T Corporation | | 11.9 | | | 21,102 | | | | 10,633 | | | | 14,177 | | | | 12.0 | | | 21,102 | | | | 10,568 | | | | 14,091 | | |\n| Branch Bank | | 11.3 | | | 19,480 | | | | 10,336 | | | | 13,781 | | | | 11.5 | | | 19,839 | | | | 10,307 | | | | 13,743 | | |\n| Total Capital: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| BB&T Corporation | | 13.9 | | | 24,653 | | | | 14,177 | | | | 17,722 | | | | 14.1 | | | 24,872 | | | | 14,091 | | | | 17,614 | | |\n| Branch Bank | | 13.3 | | | 22,915 | | | | 13,781 | | | | 17,226 | | | | 13.6 | | | 23,289 | | | | 13,743 | | | | 17,179 | | |\n| Leverage Capital: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| BB&T Corporation | | 9.9 | | | 21,102 | | | | 8,567 | | | | 10,708 | | | | 10.0 | | | 21,102 | | | | 8,460 | | | | 10,576 | | |\n| Branch Bank | | 9.4 | | | 19,480 | | | | 8,315 | | | | 10,394 | | | | 9.6 | | | 19,839 | | | | 8,249 | | | | 10,311 | | |\n\n","source":"TFC\/10-K\/0000092230-18-000021"} {"title":"NOTE 15. Parent Company Financial Statements","text":"The transfer of funds in the form of dividends, loans or advances from bank subsidiaries to the Parent Company is restricted. Federal law requires loans to the Parent Company or its affiliates to be secured and at market terms and generally limits loans to the Parent Company or an individual affiliate to 10% of Branch Bank\u2019s unimpaired capital and surplus. In the aggregate, loans to the Parent Company and all affiliates cannot exceed 20% of the bank\u2019s unimpaired capital and surplus.Dividend payments to the Parent Company by Branch Bank are subject to regulatory review and statutory limitations and, in some instances, regulatory approval. In general, dividends from Branch Bank to the Parent Company are limited by rules which compare dividends to net income for regulatory-defined periods. Furthermore, dividends are restricted by regulatory minimum capital constraints.","markdown_table":"\n\n| | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | | | | | | | | | | | |\n| Parent Company - Statements of Cash Flows | | Year Ended December 31, | | | | | | | | | | |\n| (Dollars in millions) | | 2017 | | | | 2016 | | | | 2015 | | |\n| Cash Flows From Operating Activities: | | | | | | | | | | | | |\n| Net income | | $ | 2,415 | | | $ | 2,442 | | | $ | 2,123 | |\n| Adjustments to reconcile net income to net cash from operating activities: | | | | | | | | | | | | |\n| Equity in earnings of subsidiaries in excess of dividends from subsidiaries | | (558 | | ) | | (1,188 | | ) | | (273 | | ) |\n| Other, net | | \u2014 | | | | (14 | | ) | | 35 | | |\n| Net cash from operating activities | | 1,857 | | | | 1,240 | | | | 1,885 | | |\n| Cash Flows From Investing Activities: | | | | | | | | | | | | |\n| Proceeds from maturities, calls and paydowns of AFS securities | | 29 | | | | 27 | | | | 49 | | |\n| Purchases of AFS securities | | (29 | | ) | | (31 | | ) | | (21 | | ) |\n| Proceeds from maturities, calls and paydowns of HTM securities | | \u2014 | | | | 2 | | | | 27 | | |\n| Investment in subsidiaries | | 1,100 | | | | (85 | | ) | | 17 | | |\n| Advances to subsidiaries | | (6,958 | | ) | | (7,719 | | ) | | (7,461 | | ) |\n| Proceeds from repayment of advances to subsidiaries | | 4,671 | | | | 6,975 | | | | 6,831 | | |\n| Net cash from acquisitions and divestitures | | \u2014 | | | | (254 | | ) | | (595 | | ) |\n| Other, net | | 1 | | | | \u2014 | | | | \u2014 | | |\n| Net cash from investing activities | | (1,186 | | ) | | (1,085 | | ) | | (1,153 | | ) |\n| Cash Flows From Financing Activities: | | | | | | | | | | | | |\n| Net change in short-term borrowings | | (39 | | ) | | (60 | | ) | | 30 | | |\n| Net change in long-term debt | | 1,319 | | | | 465 | | | | (92 | | ) |\n| Repurchase of common stock | | (1,613 | | ) | | (520 | | ) | | \u2014 | | |\n| Net cash from common stock transactions in connection with equity awards | | 108 | | | | 218 | | | | 68 | | |\n| Net proceeds from preferred stock issued | | \u2014 | | | | 450 | | | | \u2014 | | |\n| Cash dividends paid on common and preferred stock | | (1,179 | | ) | | (1,092 | | ) | | (937 | | ) |\n| Other, net | | (4 | | ) | | 7 | | | | \u2014 | | |\n| Net cash from financing activities | | (1,408 | | ) | | (532 | | ) | | (931 | | ) |\n| Net Change in Cash and Cash Equivalents | | (737 | | ) | | (377 | | ) | | (199 | | ) |\n| Cash and Cash Equivalents at Beginning of Period | | 7,115 | | | | 7,492 | | | | 7,691 | | |\n| Cash and Cash Equivalents at End of Period | | $ | 6,378 | | | $ | 7,115 | | | $ | 7,492 | |\n\n","source":"TFC\/10-K\/0000092230-18-000021"} {"title":"NOTE 16. Fair Value Disclosures","text":"The following discussion focuses on the valuation techniques and significant inputs for Level 2 and Level 3 assets and liabilities.A third-party pricing service is generally utilized in determining the fair value of the securities portfolio. Management independently evaluates the fair values provided by the pricing service through comparisons to other external pricing sources, review of additional information provided by the pricing service and other third party sources for selected securities and back-testing to compare the price realized on any security sales to the daily pricing information received from the pricing service. Fair value measurements are derived from market-based pricing matrices that were developed using observable inputs that include benchmark yields, benchmark securities, reported trades, offers, bids, issuer spreads and broker quotes. As described by security type below, additional inputs may be used, or some inputs may not be applicable. In the event that market observable data was not available, which would generally occur due to the lack of an active market for a given security, the valuation of the security would be subjective and may involve substantial judgment by management.Trading securities: Trading securities include various types of debt and equity securities, primarily consisting of debt securities issued by the U.S. Treasury, GSEs, or states and political subdivisions. The valuation techniques used for these investments are more fully discussed below.U.S. Treasury securities: Treasury securities are valued using quoted prices in active over the counter markets.GSE securities and agency MBS: GSE pass-through securities are valued using market-based pricing matrices that reference observable inputs including benchmark TBA security pricing and yield curves that were estimated based on U.S. Treasury yields and certain floating rate indices. The pricing matrices for these securities may also give consideration to pool-specific data supplied directly by the GSE. GSE CMOs are valued using market-based pricing matrices that are based on observable inputs including offers, bids, reported trades, dealer quotes and market research reports, the characteristics of a specific tranche, market convention prepayment speeds and benchmark yield curves as described above.States and political subdivisions: These securities are valued using market-based pricing matrices that reference observable inputs including MSRB reported trades, issuer spreads, material event notices and benchmark yield curves.Non-agency MBS: Pricing matrices for these securities are based on observable inputs including offers, bids, reported trades, dealer quotes and market research reports, the characteristics of a specific tranche, market convention prepayment speeds and benchmark yield curves as described above. Non-agency MBS also include investments in Re-REMIC trusts that primarily hold non-agency MBS, which are valued based on broker pricing models that use baseline securities yields and tranche-level yield adjustments to discount cash flows modeled using market convention prepayment speed and default assumptions.Other securities: These securities consist primarily of mutual funds and corporate bonds. These securities are valued based on a review of quoted market prices for assets as well as through the various other inputs discussed previously.LHFS: Certain mortgage loans are originated to be sold to investors, which are carried at fair value. The fair value is primarily based on quoted market prices for securities backed by similar types of loans. The changes in fair value of these assets are largely driven by changes in interest rates subsequent to loan funding and changes in the fair value of servicing associated with the mortgage LHFS.MSRs: Residential MSRs are valued using an OAS valuation model to project cash flows over multiple interest rate scenarios, which are then discounted at risk-adjusted rates. The model considers portfolio characteristics, contractually specified servicing fees, prepayment assumptions, delinquency rates, late charges, other ancillary revenue, costs to service and other economic factors. Fair value estimates and assumptions are compared to industry surveys, recent market activity, actual portfolio experience and, when available, other observable market data. Commercial MSRs are valued using a cash flow valuation model that calculates the present value of estimated future net servicing cash flows. BB&T considers actual and expected loan prepayment rates, discount rates, servicing costs and other economic factors that are determined based on current market conditions. Derivative assets and liabilities: The fair values of derivatives are determined based on quoted market prices and internal pricing models that use market observable data. The fair values of interest rate lock commitments, which are related to mortgage loan commitments and are categorized as Level 3, are based on quoted market prices adjusted for commitments that are not expected to fund and include the value attributable to the net servicing fees.Private equity investments: Private equity investments are measured at fair value based on the investment\u2019s net asset value. In many cases there are no observable market values for these investments and therefore management must estimate the fair value based on a comparison of the operating performance of the company to multiples in the marketplace for similar entities. This analysis requires significant judgment, and actual values in a sale could differ materially from those estimated.Securities sold short: Securities sold short represent debt securities sold short that are entered into as a hedging strategy for the purposes of supporting institutional and retail client trading activities.The following table summarizes activity for Level 3 assets and liabilities:","markdown_table":"\n\n| | | | | | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | | | | | | | | | | | | | | | |\n| December\u00a031,\u00a02016 | | | | | | | | | | | | | | | | |\n| (Dollars in millions) | | Total | | | | Level 1 | | | | Level 2 | | | | Level 3 | | |\n| Assets: | | | | | | | | | | | | | | | | |\n| Trading securities | | $ | 748 | | | $ | 324 | | | $ | 424 | | | $ | \u2014 | |\n| AFS securities: | | | | | | | | | | | | | | | | |\n| U.S. Treasury | | 2,587 | | | | \u2014 | | | | 2,587 | | | | \u2014 | | |\n| GSE | | 180 | | | | \u2014 | | | | 180 | | | | \u2014 | | |\n| Agency MBS | | 21,264 | | | | \u2014 | | | | 21,264 | | | | \u2014 | | |\n| States and political subdivisions | | 2,205 | | | | \u2014 | | | | 2,205 | | | | \u2014 | | |\n| Non-agency MBS | | 679 | | | | \u2014 | | | | 172 | | | | 507 | | |\n| Other | | 11 | | | | 8 | | | | 3 | | | | \u2014 | | |\n| Total AFS securities | | 26,926 | | | | 8 | | | | 26,411 | | | | 507 | | |\n| LHFS | | 1,716 | | | | \u2014 | | | | 1,716 | | | | \u2014 | | |\n| MSRs | | 1,052 | | | | \u2014 | | | | \u2014 | | | | 1,052 | | |\n| Derivative assets: | | | | | | | | | | | | | | | | |\n| Interest rate contracts | | 814 | | | | \u2014 | | | | 807 | | | | 7 | | |\n| Foreign exchange contracts | | 8 | | | | \u2014 | | | | 8 | | | | \u2014 | | |\n| Total derivative assets | | 822 | | | | \u2014 | | | | 815 | | | | 7 | | |\n| Private equity investments | | 362 | | | | \u2014 | | | | \u2014 | | | | 362 | | |\n| Total assets | | $ | 31,626 | | | $ | 332 | | | $ | 29,366 | | | $ | 1,928 | |\n| Liabilities: | | | | | | | | | | | | | | | | |\n| Derivative liabilities: | | | | | | | | | | | | | | | | |\n| Interest rate contracts | | $ | 998 | | | $ | \u2014 | | | $ | 978 | | | $ | 20 | |\n| Foreign exchange contracts | | 5 | | | | \u2014 | | | | 5 | | | | \u2014 | | |\n| Total derivative liabilities | | 1,003 | | | | \u2014 | | | | 983 | | | | 20 | | |\n| Securities sold short | | 137 | | | | \u2014 | | | | 137 | | | | \u2014 | | |\n| Total liabilities | | $ | 1,140 | | | $ | \u2014 | | | $ | 1,120 | | | $ | 20 | |\n\n","source":"TFC\/10-K\/0000092230-18-000021"} {"title":"NOTE 16. Fair Value Disclosures","text":"(1)Amounts related to non-agency MBS are included in interest income, amounts related to MSRs and net derivatives are primarily included in mortgage banking income and amounts related to private equity investments are included in other income in the Consolidated Statements of Income.BB&T\u2019s policy is to recognize transfers between levels as of the end of a reporting period. Transfers in and out of Level 3 are shown in the preceding tables. There were no transfers between Level 1 and Level 2 during 2017, 2016 or 2015.The non-agency MBS categorized as Level 3 represent ownership interest in various tranches of Re-REMIC trusts. These securities are valued at a discount, which is unobservable in the market, to the fair value of the underlying securities owned by the trusts. The Re-REMIC tranches do not have an active market and therefore are categorized as Level 3. At December\u00a031,\u00a02017, the fair value of the Re-REMIC non-agency MBS represented a discount of 21.1% to the fair value of the underlying securities owned by the Re-REMIC trusts.The majority of private equity investments are in SBIC qualified funds, which primarily focus on equity and subordinated debt investments in privately-held middle market companies. The majority of these VIE investments are not redeemable and distributions are received as the underlying assets of the funds liquidate. The timing of distributions, which are expected to occur on various dates on an approximately ratable basis through 2026, is uncertain and dependent on various events such as recapitalizations, refinance transactions and ownership changes, among others. As of December\u00a031,\u00a02017, restrictions on the ability to sell the investments include, but are not limited to, consent of a majority member or general partner approval for transfer of ownership. BB&T\u2019s investments are spread over numerous privately-held middle market companies, and thus the sensitivity to a change in fair value for any single investment is limited. The significant unobservable inputs for these investments are EBITDA multiples that ranged from 5x to 14x, with a weighted average of 9x, at December\u00a031,\u00a02017.The following table details the fair value and UPB of LHFS that were elected to be carried at fair value:","markdown_table":"\n\n| | | | | | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | | | | | | | | | | | | | | | |\n| | | Non-agency MBS | | | | MSRs | | | | Net Derivatives | | | | Private Equity Investments | | |\n| (Dollars in millions) | | | | |\n| Balance at January 1, 2015 | | $ | 745 | | | $ | 844 | | | $ | 17 | | | $ | 329 | |\n| Total realized and unrealized gains (losses): | | | | | | | | | | | | | | | | |\n| Included in earnings (1) | | 23 | | | | 10 | | | | 81 | | | | 49 | | |\n| Included in unrealized holding gains (losses) in OCI | | (45 | | ) | | \u2014 | | | | \u2014 | | | | \u2014 | | |\n| Purchases | | \u2014 | | | | \u2014 | | | | 1 | | | | 81 | | |\n| Issuances | | \u2014 | | | | 156 | | | | 74 | | | | \u2014 | | |\n| Sales | | \u2014 | | | | \u2014 | | | | \u2014 | | | | (132 | | ) |\n| Settlements | | (97 | | ) | | (130 | | ) | | (169 | | ) | | (38 | | ) |\n| Transfers into Level 3 | | \u2014 | | | | \u2014 | | | | \u2014 | | | | \u2014 | | |\n| Transfers out of Level 3 | | \u2014 | | | | \u2014 | | | | \u2014 | | | | \u2014 | | |\n| Balance at December 31, 2015 | | 626 | | | | 880 | | | | 4 | | | | 289 | | |\n| Total realized and unrealized gains (losses): | | | | | | | | | | | | | | | | |\n| Included in earnings (1) | | 25 | | | | 63 | | | | 97 | | | | 20 | | |\n| Included in unrealized net holding gains (losses) in OCI | | (45 | | ) | | \u2014 | | | | \u2014 | | | | \u2014 | | |\n| Purchases | | \u2014 | | | | \u2014 | | | | \u2014 | | | | 106 | | |\n| Issuances | | \u2014 | | | | 146 | | | | 82 | | | | \u2014 | | |\n| Sales | | \u2014 | | | | \u2014 | | | | \u2014 | | | | (4 | | ) |\n| Settlements | | (99 | | ) | | (160 | | ) | | (196 | | ) | | (49 | | ) |\n| Transfers into Level 3 | | \u2014 | | | | \u2014 | | | | \u2014 | | | | \u2014 | | |\n| Transfers out of Level 3 | | \u2014 | | | | \u2014 | | | | \u2014 | | | | \u2014 | | |\n| Adoption of fair value option for commercial MSRs | | \u2014 | | | | 123 | | | | \u2014 | | | | \u2014 | | |\n| Balance at December 31, 2016 | | 507 | | | | 1,052 | | | | (13 | | ) | | 362 | | |\n| Total realized and unrealized gains (losses): | | | | | | | | | | | | | | | | |\n| Included in earnings (1) | | 36 | | | | 48 | | | | 38 | | | | 58 | | |\n| Included in unrealized net holding gains (losses) in OCI | | (40 | | ) | | \u2014 | | | | \u2014 | | | | \u2014 | | |\n| Purchases | | \u2014 | | | | \u2014 | | | | \u2014 | | | | 142 | | |\n| Issuances | | \u2014 | | | | 124 | | | | 43 | | | | \u2014 | | |\n| Sales | | \u2014 | | | | \u2014 | | | | \u2014 | | | | (119 | | ) |\n| Settlements | | (71 | | ) | | (168 | | ) | | (65 | | ) | | (26 | | ) |\n| Transfers into Level 3 | | \u2014 | | | | \u2014 | | | | \u2014 | | | | \u2014 | | |\n| Transfers out of Level 3 | | \u2014 | | | | \u2014 | | | | \u2014 | | | | (13 | | ) |\n| Balance at December\u00a031,\u00a02017 | | $ | 432 | | | $ | 1,056 | | | $ | 3 | | | $ | 404 | |\n| | | | | | | | | | | | | | | | | |\n| Change in unrealized gains (losses) included in earnings for the year attributable to assets and liabilities still held at December\u00a031,\u00a02017 | | $ | 35 | | | $ | 48 | | | $ | 3 | | | $ | 12 | |\n\n","source":"TFC\/10-K\/0000092230-18-000021"} {"title":"NOTE 16. Fair Value Disclosures","text":"Excluding government guaranteed, LHFS that were in nonaccrual status or 90 days or more past due and still accruing interest were not material at December\u00a031,\u00a02017.The following table provides information about certain financial assets measured at fair value on a nonrecurring basis, which are primarily collateral dependent and may be subject to liquidity adjustments. The carrying values represent end of period values, which approximate the fair value measurements that occurred on the various measurement dates throughout the period. The valuation adjustments represent the amounts recorded during the period regardless of whether the asset is still held at period end. These assets are considered to be Level 3 assets (excludes PCI).","markdown_table":"\n\n| | | | | | | | | | | | | | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | | | | | | | | | | | | | | | | | | | | | | | |\n| | | December\u00a031, 2017 | | | | | | | | | | | | December\u00a031,\u00a02016 | | | | | | | | | | |\n| (Dollars in millions) | | Fair Value | | | | Aggregate UPB | | | | Difference | | | | Fair Value | | | | Aggregate UPB | | | | Difference | | |\n| LHFS reported at fair value | | $ | 1,099 | | | $ | 1,084 | | | $ | 15 | | | $ | 1,716 | | | $ | 1,736 | | | $ | (20 | ) |\n\n","source":"TFC\/10-K\/0000092230-18-000021"} {"title":"NOTE 16. Fair Value Disclosures","text":"For financial instruments not recorded at fair value, estimates of fair value are based on relevant market data and information about the instrument. Values obtained relate to one trading unit without regard to any premium or discount that may result from concentrations of ownership, possible tax ramifications, estimated transaction costs that may result from bulk sales or the relationship between various instruments.An active market does not exist for certain financial instruments. Fair value estimates for these instruments are based on current economic conditions, currency and interest rate risk characteristics, loss experience and other factors. Many of these estimates involve uncertainties and matters of significant judgment and cannot be determined with precision. Therefore, the fair value estimates in many instances cannot be substantiated by comparison to independent markets and, in many cases, may not be realizable in a current sale of the instrument. In addition, changes in assumptions could significantly affect these fair value estimates. The following assumptions were used to estimate the fair value of these financial instruments.Cash and cash equivalents and restricted cash: For these short-term instruments, the carrying amounts are a reasonable estimate of fair values.HTM securities: The fair values of HTM securities are based on a market approach using observable inputs such as benchmark yields and securities, TBA prices, reported trades, issuer spreads, current bids and offers, monthly payment information and collateral performance.Loans receivable: The fair values for loans are estimated using discounted cash flow analyses, applying interest rates currently being offered for loans with similar terms and credit quality, which are deemed to be indicative of orderly transactions in the current market. For commercial loans and leases, discount rates may be adjusted to address additional credit risk on lower risk grade instruments. For residential mortgage and other consumer loans, internal prepayment risk models are used to adjust contractual cash flows. Loans are aggregated into pools of similar terms and credit quality and discounted using a LIBOR based rate. The carrying amounts of accrued interest approximate fair values.Deposit liabilities: The fair values for demand deposits are equal to the amount payable on demand. Fair values for CDs are estimated using a discounted cash flow calculation that applies current interest rates to aggregate expected maturities. BB&T has developed long-term relationships with its deposit customers, commonly referred to as CDIs, that have not been considered in the determination of the deposit liabilities\u2019 fair value.Short-term borrowings: The carrying amounts of short-term borrowings, excluding securities sold short, approximate their fair values.Long-term debt: The fair values of long-term debt instruments are estimated based on quoted market prices for the instrument if available, or for similar instruments if not available, or by using discounted cash flow analyses, based on current incremental borrowing rates for similar types of instruments.Contractual commitments: The fair values of commitments are estimated using the fees charged to enter into similar agreements, taking into account the remaining terms of the agreements and the present creditworthiness of the counterparties. The fair values of guarantees and letters of credit are estimated based on the counterparties\u2019 creditworthiness and average default rates for loan products with similar risks. These respective fair value measurements are categorized within Level 3 of the fair value hierarchy. Retail lending commitments are assigned no fair value as BB&T typically has the ability to cancel such commitments by providing notice to the borrower.Financial assets and liabilities not recorded at fair value are summarized below:","markdown_table":"\n\n| | | | | | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | | | | | | | | | | | | | | | |\n| | | As Of \/ For the Year Ended | | | | | | | | | | | | | | |\n| | | December\u00a031, 2017 | | | | | | | | December\u00a031,\u00a02016 | | | | | | |\n| (Dollars in millions) | | Carrying Value | | | | Valuation Adjustments | | | | Carrying Value | | | | Valuation Adjustments | | |\n| Impaired loans | | $ | 163 | | | $ | (22 | ) | | $ | 278 | | | $ | (89 | ) |\n| Foreclosed real estate | | 32 | | | | (255 | | ) | | 50 | | | | (221 | | ) |\n\n","source":"TFC\/10-K\/0000092230-18-000021"} {"title":"NOTE 16. Fair Value Disclosures","text":"The following is a summary of selected information pertaining to off-balance sheet financial instruments:","markdown_table":"\n\n| | | | | | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | | | | | | | | | | | | | | | |\n| December\u00a031,\u00a02016 | | Carrying Amount | | | | Total Fair Value | | | | Level 2 | | | | Level 3 | | |\n| (Dollars in millions) | | | | |\n| Financial assets: | | | | | | | | | | | | | | | | |\n| HTM securities | | $ | 16,680 | | | $ | 16,546 | | | $ | 16,546 | | | $ | \u2014 | |\n| Loans and leases HFI, net of ALLL | | 141,833 | | | | 142,044 | | | | \u2014 | | | | 142,044 | | |\n| Financial liabilities: | | | | | | | | | | | | | | | | |\n| Deposits | | 160,234 | | | | 160,403 | | | | 160,403 | | | | \u2014 | | |\n| Long-term debt | | 21,965 | | | | 22,423 | | | | 22,423 | | | | \u2014 | | |\n\n","source":"TFC\/10-K\/0000092230-18-000021"} {"title":"NOTE 17. Derivative Financial Instruments","text":"The fair values of derivatives in a gain or loss position are presented on a gross basis in other assets or other liabilities, respectively, in the Consolidated Balance Sheets. Cash collateral posted for derivatives in a loss position is reported as restricted cash. Derivatives with dealer counterparties at both the bank and the parent company are governed by the terms of ISDA Master netting agreements and Credit Support Annexes. The ISDA Master agreements allow counterparties to offset trades in a gain against trades in a loss to determine net exposure and allows for the right of setoff in the event of either a default or an additional termination event. Credit Support Annexes govern the terms of daily collateral posting practices. Collateral practices mitigate the potential loss impact to affected parties by requiring liquid collateral to be posted on a scheduled basis to secure the aggregate net unsecured exposure. In addition to collateral, the right of setoff allows counterparties to offset net derivative values with a defaulting party against certain other contractual receivables from or obligations due to the defaulting party in determining the net termination amount. No portion of the change in fair value of derivatives designated as hedges has been excluded from effectiveness testing. The ineffective portion was immaterial for all periods presented. The following table presents the effect of hedging derivative instruments on the consolidated statements of income:","markdown_table":"\n\n| | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | | | | December\u00a031, 2017 | | | | | | | | | | | | December\u00a031,\u00a02016 | | | | | | | | | | |\n| | | | | Notional Amount | | | | Fair Value | | | | | | | | Notional Amount | | | | Fair Value | | | | | | |\n| (Dollars in millions) | | Hedged Item or Transaction | | | Gain | | | | Loss | | | | | Gain | | | | Loss | | |\n| Cash flow hedges: | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Interest rate contracts: | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Pay fixed swaps | | 3 mo. LIBOR funding | | $ | 6,500 | | | $ | \u2014 | | | $ | (126 | ) | | $ | 7,050 | | | $ | \u2014 | | | $ | (187 | ) |\n| Fair value hedges: | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Interest rate contracts: | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Receive fixed swaps | | Long-term debt | | 15,538 | | | | 118 | | | | (166 | | ) | | 12,099 | | | | 202 | | | | (100 | | ) |\n| Options | | Long-term debt | | 6,087 | | | | \u2014 | | | | (1 | | ) | | 2,790 | | | | \u2014 | | | | (1 | | ) |\n| Pay fixed swaps | | Commercial loans | | 416 | | | | 5 | | | | (1 | | ) | | 346 | | | | 4 | | | | (2 | | ) |\n| Pay fixed swaps | | Municipal securities | | 231 | | | | \u2014 | | | | (76 | | ) | | 231 | | | | \u2014 | | | | (83 | | ) |\n| Total | | | | 22,272 | | | | 123 | | | | (244 | | ) | | 15,466 | | | | 206 | | | | (186 | | ) |\n| Not designated as hedges: | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Client-related and other risk management: | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Interest rate contracts: | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Receive fixed swaps | | | | 10,880 | | | | 141 | | | | (61 | | ) | | 9,989 | | | | 235 | | | | (44 | | ) |\n| Pay fixed swaps | | | | 10,962 | | | | 59 | | | | (155 | | ) | | 10,263 | | | | 43 | | | | (252 | | ) |\n| Other swaps | | | | 936 | | | | 2 | | | | (2 | | ) | | 1,086 | | | | 2 | | | | (5 | | ) |\n| Other | | | | 722 | | | | 2 | | | | (2 | | ) | | 709 | | | | 2 | | | | (2 | | ) |\n| Forward commitments | | | | 3,549 | | | | 3 | | | | (2 | | ) | | 5,972 | | | | 29 | | | | (28 | | ) |\n| Foreign exchange contracts | | | | 470 | | | | 3 | | | | (6 | | ) | | 669 | | | | 8 | | | | (5 | | ) |\n| Total | | | | 27,519 | | | | 210 | | | | (228 | | ) | | 28,688 | | | | 319 | | | | (336 | | ) |\n| Mortgage banking: | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Interest rate contracts: | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Interest rate lock commitments | | | | 1,308 | | | | 7 | | | | (3 | | ) | | 2,219 | | | | 7 | | | | (20 | | ) |\n| When issued securities, forward rate agreements and forward commitments | | | | 3,124 | | | | 4 | | | | (3 | | ) | | 6,683 | | | | 51 | | | | (14 | | ) |\n| Other | | | | 182 | | | | 1 | | | | \u2014 | | | | 449 | | | | 2 | | | | (1 | | ) |\n| Total | | | | 4,614 | | | | 12 | | | | (6 | | ) | | 9,351 | | | | 60 | | | | (35 | | ) |\n| MSRs: | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Interest rate contracts: | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Receive fixed swaps | | | | 4,498 | | | | 15 | | | | (86 | | ) | | 5,034 | | | | 18 | | | | (236 | | ) |\n| Pay fixed swaps | | | | 3,418 | | | | 32 | | | | (13 | | ) | | 3,768 | | | | 56 | | | | (7 | | ) |\n| Options | | | | 4,535 | | | | 50 | | | | (11 | | ) | | 5,710 | | | | 160 | | | | (8 | | ) |\n| When issued securities, forward rate agreements and forward commitments | | | | 1,813 | | | | 1 | | | | \u2014 | | | | 3,210 | | | | 3 | | | | (8 | | ) |\n| Other | | | | 3 | | | | \u2014 | | | | \u2014 | | | | \u2014 | | | | \u2014 | | | | \u2014 | | |\n| Total | | | | 14,267 | | | | 98 | | | | (110 | | ) | | 17,722 | | | | 237 | | | | (259 | | ) |\n| Total derivatives not designated as hedges | | | | 46,400 | | | | 320 | | | | (344 | | ) | | 55,761 | | | | 616 | | | | (630 | | ) |\n| Total derivatives | | | | $ | 75,172 | | | 443 | | | | (714 | | ) | | $ | 78,277 | | | 822 | | | | (1,003 | | ) |\n| Gross amounts not offset in the Consolidated Balance Sheets: | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Amounts subject to master netting arrangements not offset due to policy election | | | | | | | | (297 | | ) | | 297 | | | | | | | | (443 | | ) | | 443 | | |\n| Cash collateral (received) posted | | | | | | | | (20 | | ) | | 344 | | | | | | | | (119 | | ) | | 450 | | |\n| Net amount | | | | | | | | $ | 126 | | | $ | (73 | ) | | | | | | $ | 260 | | | $ | (110 | ) |\n\n","source":"TFC\/10-K\/0000092230-18-000021"} {"title":"NOTE 17. Derivative Financial Instruments","text":"The following table provides a summary of derivative strategies and the related accounting treatment:","markdown_table":"\n\n| | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | | Effective Portion | | | | | | | | | | | | | | | | | | | | | | | | |\n| Year Ended December 31 | | Pre-tax Gain (Loss) Recognized in\u00a0OCI | | | | | | | | | | | | Location of Amounts Reclassified from AOCI into Income | | Pre-tax Gain (Loss) Reclassified from AOCI into Income | | | | | | | | | | |\n| (Dollars in millions) | | 2017 | | | | 2016 | | | | 2015 | | | | | 2017 | | | | 2016 | | | | 2015 | | |\n| Cash Flow Hedges: | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Interest rate contracts | | $ | 10 | | | $ | (24 | ) | | $ | (130 | ) | | Total interest expense | | $ | (15 | ) | | $ | (11 | ) | | $ | (83 | ) |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | Location of Amounts Recognized in Income | | Pre-tax Gain (Loss) Recognized in Income | | | | | | | | | | |\n| | | | | | | | | | | | | | | | 2017 | | | | 2016 | | | | 2015 | | |\n| | | | | | | | | | | | | | | | | (Dollars in millions) | | | | | | | | | | |\n| Fair Value Hedges: | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Interest rate contracts | | | | | | | | | | | | | | Total interest income | | $ | (19 | ) | | $ | (18 | ) | | $ | (20 | ) |\n| Interest rate contracts | | | | | | | | | | | | | | Total interest expense | | 148 | | | | 226 | | | | 279 | | |\n| Total | | | | | | | | | | | | | | | | $ | 129 | | | $ | 208 | | | $ | 259 | |\n| Not Designated as Hedges: | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Client-related and other risk management: | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Interest rate contracts | | | | | | | | | | | | | | Other income | | $ | 50 | | | $ | 52 | | | $ | 27 | |\n| Foreign exchange contracts | | | | | | | | | | | | | | Other income | | 1 | | | | 11 | | | | 21 | | |\n| Mortgage Banking: | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Interest rate contracts | | | | | | | | | | | | | | Mortgage banking income | | (12 | | ) | | 8 | | | | 7 | | |\n| MSRs: | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Interest rate contracts | | | | | | | | | | | | | | Mortgage banking income | | \u2014 | | | | 31 | | | | 32 | | |\n| Total | | | | | | | | | | | | | | | | $ | 39 | | | $ | 102 | | | $ | 87 | |\n\n","source":"TFC\/10-K\/0000092230-18-000021"} {"title":"NOTE 17. Derivative Financial Instruments","text":"The following table presents information about BB&T's cash flow and fair value hedges:","markdown_table":"\n\n| | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- |\n| | | | | | | |\n| | | Cash Flow Hedges | | Fair Value Hedges | | Derivatives Not Designated as Hedges |\n| Risk exposure | | Variability in cash flows of interest payments on floating rate business loans, overnight funding and various LIBOR funding instruments. | | Losses in value on fixed rate long-term debt, CDs, FHLB advances, loans and state and political subdivision securities due to changes in interest rates. | | Risk associated with an asset or liability, including mortgage banking operations and MSRs, or for client needs. Includes exposure to changes in market rates and conditions subsequent to the interest rate lock and funding date for mortgage loans originated for sale. |\n| Risk management objective | | Hedge the variability in the interest payments and receipts on future cash flows for forecasted transactions related to the first unhedged payments and receipts of variable interest. | | Convert the fixed rate paid or received to a floating rate, primarily through the use of swaps. | | For interest rate lock commitment derivatives and LHFS, use mortgage-based derivatives such as forward commitments and options to mitigate market risk. For MSRs, mitigate the income statement effect of changes in the fair value of the MSRs. |\n| Treatment for portion that is highly effective | | Recognized in AOCI until the related cash flows from the hedged item are recognized in earnings. | | Recognized in current period income along with the corresponding changes in the fair value of the designated hedged item attributable to the risk being hedged. | | Entire change in fair value recognized in current period income. |\n| Treatment for portion that is ineffective | | Recognized in current period income. | | Recognized in current period income. | | Not applicable |\n| Treatment if hedge ceases to be highly effective or is terminated | | Hedge is dedesignated. Effective changes in value that are recorded in AOCI before dedesignation are amortized to yield over the period the forecasted hedged transactions impact earnings. | | If hedged item remains outstanding, cash flows from terminations are reported in the same category as the cash flows from the hedged item and effective changes in value are reflected as part of the carrying value of the financial instrument and amortized to earnings over its estimated remaining life. | | Not applicable |\n| Treatment if transaction is no longer probable of occurring during forecast period or within a short period thereafter | | Hedge accounting is ceased and any gain or loss in AOCI is reported in earnings immediately. | | Not applicable | | Not applicable |\n\n","source":"TFC\/10-K\/0000092230-18-000021"} {"title":"Other, Treasury & Corporate","text":"(1) Includes financial data from subsidiaries below the quantitative and qualitative thresholds requiring disclosure.","markdown_table":"\n\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Year Ended December 31, | | CB-Retail | | | | | | | | | | | | CB-Commercial | | | | | | | | | | | | FS&CF | | | | | | | | | | |\n| (Dollars in millions) | | 2017 | | | | 2016 | | | | 2015 | | | | 2017 | | | | 2016 | | | | 2015 | | | | 2017 | | | | 2016 | | | | 2015 | | |\n| Net interest income (expense) | | $ | 3,415 | | | $ | 3,290 | | | $ | 3,035 | | | $ | 1,740 | | | $ | 1,604 | | | $ | 1,345 | | | $ | 583 | | | $ | 511 | | | $ | 443 | |\n| Net intersegment interest income (expense) | | 149 | | | | 115 | | | | (119 | | ) | | 379 | | | | 404 | | | | 324 | | | | 127 | | | | 142 | | | | 110 | | |\n| Segment net interest income | | 3,564 | | | | 3,405 | | | | 2,916 | | | | 2,119 | | | | 2,008 | | | | 1,669 | | | | 710 | | | | 653 | | | | 553 | | |\n| Allocated provision for credit losses | | 501 | | | | 475 | | | | 365 | | | | 69 | | | | (40 | | ) | | 1 | | | | (15 | | ) | | 128 | | | | 67 | | |\n| Segment net interest income after provision | | 3,063 | | | | 2,930 | | | | 2,551 | | | | 2,050 | | | | 2,048 | | | | 1,668 | | | | 725 | | | | 525 | | | | 486 | | |\n| Noninterest income | | 1,404 | | | | 1,354 | | | | 1,342 | | | | 423 | | | | 392 | | | | 390 | | | | 1,181 | | | | 1,148 | | | | 1,046 | | |\n| Noninterest expense | | 2,725 | | | | 2,469 | | | | 2,357 | | | | 1,198 | | | | 1,302 | | | | 1,153 | | | | 1,190 | | | | 1,141 | | | | 1,020 | | |\n| Income (loss) before income taxes | | 1,742 | | | | 1,815 | | | | 1,536 | | | | 1,275 | | | | 1,138 | | | | 905 | | | | 716 | | | | 532 | | | | 512 | | |\n| Provision (benefit) for income taxes | | 650 | | | | 686 | | | | 588 | | | | 441 | | | | 403 | | | | 324 | | | | 225 | | | | 156 | | | | 151 | | |\n| Segment net income (loss) | | $ | 1,092 | | | $ | 1,129 | | | $ | 948 | | | $ | 834 | | | $ | 735 | | | $ | 581 | | | $ | 491 | | | $ | 376 | | | $ | 361 | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Identifiable assets (period end) | | $ | 71,093 | | | $ | 74,642 | | | $ | 71,027 | | | $ | 56,563 | | | $ | 55,035 | | | $ | 51,231 | | | $ | 29,144 | | | $ | 26,795 | | | $ | 25,294 | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | | IH&PF | | | | | | | | | | | | OT&C (1) | | | | | | | | | | | | Total BB&T Corporation | | | | | | | | | | |\n| | | 2017 | | | | 2016 | | | | 2015 | | | | 2017 | | | | 2016 | | | | 2015 | | | | 2017 | | | | 2016 | | | | 2015 | | |\n| Net interest income (expense) | | $ | 98 | | | $ | 86 | | | $ | 79 | | | $ | 699 | | | $ | 830 | | | $ | 690 | | | $ | 6,535 | | | $ | 6,321 | | | $ | 5,592 | |\n| Net intersegment interest income (expense) | | (21 | | ) | | (19 | | ) | | (16 | | ) | | (634 | | ) | | (642 | | ) | | (299 | | ) | | \u2014 | | | | \u2014 | | | | \u2014 | | |\n| Segment net interest income | | 77 | | | | 67 | | | | 63 | | | | 65 | | | | 188 | | | | 391 | | | | 6,535 | | | | 6,321 | | | | 5,592 | | |\n| Allocated provision for credit losses | | 4 | | | | 3 | | | | 4 | | | | (12 | | ) | | 6 | | | | (9 | | ) | | 547 | | | | 572 | | | | 428 | | |\n| Segment net interest income after provision | | 73 | | | | 64 | | | | 59 | | | | 77 | | | | 182 | | | | 400 | | | | 5,988 | | | | 5,749 | | | | 5,164 | | |\n| Noninterest income | | 1,777 | | | | 1,731 | | | | 1,611 | | | | (3 | | ) | | (153 | | ) | | (370 | | ) | | 4,782 | | | | 4,472 | | | | 4,019 | | |\n| Noninterest expense | | 1,590 | | | | 1,525 | | | | 1,371 | | | | 741 | | | | 284 | | | | 365 | | | | 7,444 | | | | 6,721 | | | | 6,266 | | |\n| Income (loss) before income taxes | | 260 | | | | 270 | | | | 299 | | | | (667 | | ) | | (255 | | ) | | (335 | | ) | | 3,326 | | | | 3,500 | | | | 2,917 | | |\n| Provision (benefit) for income taxes | | 99 | | | | 104 | | | | 105 | | | | (504 | | ) | | (291 | | ) | | (374 | | ) | | 911 | | | | 1,058 | | | | 794 | | |\n| Segment net income (loss) | | $ | 161 | | | $ | 166 | | | $ | 194 | | | $ | (163 | ) | | $ | 36 | | | $ | 39 | | | $ | 2,415 | | | $ | 2,442 | | | $ | 2,123 | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Identifiable assets (period end) | | $ | 6,024 | | | $ | 5,943 | | | $ | 4,998 | | | $ | 58,818 | | | $ | 56,861 | | | $ | 57,397 | | | $ | 221,642 | | | $ | 219,276 | | | $ | 209,947 | |\n\n","source":"TFC\/10-K\/0000092230-18-000021"} {"title":"ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES","text":"*Management compensatory plan or arrangement.\u2020Exhibit filed with the SEC and available upon request.","markdown_table":"\n\n| | | | | |\n| --- | --- | --- | --- | --- |\n| | | | | |\n| Exhibit No. | | Description | | Location |\n| 101.CAL | | XBRL Taxonomy Extension Calculation Linkbase. | | Filed herewith. |\n| 101.DEF | | XBRL Taxonomy Definition Linkbase. | | Filed herewith. |\n| 101.INS | | XBRL Instance Document. | | Filed herewith. |\n| 101.LAB | | XBRL Taxonomy Extension Label Linkbase. | | Filed herewith. |\n| 101.PRE | | XBRL Taxonomy Extension Presentation Linkbase. | | Filed herewith. |\n| 101.SCH | | XBRL Taxonomy Extension Schema. | | Filed herewith. |\n\n","source":"TFC\/10-K\/0000092230-18-000021"} {"title":"Net Interest Income and NIM","text":"(1)Yields are stated on a TE basis utilizing federal tax rate. The change in interest not solely due to changes in rate or volume has been allocated based on the pro-rata absolute dollar amount of each. Interest income includes certain fees, deferred costs and dividends.(2)Total securities include AFS and HTM securities. (3)Includes cash equivalents, interest-bearing deposits with banks, FHLB stock and other earning assets. (4)Fees, which are not material for any of the periods shown, are included for rate calculation purposes. NPLs are included in the average balances. (5)Excludes basis adjustments for fair value hedges.(6)Total deposit costs were 0.22%, 0.64% and 0.41% for the years ended December 31, 2020, 2019 and 2018, respectively.","markdown_table":"\n\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Table 9: Taxable-Equivalent Net Interest Income and Rate \/ Volume Analysis (1) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 2020 vs. 2019 | | | | | | | | | | | | | | | | | | 2019 vs. 2018 | | | | | | | | | | | | | | |\n| Year Ended December 31,(Dollars in millions) | | | Average Balances (5) | | | | | | | | | | | | | | | | | | Yield\/Rate | | | | | | | | | | | | | | | | | | Income\/Expense | | | | | | | | | | | | | | | | | | Incr.(Decr.) | | | | | | Change due to | | | | | | | | | | | | Incr.(Decr.) | | | | | | Change due to | | | | | | | | |\n| 2020 | | | | | | 2019 | | | | | | 2018 | | | | | | 2020 | | | | | | 2019 | | | | | | 2018 | | | | | | 2020 | | | | | | 2019 | | | | | | 2018 | | | | | | | | | Rate | | | | | | Volume | | | | | | | | | Rate | | | | | | Volume | | |\n| Assets | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Total securities, at amortized cost: (2) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| U.S. Treasury | | | $ | 2,194 | | | | | $ | 2,644 | | | | | $ | 3,800 | | | | | 1.81 | | % | | | | 2.01 | | % | | | | 1.89 | | % | | | | $ | 40 | | | | | $ | 53 | | | | | $ | 72 | | | | | $ | (13) | | | | | $ | (5) | | | | | $ | (8) | | | | | $ | (19) | | | | | $ | 4 | | | | | $ | (23) | |\n| GSE | | | 1,846 | | | | | | 2,402 | | | | | | 2,394 | | | | | | 2.33 | | | | | | 2.26 | | | | | | 2.23 | | | | | | 43 | | | | | | 53 | | | | | | 54 | | | | | | (10) | | | | | | 2 | | | | | | (12) | | | | | | (1) | | | | | | (1) | | | | | | \u2014 | | |\n| Agency MBS | | | 78,564 | | | | | | 44,710 | | | | | | 39,559 | | | | | | 2.07 | | | | | | 2.59 | | | | | | 2.45 | | | | | | 1,625 | | | | | | 1,161 | | | | | | 969 | | | | | | 464 | | | | | | (270) | | | | | | 734 | | | | | | 192 | | | | | | 59 | | | | | | 133 | | |\n| States and political subdivisions | | | 501 | | | | | | 587 | | | | | | 958 | | | | | | 3.92 | | | | | | 3.73 | | | | | | 3.68 | | | | | | 19 | | | | | | 21 | | | | | | 35 | | | | | | (2) | | | | | | 1 | | | | | | (3) | | | | | | (14) | | | | | | \u2014 | | | | | | (14) | | |\n| Non-agency MBS | | | 86 | | | | | | 269 | | | | | | 349 | | | | | | 16.81 | | | | | | 14.05 | | | | | | 11.93 | | | | | | 15 | | | | | | 38 | | | | | | 42 | | | | | | (23) | | | | | | 6 | | | | | | (29) | | | | | | (4) | | | | | | 7 | | | | | | (11) | | |\n| Other | | | 36 | | | | | | 33 | | | | | | 40 | | | | | | 2.33 | | | | | | 3.75 | | | | | | 3.34 | | | | | | 1 | | | | | | 1 | | | | | | 1 | | | | | | \u2014 | | | | | | \u2014 | | | | | | \u2014 | | | | | | \u2014 | | | | | | \u2014 | | | | | | \u2014 | | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Total securities | | | 83,227 | | | | | | 50,645 | | | | | | 47,100 | | | | | | 2.09 | | | | | | 2.62 | | | | | | 2.49 | | | | | | 1,743 | | | | | | 1,327 | | | | | | 1,173 | | | | | | 416 | | | | | | (266) | | | | | | 682 | | | | | | 154 | | | | | | 69 | | | | | | 85 | | |\n| Interest earning trading assets | | | 4,655 | | | | | | 1,277 | | | | | | 633 | | | | | | 3.62 | | | | | | 2.02 | | | | | | 3.82 | | | | | | 168 | | | | | | 26 | | | | | | 24 | | | | | | 142 | | | | | | 33 | | | | | | 109 | | | | | | 2 | | | | | | (15) | | | | | | 17 | | |\n| Other earning assets (3) | | | 31,240 | | | | | | 2,888 | | | | | | 1,618 | | | | | | 0.50 | | | | | | 2.89 | | | | | | 2.63 | | | | | | 156 | | | | | | 83 | | | | | | 43 | | | | | | 73 | | | | | | (122) | | | | | | 195 | | | | | | 40 | | | | | | 5 | | | | | | 35 | | |\n| Loans and leases, net of unearned income: (4) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Commercial and industrial | | | 141,850 | | | | | | 67,435 | | | | | | 59,663 | | | | | | 3.39 | | | | | | 4.25 | | | | | | 3.98 | | | | | | 4,801 | | | | | | 2,868 | | | | | | 2,374 | | | | | | 1,933 | | | | | | (681) | | | | | | 2,614 | | | | | | 494 | | | | | | 169 | | | | | | 325 | | |\n| CRE | | | 27,410 | | | | | | 17,651 | | | | | | 16,994 | | | | | | 3.32 | | | | | | 4.79 | | | | | | 4.67 | | | | | | 914 | | | | | | 849 | | | | | | 798 | | | | | | 65 | | | | | | (311) | | | | | | 376 | | | | | | 51 | | | | | | 21 | | | | | | 30 | | |\n| Commercial Construction | | | 6,659 | | | | | | 4,061 | | | | | | 4,441 | | | | | | 3.72 | | | | | | 5.23 | | | | | | 4.79 | | | | | | 243 | | | | | | 208 | | | | | | 209 | | | | | | 35 | | | | | | (74) | | | | | | 109 | | | | | | (1) | | | | | | 19 | | | | | | (20) | | |\n| Lease financing | | | 5,753 | | | | | | 2,443 | | | | | | 1,917 | | | | | | 4.38 | | | | | | 3.44 | | | | | | 3.19 | | | | | | 252 | | | | | | 84 | | | | | | 61 | | | | | | 168 | | | | | | 28 | | | | | | 140 | | | | | | 23 | | | | | | 5 | | | | | | 18 | | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Residential mortgage | | | 51,423 | | | | | | 31,668 | | | | | | 29,932 | | | | | | 4.51 | | | | | | 4.08 | | | | | | 4.05 | | | | | | 2,320 | | | | | | 1,291 | | | | | | 1,212 | | | | | | 1,029 | | | | | | 148 | | | | | | 881 | | | | | | 79 | | | | | | 9 | | | | | | 70 | | |\n| Residential home equity and direct | | | 26,951 | | | | | | 12,716 | | | | | | 11,860 | | | | | | 6.03 | | | | | | 5.97 | | | | | | 5.41 | | | | | | 1,625 | | | | | | 759 | | | | | | 641 | | | | | | 866 | | | | | | 8 | | | | | | 858 | | | | | | 118 | | | | | | 70 | | | | | | 48 | | |\n| Indirect auto | | | 25,055 | | | | | | 12,545 | | | | | | 11,215 | | | | | | 6.61 | | | | | | 8.51 | | | | | | 8.18 | | | | | | 1,656 | | | | | | 1,068 | | | | | | 917 | | | | | | 588 | | | | | | (282) | | | | | | 870 | | | | | | 151 | | | | | | 38 | | | | | | 113 | | |\n| Indirect other | | | 11,264 | | | | | | 6,654 | | | | | | 5,896 | | | | | | 7.11 | | | | | | 6.65 | | | | | | 6.25 | | | | | | 801 | | | | | | 443 | | | | | | 368 | | | | | | 358 | | | | | | 33 | | | | | | 325 | | | | | | 75 | | | | | | 25 | | | | | | 50 | | |\n| Student | | | 7,596 | | | | | | 460 | | | | | | \u2014 | | | | | | 4.62 | | | | | | 5.20 | | | | | | \u2014 | | | | | | 351 | | | | | | 24 | | | | | | \u2014 | | | | | | 327 | | | | | | (3) | | | | | | 330 | | | | | | 24 | | | | | | \u2014 | | | | | | 24 | | |\n| Credit card | | | 5,027 | | | | | | 3,181 | | | | | | 2,723 | | | | | | 9.34 | | | | | | 9.05 | | | | | | 8.73 | | | | | | 470 | | | | | | 288 | | | | | | 238 | | | | | | 182 | | | | | | 10 | | | | | | 172 | | | | | | 50 | | | | | | 9 | | | | | | 41 | | |\n| PCI | | | \u2014 | | | | | | 631 | | | | | | 548 | | | | | | \u2014 | | | | | | 16.05 | | | | | | 19.64 | | | | | | \u2014 | | | | | | 102 | | | | | | 108 | | | | | | (102) | | | | | | \u2014 | | | | | | (102) | | | | | | (6) | | | | | | (21) | | | | | | 15 | | |\n| Total loans and leases HFI | | | 308,988 | | | | | | 159,445 | | | | | | 145,189 | | | | | | 4.35 | | | | | | 5.01 | | | | | | 4.77 | | | | | | 13,433 | | | | | | 7,984 | | | | | | 6,926 | | | | | | 5,449 | | | | | | (1,124) | | | | | | 6,573 | | | | | | 1,058 | | | | | | 344 | | | | | | 714 | | |\n| LHFS | | | 5,513 | | | | | | 2,159 | | | | | | 1,228 | | | | | | 3.13 | | | | | | 3.91 | | | | | | 4.13 | | | | | | 173 | | | | | | 85 | | | | | | 50 | | | | | | 88 | | | | | | (20) | | | | | | 108 | | | | | | 35 | | | | | | (3) | | | | | | 38 | | |\n| Total loans and leases | | | 314,501 | | | | | | 161,604 | | | | | | 146,417 | | | | | | 4.33 | | | | | | 4.99 | | | | | | 4.77 | | | | | | 13,606 | | | | | | 8,069 | | | | | | 6,976 | | | | | | 5,537 | | | | | | (1,144) | | | | | | 6,681 | | | | | | 1,093 | | | | | | 341 | | | | | | 752 | | |\n| Total earning assets | | | 433,623 | | | | | | 216,414 | | | | | | 195,768 | | | | | | 3.61 | | | | | | 4.39 | | | | | | 4.20 | | | | | | 15,673 | | | | | | 9,505 | | | | | | 8,216 | | | | | | 6,168 | | | | | | (1,499) | | | | | | 7,667 | | | | | | 1,289 | | | | | | 400 | | | | | | 889 | | |\n| Nonearning assets | | | 65,462 | | | | | | 31,080 | | | | | | 26,505 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Total assets | | | $ | 499,085 | | | | | $ | 247,494 | | | | | $ | 222,273 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Liabilities and Shareholders' Equity | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Interest-bearing deposits: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Interest-checking | | | $ | 94,879 | | | | | $ | 31,592 | | | | | $ | 26,951 | | | | | 0.23 | | | | | | 0.62 | | | | | | 0.43 | | | | | | 216 | | | | | | 197 | | | | | | 116 | | | | | | 19 | | | | | | (184) | | | | | | 203 | | | | | | 81 | | | | | | 59 | | | | | | 22 | | |\n| Money market and savings | | | 123,826 | | | | | | 67,922 | | | | | | 62,257 | | | | | | 0.21 | | | | | | 0.91 | | | | | | 0.62 | | | | | | 264 | | | | | | 621 | | | | | | 387 | | | | | | (357) | | | | | | (664) | | | | | | 307 | | | | | | 234 | | | | | | 196 | | | | | | 38 | | |\n| Time deposits | | | 30,008 | | | | | | 17,970 | | | | | | 13,963 | | | | | | 1.02 | | | | | | 1.54 | | | | | | 0.94 | | | | | | 305 | | | | | | 277 | | | | | | 132 | | | | | | 28 | | | | | | (115) | | | | | | 143 | | | | | | 145 | | | | | | 100 | | | | | | 45 | | |\n| Foreign office deposits - interest-bearing | | | \u2014 | | | | | | 272 | | | | | | 494 | | | | | | \u2014 | | | | | | 2.35 | | | | | | 1.67 | | | | | | \u2014 | | | | | | 6 | | | | | | 9 | | | | | | (6) | | | | | | \u2014 | | | | | | (6) | | | | | | (3) | | | | | | 2 | | | | | | (5) | | |\n| Total interest-bearing deposits (6) | | | 248,713 | | | | | | 117,756 | | | | | | 103,665 | | | | | | 0.32 | | | | | | 0.93 | | | | | | 0.62 | | | | | | 785 | | | | | | 1,101 | | | | | | 644 | | | | | | (316) | | | | | | (963) | | | | | | 647 | | | | | | 457 | | | | | | 357 | | | | | | 100 | | |\n| Short-term borrowings | | | 10,129 | | | | | | 8,462 | | | | | | 5,955 | | | | | | 1.35 | | | | | | 2.34 | | | | | | 1.86 | | | | | | 137 | | | | | | 198 | | | | | | 111 | | | | | | (61) | | | | | | (95) | | | | | | 34 | | | | | | 87 | | | | | | 33 | | | | | | 54 | | |\n| Long-term debt | | | 45,793 | | | | | | 24,756 | | | | | | 23,755 | | | | | | 1.75 | | | | | | 3.22 | | | | | | 2.88 | | | | | | 800 | | | | | | 797 | | | | | | 683 | | | | | | 3 | | | | | | (472) | | | | | | 475 | | | | | | 114 | | | | | | 84 | | | | | | 30 | | |\n| Total interest-bearing liabilities | | | 304,635 | | | | | | 150,974 | | | | | | 133,375 | | | | | | 0.57 | | | | | | 1.39 | | | | | | 1.08 | | | | | | 1,722 | | | | | | 2,096 | | | | | | 1,438 | | | | | | (374) | | | | | | (1,530) | | | | | | 1,156 | | | | | | 658 | | | | | | 474 | | | | | | 184 | | |\n| Noninterest-bearing deposits (6) | | | 114,580 | | | | | | 55,513 | | | | | | 53,818 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Other liabilities | | | 11,846 | | | | | | 6,899 | | | | | | 5,337 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Shareholders' equity | | | 68,024 | | | | | | 34,108 | | | | | | 29,743 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Total liabilities and shareholders' equity | | | $ | 499,085 | | | | | $ | 247,494 | | | | | $ | 222,273 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Average interest-rate spread | | | | | | | | | | | | | | | | | | | | | 3.04 | | % | | | | 3.00 | | % | | | | 3.12 | | % | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| NIM\/net interest income | | | | | | | | | | | | | | | | | | | | | 3.22 | | % | | | | 3.42 | | % | | | | 3.46 | | % | | | | $ | 13,951 | | | | | $ | 7,409 | | | | | $ | 6,778 | | | | | $ | 6,542 | | | | | $ | 31 | | | | | $ | 6,511 | | | | | $ | 631 | | | | | $ | (74) | | | | | $ | 705 | |\n| Taxable-equivalent adjustment | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | $ | 125 | | | | | $ | 96 | | | | | $ | 96 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n\n","source":"TFC\/10-K\/0000092230-21-000032"} {"title":"Noninterest Income","text":"Noninterest income for the year ended December 31, 2020 increased $3.6 billion compared to the earlier period. The current period includes $402 million of net securities gains primarily from the sale of non-agency MBS in the second quarter of 2020 and agency MBS in the third quarter of 2020. The prior period includes $116 million of net securities losses from the sale of agency MBS. Excluding the net securities gains and losses, noninterest income increased $3.1 billion, with nearly all categories of noninterest income being impacted by the Merger. In addition to the impacts from the Merger, insurance income increased $121 million due to strong production and acquisitions. Service charges on deposits were up despite reduced overdraft incident rates and increased refunds and waivers to support clients impacted by the COVID-19 pandemic. Residential mortgage banking income was up due to strong production and refinance activity driven by the lower rate environment, partially offset by lower valuations of the mortgage servicing rights and increased amortization driven by higher prepayments speeds. Investment banking and trading income was up, but was negatively impacted by credit valuation adjustments on the derivatives portfolio primarily related to the decline in interest rates and widening of credit spreads. 46 Truist Financial Corporation","markdown_table":"\n\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Table 10: Noninterest Income | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Year Ended December 31,(Dollars in millions) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | % Change | | | | | | | | | | | |\n| | | | | | | | | | | | | | | | | | | 2020 | | | | | | 2019 | | | | | | 2018 | | | | | | 2020 vs. 2019 | | | | | | 2019 vs. 2018 | | | | | |\n| Insurance income | | | | | | | | | | | | | | | | | | | | | $ | 2,193 | | | | | $ | 2,072 | | | | | $ | 1,852 | | | | | 5.8 | | % | | | | 11.9 | | % | | | |\n| Wealth management income | | | | | | | | | | | | | | | | | | | | | 1,277 | | | | | | 715 | | | | | | 660 | | | | | | 78.6 | | | | | | 8.3 | | | | | |\n| Service charges on deposits | | | | | | | | | | | | | | | | | | | | | 1,020 | | | | | | 762 | | | | | | 712 | | | | | | 33.9 | | | | | | 7.0 | | | | | |\n| Residential mortgage income | | | | | | | | | | | | | | | | | | | | | 1,000 | | | | | | 285 | | | | | | 258 | | | | | | NM | | | | | | 10.5 | | | | | |\n| Investment banking and trading income | | | | | | | | | | | | | | | | | | | | | 944 | | | | | | 244 | | | | | | 154 | | | | | | NM | | | | | | 58.4 | | | | | |\n| Card and payment related fees | | | | | | | | | | | | | | | | | | | | | 761 | | | | | | 555 | | | | | | 522 | | | | | | 37.1 | | | | | | 6.3 | | | | | |\n| Lending related fees | | | | | | | | | | | | | | | | | | | | | 315 | | | | | | 124 | | | | | | 99 | | | | | | 154.0 | | | | | | 25.3 | | | | | |\n| Operating lease income | | | | | | | | | | | | | | | | | | | | | 309 | | | | | | 153 | | | | | | 145 | | | | | | 102.0 | | | | | | 5.5 | | | | | |\n| Commercial real estate related income | | | | | | | | | | | | | | | | | | | | | 271 | | | | | | 116 | | | | | | 100 | | | | | | 133.6 | | | | | | 16.0 | | | | | |\n| Income from bank-owned life insurance | | | | | | | | | | | | | | | | | | | | | 179 | | | | | | 129 | | | | | | 116 | | | | | | 38.8 | | | | | | 11.2 | | | | | |\n| Securities gains (losses) | | | | | | | | | | | | | | | | | | | | | 402 | | | | | | (116) | | | | | | 3 | | | | | | NM | | | | | | NM | | | | | |\n| Other income (loss) | | | | | | | | | | | | | | | | | | | | | 208 | | | | | | 216 | | | | | | 255 | | | | | | (3.7) | | | | | | (15.3) | | | | | |\n| Total noninterest income | | | | | | | | | | | | | | | | | | | | | $ | 8,879 | | | | | $ | 5,255 | | | | | $ | 4,876 | | | | | 69.0 | | | | | | 7.8 | | | | | |\n\n","source":"TFC\/10-K\/0000092230-21-000032"} {"title":"Noninterest Expense","text":"Noninterest expense for the year ended December 31, 2020 was up $7.0 billion compared to the earlier period. Merger-related and restructuring charges and other incremental operating expenses related to the Merger increased $500 million and $370 million, respectively. In addition, the current period was impacted by $235 million of losses on the early extinguishment of long-term debt and a $50 million charitable contribution to the Truist Charitable Fund. Excluding the items mentioned above and the impact of an increase of $521 million of amortization expense for intangibles, noninterest expense increased $5.3 billion, primarily reflecting the impact of the Merger. In addition to the impacts of the Merger, operating costs were elevated due to COVID-19, which resulted in approximately $250 million of expenses compared to the earlier period. This was primarily related to additional on-site pay and bonuses for certain teammates, net occupancy costs for enhanced cleaning and teammate support expenses. Additionally, personnel expenses increased as a result of the completion of a post-Merger reevaluation of job grades that resulted in additional salaries, incentives and equity-based compensation expenses.","markdown_table":"\n\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Table 11: Noninterest Expense | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | | | | | | | | | | | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Year Ended December 31,(Dollars in millions) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | % Change | | | | | | | | |\n| | | | | | | | | | | | | | | | | | | 2020 | | | | | | 2019 | | | | | | 2018 | | | | | | 2020 vs. 2019 | | | | | | 2019 vs. 2018 | | |\n| Personnel expense | | | | | | | | | | | | | | | | | | | | | $ | 8,146 | | | | | $ | 4,833 | | | | | $ | 4,313 | | | | | 68.5 | | % | | | | 12.1 | | % |\n| Professional fees and outside processing | | | | | | | | | | | | | | | | | | | | | 1,252 | | | | | | 433 | | | | | | 365 | | | | | | 189.1 | | | | | | 18.6 | | |\n| Net occupancy expense | | | | | | | | | | | | | | | | | | | | | 904 | | | | | | 507 | | | | | | 491 | | | | | | 78.3 | | | | | | 3.3 | | |\n| Software expense | | | | | | | | | | | | | | | | | | | | | 862 | | | | | | 338 | | | | | | 272 | | | | | | 155.0 | | | | | | 24.3 | | |\n| Amortization of intangibles | | | | | | | | | | | | | | | | | | | | | 685 | | | | | | 164 | | | | | | 131 | | | | | | NM | | | | | | 25.2 | | |\n| Equipment expense | | | | | | | | | | | | | | | | | | | | | 484 | | | | | | 280 | | | | | | 267 | | | | | | 72.9 | | | | | | 4.9 | | |\n| Marketing and customer development | | | | | | | | | | | | | | | | | | | | | 273 | | | | | | 137 | | | | | | 102 | | | | | | 99.3 | | | | | | 34.3 | | |\n| Operating lease depreciation | | | | | | | | | | | | | | | | | | | | | 258 | | | | | | 136 | | | | | | 120 | | | | | | 89.7 | | | | | | 13.3 | | |\n| Loan-related expense | | | | | | | | | | | | | | | | | | | | | 242 | | | | | | 123 | | | | | | 108 | | | | | | 96.7 | | | | | | 13.9 | | |\n| Regulatory costs | | | | | | | | | | | | | | | | | | | | | 125 | | | | | | 81 | | | | | | 134 | | | | | | 54.3 | | | | | | (39.6) | | |\n| Merger-related and restructuring charges | | | | | | | | | | | | | | | | | | | | | 860 | | | | | | 360 | | | | | | 146 | | | | | | 138.9 | | | | | | 146.6 | | |\n| Loss (gain) on early extinguishment of debt | | | | | | | | | | | | | | | | | | | | | 235 | | | | | | \u2014 | | | | | | \u2014 | | | | | | NM | | | | | | NM | | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Other expense | | | | | | | | | | | | | | | | | | | | | 571 | | | | | | 542 | | | | | | 483 | | | | | | 5.4 | | | | | | 12.2 | | |\n| Total noninterest expense | | | | | | | | | | | | | | | | | | | | | $ | 14,897 | | | | | $ | 7,934 | | | | | $ | 6,932 | | | | | 87.8 | | | | | | 14.5 | | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n\n","source":"TFC\/10-K\/0000092230-21-000032"} {"title":"Merger-Related and Restructuring Charges","text":"(1)The Company recognized $825 million and $298 million for the year ended December 31, 2020 and 2019, respectively, related to the Merger. At December\u00a031, 2020 and 2019, the Company had an accrual of $50 million and $76 million related to the Merger, respectively. The remaining expense and accrual relate to other restructuring activities.","markdown_table":"\n\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Table 12: Merger-Related and Restructuring Accrual Activity | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| (Dollars in millions) | | | | | | | | | | | | | | | | | | | | | | | | | | | Accrual at Jan 1, 2019 | | | | | | Expense | | | | | | Utilized | | | | | | Accrual at Dec 31, 2019 | | | | | | | | | | | | Expense | | | | | | Utilized | | | | | | Accrual at Dec 31, 2020 | | | | | | | | | | | | | | |\n| Severance and personnel-related | | | | | | | | | | | | | | | | | | | | | | | | | | | $ | 43 | | | | | $ | 149 | | | | | $ | (146) | | | | | $ | 46 | | | | | | | | | | | $ | 232 | | | | | $ | (242) | | | | | $ | 36 | | | | | | | | | | | | | |\n| Occupancy and equipment | | | | | | | | | | | | | | | | | | | | | | | | | | | \u2014 | | | | | | 13 | | | | | | (13) | | | | | | \u2014 | | | | | | | | | | | | 294 | | | | | | (294) | | | | | | \u2014 | | | | | | | | | | | | | | |\n| Professional services | | | | | | | | | | | | | | | | | | | | | | | | | | | 1 | | | | | | 102 | | | | | | (61) | | | | | | 42 | | | | | | | | | | | | 238 | | | | | | (264) | | | | | | 16 | | | | | | | | | | | | | | |\n| Systems conversion and related costs | | | | | | | | | | | | | | | | | | | | | | | | | | | \u2014 | | | | | | 4 | | | | | | (4) | | | | | | \u2014 | | | | | | | | | | | | 30 | | | | | | (30) | | | | | | \u2014 | | | | | | | | | | | | | | |\n| Other adjustments | | | | | | | | | | | | | | | | | | | | | | | | | | | \u2014 | | | | | | 92 | | | | | | (91) | | | | | | 1 | | | | | | | | | | | | 66 | | | | | | (56) | | | | | | 11 | | | | | | | | | | | | | | |\n| Total (1) | | | | | | | | | | | | | | | | | | | | | | | | | | | $ | 44 | | | | | $ | 360 | | | | | $ | (315) | | | | | $ | 89 | | | | | | | | | | | $ | 860 | | | | | $ | (886) | | | | | $ | 63 | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n\n","source":"TFC\/10-K\/0000092230-21-000032"} {"title":"Investment Activities","text":"The securities portfolio totaled $120.8 billion at December\u00a031, 2020, compared to $74.7 billion at December\u00a031, 2019. The increase was due primarily to a $47.0 billion increase in Agency MBS. The increase in the Agency MBS portfolio includes the redeployment of excess liquidity. During 2020, the Company sold non-Agency MBS, and sold and reinvested residential Agency MBS. These sales were the primary drivers for the gains of $402 million for the year ended December 31, 2020.As of December\u00a031, 2020, approximately 1.9% of the securities portfolio was variable rate, compared to 3.6% as of December\u00a031, 2019. The effective duration of the securities portfolio was 4.0 years at December\u00a031, 2020, compared to 4.7 years at December\u00a031, 2019.U.S. Treasury, GSE and Agency MBS represented 99.6% of the total securities portfolio as of December 31, 2020, compared to 98.7% as of the prior year end.50 Truist Financial CorporationThe following table presents the securities portfolio at December\u00a031, 2020, segregated by major category of security holdings with ranges of maturities and average yields disclosed:","markdown_table":"\n\n| | | | | | | | | | | | | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| Table 14: Composition of Securities Portfolio | | | | | | | | | | | | | | | | | |\n| December\u00a031,(Dollars in millions) | | | 2020 | | | | | | 2019 | | | | | | | | | | | | | | |\n| AFS securities (at fair value): | | | | | | | | | | | | | | | | | | | | | | | |\n| U.S. Treasury | | | $ | 1,746 | | | | | $ | 2,276 | | | | | | | | | | | | | |\n| GSE | | | 1,917 | | | | | | 1,881 | | | | | | | | | | | | | | |\n| Agency MBS - residential | | | 113,541 | | | | | | 68,236 | | | | | | | | | | | | | | |\n| Agency MBS - commercial | | | 3,057 | | | | | | 1,341 | | | | | | | | | | | | | | |\n| States and political subdivisions | | | 493 | | | | | | 585 | | | | | | | | | | | | | | |\n| Non-agency MBS | | | \u2014 | | | | | | 368 | | | | | | | | | | | | | | |\n| Other | | | 34 | | | | | | 40 | | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | | | | | | | | | | |\n| Total AFS securities | | | $ | 120,788 | | | | | $ | 74,727 | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | | | | | | | | | | |\n\n","source":"TFC\/10-K\/0000092230-21-000032"} {"title":"Investment Activities","text":"(1)Yields represent interest computed under the effective interest method on a TE basis using the federal income tax rate and the amortized cost of the securities.(2)For purposes of the maturity table, MBS, which are not due at a single maturity date, have been included in maturity groupings based on the contractual maturity. The expected life of MBS will differ from contractual maturities because borrowers may have the right to call or prepay the underlying mortgage loans.","markdown_table":"\n\n| | | | | | | | | | | | | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| Table 15: Securities Yields by Major Category and Maturity | | | | | | | | | | | |\n| December 31, 2020(Dollars in millions) | | | AFS | | | | | | | | | | | | | | |\n| Fair Value | | | | | | Yield (1) | | | | | | | | | | | | | | |\n| U.S. Treasury: | | | | | | | | | | | | | | | | | | | | | | | |\n| Within one year | | | $ | 254 | | | | | 1.51 | | % | | | | | | | | | | | | |\n| One to five years | | | 1,492 | | | | | | 0.85 | | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | | | | | | | | | | |\n| Total | | | 1,746 | | | | | | 0.95 | | | | | | | | | | | | | | |\n| GSE: | | | | | | | | | | | | | | | | | | | | | | | |\n| Within one year | | | 288 | | | | | | 2.81 | | | | | | | | | | | | | | |\n| One to five years | | | 1,553 | | | | | | 2.20 | | | | | | | | | | | | | | |\n| After ten years | | | 76 | | | | | | 3.03 | | | | | | | | | | | | | | |\n| Total | | | 1,917 | | | | | | 2.33 | | | | | | | | | | | | | | |\n| Agency MBS - residential: (2) | | | | | | | | | | | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | | | | | | | | | | |\n| One to five years | | | 1 | | | | | | 2.77 | | | | | | | | | | | | | | |\n| Five to ten years | | | 441 | | | | | | 2.42 | | | | | | | | | | | | | | |\n| After ten years | | | 113,099 | | | | | | 1.95 | | | | | | | | | | | | | | |\n| Total | | | 113,541 | | | | | | 1.95 | | | | | | | | | | | | | | |\n| Agency MBS - commercial: (2) | | | | | | | | | | | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | | | | | | | | | | |\n| One to five years | | | 2 | | | | | | 2.80 | | | | | | | | | | | | | | |\n| Five to ten years | | | 10 | | | | | | 2.86 | | | | | | | | | | | | | | |\n| After ten years | | | 3,045 | | | | | | 1.92 | | | | | | | | | | | | | | |\n| Total | | | 3,057 | | | | | | 1.93 | | | | | | | | | | | | | | |\n| States and political subdivisions: | | | | | | | | | | | | | | | | | | | | | | | |\n| Within one year | | | 29 | | | | | | 3.54 | | | | | | | | | | | | | | |\n| One to five years | | | 132 | | | | | | 2.58 | | | | | | | | | | | | | | |\n| Five to ten years | | | 115 | | | | | | 4.58 | | | | | | | | | | | | | | |\n| After ten years | | | 217 | | | | | | 3.65 | | | | | | | | | | | | | | |\n| Total | | | 493 | | | | | | 3.57 | | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | | | | | | | | | | |\n| Other: | | | | | | | | | | | | | | | | | | | | | | | |\n| Within one year | | | 1 | | | | | | 1.83 | | | | | | | | | | | | | | |\n| One to five years | | | 7 | | | | | | 3.55 | | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | | | | | | | | | | |\n| After ten years | | | 26 | | | | | | 1.70 | | | | | | | | | | | | | | |\n| Total | | | 34 | | | | | | 2.08 | | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | | | | | | | | | | |\n| Total securities | | | $ | 120,788 | | | | | 1.95 | | | | | | | | | | | | | | |\n\n","source":"TFC\/10-K\/0000092230-21-000032"} {"title":"PCI","text":"Loans and leases HFI were $299.7 billion at December\u00a031, 2020, down $108 million compared to 2019.Commercial loans increased $7.3 billion during 2020. The growth in the commercial portfolio was primarily in commercial and industrial loans and reflects PPP loan originations, which was partially offset by lower utilization of commercial lines. Truist served as the fourth largest PPP lender in 2020. The carrying value of PPP loans was $11.0 billion as of December\u00a031, 2020. Additionally, within the commercial and industrial portfolio, Truist experienced growth in loans from mortgage warehouse lending due to the decline in rates and increased refinance activity. Growth in commercial portfolios was partially offset by a decline in dealer floor plan lending and the transfer of $1.0 billion of certain loans and leases to held for sale related to the decision to exit a small ticket loan and lease portfolio.Consumer loans decreased $3.2 billion during 2020 primarily due to refinance activity resulting in a decline in residential mortgages and residential home equity and direct loans. This was partially offset by an increase in indirect auto due to expanded client offerings and an improving credit environment.Credit card loans decreased $780 million during 2020 due to lower business and consumer spending as a result of COVID-19.LHFS decreased $2.3 billion during 2020 primarily due to the sale of loans that had been placed in LHFS after the close of the Merger and the branch divestiture in connection with the Merger, partially offset by the transfer of $1.0 billion to LHFS due to the decision to exit a small ticket loan and lease portfolio.The following table presents a summary of the commercial loan portfolio, segregated by contractual maturities and interest rate terms. Determinations of maturities are based on contractual terms. Truist's credit policy typically does not permit automatic renewal of loans. At the scheduled maturity date (including balloon payment date), the client generally must request a new loan to replace the matured loan and execute either a new note or note modification with rate, terms and conditions negotiated at that time.","markdown_table":"\n\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| Table 16: Loans and Leases as of Period End | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| December\u00a031,(Dollars in millions) | | | | | | 2020 | | | | | | 2019 | | | | | | 2018 | | | | | | 2017 | | | | | | 2016 | | | | | | | | |\n| Commercial: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Commercial and industrial | | | | | | $ | 138,354 | | | | | $ | 130,180 | | | | | $ | 61,935 | | | | | $ | 59,153 | | | | | $ | 57,739 | | | | | | | |\n| CRE | | | | | | 26,595 | | | | | | 26,832 | | | | | | 16,808 | | | | | | 17,173 | | | | | | 15,945 | | | | | | | | |\n| Commercial construction | | | | | | 6,491 | | | | | | 6,205 | | | | | | 4,252 | | | | | | 4,090 | | | | | | 3,819 | | | | | | | | |\n| Lease financing | | | | | | 5,240 | | | | | | 6,122 | | | | | | 2,018 | | | | | | 1,911 | | | | | | 1,677 | | | | | | | | |\n| Consumer: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Residential mortgage | | | | | | 47,272 | | | | | | 52,071 | | | | | | 31,393 | | | | | | 28,725 | | | | | | 29,921 | | | | | | | | |\n| Residential home equity and direct | | | | | | 26,064 | | | | | | 27,044 | | | | | | 11,775 | | | | | | 12,088 | | | | | | 12,295 | | | | | | | | |\n| Indirect auto | | | | | | 26,150 | | | | | | 24,442 | | | | | | 11,282 | | | | | | 11,641 | | | | | | 13,342 | | | | | | | | |\n| Indirect other | | | | | | 11,177 | | | | | | 11,100 | | | | | | 6,143 | | | | | | 5,594 | | | | | | 5,222 | | | | | | | | |\n| Student | | | | | | 7,552 | | | | | | 6,743 | | | | | | \u2014 | | | | | | \u2014 | | | | | | \u2014 | | | | | | | | |\n| Credit card | | | | | | 4,839 | | | | | | 5,619 | | | | | | 2,941 | | | | | | 2,675 | | | | | | 2,452 | | | | | | | | |\n| PCI | | | | | | \u2014 | | | | | | 3,484 | | | | | | 466 | | | | | | 651 | | | | | | 910 | | | | | | | | |\n| Total loans and leases HFI | | | | | | 299,734 | | | | | | 299,842 | | | | | | 149,013 | | | | | | 143,701 | | | | | | 143,322 | | | | | | | | |\n| LHFS | | | | | | 6,059 | | | | | | 8,373 | | | | | | 988 | | | | | | 1,099 | | | | | | 1,716 | | | | | | | | |\n| Total loans and leases | | | | | | $ | 305,793 | | | | | $ | 308,215 | | | | | $ | 150,001 | | | | | $ | 144,800 | | | | | $ | 145,038 | | | | | | | |\n\n","source":"TFC\/10-K\/0000092230-21-000032"} {"title":"PCI","text":"Certain residential mortgage loans have an initial period where the borrower is only required to pay the periodic interest. After the interest-only period, the loan will require the payment of both interest and principal over the remaining term. The outstanding balances of variable rate residential mortgage loans in the interest-only phase were approximately $358 million and $392 million at December\u00a031, 2020 and December\u00a031, 2019, respectively. The following table presents the composition of average loans and leases for each of the last five quarters:","markdown_table":"\n\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| Table 17: Commercial Loan Maturities | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| December 31, 2020(Dollars in millions) | | | | | | 1 Year or Less | | | | | | 1 to 5 Years | | | | | | After 5 Years | | | | | | | | | | | | Total | | |\n| Fixed rate: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Commercial and industrial | | | | | | $ | 4,776 | | | | | $ | 21,910 | | | | | $ | 18,383 | | | | | | | | | | | $ | 45,069 | | | | |\n| CRE | | | | | | 359 | | | | | | 2,296 | | | | | | 2,273 | | | | | | | | | | | | 4,928 | | | | | |\n| Commercial construction | | | | | | 10 | | | | | | 85 | | | | | | 116 | | | | | | | | | | | | 211 | | | | | |\n| Lease financing | | | | | | 189 | | | | | | 1,876 | | | | | | 1,807 | | | | | | | | | | | | 3,872 | | | | | |\n| Total fixed rate | | | | | | 5,334 | | | | | | 26,167 | | | | | | 22,579 | | | | | | | | | | | | 54,080 | | | | | |\n| Variable rate: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Commercial and industrial | | | | | | 20,610 | | | | | | 54,435 | | | | | | 18,240 | | | | | | | | | | | | 93,285 | | | | | |\n| CRE | | | | | | 3,354 | | | | | | 12,364 | | | | | | 5,949 | | | | | | | | | | | | 21,667 | | | | | |\n| Commercial construction | | | | | | 1,738 | | | | | | 4,054 | | | | | | 488 | | | | | | | | | | | | 6,280 | | | | | |\n| Lease financing | | | | | | 147 | | | | | | 315 | | | | | | 906 | | | | | | | | | | | | 1,368 | | | | | |\n| Total variable rate | | | | | | 25,849 | | | | | | 71,168 | | | | | | 25,583 | | | | | | | | | | | | 122,600 | | | | | |\n| Total commercial loans and leases | | | | | | $ | 31,183 | | | | | $ | 97,335 | | | | | $ | 48,162 | | | | | | | | | | | $ | 176,680 | | | | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n\n","source":"TFC\/10-K\/0000092230-21-000032"} {"title":"PCI","text":"Average loans and leases held for investment for the fourth quarter of 2020 were $302.9 billion, down $7.6 billion compared to the third quarter of 2020.Average commercial loans decreased $5.4 billion, primarily in commercial and industrial loans due to paydowns on commercial lines. This was partially offset by growth in mortgage warehouse lending, dealer floor plan lending and governmental finance loans. The carrying value of PPP loans was down $1.4 billion compared to September 30, 2020, which resulted in a decline of $304 million in average PPP loans compared to the average for the third quarter of 2020. In addition, average commercial loans were impacted by the transfer of $1.0 billion of certain loans and leases to held for sale, which resulted in a decline in the average balance of $323 million compared to the third quarter of 2020.Average consumer loans decreased $2.2 billion primarily due to seasonally lower loan production and refinance activity resulting in a decline in residential mortgages and residential home equity and direct loans. This was partially offset by an increase in indirect auto loans.54 Truist Financial Corporation","markdown_table":"\n\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| Table 18: Average Loans and Leases | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| For the Three Months Ended(Dollars in millions) | | | | | | Dec 31, 2020 | | | | | | Sep 30, 2020 | | | | | | Jun 30, 2020 | | | | | | Mar 31, 2020 | | | | | | Dec 31, 2019 | | |\n| Commercial: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Commercial and industrial | | | | | | $ | 139,223 | | | | | $ | 143,452 | | | | | $ | 152,991 | | | | | $ | 131,743 | | | | | $ | 81,853 | |\n| CRE | | | | | | 27,030 | | | | | | 27,761 | | | | | | 27,804 | | | | | | 27,046 | | | | | | 19,896 | | |\n| Commercial construction | | | | | | 6,616 | | | | | | 6,861 | | | | | | 6,748 | | | | | | 6,409 | | | | | | 4,506 | | |\n| Lease financing | | | | | | 5,401 | | | | | | 5,626 | | | | | | 5,922 | | | | | | 6,070 | | | | | | 3,357 | | |\n| Consumer: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Residential mortgage | | | | | | 48,847 | | | | | | 51,500 | | | | | | 52,380 | | | | | | 52,993 | | | | | | 34,824 | | |\n| Residential home equity and direct | | | | | | 26,327 | | | | | | 26,726 | | | | | | 27,199 | | | | | | 27,564 | | | | | | 15,810 | | |\n| Indirect auto | | | | | | 25,788 | | | | | | 24,732 | | | | | | 24,721 | | | | | | 24,975 | | | | | | 15,390 | | |\n| Indirect other | | | | | | 11,291 | | | | | | 11,530 | | | | | | 11,282 | | | | | | 10,950 | | | | | | 7,772 | | |\n| Student | | | | | | 7,519 | | | | | | 7,446 | | | | | | 7,633 | | | | | | 7,787 | | | | | | 1,825 | | |\n| Credit card | | | | | | 4,818 | | | | | | 4,810 | | | | | | 4,949 | | | | | | 5,534 | | | | | | 3,788 | | |\n| PCI | | | | | | \u2014 | | | | | | \u2014 | | | | | | \u2014 | | | | | | \u2014 | | | | | | 1,220 | | |\n| Total average loans and leases HFI | | | | | | $ | 302,860 | | | | | $ | 310,444 | | | | | $ | 321,629 | | | | | $ | 301,071 | | | | | $ | 190,241 | |\n\n","source":"TFC\/10-K\/0000092230-21-000032"} {"title":"COVID-19 Lending Activities","text":"(1)Excludes approximately 46,000 of active accommodations related to government guaranteed loans totaling approximately $2.3 billion.(2)Calculated based on accommodation count; includes loans that are less than 30 days past due. The following table provides a summary of the Company\u2019s exposure related to loans that have exited accommodations:","markdown_table":"\n\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | | |\n| Table 19: Client Accommodations (1) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | | | Active Accommodations | | | | | | | | | | | | Exited Accommodations | | | | | | | | | | | | | | |\n| December 31, 2020(Dollars in millions) | | | Total Count | | | | | | Outstanding Balance | | | | | | Outstanding Balance | | | | | | % Paid-off or Current (2) | | | | | | Types of Accommodations | | |\n| Commercial | | | 835 | | | | | | $ | 274 | | | | | $ | 21,239 | | | | | 97.2 | | % | | | | Clients may elect to defer loan or lease payments for up to 90 days without late fees being incurred but with finance charges continuing to accrue. | | |\n| Consumer | | | 123,191 | | | | | | 3,729 | | | | | | 8,062 | | | | | | 90.8 | | | | | | Clients may elect to defer loan payments for time periods that generally range from 30 to 90 days without late fees being incurred but with finance charges generally continuing to accrue. The Company\u2019s residential mortgage forbearance program generally provides up to 180 days of relief, provided that additional relief may be provided in certain circumstances. | | |\n| Credit card | | | 5,996 | | | | | | 31 | | | | | | 187 | | | | | | 88.5 | | | | | | Clients may elect to defer payments for up to 90 days without late fees being incurred but with finance charges accruing. In addition, Truist provided credit card clients with 5% cash back on qualifying card purchases for certain important basic needs. | | |\n| Total | | | 130,022 | | | | | | $ | 4,034 | | | | | $ | 29,488 | | | | | | | | | | | | | |\n\n","source":"TFC\/10-K\/0000092230-21-000032"} {"title":"COVID-19 Lending Activities","text":"The following table provides a summary of exposure to industries that management believes are most vulnerable in the current economic environment. These selected industry exposures represent 9.0% of loans held for investment at December\u00a031, 2020. Truist is actively managing these portfolios and will continue to make underwriting or risk acceptance adjustments as appropriate. These exposures decreased $0.8 billion or 2.6% during the fourth quarter. In addition, management is closely monitoring its leveraged lending and small secured real estate portfolios which comprised 3.1% and 1.5% of loans held for investment at December\u00a031, 2020, respectfully.","markdown_table":"\n\n| | | | | | |\n| --- | --- | --- | --- | --- | --- |\n| | | | | | |\n| Table 20: Accommodations Exposure | | | | | |\n| December 31, 2020(Dollars in billions) | | | Exposure | | |\n| Current | | | $ | 28,571 | |\n| Past due and still accruing | | | 545 | | |\n| Nonperforming | | | 372 | | |\n| Total | | | $ | 29,488 | |\n\n","source":"TFC\/10-K\/0000092230-21-000032"} {"title":"Asset Quality","text":"(1)The past due status of loans that received a deferral under the CARES Act is generally frozen during the deferral period.56 Truist Financial CorporationNonperforming assets totaled $1.4 billion at December\u00a031, 2020, up $703 million compared to December\u00a031, 2019 primarily from the adoption of CECL, which resulted in the discontinuation of the pool-level accounting for PCI loans and replaced that with a loan-level evaluation for nonaccrual status. As of December 31, 2019, there was approximately $500 million of PCI loans that would have been classified as nonperforming had the Company evaluated accrual status on a loan level basis. The remaining increase in nonperforming loans held for investment is primarily in commercial and industrial loans and an increase in nonperforming mortgage loans due to loans exiting certain accommodation programs related to the CARES Act. Nonperforming loans and leases represented 0.44% of total loans and leases, up 26 basis points compared to December\u00a031, 2019. Performing TDRs were up $381 million compared to the prior year primarily in residential mortgage, lease financing and indirect auto loans. This increase primarily reflects the application of acquisition accounting related to the Merger, which resulted in the removal of the TDR designation on all loans that were restructured by SunTrust prior to the Merger date.Loans 90 days or more past due and still accruing totaled $2.0 billion at December\u00a031, 2020, relatively flat compared to the prior year. In connection with the discontinuation of pool level accounting for PCI loans, loans 90 days or more past due and still accruing decreased as loan-level evaluations resulted in certain loans being placed in nonaccrual status. This decrease was partially offset by an increase in government guaranteed student loans. Additionally, residential mortgage loans 90 days or more past due increased primarily due to the repurchase of delinquent government guaranteed loans. The ratio of loans 90 days or more past due and still accruing as a percentage of loans and leases was 0.67% at December\u00a031, 2020, an increase of 1 basis point from the prior year. Excluding government guaranteed and PCI loans, the ratio of loans 90 days or more past due and still accruing as a percentage of loans and leases was 0.04% at December\u00a031, 2020, up 1 basis point from December\u00a031, 2019.Loans 30-89 days past due and still accruing totaled $2.2 billion at December\u00a031, 2020, relatively flat compared to the prior year. Loans 30-89 days past due reflects a decrease in PCI loans, offset by a corresponding increase in the portfolios where these loans were transferred in connection with the implementation of CECL. The ratio of loans 30-89 days or more past due and still accruing as a percentage of loans and leases was 0.74% at December\u00a031, 2020, flat compared to the prior year.Problem loans include NPLs and loans that are 90 days or more past due and still accruing as disclosed in Table 22. In addition, for the commercial portfolio segment, loans that are rated special mention or substandard performing are closely monitored by management as potential problem loans. Refer to \"Note 5. Loans and ACL\" for additional disclosures related to these potential problem loans.","markdown_table":"\n\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Table 22: Asset Quality | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| December 31,(Dollars in millions) | | | 2020 | | | | | | | | | | | | | | | | | | | | | | | | 2019 | | | | | | 2018 | | | | | | 2017 | | | | | | 2016 | | | | | | | | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| NPAs: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| NPLs: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Commercial and industrial | | | $ | 532 | | | | | | | | | | | | | | | | | | | | | | | $ | 212 | | | | | $ | 200 | | | | | $ | 259 | | | | | $ | 369 | | | | | | | |\n| CRE | | | 75 | | | | | | | | | | | | | | | | | | | | | | | | 10 | | | | | | 63 | | | | | | 37 | | | | | | 40 | | | | | | | | |\n| Commercial construction | | | 14 | | | | | | | | | | | | | | | | | | | | | | | | \u2014 | | | | | | 2 | | | | | | 8 | | | | | | 17 | | | | | | | | |\n| Lease financing | | | 28 | | | | | | | | | | | | | | | | | | | | | | | | 8 | | | | | | 3 | | | | | | 1 | | | | | | 4 | | | | | | | | |\n| Residential mortgage | | | 316 | | | | | | | | | | | | | | | | | | | | | | | | 55 | | | | | | 119 | | | | | | 129 | | | | | | 172 | | | | | | | | |\n| Residential home equity and direct | | | 205 | | | | | | | | | | | | | | | | | | | | | | | | 67 | | | | | | 53 | | | | | | 64 | | | | | | 63 | | | | | | | | |\n| Indirect auto | | | 155 | | | | | | | | | | | | | | | | | | | | | | | | 100 | | | | | | 82 | | | | | | 71 | | | | | | 71 | | | | | | | | |\n| Indirect other | | | 5 | | | | | | | | | | | | | | | | | | | | | | | | 2 | | | | | | \u2014 | | | | | | 1 | | | | | | \u2014 | | | | | | | | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Total NPLs HFI | | | 1,330 | | | | | | | | | | | | | | | | | | | | | | | | 454 | | | | | | 522 | | | | | | 570 | | | | | | 736 | | | | | | | | |\n| Loans held for sale | | | 5 | | | | | | | | | | | | | | | | | | | | | | | | 107 | | | | | | \u2014 | | | | | | \u2014 | | | | | | \u2014 | | | | | | | | |\n| Total nonaccrual loans and leases | | | 1,335 | | | | | | | | | | | | | | | | | | | | | | | | 561 | | | | | | 522 | | | | | | 570 | | | | | | 736 | | | | | | | | |\n| Foreclosed real estate | | | 20 | | | | | | | | | | | | | | | | | | | | | | | | 82 | | | | | | 35 | | | | | | 32 | | | | | | 50 | | | | | | | | |\n| Other foreclosed property | | | 32 | | | | | | | | | | | | | | | | | | | | | | | | 41 | | | | | | 28 | | | | | | 25 | | | | | | 27 | | | | | | | | |\n| Total nonperforming assets | | | $ | 1,387 | | | | | | | | | | | | | | | | | | | | | | | $ | 684 | | | | | $ | 585 | | | | | $ | 627 | | | | | $ | 813 | | | | | | | |\n| TDRs: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Performing TDRs: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Commercial and industrial | | | $ | 78 | | | | | | | | | | | | | | | | | | | | | | | $ | 47 | | | | | $ | 65 | | | | | $ | 50 | | | | | $ | 57 | | | | | | | |\n| CRE | | | 47 | | | | | | | | | | | | | | | | | | | | | | | | 6 | | | | | | 8 | | | | | | 11 | | | | | | 16 | | | | | | | | |\n| Commercial construction | | | \u2014 | | | | | | | | | | | | | | | | | | | | | | | | 37 | | | | | | 2 | | | | | | 5 | | | | | | 9 | | | | | | | | |\n| Lease financing | | | 60 | | | | | | | | | | | | | | | | | | | | | | | | \u2014 | | | | | | \u2014 | | | | | | \u2014 | | | | | | \u2014 | | | | | | | | |\n| Residential mortgage | | | 648 | | | | | | | | | | | | | | | | | | | | | | | | 470 | | | | | | 656 | | | | | | 605 | | | | | | 769 | | | | | | | | |\n| Residential home equity and direct | | | 88 | | | | | | | | | | | | | | | | | | | | | | | | 51 | | | | | | 56 | | | | | | 63 | | | | | | 69 | | | | | | | | |\n| Indirect auto | | | 392 | | | | | | | | | | | | | | | | | | | | | | | | 333 | | | | | | 299 | | | | | | 274 | | | | | | 234 | | | | | | | | |\n| Indirect other | | | 6 | | | | | | | | | | | | | | | | | | | | | | | | 5 | | | | | | 6 | | | | | | 7 | | | | | | 6 | | | | | | | | |\n| Student | | | 5 | | | | | | | | | | | | | | | | | | | | | | | | \u2014 | | | | | | \u2014 | | | | | | \u2014 | | | | | | \u2014 | | | | | | | | |\n| Credit card | | | 37 | | | | | | | | | | | | | | | | | | | | | | | | 31 | | | | | | 27 | | | | | | 28 | | | | | | 27 | | | | | | | | |\n| Total performing TDRs | | | $ | 1,361 | | | | | | | | | | | | | | | | | | | | | | | $ | 980 | | | | | $ | 1,119 | | | | | $ | 1,043 | | | | | $ | 1,187 | | | | | | | |\n| Nonperforming TDRs | | | 164 | | | | | | | | | | | | | | | | | | | | | | | | 82 | | | | | | 176 | | | | | | 189 | | | | | | 184 | | | | | | | | |\n| Total TDRs | | | $ | 1,525 | | | | | | | | | | | | | | | | | | | | | | | $ | 1,062 | | | | | $ | 1,295 | | | | | $ | 1,232 | | | | | $ | 1,371 | | | | | | | |\n| Loans 90 days or more past due and still accruing: (1) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Commercial and industrial | | | $ | 13 | | | | | | | | | | | | | | | | | | | | | | | $ | 1 | | | | | $ | \u2014 | | | | | $ | 1 | | | | | $ | \u2014 | | | | | | | |\n| CRE | | | \u2014 | | | | | | | | | | | | | | | | | | | | | | | | \u2014 | | | | | | \u2014 | | | | | | 1 | | | | | | \u2014 | | | | | | | | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Residential mortgage | | | 841 | | | | | | | | | | | | | | | | | | | | | | | | 543 | | | | | | 405 | | | | | | 465 | | | | | | 522 | | | | | | | | |\n| Residential home equity and direct | | | 10 | | | | | | | | | | | | | | | | | | | | | | | | 9 | | | | | | 8 | | | | | | 6 | | | | | | 6 | | | | | | | | |\n| Indirect auto | | | 2 | | | | | | | | | | | | | | | | | | | | | | | | 11 | | | | | | 6 | | | | | | 6 | | | | | | 5 | | | | | | | | |\n| Indirect other | | | 2 | | | | | | | | | | | | | | | | | | | | | | | | 2 | | | | | | \u2014 | | | | | | \u2014 | | | | | | 1 | | | | | | | | |\n| Student | | | 1,111 | | | | | | | | | | | | | | | | | | | | | | | | 188 | | | | | | \u2014 | | | | | | \u2014 | | | | | | \u2014 | | | | | | | | |\n| Credit card | | | 29 | | | | | | | | | | | | | | | | | | | | | | | | 22 | | | | | | 13 | | | | | | 12 | | | | | | 12 | | | | | | | | |\n| PCI | | | \u2014 | | | | | | | | | | | | | | | | | | | | | | | | 1,218 | | | | | | 30 | | | | | | 57 | | | | | | 90 | | | | | | | | |\n| Total loans 90 days or more past due and still accruing | | | $ | 2,008 | | | | | | | | | | | | | | | | | | | | | | | $ | 1,994 | | | | | $ | 462 | | | | | $ | 548 | | | | | $ | 636 | | | | | | | |\n| Loans 30-89 days past due and still accruing: (1) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Commercial and industrial | | | $ | 83 | | | | | | | | | | | | | | | | | | | | | | | $ | 94 | | | | | $ | 34 | | | | | $ | 41 | | | | | $ | 44 | | | | | | | |\n| CRE | | | 14 | | | | | | | | | | | | | | | | | | | | | | | | 5 | | | | | | 4 | | | | | | 8 | | | | | | 6 | | | | | | | | |\n| Commercial construction | | | 5 | | | | | | | | | | | | | | | | | | | | | | | | 1 | | | | | | 1 | | | | | | \u2014 | | | | | | 2 | | | | | | | | |\n| Lease financing | | | 6 | | | | | | | | | | | | | | | | | | | | | | | | 2 | | | | | | 1 | | | | | | 4 | | | | | | 4 | | | | | | | | |\n| Residential mortgage | | | 782 | | | | | | | | | | | | | | | | | | | | | | | | 498 | | | | | | 456 | | | | | | 472 | | | | | | 525 | | | | | | | | |\n| Residential home equity and direct | | | 98 | | | | | | | | | | | | | | | | | | | | | | | | 122 | | | | | | 63 | | | | | | 67 | | | | | | 62 | | | | | | | | |\n| Indirect auto | | | 495 | | | | | | | | | | | | | | | | | | | | | | | | 560 | | | | | | 390 | | | | | | 373 | | | | | | 347 | | | | | | | | |\n| Indirect other | | | 68 | | | | | | | | | | | | | | | | | | | | | | | | 85 | | | | | | 46 | | | | | | 39 | | | | | | 30 | | | | | | | | |\n| Student | | | 618 | | | | | | | | | | | | | | | | | | | | | | | | 650 | | | | | | \u2014 | | | | | | \u2014 | | | | | | \u2014 | | | | | | | | |\n| Credit card | | | 51 | | | | | | | | | | | | | | | | | | | | | | | | 56 | | | | | | 26 | | | | | | 21 | | | | | | 21 | | | | | | | | |\n| PCI | | | \u2014 | | | | | | | | | | | | | | | | | | | | | | | | 140 | | | | | | 23 | | | | | | 27 | | | | | | 36 | | | | | | | | |\n| Total loans 30-89 days past due and still accruing | | | $ | 2,220 | | | | | | | | | | | | | | | | | | | | | | | $ | 2,213 | | | | | $ | 1,044 | | | | | $ | 1,052 | | | | | $ | 1,077 | | | | | | | |\n\n","source":"TFC\/10-K\/0000092230-21-000032"} {"title":"Asset Quality","text":"Applicable ratios are annualized.(1)Includes LHFS.(2)This asset quality ratio has been adjusted to remove the impact of government guaranteed mortgage, student and PPP loans, and PCI, as applicable. Management believes the inclusion of such assets in this asset quality ratio results in distortion of this ratio such that it might not be reflective of asset collectability or might not be comparable to other periods presented or to other portfolios that do not have government guarantees or were not impacted by PCI accounting requirements.The following table presents activity related to NPAs:","markdown_table":"\n\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| Table 23: Asset Quality Ratios | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| As Of \/ For The Year Ended December 31, | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 2020 | | | | | | 2019 | | | | | | 2018 | | | | | | 2017 | | | | | | 2016 | | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Loans 30-89 days past due and still accruing as a percentage of loans and leases HFI | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 0.74 | | % | | | | 0.74 | | % | | | | 0.70 | | % | | | | 0.73 | | % | | | | 0.75 | | % |\n| Loans 90 days or more past due and still accruing as a percentage of loans and leases HFI | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 0.67 | | | | | | 0.66 | | | | | | 0.31 | | | | | | 0.38 | | | | | | 0.44 | | |\n| NPLs as a percentage of loans and leases HFI | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 0.44 | | | | | | 0.15 | | | | | | 0.35 | | | | | | 0.40 | | | | | | 0.51 | | |\n| Nonperforming loans and leases as a percentage of loans and leases (1) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 0.44 | | | | | | 0.18 | | | | | | 0.35 | | | | | | 0.40 | | | | | | 0.51 | | |\n| NPAs as a percentage of: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Total assets (1) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 0.27 | | | | | | 0.14 | | | | | | 0.26 | | | | | | 0.28 | | | | | | 0.37 | | |\n| Loans and leases HFI plus foreclosed property | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 0.46 | | | | | | 0.19 | | | | | | 0.39 | | | | | | 0.44 | | | | | | 0.57 | | |\n| Net charge-offs as a percentage of average loans and leases HFI | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 0.36 | | | | | | 0.40 | | | | | | 0.36 | | | | | | 0.38 | | | | | | 0.38 | | |\n| ALLL as a percentage of loans and leases HFI | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 1.95 | | | | | | 0.52 | | | | | | 1.05 | | | | | | 1.04 | | | | | | 1.04 | | |\n| Ratio of ALLL to: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Net charge-offs | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 5.21x | | | | | | 2.44x | | | | | | 2.98x | | | | | | 2.78x | | | | | | 2.80x | | |\n| NPLs | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 4.39x | | | | | | 3.41x | | | | | | 2.99x | | | | | | 2.62x | | | | | | 2.03x | | |\n| Loans 90 days or more past due and still accruing as a percentage of loans and leases HFI excluding PPP, other government guaranteed and PCI loans(2) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 0.04 | | % | | | | 0.03 | | % | | | | 0.04 | | % | | | | 0.05 | | % | | | | 0.07 | | % |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n\n","source":"TFC\/10-K\/0000092230-21-000032"} {"title":"Asset Quality","text":"(1)For 2020, includes approximately $500 million of loans previously classified as PCI that would have otherwise been nonperforming as of December 31, 2019.(2)Includes charge-offs and losses recorded upon sale of $139 million and $228 million for the year ended December 31, 2020 and 2019, respectively.(3)Includes charge-offs and losses recorded upon sale of $132 million and $39 million for the year ended December 31, 2020 and 2019, respectively.TDRs occur when a borrower is experiencing, or is expected to experience, financial difficulties in the near term and a concession has been granted to the borrower. As a result, Truist works with borrowers to prevent further difficulties and to improve the likelihood of recovery on a loan. To facilitate this process, a concessionary modification that would not otherwise be considered may be granted, resulting in classification of the loan as a TDR. In accordance with the CARES Act, Truist implemented loan modification programs in response to the COVID-19 pandemic in order to provide borrowers with flexibility with respect to repayment terms. Payment relief assistance provided by Truist includes forbearance, deferrals, extension and re-aging programs, along with certain other modification strategies. The Company adopted certain provisions of the CARES Act and other regulatory guidance that provide relief from the requirement to apply TDR accounting to (1) certain modifications of federally backed mortgages upon request from the borrower, and (2) certain modifications of other non-federally backed mortgages for borrowers impacted by the COVID-19 pandemic that were less than 30 days past due at December 31, 2019. Refer to \"Note 1. Basis of Presentation\" for Truist\u2019s policy related to TDRs and COVID-19 loan modifications. TDRs identified by SunTrust prior to the Merger date are not included in Truist's TDR disclosure because all such loans were recorded at fair value and a new accounting basis was established as of the Merger date. Subsequent modifications are evaluated for potential treatment as TDRs in accordance with Truist's accounting policies.The following table provides a summary of performing TDR activity:","markdown_table":"\n\n| | | | | | | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| Table 24: Rollforward of NPAs | | | | | | | | | | | | | | | | | |\n| (Dollars in millions) | | | | | | 2020 | | | | | | 2019 | | | | | |\n| Balance, January 1 | | | | | | $ | 684 | | | | | $ | 585 | | | | |\n| New NPAs (1) | | | | | | 3,247 | | | | | | 1,499 | | | | | |\n| Advances and principal increases | | | | | | 299 | | | | | | 143 | | | | | |\n| Disposals of foreclosed assets (2) | | | | | | (432) | | | | | | (479) | | | | | |\n| Disposals of NPLs (3) | | | | | | (712) | | | | | | (239) | | | | | |\n| Charge-offs and losses | | | | | | (578) | | | | | | (295) | | | | | |\n| Payments | | | | | | (766) | | | | | | (392) | | | | | |\n| Transfers to performing status | | | | | | (339) | | | | | | (137) | | | | | |\n| Other, net | | | | | | (16) | | | | | | (1) | | | | | |\n| Ending balance, December\u00a031 | | | | | | $ | 1,387 | | | | | $ | 684 | | | | |\n\n","source":"TFC\/10-K\/0000092230-21-000032"} {"title":"Asset Quality","text":"(1)Includes scheduled principal payments, prepayments and payoffs of amounts outstanding. (2)Represent loans that no longer meet the requirements necessary to reflect the loan in accruing status.TDR classification may be removed due to the passage of time if the loan: (i) did not include a forgiveness of principal or interest, (ii) has performed in accordance with the modified terms (generally a minimum of six months), (iii) was reported as a TDR over a year-end reporting period, and (iv) reflected an interest rate on the modified loan that was no less than a market rate at the date of modification. TDR classification may also be removed for an accruing loan upon the occurrence of a subsequent non-concessionary modification granted at market terms and within current underwriting guidelines. In connection with consumer TDRs, a NPL will be returned to accruing status when (i) the borrower has resumed paying the full amount of the scheduled contractual interest and principal payments, (ii) management concludes that all principal and interest amounts contractually due (including arrearages) are reasonably assured of repayment, and (iii) there is a sustained period of repayment performance, generally a minimum of six months.58 Truist Financial CorporationThe following table provides further details regarding the payment status of TDRs outstanding at December\u00a031, 2020:","markdown_table":"\n\n| | | | | | | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| Table 25: Rollforward of Performing TDRs | | | | | | | | | | | | | | | | | |\n| (Dollars in millions) | | | | | | 2020 | | | | | | 2019 | | | | | |\n| Balance, January 1 | | | | | | $ | 980 | | | | | $ | 1,119 | | | | |\n| Inflows | | | | | | 933 | | | | | | 576 | | | | | |\n| Payments and payoffs (1) | | | | | | (194) | | | | | | (214) | | | | | |\n| Charge-offs | | | | | | (44) | | | | | | (67) | | | | | |\n| Transfers to nonperforming TDRs (2) | | | | | | (78) | | | | | | (77) | | | | | |\n| Removal due to the passage of time | | | | | | (8) | | | | | | (18) | | | | | |\n| Non-concessionary re-modifications | | | | | | (3) | | | | | | (8) | | | | | |\n| Transferred to LHFS, sold and other | | | | | | (225) | | | | | | (331) | | | | | |\n| | | | | | | | | | | | | | | | | | |\n| Balance, December\u00a031 | | | | | | $ | 1,361 | | | | | $ | 980 | | | | |\n| | | | | | | | | | | | | | | | | | |\n\n","source":"TFC\/10-K\/0000092230-21-000032"} {"title":"Asset Quality","text":"(1)Past due performing TDRs are included in past due disclosures and nonperforming TDRs are included in NPL disclosures.","markdown_table":"\n\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| Table 26: Payment Status of TDRs (1) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| December 31, 2020(Dollars in millions) | | | Current | | | | | | | | | | | | Past Due 30-89 Days | | | | | | | | | | | | Past Due 90 Days Or More | | | | | | | | | | | | Total | | |\n| Performing TDRs: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Commercial: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Commercial and industrial | | | $ | 77 | | | | | 98.7 | | % | | | | $ | \u2014 | | | | | \u2014 | | % | | | | $ | 1 | | | | | 1.3 | | % | | | | $ | 78 | |\n| CRE | | | 47 | | | | | | 100.0 | | | | | | \u2014 | | | | | | \u2014 | | | | | | \u2014 | | | | | | \u2014 | | | | | | 47 | | |\n| Commercial construction | | | \u2014 | | | | | | \u2014 | | | | | | \u2014 | | | | | | \u2014 | | | | | | \u2014 | | | | | | \u2014 | | | | | | \u2014 | | |\n| Lease financing | | | 60 | | | | | | 100.0 | | | | | | \u2014 | | | | | | \u2014 | | | | | | \u2014 | | | | | | \u2014 | | | | | | 60 | | |\n| Consumer: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Residential mortgage | | | 383 | | | | | | 59.1 | | | | | | 107 | | | | | | 16.5 | | | | | | 158 | | | | | | 24.4 | | | | | | 648 | | |\n| Residential home equity and direct | | | 82 | | | | | | 93.2 | | | | | | 5 | | | | | | 5.7 | | | | | | 1 | | | | | | 1.1 | | | | | | 88 | | |\n| Indirect auto | | | 333 | | | | | | 84.9 | | | | | | 59 | | | | | | 15.1 | | | | | | \u2014 | | | | | | \u2014 | | | | | | 392 | | |\n| Indirect other | | | 5 | | | | | | 83.3 | | | | | | 1 | | | | | | 16.7 | | | | | | \u2014 | | | | | | \u2014 | | | | | | 6 | | |\n| Student | | | 5 | | | | | | 100.0 | | | | | | \u2014 | | | | | | \u2014 | | | | | | \u2014 | | | | | | \u2014 | | | | | | 5 | | |\n| Credit card | | | 32 | | | | | | 86.5 | | | | | | 3 | | | | | | 8.1 | | | | | | 2 | | | | | | 5.4 | | | | | | 37 | | |\n| Total performing TDRs | | | 1,024 | | | | | | 75.2 | | | | | | 175 | | | | | | 12.9 | | | | | | 162 | | | | | | 11.9 | | | | | | 1,361 | | |\n| Nonperforming TDRs | | | 76 | | | | | | 46.3 | | | | | | 20 | | | | | | 12.2 | | | | | | 68 | | | | | | 41.5 | | | | | | 164 | | |\n| Total TDRs | | | $ | 1,100 | | | | | 72.1 | | | | | | $ | 195 | | | | | 12.8 | | | | | | $ | 230 | | | | | 15.1 | | | | | | $ | 1,525 | |\n\n","source":"TFC\/10-K\/0000092230-21-000032"} {"title":"ACL","text":"The ACL totaled $6.2 billion at December\u00a031, 2020, compared to $1.9 billion at December 31, 2019. The increase in the allowance for credit losses was primarily due to the adoption of CECL. Upon adoption, the Company recorded a $3.1 billion increase in the allowance for credit losses, including $2.8 billion that was charged to retained earnings before tax, and $378 million related to the gross up for PCD loans. The remaining increase in the allowance for credit losses primarily reflects deteriorated economic conditions. As of December\u00a031, 2020, the allowance for loan and lease losses was 1.95% of loans and leases held for investment. The allowance for credit losses includes $5.8 billion for loans and leases and $364 million for the reserve for unfunded commitments. At December\u00a031, 2020, the allowance for loan and lease losses was 4.39 times nonperforming loans and leases held for investment, compared to 3.41 times at December 31, 2019. At December\u00a031, 2020, the allowance for loan and lease losses was 5.21 times annualized net charge-offs, compared to 2.44 times at December 31, 2019.60 Truist Financial CorporationNet charge-offs during 2020 totaled $1.1 billion, up $485 million compared to the prior year. The increase in net charge-offs primarily reflects the Merger. As a percentage of average loans and leases, annualized net charge-offs were 0.36%, down four basis points compared to the prior year. Current year net charge-offs include $97 million of charge-offs related to the implementation of CECL, which required a gross-up of loan carrying values in connection with the establishment of an allowance on PCD loans. Management performed a comprehensive review of PCD assets during the year and concluded in certain situations that a charge-off was required. Excluding these additional charge-offs, net charge-offs would have been an annualized 0.33% of average loans and leases for 2020, down seven basis points compared to the prior year.The following table presents an allocation of the ALLL. The entire amount of the allowance is available to absorb losses occurring in any category of loans and leases.","markdown_table":"\n\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Table 27: Activity in ACL | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| (Dollars in millions) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 2020 | | | | | | 2019 | | | | | | 2018 | | | | | | 2017 | | | | | | 2016 | | | | | | | | | | | | | | |\n| Balance, beginning of period | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | $ | 1,889 | | | | | $ | 1,651 | | | | | $ | 1,609 | | | | | $ | 1,599 | | | | | $ | 1,550 | | | | | | | | | | | | | |\n| CECL adoption - impact to retained earnings before tax | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 2,762 | | | | | | \u2014 | | | | | | \u2014 | | | | | | \u2014 | | | | | | \u2014 | | | | | | | | | | | | | | |\n| CECL adoption - reserves on PCD assets | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 378 | | | | | | \u2014 | | | | | | \u2014 | | | | | | \u2014 | | | | | | \u2014 | | | | | | | | | | | | | | |\n| Provision for credit losses | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 2,335 | | | | | | 615 | | | | | | 566 | | | | | | 547 | | | | | | 572 | | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Charge-offs: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Commercial and industrial | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | (358) | | | | | | (90) | | | | | | (92) | | | | | | (95) | | | | | | (143) | | | | | | | | | | | | | | |\n| CRE | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | (78) | | | | | | (33) | | | | | | (10) | | | | | | (8) | | | | | | (8) | | | | | | | | | | | | | | |\n| Commercial construction | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | (30) | | | | | | \u2014 | | | | | | (3) | | | | | | (2) | | | | | | (1) | | | | | | | | | | | | | | |\n| Lease financing | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | (54) | | | | | | (11) | | | | | | (4) | | | | | | (5) | | | | | | (6) | | | | | | | | | | | | | | |\n| Residential mortgage | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | (56) | | | | | | (21) | | | | | | (21) | | | | | | (47) | | | | | | (40) | | | | | | | | | | | | | | |\n| Residential home equity and direct | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | (231) | | | | | | (93) | | | | | | (79) | | | | | | (69) | | | | | | (61) | | | | | | | | | | | | | | |\n| Indirect auto | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | (378) | | | | | | (370) | | | | | | (342) | | | | | | (355) | | | | | | (315) | | | | | | | | | | | | | | |\n| Indirect other | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | (60) | | | | | | (62) | | | | | | (49) | | | | | | (47) | | | | | | (51) | | | | | | | | | | | | | | |\n| Student | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | (23) | | | | | | \u2014 | | | | | | \u2014 | | | | | | \u2014 | | | | | | \u2014 | | | | | | | | | | | | | | |\n| Credit card | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | (182) | | | | | | (109) | | | | | | (76) | | | | | | (68) | | | | | | (61) | | | | | | | | | | | | | | |\n| PCI | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | \u2014 | | | | | | \u2014 | | | | | | (2) | | | | | | (1) | | | | | | (15) | | | | | | | | | | | | | | |\n| Total charge-offs | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | (1,450) | | | | | | (789) | | | | | | (678) | | | | | | (697) | | | | | | (701) | | | | | | | | | | | | | | |\n| Recoveries: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Commercial and industrial | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 92 | | | | | | 25 | | | | | | 39 | | | | | | 36 | | | | | | 44 | | | | | | | | | | | | | | |\n| CRE | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 5 | | | | | | 5 | | | | | | 3 | | | | | | 9 | | | | | | 9 | | | | | | | | | | | | | | |\n| Commercial construction | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 11 | | | | | | 3 | | | | | | 5 | | | | | | 7 | | | | | | 10 | | | | | | | | | | | | | | |\n| Lease financing | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 4 | | | | | | 1 | | | | | | 1 | | | | | | 2 | | | | | | 2 | | | | | | | | | | | | | | |\n| Residential mortgage | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 10 | | | | | | 2 | | | | | | 2 | | | | | | 2 | | | | | | 3 | | | | | | | | | | | | | | |\n| Residential home equity and direct | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 66 | | | | | | 30 | | | | | | 25 | | | | | | 27 | | | | | | 28 | | | | | | | | | | | | | | |\n| Indirect auto | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 87 | | | | | | 52 | | | | | | 49 | | | | | | 46 | | | | | | 44 | | | | | | | | | | | | | | |\n| Indirect other | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 23 | | | | | | 17 | | | | | | 13 | | | | | | 14 | | | | | | 11 | | | | | | | | | | | | | | |\n| Student | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 1 | | | | | | \u2014 | | | | | | \u2014 | | | | | | \u2014 | | | | | | \u2014 | | | | | | | | | | | | | | |\n| Credit card | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 32 | | | | | | 20 | | | | | | 17 | | | | | | 17 | | | | | | 18 | | | | | | | | | | | | | | |\n| Total recoveries | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 331 | | | | | | 155 | | | | | | 154 | | | | | | 160 | | | | | | 169 | | | | | | | | | | | | | | |\n| Net charge-offs | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | (1,119) | | | | | | (634) | | | | | | (524) | | | | | | (537) | | | | | | (532) | | | | | | | | | | | | | | |\n| Other | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | (46) | | | | | | 257 | | | | | | \u2014 | | | | | | \u2014 | | | | | | 9 | | | | | | | | | | | | | | |\n| Balance, end of period | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | $ | 6,199 | | | | | $ | 1,889 | | | | | $ | 1,651 | | | | | $ | 1,609 | | | | | $ | 1,599 | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| ALLL (excluding PCD \/ PCI loans) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | $ | 5,668 | | | | | $ | 1,541 | | | | | $ | 1,549 | | | | | $ | 1,462 | | | | | $ | 1,445 | | | | | | | | | | | | | |\n| ALLL for PCD \/ PCI loans | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 167 | | | | | | 8 | | | | | | 9 | | | | | | 28 | | | | | | 44 | | | | | | | | | | | | | | |\n| RUFC | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 364 | | | | | | 340 | | | | | | 93 | | | | | | 119 | | | | | | 110 | | | | | | | | | | | | | | |\n| Total ACL | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | $ | 6,199 | | | | | $ | 1,889 | | | | | $ | 1,651 | | | | | $ | 1,609 | | | | | $ | 1,599 | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n\n","source":"TFC\/10-K\/0000092230-21-000032"} {"title":"ACL","text":"Truist monitors the performance of its home equity loans and lines secured by second liens similarly to other consumer loans and utilizes assumptions specific to these loans in determining the necessary ALLL. Truist also receives notification when the first lien holder, whether Truist or another financial institution, has initiated foreclosure proceedings against the borrower. When notified that the first lien is in the process of foreclosure, Truist obtains valuations to determine if any additional charge-offs or reserves are warranted. These valuations are updated at least annually thereafter.Truist has limited ability to monitor the delinquency status of the first lien, unless the first lien is held or serviced by Truist. As a result, using migration assumptions that are based on historical experience and adjusted for current trends, Truist estimates the volume of second lien positions where the first lien is delinquent and adjusts the ALLL to reflect the increased risk of loss on these credits. Finally, Truist also provides additional reserves for second lien positions when the estimated combined current loan to value ratio for the credit exceeds 100%. As of December\u00a031, 2020, Truist held or serviced the first lien on 30.6% of its second lien positions.","markdown_table":"\n\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| Table 28: Allocation of ALLL by Category | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | | | 2020 | | | | | | | | | | | | 2019 | | | | | | | | | | | | 2018 | | | | | | | | | | | | 2017 | | | | | | | | | | | | 2016 | | | | | | | | |\n| December 31,(Dollars in millions) | | | Amount | | | | | | | | | | | | % Loans in Each Category | | | | | | Amount | | | | | | | | | | | | % Loans in Each Category | | | | | | Amount | | | | | | | | | | | | % Loans in each category | | | | | | Amount | | | | | | | | | | | | % Loans in each category | | | | | | Amount | | | | | | | | | | | | % Loans in each category | | |\n| Commercial and industrial | | | $ | 2,156 | | | | | | | | | | | 46.2 | | % | | | | $ | 560 | | | | | | | | | | | 43.4 | | % | | | | $ | 546 | | | | | | | | | | | 41.4 | | % | | | | $ | 522 | | | | | | | | | | | 41.1 | | % | | | | $ | 530 | | | | | | | | | | | 40.4 | | % |\n| CRE | | | 573 | | | | | | | | | | | | 8.9 | | | | | | 150 | | | | | | | | | | | | 8.9 | | | | | | 142 | | | | | | | | | | | | 11.3 | | | | | | 118 | | | | | | | | | | | | 12.0 | | | | | | 120 | | | | | | | | | | | | 11.1 | | |\n| Commercial construction | | | 81 | | | | | | | | | | | | 2.2 | | | | | | 52 | | | | | | | | | | | | 2.1 | | | | | | 48 | | | | | | | | | | | | 2.9 | | | | | | 42 | | | | | | | | | | | | 2.8 | | | | | | 25 | | | | | | | | | | | | 2.7 | | |\n| Lease financing | | | 48 | | | | | | | | | | | | 1.7 | | | | | | 10 | | | | | | | | | | | | 2.0 | | | | | | 11 | | | | | | | | | | | | 1.4 | | | | | | 9 | | | | | | | | | | | | 1.3 | | | | | | 7 | | | | | | | | | | | | 1.2 | | |\n| Residential mortgage | | | 368 | | | | | | | | | | | | 15.8 | | | | | | 176 | | | | | | | | | | | | 17.4 | | | | | | 232 | | | | | | | | | | | | 21.1 | | | | | | 209 | | | | | | | | | | | | 20.0 | | | | | | 227 | | | | | | | | | | | | 20.8 | | |\n| Residential home equity and direct | | | 714 | | | | | | | | | | | | 8.7 | | | | | | 107 | | | | | | | | | | | | 9.0 | | | | | | 104 | | | | | | | | | | | | 7.9 | | | | | | 113 | | | | | | | | | | | | 8.4 | | | | | | 111 | | | | | | | | | | | | 8.6 | | |\n| Indirect auto | | | 1,198 | | | | | | | | | | | | 8.7 | | | | | | 304 | | | | | | | | | | | | 8.2 | | | | | | 298 | | | | | | | | | | | | 7.6 | | | | | | 296 | | | | | | | | | | | | 8.1 | | | | | | 273 | | | | | | | | | | | | 9.3 | | |\n| Indirect other | | | 208 | | | | | | | | | | | | 3.7 | | | | | | 60 | | | | | | | | | | | | 3.7 | | | | | | 58 | | | | | | | | | | | | 4.1 | | | | | | 52 | | | | | | | | | | | | 3.9 | | | | | | 54 | | | | | | | | | | | | 3.6 | | |\n| Student | | | 130 | | | | | | | | | | | | 2.5 | | | | | | \u2014 | | | | | | | | | | | | 2.2 | | | | | | \u2014 | | | | | | | | | | | | \u2014 | | | | | | \u2014 | | | | | | | | | | | | \u2014 | | | | | | \u2014 | | | | | | | | | | | | \u2014 | | |\n| Credit card | | | 359 | | | | | | | | | | | | 1.6 | | | | | | 122 | | | | | | | | | | | | 1.9 | | | | | | 110 | | | | | | | | | | | | 2.0 | | | | | | 101 | | | | | | | | | | | | 1.9 | | | | | | 98 | | | | | | | | | | | | 1.7 | | |\n| PCI | | | \u2014 | | | | | | | | | | | | \u2014 | | | | | | 8 | | | | | | | | | | | | 1.2 | | | | | | 9 | | | | | | | | | | | | 0.3 | | | | | | 28 | | | | | | | | | | | | 0.5 | | | | | | 44 | | | | | | | | | | | | 0.6 | | |\n| Total ALLL | | | 5,835 | | | | | | | | | | | | 100.0 | | % | | | | 1,549 | | | | | | | | | | | | 100.0 | | % | | | | 1,558 | | | | | | | | | | | | 100.0 | | % | | | | 1,490 | | | | | | | | | | | | 100.0 | | % | | | | 1,489 | | | | | | | | | | | | 100.0 | | % |\n| RUFC | | | 364 | | | | | | | | | | | | | | | | | | 340 | | | | | | | | | | | | | | | | | | 93 | | | | | | | | | | | | | | | | | | 119 | | | | | | | | | | | | | | | | | | 110 | | | | | | | | | | | | | | |\n| Total ACL | | | $ | 6,199 | | | | | | | | | | | | | | | | | $ | 1,889 | | | | | | | | | | | | | | | | | $ | 1,651 | | | | | | | | | | | | | | | | | $ | 1,609 | | | | | | | | | | | | | | | | | $ | 1,599 | | | | | | | | | | | | | |\n\n","source":"TFC\/10-K\/0000092230-21-000032"} {"title":"Deposits","text":"Deposits totaled $381.1 billion at December\u00a031, 2020, an increase of $46.4 billion from December\u00a031, 2019. The growth in deposits reflects solid growth in all non-time deposit categories resulting from pandemic-related client behavior and government stimulus programs. Time deposits decreased primarily due to maturities of wholesale negotiable certificates of deposit and higher-cost personal and business accounts.62 Truist Financial CorporationThe following table presents average deposits for each of the last five quarters:","markdown_table":"\n\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| Table 30: Deposits as of Period End | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| December 31,(Dollars in millions) | | | | | | 2020 | | | | | | | | | | | | | | | | | | | | | | | | 2019 | | | | | | 2018 | | | | | | 2017 | | | | | | 2016 | | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Noninterest-bearing deposits | | | | | | $ | 127,629 | | | | | | | | | | | | | | | | | | | | | | | $ | 92,405 | | | | | $ | 53,025 | | | | | $ | 53,767 | | | | | $ | 50,697 | |\n| Interest checking | | | | | | 105,269 | | | | | | | | | | | | | | | | | | | | | | | | 85,492 | | | | | | 28,130 | | | | | | 27,677 | | | | | | 30,263 | | |\n| Money market and savings | | | | | | 126,238 | | | | | | | | | | | | | | | | | | | | | | | | 120,934 | | | | | | 63,467 | | | | | | 62,757 | | | | | | 64,883 | | |\n| Time deposits | | | | | | 21,941 | | | | | | | | | | | | | | | | | | | | | | | | 35,896 | | | | | | 16,577 | | | | | | 13,170 | | | | | | 14,391 | | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Total deposits | | | | | | $ | 381,077 | | | | | | | | | | | | | | | | | | | | | | | $ | 334,727 | | | | | $ | 161,199 | | | | | $ | 157,371 | | | | | $ | 160,234 | |\n\n","source":"TFC\/10-K\/0000092230-21-000032"} {"title":"Deposits","text":"Average deposits for the fourth quarter of 2020 were $375.3 billion, an increase of $3.1 billion compared to the prior quarter. Average noninterest-bearing and interest checking deposit growth was strong for the fourth quarter of 2020 driven by anticipated seasonal inflows in addition to continued growth resulting from pandemic-related client behavior. Average time deposits decreased primarily due to maturity of wholesale negotiable certificates of deposit and higher-cost personal and business accounts.Average noninterest-bearing deposits represented 33.9% of total deposits for the fourth quarter of 2020, compared to 33.3% for the prior quarter. The cost of average total deposits was 0.07% for the fourth quarter, down three basis points compared to the prior quarter. The cost of average interest-bearing deposits was 0.11% for the fourth quarter, down four basis points compared to the prior quarter.The following table summarizes the maturities of time deposits above $100,000:","markdown_table":"\n\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| Table 31: Average Deposits | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Three Months Ended(Dollars in millions) | | | | | | Dec 31, 2020 | | | | | | Sep 30, 2020 | | | | | | Jun 30, 2020 | | | | | | Mar 31, 2020 | | | | | | Dec 31, 2019 | | |\n| Noninterest-bearing deposits | | | | | | $ | 127,103 | | | | | $ | 123,966 | | | | | $ | 113,875 | | | | | $ | 93,135 | | | | | $ | 64,485 | |\n| Interest checking | | | | | | 99,866 | | | | | | 96,707 | | | | | | 97,863 | | | | | | 85,008 | | | | | | 43,246 | | |\n| Money market and savings | | | | | | 124,692 | | | | | | 123,598 | | | | | | 126,071 | | | | | | 120,936 | | | | | | 79,903 | | |\n| Time deposits | | | | | | 23,605 | | | | | | 27,940 | | | | | | 33,009 | | | | | | 35,570 | | | | | | 23,058 | | |\n| Foreign office deposits - interest-bearing | | | | | | \u2014 | | | | | | \u2014 | | | | | | \u2014 | | | | | | \u2014 | | | | | | 24 | | |\n| Total average deposits | | | | | | $ | 375,266 | | | | | $ | 372,211 | | | | | $ | 370,818 | | | | | $ | 334,649 | | | | | $ | 210,716 | |\n\n","source":"TFC\/10-K\/0000092230-21-000032"} {"title":"Borrowings","text":"At December\u00a031, 2020, short-term borrowings totaled $6.1 billion, a decrease of $12.1 billion compared to December\u00a031, 2019, due primarily to a decrease of $10.8 billion in short-term FHLB advances. These borrowing sources were replaced with deposit funding.Average short-term borrowings were $10.1 billion, or 2.4% of total funding for 2020, as compared to $8.5 billion, or 4.1% for the prior year. The increase in the average amount was due to the Merger. Average short-term borrowings decreased as a percentage of funding sources due to strong deposit growth.Long-term debt provides funding and, to a lesser extent, regulatory capital, and primarily consists of senior and subordinated notes issued by Truist and Truist Bank. Long-term debt totaled $39.6 billion at December\u00a031, 2020, a decrease of $1.7 billion compared to December\u00a031, 2019. During 2020, the Company issued $4.8 billion of senior notes with interest rates from 1.125% to 1.95% maturing in 2023 to 2030, $500 million in floating rate senior notes maturing in 2023 and $1.3 billion of subordinated notes with an interest rate of 2.25% maturing in 2030. These issuances were partially offset by the redemption of $4.6 billion of senior notes during 2020 and a decrease of $3.3 billion in long-term FHLB advances. FHLB advances represented 2.2% of total outstanding long-term debt at December\u00a031, 2020, compared to 10.0% at December\u00a031, 2019. The average cost of long-term debt was 1.75% for the year ended December 31, 2020, down 147 basis points compared to the same period in 2019. Truist entered into $20 billion of FHLB advances during 2020 to build liquidity and ensure the Company was able to meet the funding needs of its clients. As market conditions stabilized and deposits increased, these advances were repaid and the Company recognized a loss of $235 million on the early extinguishment of debt. The repayment of these advances improved net interest income, the net interest margin and the leverage ratios.","markdown_table":"\n\n| | | | | | | | | | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| Table 33: Short-Term Borrowings | | | | | | | | | | | | | | | | | | | | |\n| As Of \/ For The Year Ended December 31,(Dollars in millions) | | | | | | 2020 | | | | | | 2019 | | | | | | 2018 | | |\n| Securities sold under agreements to repurchase: | | | | | | | | | | | | | | | | | | | | |\n| Maximum outstanding at any month-end during the year | | | | | | $ | 2,348 | | | | | $ | 1,969 | | | | | $ | 836 | |\n| Balance outstanding at end of year | | | | | | 1,221 | | | | | | 1,969 | | | | | | 270 | | |\n| Average outstanding during the year | | | | | | 1,504 | | | | | | 826 | | | | | | 446 | | |\n| Average interest rate during the year | | | | | | 0.64 | | % | | | | 2.01 | | % | | | | 1.35 | | % |\n| Average interest rate at end of year | | | | | | 0.13 | | | | | | 1.41 | | | | | | 1.59 | | |\n| Federal funds purchased and short-term borrowed funds: | | | | | | | | | | | | | | | | | | | | |\n| Maximum outstanding at any month-end during the year | | | | | | $ | 19,392 | | | | | $ | 14,493 | | | | | $ | 8,919 | |\n| Balance outstanding at end of year | | | | | | 3,372 | | | | | | 14,493 | | | | | | 4,763 | | |\n| Average outstanding during the year | | | | | | 6,951 | | | | | | 7,354 | | | | | | 5,341 | | |\n| Average interest rate during the year | | | | | | 1.17 | | % | | | | 2.28 | | % | | | | 1.98 | | % |\n| Average interest rate at end of year | | | | | | 0.20 | | | | | | 1.75 | | | | | | 2.49 | | |\n\n","source":"TFC\/10-K\/0000092230-21-000032"} {"title":"Interest Rate Market Risk","text":"(1)The Down 25 and 50 rates are floored at one basis point and may not reflect Down 25 and 50 basis points for all rate indices.Truist has established parameters related to interest rate sensitivity measures that prescribe a maximum impact on net interest income under different interest rate scenarios that would result in an escalation to the Board. The following parameters and interest rate scenarios are considered Truist's primary measures of interest rate risk:\u2022Maximum impact on net interest income of 7.5% for the next 12 months assuming a 25 basis point change in interest rates each quarter for four quarters; and a\u2022Maximum impact on net interest income of 10% for an immediate 100 basis point parallel change in rates.This interest rate shock analysis is designed to create an outer bound of acceptable interest rate risk.Management considers how the interest rate risk position could be impacted by changes in balance sheet mix. Liquidity in the banking industry has been very strong during the current economic cycle. Much of this liquidity increase has resulted in growth in noninterest-bearing demand deposits. Consistent with the industry, Truist has seen a significant increase in this funding source. The behavior of these deposits is one of the most important assumptions used in determining the interest rate risk position of Truist. A decrease in the amount of these deposits in the future would reduce the asset sensitivity of Truist\u2019s balance sheet because the Company would increase interest-bearing funds to offset the loss of this advantageous funding source.The following table shows the results of Truist's interest-rate sensitivity position assuming the loss of demand deposits and an associated increase in managed rate deposits under various scenarios. For purposes of this analysis, Truist modeled the incremental beta of managed rate deposits for the replacement of the demand deposits at 100%.","markdown_table":"\n\n| | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Table 34: Interest Sensitivity Simulation Analysis | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Interest Rate Scenario | | | | | | | | | | | | | | | | | | Annualized Hypothetical Percentage Change in Net Interest Income | | | | | | | | |\n| Linear Change in Prime Rate (bps) | | | | | | Prime Rate | | | | | | | | | | | |\n| | | | Dec 31, 2020 | | | | | | Dec 31, 2019 | | | | | | Dec 31, 2020 | | | | | | Dec 31, 2019 | | |\n| Up 100 | | | | | | 4.25 | | % | | | | 5.75 | | % | | | | 4.18 | | % | | | | 0.95 | | % |\n| Up 50 | | | | | | 3.75 | | | | | | 5.25 | | | | | | 3.24 | | | | | | 0.75 | | |\n| No Change | | | | | | 3.25 | | | | | | 4.75 | | | | | | \u2014 | | | | | | \u2014 | | |\n| Down 25 (1) | | | | | | 3.00 | | | | | | 4.50 | | | | | | (1.82) | | | | | | NA | | |\n| Down 50 (1) | | | | | | 2.75 | | | | | | 4.25 | | | | | | (2.09) | | | | | | (1.18) | | |\n\n","source":"TFC\/10-K\/0000092230-21-000032"} {"title":"Interest Rate Market Risk","text":"(1)The base scenario is equal to the annualized hypothetical percentage change in net interest income at December\u00a031, 2020 as presented in the preceding table.Truist also uses an EVE analysis to focus on longer-term projected changes in asset and liability values given potential changes in interest rates. This measure allows Truist to analyze interest rate risk that falls outside the net interest income simulation period. The EVE model is a discounted cash flow of the portfolio of assets, liabilities and derivative instruments. The difference in the present value of assets minus the present value of liabilities is defined as EVE.The following table shows the effect that the indicated changes in interest rates would have on EVE:","markdown_table":"\n\n| | | | | | | | | | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | | | | | | | | | | | | | | | | | | | |\n| Table 35: Deposit Mix Sensitivity Analysis | | | | | | | | | | | | | | | | | | | | |\n| Linear Change in Rates (bps) | | | | | | Base Scenario at December 31, 2020 (1) | | | | | | Results Assuming a Decrease in Noninterest-Bearing Demand Deposits | | | | | | | | |\n| | | | | | | $20 Billion | | | | | | $40 Billion | | |\n| Up 100 | | | | | | 4.18 | | % | | | | 3.36 | | % | | | | 2.54 | | % |\n| Up 50 | | | | | | 3.24 | | | | | | 2.64 | | | | | | 2.04 | | |\n\n","source":"TFC\/10-K\/0000092230-21-000032"} {"title":"Interest Rate Market Risk","text":"Truist uses financial instruments including derivatives to manage interest rate risk related to securities, commercial loans, MSRs and mortgage banking operations, long-term debt and other funding sources. During October 2020, Truist initiated a new investment securities fair value hedging program, using fixed interest rate swaps to hedge prepayable securities. Truist also uses derivatives to facilitate transactions on behalf of its clients and as part of associated hedging activities. As of December\u00a031, 2020, Truist had derivative financial instruments outstanding with notional amounts totaling $322.9 billion, with an associated net fair value of $3.3 billion. See \"Note 19. Derivative Financial Instruments\" for additional disclosures.LIBOR in its current form was anticipated to no longer be available after 2021. For most tenors of U.S. dollar LIBOR, subject to the results of a consultation period ending January 2021, the administrator of LIBOR is considering extending publication until June 30, 2023. Tenors used infrequently by Truist, including one week and two month U.S. dollar LIBOR, are still anticipated to cease publication at December 31, 2021, based on this new guidance. Truist has U.S. dollar LIBOR-based contracts that extend beyond June 30, 2023. To prepare for the transition to an alternative reference rate, management has formed a cross-functional project team to address the LIBOR transition. The project team has performed an assessment to identify the potential risks related to the transition from LIBOR to a new index. The project team provides updates to Executive Leadership and the Board.Contract fallback language for existing loans and leases is under review and certain contracts will need updated provisions for the transition. Current fallback language used for new, renewed, and modified contracts is generally consistent with ARRC recommendations. Updates to current fallback language will be evaluated according to new regulatory guidance for the extension of timelines for the transition and expectations for production of U.S. dollar LIBOR contracts during 2021. Truist continues to manage the impact of these contracts and other financial instruments, systems implications, hedging strategies, and related operational and market risks on established project plans for business and operational readiness for the transition. Market risks associated with this change are dependent on the alternative reference rates available and market conditions at transition. For a further discussion of the various risks associated with the potential cessation of LIBOR and the transition to alternative reference rates, refer to the section titled \"Item1A. Risk Factors.\" In 2020, Truist began offering SOFR-based lending solutions to wholesale and consumer clients, and entered into SOFR-based derivative contracts. Truist expects SOFR to become a more commonly-used pricing benchmark across the industry. Truist continues to evaluate SOFR for additional product offerings and other alternative reference rates as replacements for LIBOR.","markdown_table":"\n\n| | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| Table 36: EVE Simulation Analysis | | | | | | | | | | | | | | |\n| Change in Interest Rates (bps) | | | | | | | | | | | | Hypothetical Percentage Change in EVE | | | | | | | | |\n| | | | | | | | | | | | | | | | Dec 31, 2020 | | | | | | Dec 31, 2019 | | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Up 100 | | | | | | | | | | | | | | | | | | 3.9 | | % | | | | (2.9) | | % |\n| No Change | | | | | | | | | | | | | | | | | | \u2014 | | | | | | \u2014 | | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Down 100 | | | | | | | | | | | | | | | | | | (7.6) | | | | | | (3.0) | | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | |\n\n","source":"TFC\/10-K\/0000092230-21-000032"} {"title":"Stressed VaR-based measures","text":"The increase from the prior year in stressed VaR-based measures was due to the integration of heritage SunTrust trading business after the Merger and the market volatility due to the COVID-19 pandemic.","markdown_table":"\n\n| | | | | | | | | | | | | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| Table 38: Stressed VaR-based Measures - 10 Day Holding Period | | | | | | | | | | | | | | | | | | | | |\n| | | | | | | | | | | | |\n| Year Ended December 31, | | | | | | | | | | | | | | | | | | | | | | | |\n| (Dollars in millions) | | | | | | | | | | | | | | | 2020 | | | | | | 2019 | | |\n| Maximum | | | | | | | | | | | | | | | $ | 65 | | | | | $ | 33 | |\n| Average | | | | | | | | | | | | | | | 33 | | | | | | 5 | | |\n| Minimum | | | | | | | | | | | | | | | 13 | | | | | | 2 | | |\n| Period-end | | | | | | | | | | | | | | | 28 | | | | | | 28 | | |\n\n","source":"TFC\/10-K\/0000092230-21-000032"} {"title":"Truist Bank","text":"Truist has a contingency funding plan designed to ensure that liquidity sources are sufficient to meet ongoing obligations and commitments, particularly in the event of a liquidity contraction. This plan is designed to examine and quantify the organization's liquidity under various \"stress\" scenarios. Additionally, the plan provides a framework for management and other critical personnel to follow in the event of a liquidity contraction or in anticipation of such an event. The plan addresses authority for activation and decision making, liquidity options, and the responsibilities of key departments in the event of a liquidity contraction. Management believes current sources of liquidity are adequate to meet Truist's current requirements and plans for continued growth. See \"Note 9. Other Assets and Liabilities,\" \"Note 11. Borrowings\" and \"Note 16. Commitments and Contingencies\" for additional information regarding outstanding balances of sources of liquidity and contractual commitments and obligations.","markdown_table":"\n\n| | | | | | | | | | | | | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| Table 39: Credit Ratings of Truist Financial Corporation and Truist Bank | | | | | | | | | | | | | | | | | | | | | | | |\n| | | | S&P | | | | | | Moody's | | | | | | Fitch | | | | | | DBRS Morningstar | | |\n| Truist Financial Corporation: | | | | | | | | | | | | | | | | | | | | | | | |\n| Issuer | | | A- \/ A-2 | | | | | | A3 | | | | | | A+ \/ F1 | | | | | | AH \/ R-1L | | |\n| Senior unsecured | | | A- | | | | | | A3 | | | | | | A | | | | | | AH | | |\n| Subordinated | | | BBB+ | | | | | | A3 | | | | | | A- | | | | | | A | | |\n| Preferred stock | | | BBB- | | | | | | Baa2(hyb) | | | | | | BBB | | | | | | BBBH | | |\n| Truist Bank: | | | | | | | | | | | | | | | | | | | | | | | |\n| Issuer | | | A \/ A-1 | | | | | | A2 | | | | | | A+ \/ F1 | | | | | | AAL \/ R-1M | | |\n| Senior unsecured | | | A | | | | | | A2 | | | | | | A+ | | | | | | AAL | | |\n| Deposits | | | NA | | | | | | Aa2 \/ P-1 | | | | | | AA- \/ F1+ | | | | | | AAL \/ R-1M | | |\n| Subordinated | | | A- | | | | | | (P) A3 | | | | | | A | | | | | | AH | | |\n| Ratings outlook: | | | | | | | | | | | | | | | | | | | | | | | |\n| Credit trend | | | Stable | | | | | | Stable | | | | | | Negative | | | | | | Stable | | |\n\n","source":"TFC\/10-K\/0000092230-21-000032"} {"title":"Contractual Obligations, Commitments, Contingent Liabilities and Off-Balance Sheet Arrangements","text":"(1)Amounts include imputed interest of $5 million related to finance leases.(2)Based on estimated payment dates.(3)Includes accrued interest and future contractual interest obligations. Variable rate payments are based upon the rate in effect at December\u00a031, 2020.(4)Represents obligations to purchase goods or services that are enforceable and legally binding. Many of the purchase obligations have terms that are not fixed and determinable and are included in the table above based upon the estimated timing and amount of payment. In addition, certain of the purchase agreements contain clauses that would allow Truist to cancel the agreement with specified notice; however, that impact is not included in the table above.(5)Although technically unfunded plans, rabbi trusts and insurance policies on the lives of certain of the covered employees are available to finance future benefit plan payments.Truist's commitments include investments in affordable housing projects throughout its market area, renewable energy credits, and private equity funds. Refer to \"Note 1. Basis of Presentation\" and \"Note 16. Commitments and Contingencies\" for further discussion of these commitments. In addition, Truist enters into derivative contracts to manage various financial risks. Further discussion of derivative instruments is included in \"Note 1. Basis of Presentation\" and \"Note 19. Derivative Financial Instruments.\" Further discussion related to the nature of Truist's obligations is included in \"Note 16. Commitments and Contingencies.\" Further discussion of Truist's commitments is included in \"Note 16. Commitments and Contingencies\" and \"Note 18. Fair Value Disclosures.\" 76 Truist Financial Corporation","markdown_table":"\n\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Table 40: Contractual Obligations and Other Commitments | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| December 31, 2020(Dollars in millions) | | | Total | | | | | | Less than 1 Year | | | | | | 1 to 3 Years | | | | | | 3 to 5 Years | | | | | | After 5 Years | | |\n| Long-term debt (1) | | | $ | 39,602 | | | | | $ | 5,373 | | | | | $ | 14,375 | | | | | $ | 11,106 | | | | | $ | 8,748 | |\n| Operating leases | | | 2,079 | | | | | | 361 | | | | | | 677 | | | | | | 468 | | | | | | 573 | | |\n| Commitments to fund affordable housing investments | | | 1,057 | | | | | | 623 | | | | | | 364 | | | | | | 27 | | | | | | 43 | | |\n| Renewable energy, private equity and certain other equity method investment commitments (2) | | | 547 | | | | | | 284 | | | | | | 145 | | | | | | 74 | | | | | | 44 | | |\n| Time deposits | | | 21,941 | | | | | | 17,438 | | | | | | 3,860 | | | | | | 593 | | | | | | 50 | | |\n| Contractual interest payments (3) | | | 3,723 | | | | | | 1,012 | | | | | | 1,407 | | | | | | 838 | | | | | | 466 | | |\n| Purchase obligations (4) | | | 2,020 | | | | | | 705 | | | | | | 739 | | | | | | 401 | | | | | | 175 | | |\n| Nonqualified benefit plan obligations (5) | | | 1,914 | | | | | | 22 | | | | | | 54 | | | | | | 53 | | | | | | 1,785 | | |\n| Total contractual cash obligations | | | $ | 72,883 | | | | | $ | 25,818 | | | | | $ | 21,621 | | | | | $ | 13,560 | | | | | $ | 11,884 | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | |\n\n","source":"TFC\/10-K\/0000092230-21-000032"} {"title":"Capital","text":"(1)The Truist targets are subject to revision based on finalization of pending regulatory guidance and other strategic factors.(2)Truist's goal is to maintain capital levels above all regulatory minimums.(3)Reflects a SCB of 270 basis points for Truist.During the first quarter of 2020, as market conditions evolved, Truist received Board approval to establish new interim operating targets that provide for sufficient capital levels while allowing the company to support clients through the economic downturn. These interim operating targets will be evaluated as economic conditions evolve.While nonrecurring events or management decisions may result in the Company temporarily falling below its operating targets for one or more of these ratios, it is management's intent to return to these operating targets within a reasonable period of time through capital planning. Such temporary decreases below the operating minimums shown above are not considered an infringement of Truist's overall capital policy, provided a return above the minimums is forecasted to occur within a reasonable time period.In August 2020, the Federal Reserve informed Truist of its SCB of 270 basis points for risk-based capital ratios. This buffer was determined based on stress testing results developed by the Federal Reserve and is effective from October 1, 2020 through September 30, 2021, at which point a revised SCB will be calculated and provided to Truist. Consistent with the Federal Reserve\u2019s mandate across the industry, Truist resubmitted its capital plan in November 2020 to reflect changes in financial markets and the macroeconomic outlook. Truist\u2019s review of the results of the 2020 CCAR supervisory stress test notes that the modeled outcomes shown by the FRB differ from those calculated by the Company. Truist believes those differences are attributable in part to the application of purchase accounting associated with the Merger. Purchase accounting adjustments could result in a reduction in provision expense and an increase in pre-provision net revenue. These differences could result in higher capital ratios than were reflected in the CCAR results.In December 2020, the Board of Directors authorized the repurchase of up to $2.0 billion of the Company\u2019s common stock beginning in the first quarter of 2021, as well as certain other actions to optimize Truist\u2019s capital position. Management\u2019s intention is to maintain an approximate 10% Common Equity Tier 1 ratio after considering strategic actions such as non-bank acquisitions or stock repurchases, as well as changes in risk-weighted assets. Any stock repurchase activity will be informed by economic and regulatory considerations as well as Truist\u2019s capital position, earnings outlook, and capital deployment priorities.Payments of cash dividends and repurchases of common shares are the methods used to manage any excess capital generated. In addition, management closely monitors the Parent Company's double leverage ratio (investments in subsidiaries as a percentage of shareholders' equity). The active management of the subsidiaries' equity capital, as described above, is the process used to manage this important driver of Parent Company liquidity and is a key element in the management of Truist's capital position.Management intends to maintain capital at Truist Bank at levels that will result in classification as \"well-capitalized\" for regulatory purposes. Secondarily, it is management's intent to maintain Truist Bank's capital at levels that result in regulatory risk-based capital ratios that are generally comparable with peers of similar size, complexity and risk profile. If the capital levels of Truist Bank increase above these guidelines, excess capital may be transferred to the Parent Company in the form of special dividend payments, subject to regulatory and other operating considerations.Management's capital deployment plan in order of preference is to focus on (i) organic growth, (ii) dividends, and (iii) strategic opportunities and\/or share repurchases depending on opportunities in the marketplace and Truist's interest and ability to proceed with acquisitions.Truist Bank's capital ratios are presented in the following table:","markdown_table":"\n\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| Table 41: Capital Requirements and Targets | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | | | Minimum Capital | | | | | | Well Capitalized | | | | | | | | | Minimum Capital Plus Stress Capital Buffer (3) | | | | | | Truist Targets (1) | | | | | |\n| | | | | | | Truist | | | Truist Bank | | | | | | | | | Interim Operating (2) | | | | | | Stressed | | |\n| CET1 | | | 4.5 | | % | | | | NA | | | 6.5 | | % | | | | 7.2 | | % | | | | 8.0 | | % | | | | 7.2 | | % |\n| Tier 1 capital | | | 6.0 | | | | | | 6.0 | | | 8.0 | | | | | | 8.7 | | | | | | 9.3 | | | | | | 8.7 | | |\n| Total capital | | | 8.0 | | | | | | 10.0 | | | 10.0 | | | | | | 10.7 | | | | | | 11.3 | | | | | | 10.7 | | |\n| Leverage ratio | | | 4.0 | | | | | | NA | | | 5.0 | | | | | | NA | | | | | | 7.5 | | | | | | 7.0 | | |\n| Supplementary leverage ratio | | | 3.0 | | | | | | NA | | | NA | | | | | | NA | | | | | | 6.5 | | | | | | 6.0 | | |\n\n","source":"TFC\/10-K\/0000092230-21-000032"} {"title":"Capital","text":"(1)The leverage ratio is calculated using end of period Tier 1 capital and quarterly average tangible assets. The timing of the Merger impacted the 4Q19 result.(2)Truist Bank became subject to the supplementary leverage ratio as of January 1, 2020. Truist's capital ratios are presented in the following table:","markdown_table":"\n\n| | | | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| Table 42: Capital Ratios - Truist Bank | | | | | | | | | | | | | | |\n| December 31, | | | | | | 2020 | | | | | | 2019 | | |\n| CET1 to risk-weighted assets | | | | | | 11.0 | | % | | | | 10.6 | | % |\n| Tier 1 capital to risk-weighted assets | | | | | | 11.0 | | | | | | 10.6 | | |\n| Total capital to risk-weighted assets | | | | | | 13.0 | | | | | | 12.0 | | |\n| Leverage ratio (1) | | | | | | 8.7 | | | | | | 14.5 | | |\n| Supplementary leverage ratio (2) | | | | | | 7.5 | | | | | | NA | | |\n\n","source":"TFC\/10-K\/0000092230-21-000032"} {"title":"Capital","text":"(1)The leverage ratio is calculated using end of period Tier 1 capital and quarterly average tangible assets. The timing of the Merger impacted the 4Q19 result.(2)Truist became subject to the supplementary leverage ratio as of January 1, 2020. (3)Tangible common equity and related measures are non-GAAP measures that exclude the impact of intangible assets, net of deferred taxes, and their related amortization. These measures are useful for evaluating the performance of a business consistently, whether acquired or developed internally. Truist's management uses these measures to assess the quality of capital and returns relative to balance sheet risk. These capital measures are not necessarily comparable to similar capital measures that may be presented by other companies.Capital ratios improved compared to year-end 2020, due to growth in CET1 capital, partially offset by higher risk-weighted assets. Truist's capital levels remain strong compared to the regulatory levels for well capitalized banks at December\u00a031, 2020. Truist\u2019s other capital measures also improved as Truist issued various capital instruments to strengthen its capital position. Truist issued $3.5 billion of preferred stock and redeemed $500 million of Series K preferred stock during 2020. In addition, Truist issued $1.3 billion of subordinated debt. During 2020,Truist paid $2.4 billion in common stock dividends or $1.80 per share, which resulted in a total payout ratio of 58.0% for the year.78 Truist Financial Corporation","markdown_table":"\n\n| | | | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | |\n| Table 43: Capital Ratios - Truist Financial Corporation | | | | | | | | | | | | | | |\n| December\u00a031,(Dollars in millions, except per share data, shares in thousands) | | | | | | 2020 | | | | | | 2019 | | |\n| | | | | | | | | | | | | | | |\n| Risk-based: | | | | | | | | | | | | | | |\n| CET1 capital to risk-weighted assets | | | | | | 10.0 | | % | | | | 9.5 | | % |\n| Tier 1 capital to risk-weighted assets | | | | | | 12.1 | | | | | | 10.8 | | |\n| Total capital to risk-weighted assets | | | | | | 14.5 | | | | | | 12.6 | | |\n| Leverage ratio (1) | | | | | | 9.6 | | | | | | 14.7 | | |\n| Supplementary leverage ratio (2) | | | | | | 8.7 | | | | | | NA | | |\n| Non-GAAP capital measure (3): | | | | | | | | | | | | | | |\n| Tangible common equity per common share | | | | | | $ | 26.78 | | | | | $ | 25.93 | |\n| Calculation of tangible common equity (3): | | | | | | | | | | | | | | |\n| Total shareholders' equity | | | | | | $ | 70,912 | | | | | $ | 66,558 | |\n| Less: | | | | | | | | | | | | | | |\n| Preferred stock | | | | | | 8,048 | | | | | | 5,102 | | |\n| Noncontrolling interests | | | | | | 105 | | | | | | 174 | | |\n| Goodwill and intangible assets, net of deferred taxes | | | | | | 26,629 | | | | | | 26,482 | | |\n| Tangible common equity | | | | | | $ | 36,130 | | | | | $ | 34,800 | |\n| Risk-weighted assets | | | | | | $ | 379,153 | | | | | $ | 376,056 | |\n| Common shares outstanding at end of period | | | | | | 1,348,961 | | | | | | 1,342,166 | | |\n\n","source":"TFC\/10-K\/0000092230-21-000032"} {"title":"Capital","text":"(1)Loans and leases are net of unearned income and include LHFS.","markdown_table":"\n\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| Table 44: Quarterly Financial Summary \u2013 Unaudited | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | | | 2020 | | | | | | | | | | | | | | | | | | | | | | | | 2019 | | | | | | | | | | | | | | | | | | | | |\n| (Dollars in millions, except per share data) | | | Fourth Quarter | | | | | | Third Quarter | | | | | | Second Quarter | | | | | | First Quarter | | | | | | Fourth Quarter | | | | | | Third Quarter | | | | | | Second Quarter | | | | | | First Quarter | | |\n| Consolidated summary of operations: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Interest income | | | $ | 3,611 | | | | | $ | 3,623 | | | | | $ | 3,888 | | | | | $ | 4,426 | | | | | $ | 2,812 | | | | | $ | 2,218 | | | | | $ | 2,206 | | | | | $ | 2,173 | |\n| Interest expense | | | 245 | | | | | | 261 | | | | | | 440 | | | | | | 776 | | | | | | 585 | | | | | | 518 | | | | | | 516 | | | | | | 477 | | |\n| Provision for credit losses | | | 177 | | | | | | 421 | | | | | | 844 | | | | | | 893 | | | | | | 171 | | | | | | 117 | | | | | | 172 | | | | | | 155 | | |\n| Noninterest income | | | 2,285 | | | | | | 2,210 | | | | | | 2,423 | | | | | | 1,961 | | | | | | 1,398 | | | | | | 1,303 | | | | | | 1,352 | | | | | | 1,202 | | |\n| Noninterest expense | | | 3,833 | | | | | | 3,755 | | | | | | 3,878 | | | | | | 3,431 | | | | | | 2,575 | | | | | | 1,840 | | | | | | 1,751 | | | | | | 1,768 | | |\n| Provision for income taxes | | | 311 | | | | | | 255 | | | | | | 191 | | | | | | 224 | | | | | | 153 | | | | | | 218 | | | | | | 234 | | | | | | 177 | | |\n| Net income | | | 1,330 | | | | | | 1,141 | | | | | | 958 | | | | | | 1,063 | | | | | | 726 | | | | | | 828 | | | | | | 885 | | | | | | 798 | | |\n| Noncontrolling interest | | | 1 | | | | | | 3 | | | | | | 3 | | | | | | 3 | | | | | | 5 | | | | | | 3 | | | | | | (1) | | | | | | 6 | | |\n| Preferred stock dividends | | | 101 | | | | | | 70 | | | | | | 53 | | | | | | 74 | | | | | | 19 | | | | | | 90 | | | | | | 44 | | | | | | 43 | | |\n| Net income available to common shareholders | | | $ | 1,228 | | | | | $ | 1,068 | | | | | $ | 902 | | | | | $ | 986 | | | | | $ | 702 | | | | | $ | 735 | | | | | $ | 842 | | | | | $ | 749 | |\n| Basic EPS | | | $ | 0.91 | | | | | $ | 0.79 | | | | | $ | 0.67 | | | | | $ | 0.73 | | | | | $ | 0.76 | | | | | $ | 0.96 | | | | | $ | 1.10 | | | | | $ | 0.98 | |\n| Diluted EPS | | | $ | 0.90 | | | | | $ | 0.79 | | | | | $ | 0.67 | | | | | $ | 0.73 | | | | | $ | 0.75 | | | | | $ | 0.95 | | | | | $ | 1.09 | | | | | $ | 0.97 | |\n| Selected average balances: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Assets | | | $ | 503,181 | | | | | $ | 500,826 | | | | | $ | 514,720 | | | | | $ | 477,550 | | | | | $ | 302,059 | | | | | $ | 232,420 | | | | | $ | 229,249 | | | | | $ | 225,573 | |\n| Securities, at amortized cost | | | 102,053 | | | | | | 79,828 | | | | | | 75,159 | | | | | | 75,701 | | | | | | 60,699 | | | | | | 48,900 | | | | | | 46,115 | | | | | | 46,734 | | |\n| Loans and leases (1) | | | 308,188 | | | | | | 315,691 | | | | | | 326,435 | | | | | | 307,748 | | | | | | 193,641 | | | | | | 152,042 | | | | | | 151,557 | | | | | | 148,790 | | |\n| Total earning assets | | | 438,666 | | | | | | 435,394 | | | | | | 446,825 | | | | | | 413,533 | | | | | | 263,115 | | | | | | 203,408 | | | | | | 200,839 | | | | | | 197,721 | | |\n| Deposits | | | 375,266 | | | | | | 372,211 | | | | | | 370,818 | | | | | | 334,649 | | | | | | 210,716 | | | | | | 161,992 | | | | | | 159,891 | | | | | | 160,045 | | |\n| Short-term borrowings | | | 6,493 | | | | | | 6,209 | | | | | | 8,998 | | | | | | 18,900 | | | | | | 11,489 | | | | | | 8,307 | | | | | | 8,367 | | | | | | 5,624 | | |\n| Long-term debt | | | 40,284 | | | | | | 40,919 | | | | | | 55,537 | | | | | | 46,547 | | | | | | 29,888 | | | | | | 22,608 | | | | | | 23,233 | | | | | | 23,247 | | |\n| Total interest-bearing liabilities | | | 294,940 | | | | | | 295,373 | | | | | | 321,478 | | | | | | 306,961 | | | | | | 187,608 | | | | | | 140,407 | | | | | | 138,811 | | | | | | 136,633 | | |\n| Shareholders' equity | | | 70,145 | | | | | | 69,634 | | | | | | 66,863 | | | | | | 65,412 | | | | | | 41,740 | | | | | | 32,744 | | | | | | 31,301 | | | | | | 30,541 | | |\n\n","source":"TFC\/10-K\/0000092230-21-000032"} {"title":"NPAs","text":"(1)Loans may be returned to performing status when (i) the borrower has resumed paying the full amount of the scheduled contractual interest and principal payments, (ii) management concludes that all principal and interest amounts contractually due (including arrearages) are reasonably assured of repayment, and (iii) there is a sustained period of repayment performance, generally a minimum of six months.(2)Or when it is probable that principal or interest is not fully collectible, whichever occurs first.(3)Depends on product type, loss mitigation status, status of the government guaranty, if applicable, and certain other product-specific factors.(4)Student loans are not placed in nonperforming status, which reflects consideration of governmental guarantees or accelerated charge-off policies related to certain non-guaranteed portfolios.(5)Claims related to government guaranteed loans may be filed once the loans reach 270 days past due. The non-guaranteed balance, which ranges from 2-3%, is charged off once the claim proceeds related to the guaranteed portion have been received.(6)Credit cards are generally not placed on nonperforming status, but are fully charged off at specified delinquency dates consistent with regulatory guidelines.","markdown_table":"\n\n| | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| (number of days) | | | | | | Placed on Nonperforming (1) | | | | | | | | | | | | Evaluated for Charge-off | | | | | | | | |\n| Commercial: | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Commercial and industrial | | | | | | 90 | | | (2) | | | | | | | | | 90 | | | (2) | | | | | |\n| CRE | | | | | | 90 | | | (2) | | | | | | | | | 90 | | | (2) | | | | | |\n| Commercial construction | | | | | | 90 | | | (2) | | | | | | | | | 90 | | | (2) | | | | | |\n| Lease financing | | | | | | 90 | | | (2) | | | | | | | | | 90 | | | (2) | | | | | |\n| Consumer: | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Residential mortgage (3) | | | | | | 90 | | | to | | | 180 | | | | | | 90 | | | to | | | 210 | | |\n| Residential home equity and direct (3) | | | | | | 90 | | | to | | | 120 | | | | | | 90 | | | to | | | 180 | | |\n| Indirect auto (3) | | | | | | 90 | | | | | | | | | | | | 120 | | | | | | | | |\n| Indirect other (3) | | | | | | 90 | | | to | | | 120 | | | | | | 120 | | | to | | | 180 | | |\n| Student (4) (5) | | | | | | NA | | | | | | | | | | | | 120 | | | to | | | 180 | | |\n| Credit card (6) | | | | | | NA | | | | | | | | | | | | 90 | | | to | | | 180 | | |\n\n","source":"TFC\/10-K\/0000092230-21-000032"} {"title":"Commercial","text":"Loans are generally pooled one level below the portfolio segment for the collectively calculated ALLL based on factors such as business sector, project and property type, line of business, collateral, loan type, obligor exposure, and risk grade or score. Commercial loss forecasting models are expected loss frameworks that use macroeconomic forecast data across scenarios and current portfolio attributes as inputs. The models forecast probability of default, exposure at default and loss given default by correlating certain macroeconomic forecast data to historical experience. The primary macroeconomic drivers for the commercial portfolios include unemployment trends, U.S. real GDP, corporate credit spreads, rental rates and property values.Truist's policy is to review and individually evaluate the reserve for all nonperforming lending relationships and TDRs with an outstanding balance of $5\u00a0million or more, as such lending relationships do not typically share similar risk characteristics with others. Individually evaluated reserves are based on current forecasts, the present value of expected cash flows discounted at the loan's effective interest rate or the value of collateral, which is generally based on appraisals, recent sales of foreclosed properties and\/or relevant property-specific market information. Truist has elected to measure expected credit losses on collateral-dependent loans based on the fair value of the collateral. Loans are considered collateral dependent when it is probable that Truist will be unable to collect principal and interest according to the contractual terms of the agreement and repayment is expected to be provided substantially by the sale or continued operation of the underlying collateral. Commercial loans are typically secured by real estate, business equipment, inventories and other types of collateral.","markdown_table":"\n\n| | | | | | |\n| --- | --- | --- | --- | --- | --- |\n| Risk Rating | | | Description | | |\n| Pass | | | Loans not considered to be problem credits | | |\n| Special Mention | | | Loans that have a potential weakness deserving management's close attention | | |\n| Substandard | | | Loans for which a well-defined weakness has been identified that may put full collection of contractual cash flows at risk | | |\n| Nonperforming | | | Loans for which full collection of principal and interest is not considered probable | | |\n\n","source":"TFC\/10-K\/0000092230-21-000032"} {"title":"Derivative Financial Instruments","text":"102 Truist Financial Corporation","markdown_table":"\n\n| | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | | Cash Flow Hedges | | | Fair Value Hedges | | | | | |\n| Risk exposure | | | Variability in cash flows of interest payments on floating rate loans, overnight funding and various LIBOR and successor rate funding instruments. | | | Changes in value on fixed rate long-term debt, FHLB advances, loans and AFS securities due to changes in interest rates. | | | | | |\n| Risk management objective | | | Hedge the variability in the interest payments and receipts on future cash flows for forecasted transactions related to the first unhedged payments and receipts of variable interest due to changes in the contractually specified interest rate. | | | Convert the fixed rate paid or received to a floating rate, primarily through the use of swaps. | | | | | |\n| Treatment during the hedge period | | | Changes in value of the hedging instruments are recognized in AOCI until the related cash flows from the hedged item are recognized in earnings. The amount reclassified to earnings is recorded in the same line item as the earnings effect of the hedged item. | | | Changes in value of both the hedging instruments and the assets or liabilities being hedged are recognized in the income statement line item associated with the asset or liability being hedged. | | | | | |\n| Treatment if hedge ceases to be highly effective or is terminated | | | Hedge is dedesignated. Changes in value recorded in AOCI before dedesignation are amortized to yield over the period the forecasted hedged transactions impact earnings. | | | If hedged item remains outstanding, the basis adjustment that resulted from hedging is amortized into earnings over the designated hedged period or the maturity date of the instrument, and cash flows from terminated hedges are reported in the same category as the cash flows from the hedged item. | | | | | |\n| Treatment if transaction is no longer probable of occurring during forecast period or within a short period thereafter | | | Hedge accounting ceases and any gain or loss in AOCI is recognized in earnings immediately. | | | Not applicable | | | | | |\n\n","source":"TFC\/10-K\/0000092230-21-000032"} {"title":"NOTE 2. Business Combinations","text":"The following is a description of the methods used to determine the fair values of significant assets and liabilities.Cash and cash equivalents; Interest-bearing deposits with banks, and Federal Funds sold and securities purchased under resale agreements: The carrying amount of these assets is a reasonable estimate of fair value based on the short-term nature of these assets.","markdown_table":"\n\n| | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| (Dollars in millions) | | | UPB | | | | | | Fair Value | | |\n| Fair value of Merger consideration | | | | | | | | | $ | 33,547 | |\n| Assets | | | | | | | | | | | |\n| Cash and due from banks | | | | | | | | | 1,621 | | |\n| Interest-bearing deposits with banks | | | | | | | | | 4,668 | | |\n| Securities borrowed or purchased under resale agreements | | | | | | | | | 1,191 | | |\n| Trading assets | | | | | | | | | 5,710 | | |\n| AFS securities | | | | | | | | | 30,986 | | |\n| LHFS | | | | | | | | | 3,752 | | |\n| Loans and leases: | | | | | | | | | | | |\n| Commercial and industrial | | | $ | 68,687 | | | | | 67,101 | | |\n| CRE | | | 9,509 | | | | | | 9,357 | | |\n| Commercial Construction | | | 2,136 | | | | | | 2,096 | | |\n| Commercial Leases | | | 3,967 | | | | | | 3,743 | | |\n| Mortgage Loans | | | 28,191 | | | | | | 27,180 | | |\n| Home Equity and Direct Lending | | | 15,917 | | | | | | 15,628 | | |\n| Indirect Auto | | | 12,373 | | | | | | 12,203 | | |\n| Indirect Other | | | 4,678 | | | | | | 4,445 | | |\n| Student Lending | | | 6,867 | | | | | | 6,657 | | |\n| Credit Card | | | 2,518 | | | | | | 2,497 | | |\n| PCI | | | 3,652 | | | | | | 3,126 | | |\n| Total loans and leases | | | $ | 158,495 | | | | | 154,033 | | |\n| Premises and equipment | | | | | | | | | 1,496 | | |\n| CDI and other intangible assets | | | | | | | | | 2,734 | | |\n| MSRs | | | | | | | | | 1,605 | | |\n| Other assets | | | | | | | | | 13,646 | | |\n| Total assets | | | | | | | | | 221,442 | | |\n| Liabilities and Equity | | | | | | | | | | | |\n| Deposits | | | | | | | | | (170,633) | | |\n| Short-term borrowings | | | | | | | | | (6,837) | | |\n| Long-term debt | | | | | | | | | (19,484) | | |\n| Other liabilities | | | | | | | | | (5,011) | | |\n| Total liabilities | | | | | | | | | (201,965) | | |\n| Noncontrolling interest | | | | | | | | | (108) | | |\n| Less: Net assets | | | | | | | | | 19,369 | | |\n| Goodwill | | | | | | | | | $ | 14,178 | |\n\n","source":"TFC\/10-K\/0000092230-21-000032"} {"title":"NOTE 3. Securities Financing Activities","text":"For securities sold under agreements to repurchase, the Company would be obligated to provide additional collateral in the event of a significant decline in fair value of the collateral pledged. This risk is managed by monitoring the liquidity and credit quality of the collateral, as well as the maturity profile of the transactions. Refer to \"Note 16. Commitments and Contingencies\" for additional information related to pledged securities. Securities sold under agreements to repurchase are accounted for as secured borrowings. The following table presents the Company\u2019s related activity, by collateral type and remaining contractual maturity:","markdown_table":"\n\n| | | | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | | | | | | | | | | |\n| December 31,(Dollars in millions) | | | | | | 2020 | | | | | | 2019 | | |\n| Securities purchased under resale agreements | | | | | | $ | 1,158 | | | | | $ | 986 | |\n| Securities borrowed | | | | | | 587 | | | | | | 431 | | |\n| Total securities borrowed or purchased under resale agreements | | | | | | $ | 1,745 | | | | | $ | 1,417 | |\n| | | | | | | | | | | | | | | |\n\n","source":"TFC\/10-K\/0000092230-21-000032"} {"title":"NOTE 3. Securities Financing Activities","text":"There were no securities financing transactions subject to legally enforceable master netting arrangements that were eligible for balance sheet netting for the periods presented.","markdown_table":"\n\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | | | | | | | | | | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| December\u00a031, (Dollars in millions) | | | 2020 | | | | | | | | | | | | | | | | | | 2019 | | | | | | | | | | | | | | | | | | | | |\n| Overnight and Continuous | | | | | | Up to 30 days | | | | | | | | | | | | Total | | | | | | Overnight and Continuous | | | | | | Up to 30 days | | | | | | 30-90 days | | | | | | Total | | |\n| U.S. Treasury | | | $ | 305 | | | | | $ | 31 | | | | | | | | | | | $ | 336 | | | | | $ | 115 | | | | | $ | 35 | | | | | $ | \u2014 | | | | | $ | 150 | |\n| GSE | | | 45 | | | | | | 9 | | | | | | | | | | | | 54 | | | | | | 87 | | | | | | 37 | | | | | | \u2014 | | | | | | 124 | | |\n| Agency MBS - residential | | | 442 | | | | | | 6 | | | | | | | | | | | | 448 | | | | | | 928 | | | | | | 41 | | | | | | 100 | | | | | | 1,069 | | |\n| Corporate and other debt securities | | | 204 | | | | | | 179 | | | | | | | | | | | | 383 | | | | | | 310 | | | | | | 316 | | | | | | \u2014 | | | | | | 626 | | |\n| Total securities sold under agreements to repurchase | | | $ | 996 | | | | | $ | 225 | | | | | | | | | | | $ | 1,221 | | | | | $ | 1,440 | | | | | $ | 429 | | | | | $ | 100 | | | | | $ | 1,969 | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n\n","source":"TFC\/10-K\/0000092230-21-000032"} {"title":"NOTE 4. Investment Securities","text":"Certain securities issued by FNMA and FHLMC exceeded 10% of shareholders' equity at December\u00a031, 2020. The FNMA investments had total amortized cost and fair value of $28.5 billion and $29.0 billion, respectively. The FHLMC investments had total amortized cost and fair value of $29.0 billion and $29.4\u00a0billion, respectively.","markdown_table":"\n\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| December 31, 2020(Dollars in millions) | | | | | | Amortized Cost | | | | | | Gross\u00a0Unrealized | | | | | | | | | | | | Fair Value | | | | | |\n| | | | | | | Gains | | | | | | Losses | | | | | | | | |\n| AFS securities: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| U.S. Treasury | | | | | | $ | 1,721 | | | | | $ | 25 | | | | | $ | \u2014 | | | | | $ | 1,746 | | | | |\n| GSE | | | | | | 1,840 | | | | | | 77 | | | | | | \u2014 | | | | | | 1,917 | | | | | |\n| Agency MBS - residential | | | | | | 111,589 | | | | | | 1,975 | | | | | | 23 | | | | | | 113,541 | | | | | |\n| Agency MBS - commercial | | | | | | 2,987 | | | | | | 72 | | | | | | 2 | | | | | | 3,057 | | | | | |\n| States and political subdivisions | | | | | | 447 | | | | | | 47 | | | | | | 1 | | | | | | 493 | | | | | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Other | | | | | | 34 | | | | | | \u2014 | | | | | | \u2014 | | | | | | 34 | | | | | |\n| Total AFS securities | | | | | | $ | 118,618 | | | | | $ | 2,196 | | | | | $ | 26 | | | | | $ | 120,788 | | | | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| December 31, 2019(Dollars in millions) | | | | | | Amortized Cost | | | | | | Gross\u00a0Unrealized | | | | | | | | | | | | Fair Value | | | | | |\n| | | | | | | Gains | | | | | | Losses | | | | | | | | |\n| AFS securities: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| U.S. Treasury | | | | | | $ | 2,275 | | | | | $ | 7 | | | | | $ | 6 | | | | | $ | 2,276 | | | | |\n| GSE | | | | | | 1,847 | | | | | | 34 | | | | | | \u2014 | | | | | | 1,881 | | | | | |\n| Agency MBS - residential | | | | | | 67,983 | | | | | | 411 | | | | | | 158 | | | | | | 68,236 | | | | | |\n| Agency MBS - commercial | | | | | | 1,335 | | | | | | 13 | | | | | | 7 | | | | | | 1,341 | | | | | |\n| States and political subdivisions | | | | | | 557 | | | | | | 34 | | | | | | 6 | | | | | | 585 | | | | | |\n| Non-agency MBS | | | | | | 190 | | | | | | 178 | | | | | | \u2014 | | | | | | 368 | | | | | |\n| Other | | | | | | 40 | | | | | | \u2014 | | | | | | \u2014 | | | | | | 40 | | | | | |\n| Total AFS securities | | | | | | $ | 74,227 | | | | | $ | 677 | | | | | $ | 177 | | | | | $ | 74,727 | | | | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n\n","source":"TFC\/10-K\/0000092230-21-000032"} {"title":"NOTE 4. Investment Securities","text":"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:","markdown_table":"\n\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | | Amortized Cost | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Fair Value | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| December 31, 2020(Dollars in millions) | | | Due in one year or less | | | | | | Due after one year through five years | | | | | | Due after five years through ten years | | | | | | Due after ten years | | | | | | Total | | | | | | Due in one year or less | | | | | | Due after one year through five years | | | | | | Due after five years through ten years | | | | | | Due after ten years | | | | | | Total | | | | | | | | |\n| AFS securities: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| U.S. Treasury | | | $ | 253 | | | | | $ | 1,468 | | | | | $ | \u2014 | | | | | $ | \u2014 | | | | | $ | 1,721 | | | | | $ | 254 | | | | | $ | 1,492 | | | | | $ | \u2014 | | | | | $ | \u2014 | | | | | $ | 1,746 | | | | | | | |\n| GSE | | | 282 | | | | | | 1,487 | | | | | | \u2014 | | | | | | 71 | | | | | | 1,840 | | | | | | 288 | | | | | | 1,553 | | | | | | \u2014 | | | | | | 76 | | | | | | 1,917 | | | | | | | | |\n| Agency MBS - residential | | | \u2014 | | | | | | 1 | | | | | | 427 | | | | | | 111,161 | | | | | | 111,589 | | | | | | \u2014 | | | | | | 1 | | | | | | 441 | | | | | | 113,099 | | | | | | 113,541 | | | | | | | | |\n| Agency MBS - commercial | | | \u2014 | | | | | | 1 | | | | | | 9 | | | | | | 2,977 | | | | | | 2,987 | | | | | | \u2014 | | | | | | 2 | | | | | | 10 | | | | | | 3,045 | | | | | | 3,057 | | | | | | | | |\n| States and political subdivisions | | | 29 | | | | | | 128 | | | | | | 100 | | | | | | 190 | | | | | | 447 | | | | | | 29 | | | | | | 132 | | | | | | 115 | | | | | | 217 | | | | | | 493 | | | | | | | | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Other | | | 1 | | | | | | 7 | | | | | | \u2014 | | | | | | 26 | | | | | | 34 | | | | | | 1 | | | | | | 7 | | | | | | \u2014 | | | | | | 26 | | | | | | 34 | | | | | | | | |\n| Total AFS securities | | | $ | 565 | | | | | $ | 3,092 | | | | | $ | 536 | | | | | $ | 114,425 | | | | | $ | 118,618 | | | | | $ | 572 | | | | | $ | 3,187 | | | | | $ | 566 | | | | | $ | 116,463 | | | | | $ | 120,788 | | | | | | | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n\n","source":"TFC\/10-K\/0000092230-21-000032"} {"title":"NOTE 4. Investment Securities","text":"At December\u00a031, 2020, no ACL was established for AFS securities. 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. The majority of the unrealized loss on states and political subdivisions securities was the result of fair value hedge basis adjustments that are a component of amortized cost.","markdown_table":"\n\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | | Less than 12 months | | | | | | | | | | | | 12 months or more | | | | | | | | | | | | Total | | | | | | | | |\n| December 31, 2020(Dollars in millions) | | | Fair Value | | | | | | Unrealized Losses | | | | | | Fair Value | | | | | | Unrealized Losses | | | | | | Fair Value | | | | | | Unrealized Losses | | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| AFS securities: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| U.S. Treasury | | | $ | 17 | | | | | $ | \u2014 | | | | | $ | \u2014 | | | | | $ | \u2014 | | | | | $ | 17 | | | | | $ | \u2014 | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Agency MBS - residential | | | 4,028 | | | | | | 21 | | | | | | 203 | | | | | | 2 | | | | | | 4,231 | | | | | | 23 | | |\n| Agency MBS - commercial | | | 463 | | | | | | 2 | | | | | | 4 | | | | | | \u2014 | | | | | | 467 | | | | | | 2 | | |\n| States and political subdivisions | | | 20 | | | | | | \u2014 | | | | | | 32 | | | | | | 1 | | | | | | 52 | | | | | | 1 | | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Other | | | 6 | | | | | | \u2014 | | | | | | \u2014 | | | | | | \u2014 | | | | | | 6 | | | | | | \u2014 | | |\n| Total | | | $ | 4,534 | | | | | $ | 23 | | | | | $ | 239 | | | | | $ | 3 | | | | | $ | 4,773 | | | | | $ | 26 | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | | | Less than 12 months | | | | | | | | | | | | 12 months or more | | | | | | | | | | | | Total | | | | | | | | |\n| December 31, 2019(Dollars in millions) | | | Fair Value | | | | | | Unrealized Losses | | | | | | Fair Value | | | | | | Unrealized Losses | | | | | | Fair Value | | | | | | Unrealized Losses | | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| AFS securities: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| U.S. Treasury | | | $ | 702 | | | | | $ | 6 | | | | | $ | \u2014 | | | | | $ | \u2014 | | | | | $ | 702 | | | | | $ | 6 | |\n| GSE | | | 6 | | | | | | \u2014 | | | | | | \u2014 | | | | | | \u2014 | | | | | | 6 | | | | | | \u2014 | | |\n| Agency MBS - residential | | | 20,328 | | | | | | 145 | | | | | | 1,326 | | | | | | 13 | | | | | | 21,654 | | | | | | 158 | | |\n| Agency MBS - commercial | | | 545 | | | | | | 5 | | | | | | 124 | | | | | | 2 | | | | | | 669 | | | | | | 7 | | |\n| States and political subdivisions | | | 65 | | | | | | 1 | | | | | | 144 | | | | | | 5 | | | | | | 209 | | | | | | 6 | | |\n| Total | | | $ | 21,646 | | | | | $ | 157 | | | | | $ | 1,594 | | | | | $ | 20 | | | | | $ | 23,240 | | | | | $ | 177 | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n\n","source":"TFC\/10-K\/0000092230-21-000032"} {"title":"NOTE 4. Investment Securities","text":"For 2020, the realized gains primarily relate to the sales of non-agency and agency MBS in the second and third quarter, respectively.","markdown_table":"\n\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Year Ended December\u00a031,(Dollars in millions) | | | | | | | | | | | | | | | | | | 2020 | | | | | | 2019 | | | | | | 2018 | | |\n| Gross realized gains | | | | | | | | | | | | | | | | | | $ | 404 | | | | | $ | 47 | | | | | $ | 4 | |\n| Gross realized losses | | | | | | | | | | | | | | | | | | (2) | | | | | | (163) | | | | | | (1) | | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Securities gains (losses), net | | | | | | | | | | | | | | | | | | $ | 402 | | | | | $ | (116) | | | | | $ | 3 | |\n\n","source":"TFC\/10-K\/0000092230-21-000032"} {"title":"NOTE 5. Loans and ACL","text":"The following table presents the amortized cost basis of loans by origination year and credit quality indicator:","markdown_table":"\n\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | | | | | Accruing | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| December 31, 2020(Dollars in millions) | | | | | | Current | | | | | | 30-89 Days Past Due | | | | | | 90 Days Or More Past Due | | | | | | Nonperforming | | | | | | Total | | |\n| Commercial: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Commercial and industrial | | | | | | $ | 137,726 | | | | | $ | 83 | | | | | $ | 13 | | | | | $ | 532 | | | | | $ | 138,354 | |\n| CRE | | | | | | 26,506 | | | | | | 14 | | | | | | \u2014 | | | | | | 75 | | | | | | 26,595 | | |\n| Commercial construction | | | | | | 6,472 | | | | | | 5 | | | | | | \u2014 | | | | | | 14 | | | | | | 6,491 | | |\n| Lease financing | | | | | | 5,206 | | | | | | 6 | | | | | | \u2014 | | | | | | 28 | | | | | | 5,240 | | |\n| Consumer: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Residential mortgage | | | | | | 45,333 | | | | | | 782 | | | | | | 841 | | | | | | 316 | | | | | | 47,272 | | |\n| Residential home equity and direct | | | | | | 25,751 | | | | | | 98 | | | | | | 10 | | | | | | 205 | | | | | | 26,064 | | |\n| Indirect auto | | | | | | 25,498 | | | | | | 495 | | | | | | 2 | | | | | | 155 | | | | | | 26,150 | | |\n| Indirect other | | | | | | 11,102 | | | | | | 68 | | | | | | 2 | | | | | | 5 | | | | | | 11,177 | | |\n| Student | | | | | | 5,823 | | | | | | 618 | | | | | | 1,111 | | | | | | \u2014 | | | | | | 7,552 | | |\n| Credit card | | | | | | 4,759 | | | | | | 51 | | | | | | 29 | | | | | | \u2014 | | | | | | 4,839 | | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Total | | | | | | $ | 294,176 | | | | | $ | 2,220 | | | | | $ | 2,008 | | | | | $ | 1,330 | | | | | $ | 299,734 | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | | | | | | Accruing | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| December 31, 2019(Dollars in millions) | | | | | | Current | | | | | | 30-89 Days Past Due | | | | | | 90 Days Or More Past Due | | | | | | Nonperforming | | | | | | Total | | |\n| Commercial: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Commercial and industrial | | | | | | $ | 129,873 | | | | | $ | 94 | | | | | $ | 1 | | | | | $ | 212 | | | | | $ | 130,180 | |\n| CRE | | | | | | 26,817 | | | | | | 5 | | | | | | \u2014 | | | | | | 10 | | | | | | 26,832 | | |\n| Commercial construction | | | | | | 6,204 | | | | | | 1 | | | | | | \u2014 | | | | | | \u2014 | | | | | | 6,205 | | |\n| Lease financing | | | | | | 6,112 | | | | | | 2 | | | | | | \u2014 | | | | | | 8 | | | | | | 6,122 | | |\n| Consumer: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Residential mortgage | | | | | | 50,975 | | | | | | 498 | | | | | | 543 | | | | | | 55 | | | | | | 52,071 | | |\n| Residential home equity and direct | | | | | | 26,846 | | | | | | 122 | | | | | | 9 | | | | | | 67 | | | | | | 27,044 | | |\n| Indirect auto | | | | | | 23,771 | | | | | | 560 | | | | | | 11 | | | | | | 100 | | | | | | 24,442 | | |\n| Indirect other | | | | | | 11,011 | | | | | | 85 | | | | | | 2 | | | | | | 2 | | | | | | 11,100 | | |\n| Student | | | | | | 5,905 | | | | | | 650 | | | | | | 188 | | | | | | \u2014 | | | | | | 6,743 | | |\n| Credit card | | | | | | 5,541 | | | | | | 56 | | | | | | 22 | | | | | | \u2014 | | | | | | 5,619 | | |\n| PCI | | | | | | 2,126 | | | | | | 140 | | | | | | 1,218 | | | | | | \u2014 | | | | | | 3,484 | | |\n| Total | | | | | | $ | 295,181 | | | | | $ | 2,213 | | | | | $ | 1,994 | | | | | $ | 454 | | | | | $ | 299,842 | |\n\n","source":"TFC\/10-K\/0000092230-21-000032"} {"title":"NOTE 5. Loans and ACL","text":"(1)Includes certain deferred fees and costs, unapplied payments and other adjustments.","markdown_table":"\n\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| December 31, 2020(Dollars in millions) | | | Amortized Cost Basis by Origination Year | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Revolving Credit | | | | | | Loans Converted to Term | | | | | | Other (1) | | | | | | | | | | | |\n| 2020 | | | | | | 2019 | | | | | | 2018 | | | | | | 2017 | | | | | | 2016 | | | | | | Prior | | | | | | | | | | | | | | | Total | | | | | |\n| Commercial: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Commercial and industrial: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Pass | | | $ | 34,858 | | | | | $ | 18,881 | | | | | $ | 13,312 | | | | | $ | 7,713 | | | | | $ | 5,174 | | | | | $ | 8,888 | | | | | $ | 42,780 | | | | | $ | 231 | | | | | $ | (579) | | | | | $ | 131,258 | | | | |\n| Special mention | | | 471 | | | | | | 434 | | | | | | 343 | | | | | | 98 | | | | | | 120 | | | | | | 157 | | | | | | 1,808 | | | | | | 5 | | | | | | (1) | | | | | | 3,435 | | | | | |\n| Substandard | | | 461 | | | | | | 445 | | | | | | 339 | | | | | | 121 | | | | | | 144 | | | | | | 256 | | | | | | 1,353 | | | | | | 12 | | | | | | (2) | | | | | | 3,129 | | | | | |\n| Nonperforming | | | 38 | | | | | | 92 | | | | | | 48 | | | | | | 29 | | | | | | 25 | | | | | | 61 | | | | | | 233 | | | | | | 4 | | | | | | 2 | | | | | | 532 | | | | | |\n| Total | | | 35,828 | | | | | | 19,852 | | | | | | 14,042 | | | | | | 7,961 | | | | | | 5,463 | | | | | | 9,362 | | | | | | 46,174 | | | | | | 252 | | | | | | (580) | | | | | | 138,354 | | | | | |\n| CRE: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Pass | | | 4,563 | | | | | | 6,600 | | | | | | 4,427 | | | | | | 2,752 | | | | | | 1,473 | | | | | | 2,096 | | | | | | 617 | | | | | | \u2014 | | | | | | (69) | | | | | | 22,459 | | | | | |\n| Special mention | | | 171 | | | | | | 599 | | | | | | 585 | | | | | | 116 | | | | | | 77 | | | | | | 141 | | | | | | \u2014 | | | | | | \u2014 | | | | | | \u2014 | | | | | | 1,689 | | | | | |\n| Substandard | | | 410 | | | | | | 776 | | | | | | 438 | | | | | | 281 | | | | | | 182 | | | | | | 280 | | | | | | 5 | | | | | | \u2014 | | | | | | \u2014 | | | | | | 2,372 | | | | | |\n| Nonperforming | | | 1 | | | | | | 15 | | | | | | 1 | | | | | | 9 | | | | | | 6 | | | | | | 43 | | | | | | \u2014 | | | | | | \u2014 | | | | | | \u2014 | | | | | | 75 | | | | | |\n| Total | | | 5,145 | | | | | | 7,990 | | | | | | 5,451 | | | | | | 3,158 | | | | | | 1,738 | | | | | | 2,560 | | | | | | 622 | | | | | | \u2014 | | | | | | (69) | | | | | | 26,595 | | | | | |\n| Commercial construction: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Pass | | | 1,052 | | | | | | 2,141 | | | | | | 1,889 | | | | | | 232 | | | | | | 27 | | | | | | 110 | | | | | | 534 | | | | | | \u2014 | | | | | | 2 | | | | | | 5,987 | | | | | |\n| Special mention | | | \u2014 | | | | | | 108 | | | | | | 64 | | | | | | 1 | | | | | | \u2014 | | | | | | \u2014 | | | | | | 2 | | | | | | \u2014 | | | | | | \u2014 | | | | | | 175 | | | | | |\n| Substandard | | | 70 | | | | | | 106 | | | | | | 73 | | | | | | 59 | | | | | | 6 | | | | | | 1 | | | | | | \u2014 | | | | | | \u2014 | | | | | | \u2014 | | | | | | 315 | | | | | |\n| Nonperforming | | | 1 | | | | | | 3 | | | | | | \u2014 | | | | | | 7 | | | | | | \u2014 | | | | | | \u2014 | | | | | | \u2014 | | | | | | 3 | | | | | | \u2014 | | | | | | 14 | | | | | |\n| Total | | | 1,123 | | | | | | 2,358 | | | | | | 2,026 | | | | | | 299 | | | | | | 33 | | | | | | 111 | | | | | | 536 | | | | | | 3 | | | | | | 2 | | | | | | 6,491 | | | | | |\n| Lease financing: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Pass | | | 1,377 | | | | | | 1,139 | | | | | | 775 | | | | | | 746 | | | | | | 241 | | | | | | 760 | | | | | | \u2014 | | | | | | \u2014 | | | | | | 27 | | | | | | 5,065 | | | | | |\n| Special mention | | | 1 | | | | | | 39 | | | | | | 20 | | | | | | 5 | | | | | | \u2014 | | | | | | 7 | | | | | | \u2014 | | | | | | \u2014 | | | | | | \u2014 | | | | | | 72 | | | | | |\n| Substandard | | | \u2014 | | | | | | 34 | | | | | | 3 | | | | | | 4 | | | | | | 3 | | | | | | 31 | | | | | | \u2014 | | | | | | \u2014 | | | | | | \u2014 | | | | | | 75 | | | | | |\n| Nonperforming | | | 2 | | | | | | 5 | | | | | | 3 | | | | | | 9 | | | | | | 4 | | | | | | 5 | | | | | | \u2014 | | | | | | \u2014 | | | | | | \u2014 | | | | | | 28 | | | | | |\n| Total | | | 1,380 | | | | | | 1,217 | | | | | | 801 | | | | | | 764 | | | | | | 248 | | | | | | 803 | | | | | | \u2014 | | | | | | \u2014 | | | | | | 27 | | | | | | 5,240 | | | | | |\n| Consumer: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Residential mortgage: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Performing | | | 8,197 | | | | | | 6,729 | | | | | | 3,735 | | | | | | 4,374 | | | | | | 5,424 | | | | | | 18,333 | | | | | | \u2014 | | | | | | \u2014 | | | | | | 164 | | | | | | 46,956 | | | | | |\n| Nonperforming | | | 3 | | | | | | 13 | | | | | | 16 | | | | | | 13 | | | | | | 14 | | | | | | 257 | | | | | | \u2014 | | | | | | \u2014 | | | | | | \u2014 | | | | | | 316 | | | | | |\n| Total | | | 8,200 | | | | | | 6,742 | | | | | | 3,751 | | | | | | 4,387 | | | | | | 5,438 | | | | | | 18,590 | | | | | | \u2014 | | | | | | \u2014 | | | | | | 164 | | | | | | 47,272 | | | | | |\n| Residential home equity and direct: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Performing | | | 4,513 | | | | | | 3,126 | | | | | | 1,416 | | | | | | 481 | | | | | | 214 | | | | | | 557 | | | | | | 13,886 | | | | | | 1,619 | | | | | | 47 | | | | | | 25,859 | | | | | |\n| Nonperforming | | | 1 | | | | | | 4 | | | | | | 2 | | | | | | 1 | | | | | | 1 | | | | | | 7 | | | | | | 87 | | | | | | 101 | | | | | | 1 | | | | | | 205 | | | | | |\n| Total | | | 4,514 | | | | | | 3,130 | | | | | | 1,418 | | | | | | 482 | | | | | | 215 | | | | | | 564 | | | | | | 13,973 | | | | | | 1,720 | | | | | | 48 | | | | | | 26,064 | | | | | |\n| Indirect auto: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Performing | | | 10,270 | | | | | | 7,436 | | | | | | 4,015 | | | | | | 2,401 | | | | | | 1,220 | | | | | | 506 | | | | | | \u2014 | | | | | | \u2014 | | | | | | 147 | | | | | | 25,995 | | | | | |\n| Nonperforming | | | 13 | | | | | | 50 | | | | | | 44 | | | | | | 27 | | | | | | 15 | | | | | | 12 | | | | | | \u2014 | | | | | | \u2014 | | | | | | (6) | | | | | | 155 | | | | | |\n| Total | | | 10,283 | | | | | | 7,486 | | | | | | 4,059 | | | | | | 2,428 | | | | | | 1,235 | | | | | | 518 | | | | | | \u2014 | | | | | | \u2014 | | | | | | 141 | | | | | | 26,150 | | | | | |\n| Indirect other: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Performing | | | 4,433 | | | | | | 3,019 | | | | | | 1,706 | | | | | | 826 | | | | | | 431 | | | | | | 718 | | | | | | \u2014 | | | | | | \u2014 | | | | | | 39 | | | | | | 11,172 | | | | | |\n| Nonperforming | | | 1 | | | | | | 1 | | | | | | 1 | | | | | | \u2014 | | | | | | \u2014 | | | | | | 2 | | | | | | \u2014 | | | | | | \u2014 | | | | | | \u2014 | | | | | | 5 | | | | | |\n| Total | | | 4,434 | | | | | | 3,020 | | | | | | 1,707 | | | | | | 826 | | | | | | 431 | | | | | | 720 | | | | | | \u2014 | | | | | | \u2014 | | | | | | 39 | | | | | | 11,177 | | | | | |\n| Student: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Performing | | | 22 | | | | | | 110 | | | | | | 95 | | | | | | 81 | | | | | | 64 | | | | | | 7,185 | | | | | | \u2014 | | | | | | \u2014 | | | | | | (5) | | | | | | 7,552 | | | | | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Credit card | | | \u2014 | | | | | | \u2014 | | | | | | \u2014 | | | | | | \u2014 | | | | | | \u2014 | | | | | | \u2014 | | | | | | 4,802 | | | | | | 37 | | | | | | \u2014 | | | | | | 4,839 | | | | | |\n| Total | | | $ | 70,929 | | | | | $ | 51,905 | | | | | $ | 33,350 | | | | | $ | 20,386 | | | | | $ | 14,865 | | | | | $ | 40,413 | | | | | $ | 66,107 | | | | | $ | 2,012 | | | | | $ | (233) | | | | | $ | 299,734 | | | | |\n\n","source":"TFC\/10-K\/0000092230-21-000032"} {"title":"ACL","text":"(1)Includes amounts assumed in the Merger.(2)Balance is prior to the adoption of CECL.(3)Includes the adoption of CECL, the ALLL for PCD acquisitions and other activity.","markdown_table":"\n\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| (Dollars in millions) | | | | | | Balance at Jan\u00a01,\u00a02020 (2) | | | | | | | | | | | | Charge-Offs | | | | | | Recoveries | | | | | | Provision (Benefit) | | | | | | Other (3) | | | | | | Balance at Dec\u00a031,\u00a02020 | | |\n| Commercial: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Commercial and industrial | | | | | | $ | 560 | | | | | | | | | | | $ | (358) | | | | | $ | 92 | | | | | $ | 958 | | | | | $ | 904 | | | | | $ | 2,156 | |\n| CRE | | | | | | 150 | | | | | | | | | | | | (78) | | | | | | 5 | | | | | | 414 | | | | | | 82 | | | | | | 573 | | |\n| Commercial construction | | | | | | 52 | | | | | | | | | | | | (30) | | | | | | 11 | | | | | | 32 | | | | | | 16 | | | | | | 81 | | |\n| Lease financing | | | | | | 10 | | | | | | | | | | | | (54) | | | | | | 4 | | | | | | (6) | | | | | | 94 | | | | | | 48 | | |\n| Consumer: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Residential mortgage | | | | | | 176 | | | | | | | | | | | | (56) | | | | | | 10 | | | | | | (27) | | | | | | 265 | | | | | | 368 | | |\n| Residential home equity and direct | | | | | | 107 | | | | | | | | | | | | (231) | | | | | | 66 | | | | | | 318 | | | | | | 454 | | | | | | 714 | | |\n| Indirect auto | | | | | | 304 | | | | | | | | | | | | (378) | | | | | | 87 | | | | | | 367 | | | | | | 818 | | | | | | 1,198 | | |\n| Indirect other | | | | | | 60 | | | | | | | | | | | | (60) | | | | | | 23 | | | | | | 35 | | | | | | 150 | | | | | | 208 | | |\n| Student | | | | | | \u2014 | | | | | | | | | | | | (23) | | | | | | 1 | | | | | | 23 | | | | | | 129 | | | | | | 130 | | |\n| Credit card | | | | | | 122 | | | | | | | | | | | | (182) | | | | | | 32 | | | | | | 212 | | | | | | 175 | | | | | | 359 | | |\n| PCI | | | | | | 8 | | | | | | | | | | | | \u2014 | | | | | | \u2014 | | | | | | \u2014 | | | | | | (8) | | | | | | \u2014 | | |\n| ALLL | | | | | | 1,549 | | | | | | | | | | | | (1,450) | | | | | | 331 | | | | | | 2,326 | | | | | | 3,079 | | | | | | 5,835 | | |\n| RUFC | | | | | | 340 | | | | | | | | | | | | \u2014 | | | | | | \u2014 | | | | | | 9 | | | | | | 15 | | | | | | 364 | | |\n| ACL | | | | | | $ | 1,889 | | | | | | | | | | | $ | (1,450) | | | | | $ | 331 | | | | | $ | 2,335 | | | | | $ | 3,094 | | | | | $ | 6,199 | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n\n","source":"TFC\/10-K\/0000092230-21-000032"} {"title":"Nonperforming and Impaired Loans","text":"The following table includes certain information regarding impaired loans, excluding PCI and LHFS, that were individually evaluated for impairment. This table excludes guaranteed student loans and guaranteed residential mortgages for which there was nominal risk of principal loss due to the government guarantee or other credit enhancements.","markdown_table":"\n\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | | | Recorded Investment | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| December 31, 2020(Dollars in millions) | | | Without an ALLL | | | | | | With an ALLL | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Commercial: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Commercial and industrial | | | $ | 82 | | | | | $ | 450 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| CRE | | | 63 | | | | | | 12 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Commercial construction | | | \u2014 | | | | | | 14 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Lease financing | | | \u2014 | | | | | | 28 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Consumer: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Residential mortgage | | | 4 | | | | | | 312 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Residential home equity and direct | | | 2 | | | | | | 203 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Indirect auto | | | 1 | | | | | | 154 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Indirect other | | | \u2014 | | | | | | 5 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Total | | | $ | 152 | | | | | $ | 1,178 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n\n","source":"TFC\/10-K\/0000092230-21-000032"} {"title":"TDRs","text":"The primary reason loan modifications were classified as TDRs is summarized in the tables below. New TDR balances represent the recorded investment at the end of the quarter in which the modification was made. The prior quarter balance represents recorded investment at the beginning of the quarter in which the modification was made. Rate modifications consist of TDRs made with below market interest rates, including those that also have modifications of loan structures.","markdown_table":"\n\n| | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | | | | | | | | | | |\n| December\u00a031,(Dollars in millions) | | | 2020 | | | | | | 2019 | | |\n| Performing TDRs: | | | | | | | | | | | |\n| Commercial: | | | | | | | | | | | |\n| Commercial and industrial | | | $ | 78 | | | | | $ | 47 | |\n| CRE | | | 47 | | | | | | 6 | | |\n| Commercial construction | | | \u2014 | | | | | | 37 | | |\n| Lease financing | | | 60 | | | | | | \u2014 | | |\n| Consumer: | | | | | | | | | | | |\n| Residential mortgage | | | 648 | | | | | | 470 | | |\n| Residential home equity and direct | | | 88 | | | | | | 51 | | |\n| Indirect auto | | | 392 | | | | | | 333 | | |\n| Indirect other | | | 6 | | | | | | 5 | | |\n| Student | | | 5 | | | | | | \u2014 | | |\n| Credit card | | | 37 | | | | | | 31 | | |\n| Total performing TDRs | | | 1,361 | | | | | | 980 | | |\n| Nonperforming TDRs | | | 164 | | | | | | 82 | | |\n| Total TDRs | | | $ | 1,525 | | | | | $ | 1,062 | |\n| ALLL attributable to TDRs | | | $ | 260 | | | | | $ | 132 | |\n\n","source":"TFC\/10-K\/0000092230-21-000032"} {"title":"TDRs","text":"118 Truist Financial Corporation","markdown_table":"\n\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | | | | | | | | | | | |\n| December 31, 2020(Dollars in millions) | | | | | | | | | | | | | | | | | | | | | Type of Modification | | | | | | | | | | | | Prior Quarter Loan Balance | | | | | | ALLL at Period End | | |\n| | | | | | | | | | | | | | | | | | | Rate | | | | | | Structure | | | | | | | | |\n| Newly designated TDRs: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Commercial: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Commercial and industrial | | | | | | | | | | | | | | | | | | | | | | | | | | | $ | 49 | | | | | $ | 93 | | | | | $ | 173 | | | | | $ | 14 | |\n| CRE | | | | | | | | | | | | | | | | | | | | | | | | | | | 39 | | | | | | 13 | | | | | | 45 | | | | | | 6 | | |\n| Commercial construction | | | | | | | | | | | | | | | | | | | | | | | | | | | \u2014 | | | | | | \u2014 | | | | | | 1 | | | | | | \u2014 | | |\n| Lease financing | | | | | | | | | | | | | | | | | | | | | | | | | | | 1 | | | | | | 70 | | | | | | 71 | | | | | | 4 | | |\n| Consumer: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Residential mortgage | | | | | | | | | | | | | | | | | | | | | | | | | | | 374 | | | | | | 112 | | | | | | 493 | | | | | | 21 | | |\n| Residential home equity and direct | | | | | | | | | | | | | | | | | | | | | | | | | | | 37 | | | | | | 34 | | | | | | 70 | | | | | | 2 | | |\n| Indirect auto | | | | | | | | | | | | | | | | | | | | | | | | | | | 129 | | | | | | 85 | | | | | | 223 | | | | | | 26 | | |\n| Indirect other | | | | | | | | | | | | | | | | | | | | | | | | | | | 3 | | | | | | 3 | | | | | | 5 | | | | | | \u2014 | | |\n| Student | | | | | | | | | | | | | | | | | | | | | | | | | | | \u2014 | | | | | | 6 | | | | | | 6 | | | | | | \u2014 | | |\n| Credit card | | | | | | | | | | | | | | | | | | | | | | | | | | | 29 | | | | | | \u2014 | | | | | | 28 | | | | | | 10 | | |\n| Re-modification of previously designated TDRs | | | | | | | | | | | | | | | | | | | | | | | | | | | 41 | | | | | | 22 | | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n\n","source":"TFC\/10-K\/0000092230-21-000032"} {"title":"TDRs","text":"Charge-offs and forgiveness of principal and interest for TDRs were immaterial for all periods presented.The re-default balance for modifications that had been classified as TDRs during the previous 12 months that experienced a payment default was $93 million, $78 million and $76 million for the years ended December 31, 2020, 2019 and 2018, respectively. Payment default is defined as movement of the TDR to nonperforming status, foreclosure or charge-off, whichever occurs first.","markdown_table":"\n\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | | | | | | | | | | | |\n| December 31, 2019(Dollars in millions) | | | | | | | | | | | | | | | | | | | | | Type of Modification | | | | | | | | | | | | Prior Quarter Loan Balance | | | | | | ALLL at Period End | | |\n| | | | | | | | | | | | | | | | | | | Rate | | | | | | Structure | | | | | | | | |\n| Newly designated TDRs: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Commercial: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Commercial and industrial | | | | | | | | | | | | | | | | | | | | | | | | | | | $ | 56 | | | | | $ | 11 | | | | | $ | 61 | | | | | $ | 8 | |\n| CRE | | | | | | | | | | | | | | | | | | | | | | | | | | | 1 | | | | | | 1 | | | | | | 4 | | | | | | \u2014 | | |\n| Commercial construction | | | | | | | | | | | | | | | | | | | | | | | | | | | 36 | | | | | | \u2014 | | | | | | 36 | | | | | | 7 | | |\n| Lease financing | | | | | | | | | | | | | | | | | | | | | | | | | | | \u2014 | | | | | | \u2014 | | | | | | \u2014 | | | | | | \u2014 | | |\n| Consumer: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Residential mortgage | | | | | | | | | | | | | | | | | | | | | | | | | | | 224 | | | | | | 27 | | | | | | 254 | | | | | | 19 | | |\n| Residential home equity and direct | | | | | | | | | | | | | | | | | | | | | | | | | | | 8 | | | | | | 3 | | | | | | 9 | | | | | | 1 | | |\n| Indirect auto | | | | | | | | | | | | | | | | | | | | | | | | | | | 209 | | | | | | 8 | | | | | | 226 | | | | | | 44 | | |\n| Indirect other | | | | | | | | | | | | | | | | | | | | | | | | | | | 4 | | | | | | \u2014 | | | | | | 4 | | | | | | \u2014 | | |\n| Student | | | | | | | | | | | | | | | | | | | | | | | | | | | \u2014 | | | | | | \u2014 | | | | | | \u2014 | | | | | | \u2014 | | |\n| Credit card | | | | | | | | | | | | | | | | | | | | | | | | | | | 24 | | | | | | \u2014 | | | | | | 18 | | | | | | 9 | | |\n| Re-modification of previously designated TDRs | | | | | | | | | | | | | | | | | | | | | | | | | | | 53 | | | | | | 23 | | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| December 31, 2018(Dollars in millions) | | | | | | | | | | | | | | | | | | | | | | | | | | | Type of Modification | | | | | | | | | | | | Prior Quarter Loan Balance | | | | | | ALLL at Period End | | |\n| | | | | | | | | | | | | | | | | | | | | | | | | Rate | | | | | | Structure | | | | | | | | |\n| Newly designated TDRs: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Commercial: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Commercial and industrial | | | | | | | | | | | | | | | | | | | | | | | | | | | $ | 74 | | | | | $ | 62 | | | | | $ | 126 | | | | | $ | 8 | |\n| CRE | | | | | | | | | | | | | | | | | | | | | | | | | | | 31 | | | | | | 2 | | | | | | 26 | | | | | | 1 | | |\n| Commercial construction | | | | | | | | | | | | | | | | | | | | | | | | | | | 1 | | | | | | 1 | | | | | | 2 | | | | | | \u2014 | | |\n| Lease financing | | | | | | | | | | | | | | | | | | | | | | | | | | | \u2014 | | | | | | \u2014 | | | | | | \u2014 | | | | | | \u2014 | | |\n| Consumer: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Residential mortgage | | | | | | | | | | | | | | | | | | | | | | | | | | | 250 | | | | | | 30 | | | | | | 280 | | | | | | 22 | | |\n| Residential home equity and direct | | | | | | | | | | | | | | | | | | | | | | | | | | | 8 | | | | | | 2 | | | | | | 6 | | | | | | 1 | | |\n| Indirect auto | | | | | | | | | | | | | | | | | | | | | | | | | | | 191 | | | | | | 4 | | | | | | 183 | | | | | | 39 | | |\n| Indirect other | | | | | | | | | | | | | | | | | | | | | | | | | | | 4 | | | | | | \u2014 | | | | | | 3 | | | | | | 1 | | |\n| Student | | | | | | | | | | | | | | | | | | | | | | | | | | | \u2014 | | | | | | \u2014 | | | | | | \u2014 | | | | | | \u2014 | | |\n| Credit card | | | | | | | | | | | | | | | | | | | | | | | | | | | 18 | | | | | | \u2014 | | | | | | 18 | | | | | | 8 | | |\n| Re-modification of previously designated TDRs | | | | | | | | | | | | | | | | | | | | | | | | | | | 120 | | | | | | 15 | | | | | | | | | | | | | | |\n\n","source":"TFC\/10-K\/0000092230-21-000032"} {"title":"NPAs","text":"(1) Beginning January 1, 2020, nonperforming loans and leases include certain assets previously classified as PCI.","markdown_table":"\n\n| | | | | | | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | | | | | | | | | | | | | | | | |\n| December\u00a031,(Dollars in millions) | | | 2020 | | | | | | 2019 | | | | | | | | |\n| Nonperforming loans and leases HFI (1) | | | $ | 1,330 | | | | | $ | 454 | | | | | | | |\n| Nonperforming LHFS | | | 5 | | | | | | 107 | | | | | | | | |\n| Foreclosed real estate | | | 20 | | | | | | 82 | | | | | | | | |\n| Other foreclosed property | | | 32 | | | | | | 41 | | | | | | | | |\n| Total nonperforming assets | | | $ | 1,387 | | | | | $ | 684 | | | | | | | |\n| | | | | | | | | | | | | | | | | | |\n| Residential mortgage loans in the process of foreclosure | | | $ | 140 | | | | | $ | 409 | | | | | | | |\n\n","source":"TFC\/10-K\/0000092230-21-000032"} {"title":"NOTE 7. Goodwill and Other Intangible Assets","text":"The following table, which excludes fully amortized intangibles, presents information for identifiable intangible assets:","markdown_table":"\n\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| (Dollars in millions) | | | CB&W | | | | | | C&CB | | | | | | IH | | | | | | Total | | | | | | | | | | | | | | |\n| Goodwill, January 1, 2018 | | | $ | 3,907 | | | | | $ | 3,938 | | | | | $ | 1,773 | | | | | $ | 9,618 | | | | | | | | | | | | | |\n| Mergers and acquisitions | | | \u2014 | | | | | | \u2014 | | | | | | 201 | | | | | | 201 | | | | | | | | | | | | | | |\n| Adjustments and other | | | (1) | | | | | | \u2014 | | | | | | \u2014 | | | | | | (1) | | | | | | | | | | | | | | |\n| Goodwill, December 31, 2018 | | | 3,906 | | | | | | 3,938 | | | | | | 1,974 | | | | | | 9,818 | | | | | | | | | | | | | | |\n| Mergers and acquisitions | | | 10,134 | | | | | | 4,187 | | | | | | 21 | | | | | | 14,342 | | | | | | | | | | | | | | |\n| Adjustments and other | | | \u2014 | | | | | | \u2014 | | | | | | (6) | | | | | | (6) | | | | | | | | | | | | | | |\n| Goodwill, December 31, 2019 | | | 14,040 | | | | | | 8,125 | | | | | | 1,989 | | | | | | 24,154 | | | | | | | | | | | | | | |\n| Mergers and acquisitions | | | \u2014 | | | | | | \u2014 | | | | | | 450 | | | | | | 450 | | | | | | | | | | | | | | |\n| Adjustments and other | | | 1,801 | | | | | | (1,958) | | | | | | \u2014 | | | | | | (157) | | | | | | | | | | | | | | |\n| Goodwill, December\u00a031, 2020 | | | $ | 15,841 | | | | | $ | 6,167 | | | | | $ | 2,439 | | | | | $ | 24,447 | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n\n","source":"TFC\/10-K\/0000092230-21-000032"} {"title":"NOTE 7. Goodwill and Other Intangible Assets","text":"The estimated amortization expense of identifiable intangibles for the next five years and thereafter is presented as follows:","markdown_table":"\n\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | | | | | | | | | | | | | |\n| | | | Weighted Average Remaining Amortization Period | | | 2020 | | | | | | | | | | | | | | | | | | 2019 | | | | | | | | | | | | | | |\n| December 31,(Dollars in millions) | | | Gross Carrying Amount | | | | | | Accumulated Amortization | | | | | | Net Carrying Amount | | | | | | Gross Carrying Amount | | | | | | Accumulated Amortization | | | | | | Net Carrying Amount | | |\n| CDI | | | 8.8 years | | | $ | 2,600 | | | | | $ | (852) | | | | | $ | 1,748 | | | | | $ | 2,474 | | | | | $ | (365) | | | | | $ | 2,109 | |\n| Other, primarily client relationship intangibles | | | 12.3 years | | | 2,217 | | | | | | (981) | | | | | | 1,236 | | | | | | 1,808 | | | | | | (775) | | | | | | 1,033 | | |\n| Total | | | | | | $ | 4,817 | | | | | $ | (1,833) | | | | | $ | 2,984 | | | | | $ | 4,282 | | | | | $ | (1,140) | | | | | $ | 3,142 | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n\n","source":"TFC\/10-K\/0000092230-21-000032"} {"title":"NOTE 7. Goodwill and Other Intangible Assets","text":"120 Truist Financial Corporation","markdown_table":"\n\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| Year Ended December 31,(Dollars in millions) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| 2021 | | | | | | 2022 | | | | | | 2023 | | | | | | 2024 | | | | | | 2025 | | | | | | Thereafter | | | | | |\n| Estimated amortization expense | | | $ | 584 | | | | | $ | 471 | | | | | $ | 392 | | | | | $ | 330 | | | | | $ | 273 | | | | | $ | 934 | | | | |\n\n","source":"TFC\/10-K\/0000092230-21-000032"} {"title":"Residential Mortgage Activities","text":"The following table presents a roll forward of the carrying value of residential MSRs recorded at fair value:","markdown_table":"\n\n| | | | | | | | | | | | | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | | | | | | | | | | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | | | | |\n| December 31,(Dollars in millions) | | | | | | 2020 | | | | | | 2019 | | | | | | 2018 | | | | | |\n| | | | | | | | | | | | | | | | | | | | | | | | |\n| UPB of residential mortgage loan servicing portfolio | | | | | | $ | 239,034 | | | | | $ | 279,558 | | | | | $ | 118,605 | | | | |\n| UPB of residential mortgage loans serviced for others, primarily agency conforming fixed rate | | | | | | 188,341 | | | | | | 219,347 | | | | | | 87,270 | | | | | |\n| Mortgage loans sold with recourse | | | | | | 328 | | | | | | 371 | | | | | | 419 | | | | | |\n| Maximum recourse exposure from mortgage loans sold with recourse liability | | | | | | 201 | | | | | | 212 | | | | | | 223 | | | | | |\n| Indemnification, recourse and repurchase reserves | | | | | | 93 | | | | | | 44 | | | | | | 24 | | | | | |\n| | | | | | | | | | | | | | | | | | | | | | | | |\n| As of \/ For the Year Ended December\u00a031, (Dollars in millions) | | | | | | 2020 | | | | | | 2019 | | | | | | 2018 | | | | | |\n| UPB of residential mortgage loans sold from LHFS | | | | | | $ | 48,366 | | | | | $ | 16,646 | | | | | $ | 10,094 | | | | |\n| Pre-tax gains recognized on mortgage loans sold and held for sale | | | | | | 1,034 | | | | | | 122 | | | | | | 116 | | | | | |\n| Servicing fees recognized from mortgage loans serviced for others | | | | | | 630 | | | | | | 265 | | | | | | 256 | | | | | |\n| Approximate weighted average servicing fee on the outstanding balance of residential mortgage loans serviced for others | | | | | | 0.32 | | % | | | | 0.31 | | % | | | | 0.28 | | % | | | |\n| Weighted average interest rate on mortgage loans serviced for others | | | | | | 3.84 | | | | | | 4.04 | | | | | | 4.04 | | | | | |\n\n","source":"TFC\/10-K\/0000092230-21-000032"} {"title":"Residential Mortgage Activities","text":"The sensitivity of the fair value of the Company's residential MSRs to changes in key assumptions is presented in the following table:","markdown_table":"\n\n| | | | | | | | | | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | | | | | | | | | | | | | | | | | | | |\n| Year Ended December 31,(Dollars in millions) | | | | | | 2020 | | | | | | 2019 | | | | | | 2018 | | |\n| Residential MSRs, carrying value, January 1 | | | | | | $ | 2,371 | | | | | $ | 957 | | | | | 914 | | |\n| Merger | | | | | | \u2014 | | | | | | 1,506 | | | | | | \u2014 | | |\n| Additions | | | | | | 653 | | | | | | 171 | | | | | | 116 | | |\n| Change in fair value due to changes in valuation inputs or assumptions: | | | | | | | | | | | | | | | | | | | | |\n| Prepayment speeds | | | | | | (572) | | | | | | (131) | | | | | | (12) | | |\n| OAS | | | | | | 75 | | | | | | 32 | | | | | | 57 | | |\n| Servicing costs | | | | | | \u2014 | | | | | | \u2014 | | | | | | 22 | | |\n| Realization of expected net servicing cash flows, passage of time and other | | | | | | (749) | | | | | | (164) | | | | | | (140) | | |\n| Residential MSRs, carrying value, December\u00a031 | | | | | | $ | 1,778 | | | | | $ | 2,371 | | | | | $ | 957 | |\n| | | | | | | | | | | | | | | | | | | | | |\n\n","source":"TFC\/10-K\/0000092230-21-000032"} {"title":"Residential Mortgage Activities","text":"The sensitivity calculations above are hypothetical and should not be considered to be predictive of future performance. As indicated, changes in fair value based on adverse changes in assumptions generally cannot be extrapolated because the relationship of the change in assumption to the change in fair value may not be linear. Also, in the above table, the effect of an adverse variation in one assumption on the fair value of the MSRs is calculated without changing any other assumption; while in reality, changes in one factor may result in changes in another, which may magnify or counteract the effect of the change. See \"Note 18. Fair Value Disclosures\" for additional information on the valuation techniques used.","markdown_table":"\n\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | | | | | | | | | | |\n| | | | | | | | | | | | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | | | 2020 | | | | | | | | | | | | | | | | | | 2019 | | | | | | | | | | | | | | |\n| December 31,(Dollars in millions) | | | Range | | | | | | | | | | | | Weighted Average | | | | | | Range | | | | | | | | | | | | Weighted Average | | |\n| Min | | | | | | Max | | | | | | | | | Min | | | | | | Max | | | | | |\n| Prepayment speed | | | 12.8 | | % | | | | 30.8 | | % | | | | 15.4 | | % | | | | 8.4 | | % | | | | 18.6 | | % | | | | 9.6 | | % |\n| Effect on fair value of a 10% increase | | | | | | | | | | | | | | | $ | (89) | | | | | | | | | | | | | | | | | $ | (102) | |\n| Effect on fair value of a 20% increase | | | | | | | | | | | | | | | (171) | | | | | | | | | | | | | | | | | | (195) | | |\n| OAS | | | 3.5 | | % | | | | 13.7 | | % | | | | 7.3 | | % | | | | 4.0 | | % | | | | 13.5 | | % | | | | 6.7 | | % |\n| Effect on fair value of a 10% increase | | | | | | | | | | | | | | | $ | (45) | | | | | | | | | | | | | | | | | $ | (54) | |\n| Effect on fair value of a 20% increase | | | | | | | | | | | | | | | (88) | | | | | | | | | | | | | | | | | | (106) | | |\n| Composition of loans serviced for others: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Fixed-rate residential mortgage loans | | | | | | | | | | | | | | | 98.8 | | % | | | | | | | | | | | | | | | | 98.5 | | % |\n| Adjustable-rate residential mortgage loans | | | | | | | | | | | | | | | 1.2 | | | | | | | | | | | | | | | | | | 1.5 | | |\n| Total | | | | | | | | | | | | | | | 100.0 | | % | | | | | | | | | | | | | | | | 100.0 | | % |\n| Weighted average life | | | | | | | | | | | | | | | 4.8 years | | | | | | | | | | | | | | | | | | 5.4 years | | |\n\n","source":"TFC\/10-K\/0000092230-21-000032"} {"title":"Commercial Mortgage Activities","text":"In the third quarter of 2020, the Company transferred certain servicing activities involving cancellable servicing rights to third parties, resulting in a decrease in the UPB of CRE mortgages serviced for others. This transfer did not materially impact commercial MSRs.","markdown_table":"\n\n| | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | | | | |\n| | | | | | | | | | | | |\n| December 31,(Dollars in millions) | | | 2020 | | | | | | 2019 | | |\n| UPB of CRE mortgages serviced for others | | | $ | 36,670 | | | | | $ | 70,404 | |\n| CRE mortgages serviced for others covered by recourse provisions | | | 9,019 | | | | | | 8,676 | | |\n| Maximum recourse exposure from CRE mortgages sold with recourse liability | | | 2,624 | | | | | | 2,479 | | |\n| Recorded reserves related to recourse exposure | | | 18 | | | | | | 13 | | |\n| CRE mortgages originated during the year-to-date period | | | 6,739 | | | | | | 8,062 | | |\n| Commercial MSRs at fair value | | | 245 | | | | | | 247 | | |\n| | | | | | | | | | | | |\n\n","source":"TFC\/10-K\/0000092230-21-000032"} {"title":"Lessor Operating Leases","text":"(1) Includes certain land parcels subject to operating leases that have indefinite lives.","markdown_table":"\n\n| | | | | | | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | | | | | | | | | | | | | | | | |\n| December 31,(Dollars in millions) | | | | | | | | | 2020 | | | | | | 2019 | | |\n| Assets held under operating leases (1) | | | | | | | | | $ | 2,144 | | | | | $ | 2,236 | |\n| | | | | | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | | | | |\n| Accumulated depreciation | | | | | | | | | (517) | | | | | | (391) | | |\n| Net | | | | | | | | | $ | 1,627 | | | | | $ | 1,845 | |\n\n","source":"TFC\/10-K\/0000092230-21-000032"} {"title":"NOTE 10. Deposits","text":"The following table presents time deposits maturities:","markdown_table":"\n\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| December 31,(Dollars in millions) | | | | | | 2020 | | | | | | 2019 | | | | | | | | | | | | | | | | | |\n| Noninterest-bearing deposits | | | | | | $ | 127,629 | | | | | $ | 92,405 | | | | | | | | | | | | | | | | |\n| Interest-bearing deposits: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Interest checking | | | | | | 105,269 | | | | | | 85,492 | | | | | | | | | | | | | | | | | |\n| Money market and savings | | | | | | 126,238 | | | | | | 120,934 | | | | | | | | | | | | | | | | | |\n| Time deposits | | | | | | 21,941 | | | | | | 35,896 | | | | | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Total deposits | | | | | | $ | 381,077 | | | | | $ | 334,727 | | | | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Time deposits greater than $250,000 | | | | | | $ | 3,296 | | | | | $ | 9,362 | | | | | | | | | | | | | | | | |\n\n","source":"TFC\/10-K\/0000092230-21-000032"} {"title":"NOTE 11. Borrowings","text":"The following table presents a summary of long-term debt:","markdown_table":"\n\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | | | | | | | | | | | | | | | | |\n| December 31,(Dollars in millions) | | | | | | 2020 | | | | | | 2019 | | | | | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Federal funds purchased | | | | | | $ | 79 | | | | | | | | | | | $ | 259 | | | | | | | | | | |\n| Securities sold under agreements to repurchase | | | | | | 1,221 | | | | | | | | | | | | 1,969 | | | | | | | | | | | |\n| FHLB advances | | | | | | 2,649 | | | | | | | | | | | | 13,480 | | | | | | | | | | | |\n| Collateral in excess of derivative exposures | | | | | | 385 | | | | | | | | | | | | 682 | | | | | | | | | | | |\n| Master notes | | | | | | 621 | | | | | | | | | | | | 493 | | | | | | | | | | | |\n| Other short-term borrowings | | | | | | 1,137 | | | | | | | | | | | | 1,335 | | | | | | | | | | | |\n| Total short-term borrowings | | | | | | $ | 6,092 | | | | | | | | | | | $ | 18,218 | | | | | | | | | | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n\n","source":"TFC\/10-K\/0000092230-21-000032"} {"title":"NOTE 11. Borrowings","text":"(1)Includes the impact of debt issuance costs and purchase accounting, and excludes hedge accounting impacts.(2)Subordinated notes with a remaining maturity of one year or greater qualify under the risk-based capital guidelines as Tier 2 supplementary capital, subject to certain limitations.(3)Consist of notes with various terms that include fixed or floating rate interest, or returns that are linked to an equity index.(4)Includes finance leases, tax credit investments, and other.(5)Includes debt associated with structured real estate leases.","markdown_table":"\n\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | | | | | | | | | | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | | | 2020 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 2019 | | |\n| December\u00a031,(Dollars in millions) | | | | | | | | | | | | | | | Stated Rate | | | | | | | | | | | | Effective Rate (1) | | | | | | Carrying Amount | | | | | | Carrying Amount | | |\n| Maturity | | | | | | | | | | | | Min | | | | | | Max | | | | | | | | | | | |\n| Truist Financial Corporation: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Fixed rate senior notes | | | 2021 | | | to | | | 2030 | | | | | | 1.13 | | % | | | | 6.00 | | % | | | | 2.52 | | % | | | | $ | 15,984 | | | | | $ | 14,431 | |\n| Floating rate senior notes | | | 2021 | | | | | | 2022 | | | | | | 0.43 | | | | | | 0.88 | | | | | | 0.64 | | | | | | 900 | | | | | | 1,749 | | |\n| Fixed rate subordinated notes (2) | | | 2022 | | | | | | 2029 | | | | | | 3.88 | | | | | | 6.00 | | | | | | 3.78 | | | | | | 1,283 | | | | | | 1,227 | | |\n| Capital notes | | | 2027 | | | | | | 2028 | | | | | | 0.87 | | | | | | 1.21 | | | | | | 1.69 | | | | | | 615 | | | | | | 611 | | |\n| Structured notes (3) | | | 2021 | | | | | | 2026 | | | | | | | | | | | | | | | | | | | | | | | | 108 | | | | | | 112 | | |\n| Truist Bank: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Fixed rate senior notes | | | 2021 | | | | | | 2025 | | | | | | 1.25 | | | | | | 4.05 | | | | | | 2.10 | | | | | | 11,907 | | | | | | 11,560 | | |\n| Floating rate senior notes | | | 2022 | | | | | | 2037 | | | | | | 0.80 | | | | | | 0.83 | | | | | | 0.70 | | | | | | 1,567 | | | | | | 1,554 | | |\n| Fixed rate subordinated notes (2) | | | 2025 | | | | | | 2030 | | | | | | 2.25 | | | | | | 3.80 | | | | | | 3.03 | | | | | | 5,142 | | | | | | 3,872 | | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| FHLB advances | | | 2021 | | | | | | 2034 | | | | | | \u2014 | | | | | | 5.36 | | | | | | 5.32 | | | | | | 878 | | | | | | 4,141 | | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Other long-term debt (4) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 1,014 | | | | | | 1,133 | | |\n| Nonbank subsidiaries: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Other long-term debt (5) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 199 | | | | | | 949 | | |\n| Total long-term debt | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | $ | 39,597 | | | | | $ | 41,339 | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n\n","source":"TFC\/10-K\/0000092230-21-000032"} {"title":"NOTE 11. Borrowings","text":"(1)Amounts include imputed interest of $5 million related to finance leases.","markdown_table":"\n\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Year Ended December 31,(Dollars in millions) | | | | | | 2021 | | | | | | 2022 | | | | | | 2023 | | | | | | 2024 | | | | | | 2025 | | | | | | Thereafter | | |\n| Future debt maturities (1) | | | | | | $ | 5,373 | | | | | $ | 9,236 | | | | | $ | 5,139 | | | | | $ | 5,309 | | | | | $ | 5,797 | | | | | $ | 8,748 | |\n\n","source":"TFC\/10-K\/0000092230-21-000032"} {"title":"Preferred Stock","text":"(1)Converted security from previously issued SunTrust preferred stock.(2)Dividend rate is the greater of 4.00% or 3-month LIBOR plus 0.530%.(3)Dividend rate is the greater of 4.00% or 3-month LIBOR plus 0.645%.(4)Fixed dividend rate will reset on June 15, 2022, then dividend rate will be 3-month LIBOR plus 3.102%.(5)Fixed dividend rate will reset on December 15, 2027, then dividend rate will be 3-month LIBOR plus 2.786%.(6)Fixed dividend rate will reset on September 1, 2024, and on each following fifth anniversary of the reset date to the five-year U.S. Treasury rate plus 3.003%.(7)Fixed dividend rate will reset on December 1, 2025, and on each following fifth anniversary of the reset date to the five-year U.S. Treasury rate plus 4.605%.(8)Fixed dividend rate will reset on September 1, 2030, and on each following tenth anniversary of the reset date to the ten-year U.S. Treasury rate plus 4.349%.(9)Dividend payments become quarterly beginning on September 15, 2022.(10)Dividend payments become quarterly after dividend rate reset.","markdown_table":"\n\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| Preferred Stock Issue(Dollars in millions) | | | Issuance Date | | | | | | | | | Earliest Redemption Date | | | | | | Liquidation Amount | | | | | | Carrying Amount | | | | | | Dividend Rate | | | | | | | | | Dividend Payments | | | | | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Series F | | | 10\/31\/2012 | | | | | | | | | 11\/1\/2017 | | | | | | $ | 450 | | | | | $ | 437 | | | | | 5.200 | | % | | | | | | | Quarterly | | | | | |\n| Series G | | | 5\/1\/2013 | | | | | | | | | 6\/1\/2018 | | | | | | 500 | | | | | | 486 | | | | | | 5.200 | | | | | | | | | Quarterly | | | | | |\n| Series H | | | 3\/9\/2016 | | | | | | | | | 6\/1\/2021 | | | | | | 465 | | | | | | 451 | | | | | | 5.625 | | | | | | | | | Quarterly | | | | | |\n| Series I | | | 12\/6\/2019 | | | (1) | | | | | | 12\/15\/2024 | | | | | | 173 | | | | | | 168 | | | | | | 4.000 | | | (2) | | | | | | Quarterly | | | | | |\n| Series J | | | 12\/6\/2019 | | | (1) | | | | | | 12\/15\/2024 | | | | | | 103 | | | | | | 92 | | | | | | 4.000 | | | (3) | | | | | | Quarterly | | | | | |\n| Series L | | | 12\/6\/2019 | | | (1) | | | | | | 12\/15\/2024 | | | | | | 750 | | | | | | 766 | | | | | | 5.050 | | | (4) | | | | | | Semi-annually | | | (9) | | |\n| Series M | | | 12\/6\/2019 | | | (1) | | | | | | 12\/15\/2027 | | | | | | 500 | | | | | | 516 | | | | | | 5.125 | | | (5) | | | | | | Semi-annually | | | (10) | | |\n| Series N | | | 7\/29\/2019 | | | | | | | | | 9\/1\/2024 | | | | | | 1,700 | | | | | | 1,683 | | | | | | 4.800 | | | (6) | | | | | | Semi-annually | | | | | |\n| Series O | | | 5\/27\/2020 | | | | | | | | | 6\/1\/2025 | | | | | | 575 | | | | | | 559 | | | | | | 5.250 | | | | | | | | | Quarterly | | | | | |\n| Series P | | | 6\/1\/2020 | | | | | | | | | 12\/1\/2025 | | | | | | 1,000 | | | | | | 992 | | | | | | 4.950 | | | (7) | | | | | | Semi-annually | | | | | |\n| Series Q | | | 6\/19\/2020 | | | | | | | | | 9\/1\/2030 | | | | | | 1,000 | | | | | | 992 | | | | | | 5.100 | | | (8) | | | | | | Semi-annually | | | | | |\n| Series R | | | 8\/3\/2020 | | | | | | | | | 9\/1\/2025 | | | | | | 925 | | | | | | 906 | | | | | | 4.750 | | | | | | | | | Quarterly | | | | | |\n| Total | | | | | | | | | | | | | | | | | | $ | 8,141 | | | | | $ | 8,048 | | | | | | | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n\n","source":"TFC\/10-K\/0000092230-21-000032"} {"title":"NOTE 14. Income Taxes","text":"A reconciliation of the provision for income taxes at the statutory federal income tax rate to the Company\u2019s actual provision for income taxes and actual effective tax rate is presented in the following table:","markdown_table":"\n\n| | | | | | | | | | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| Year Ended December 31,(Dollars in millions) | | | | | | 2020 | | | | | | 2019 | | | | | | 2018 | | |\n| Current expense: | | | | | | | | | | | | | | | | | | | | |\n| Federal | | | | | | $ | 979 | | | | | $ | 357 | | | | | $ | 629 | |\n| State | | | | | | 155 | | | | | | 97 | | | | | | 151 | | |\n| Total current expense | | | | | | 1,134 | | | | | | 454 | | | | | | 780 | | |\n| Deferred expense: | | | | | | | | | | | | | | | | | | | | |\n| Federal | | | | | | (131) | | | | | | 290 | | | | | | 26 | | |\n| State | | | | | | (22) | | | | | | 38 | | | | | | (3) | | |\n| Total deferred expense | | | | | | (153) | | | | | | 328 | | | | | | 23 | | |\n| Provision for income taxes | | | | | | $ | 981 | | | | | $ | 782 | | | | | $ | 803 | |\n| | | | | | | | | | | | | | | | | | | | | |\n\n","source":"TFC\/10-K\/0000092230-21-000032"} {"title":"NOTE 14. Income Taxes","text":"128 Truist Financial Corporation","markdown_table":"\n\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | | 2020 | | | | | | | | | | | | 2019 | | | | | | | | | | | | 2018 | | | | | | | | |\n| Year Ended December 31,(Dollars in millions) | | | Amount | | | | | | % of Income Before Taxes | | | | | | Amount | | | | | | % of Income Before Taxes | | | | | | Amount | | | | | | % of Income Before Taxes | | |\n| Federal income taxes at statutory rate | | | $ | 1,149 | | | | | 21.0 | | % | | | | $ | 844 | | | | | 21.0 | | % | | | | $ | 853 | | | | | 21.0 | | % |\n| Increase (decrease) in provision for income taxes as a result of: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| State income taxes, net of federal tax benefit | | | 105 | | | | | | 1.9 | | | | | | 107 | | | | | | 2.7 | | | | | | 117 | | | | | | 2.9 | | |\n| Income tax credits, net of amortization | | | (178) | | | | | | (3.3) | | | | | | (86) | | | | | | (2.1) | | | | | | (57) | | | | | | (1.4) | | |\n| Tax-exempt interest | | | (99) | | | | | | (1.8) | | | | | | (69) | | | | | | (1.8) | | | | | | (90) | | | | | | (2.2) | | |\n| Federal tax reform impact | | | \u2014 | | | | | | \u2014 | | | | | | \u2014 | | | | | | \u2014 | | | | | | (27) | | | | | | (0.7) | | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Other, net | | | 4 | | | | | | 0.1 | | | | | | (14) | | | | | | (0.3) | | | | | | 7 | | | | | | 0.2 | | |\n| Provision for income taxes | | | $ | 981 | | | | | 17.9 | | | | | | $ | 782 | | | | | 19.5 | | | | | | $ | 803 | | | | | 19.8 | | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n\n","source":"TFC\/10-K\/0000092230-21-000032"} {"title":"NOTE 14. Income Taxes","text":"The DTAs include Federal and state NOLs and other state carryforwards that will expire, if not utilized, in varying amounts from 2021 to 2040. The Company had a valuation allowance recorded against its state carryforwards and certain state DTAs of $123\u00a0million and $130\u00a0million at December\u00a031, 2020 and 2019, respectively.","markdown_table":"\n\n| | | | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| December 31,(Dollars in millions) | | | | | | 2020 | | | | | | 2019 | | |\n| DTAs: | | | | | | | | | | | | | | |\n| ALLL | | | | | | $ | 1,376 | | | | | $ | 366 | |\n| Employee compensation and benefits | | | | | | 698 | | | | | | 721 | | |\n| Loans | | | | | | 369 | | | | | | 753 | | |\n| Operating lease liability | | | | | | 469 | | | | | | 225 | | |\n| Accruals and reserves | | | | | | 305 | | | | | | 322 | | |\n| Federal and state NOLs and other carryforwards | | | | | | 149 | | | | | | 156 | | |\n| | | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | |\n| Net unrealized losses in AOCI | | | | | | \u2014 | | | | | | 257 | | |\n| Other | | | | | | 57 | | | | | | 77 | | |\n| Total gross DTAs | | | | | | 3,423 | | | | | | 2,877 | | |\n| Valuation allowance | | | | | | (123) | | | | | | (130) | | |\n| Total DTAs net of valuation allowance | | | | | | 3,300 | | | | | | 2,747 | | |\n| DTLs: | | | | | | | | | | | | | | |\n| Pension | | | | | | 1,299 | | | | | | 1,167 | | |\n| Goodwill and other intangible assets | | | | | | 688 | | | | | | 694 | | |\n| Equipment and auto leasing | | | | | | 599 | | | | | | 932 | | |\n| MSRs | | | | | | 459 | | | | | | 491 | | |\n| ROU assets | | | | | | 327 | | | | | | 146 | | |\n| Net unrealized gains in AOCI | | | | | | 222 | | | | | | \u2014 | | |\n| Premises and equipment | | | | | | 147 | | | | | | 162 | | |\n| Partnerships | | | | | | 84 | | | | | | 23 | | |\n| Other | | | | | | 48 | | | | | | 144 | | |\n| | | | | | | | | | | | | | | |\n| Total DTLs | | | | | | 3,873 | | | | | | 3,759 | | |\n| Net DTL | | | | | | $ | (573) | | | | | $ | (1,012) | |\n\n","source":"TFC\/10-K\/0000092230-21-000032"} {"title":"NOTE 14. Income Taxes","text":"The amount of UTBs that would favorably affect the Company's effective tax rate, if recognized, was $100\u00a0million and $99\u00a0million at December\u00a031, 2020 and 2019, respectively. Interest and penalties related to UTBs are recorded in the Provision for income taxes in the Consolidated Statement of Income. The Company had a gross liability of $12\u00a0million and $11\u00a0million for interest and penalties related to its UTBs at December\u00a031, 2020 and 2019, respectively. The amount of gross expense related interest and penalties on UTBs was immaterial.The Company files U.S. federal, state and local income tax returns. The Company's federal income tax returns are no longer subject to examination by the IRS for taxable years prior to 2017. With limited exceptions, the Company is no longer subject to examination by state and local taxing authorities for taxable years prior to 2013. It is reasonably possible that the liability for unrecognized tax benefits could decrease by as much as $15\u00a0million during the next 12 months due to completion of tax authority examinations and the expiration of statutes of limitations. It is uncertain how much, if any, of this potential decrease will impact the Company\u2019s effective tax rate.","markdown_table":"\n\n| | | | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| December 31,(Dollars in millions) | | | | | | 2020 | | | | | | 2019 | | |\n| Balance, January 1 | | | | | | $ | 127 | | | | | $ | 2 | |\n| Increases in UTBs related to prior years | | | | | | 4 | | | | | | 120 | | |\n| Decreases in UTBs related to prior years | | | | | | (1) | | | | | | \u2014 | | |\n| Increases in UTBs related to the current year | | | | | | 18 | | | | | | 6 | | |\n| Decreases in UTBs related to settlements | | | | | | (13) | | | | | | (1) | | |\n| Decreases in UTBs related to lapse of the applicable statues of limitations | | | | | | (2) | | | | | | \u2014 | | |\n| Balance, December 31 | | | | | | $ | 133 | | | | | $ | 127 | |\n\n","source":"TFC\/10-K\/0000092230-21-000032"} {"title":"Defined Benefit Retirement Plans","text":"The weighted average expected long-term rate of return on plan assets represents the average rate of return expected to be earned on plan assets over the period the benefits included in the benefit obligation are to be paid. In developing the expected rate of return, Truist considers long-term compound annualized returns of historical market data for each asset category, as well as historical actual returns on the plan assets. Using this reference information, the Company develops forward-looking return expectations for each asset category and a weighted average expected long-term rate of return for the plan based on target asset allocations contained in the Company's Investment Policy Statement. For 2021, the expected rate of return on plan assets is 6.7%.","markdown_table":"\n\n| | | | | | | | | | | | | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| Year Ended December 31,(Dollars in millions) | | | Location | | | | | | 2020 | | | | | | 2019 | | | | | | 2018 | | |\n| Net periodic pension cost: | | | | | | | | | | | | | | | | | | | | | | | |\n| Service cost | | | Personnel expense | | | | | | $ | 518 | | | | | $ | 214 | | | | | $ | 238 | |\n| Interest cost | | | Other expense | | | | | | 313 | | | | | | 233 | | | | | | 201 | | |\n| Estimated return on plan assets | | | Other expense | | | | | | (866) | | | | | | (480) | | | | | | (448) | | |\n| Net amortization and other | | | Other expense | | | | | | 76 | | | | | | 111 | | | | | | 81 | | |\n| Net periodic benefit cost | | | | | | | | | 41 | | | | | | 78 | | | | | | 72 | | |\n| Pre-tax amounts recognized in OCI: | | | | | | | | | | | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | | | | | | | | | | |\n| Net actuarial loss (gain) | | | | | | | | | (244) | | | | | | 34 | | | | | | 289 | | |\n| Net amortization | | | | | | | | | (77) | | | | | | (110) | | | | | | (81) | | |\n| Net amount recognized in OCI | | | | | | | | | (321) | | | | | | (76) | | | | | | 208 | | |\n| Total net periodic pension costs (income) recognized in total comprehensive income, pre-tax | | | | | | | | | $ | (280) | | | | | $ | 2 | | | | | $ | 280 | |\n| Weighted average assumptions used to determine net periodic pension cost: | | | | | | | | | | | | | | | | | | | | | | | |\n| Discount rate | | | | | | | | | 3.45 | | % | | | | 4.43 | | % | | | | 3.79 | | % |\n| Expected long-term rate of return on plan assets | | | | | | | | | 6.90 | | | | | | 7.00 | | | | | | 7.00 | | |\n| Assumed long-term rate of annual compensation increases | | | | | | | | | 4.50 | | | | | | 4.50 | | | | | | 4.50 | | |\n| Weighted average assumptions used to determine net periodic pension cost for SunTrust plans prior to being combined: | | | | | | | | | | | | | | | | | | | | | | | |\n| Discount rate | | | | | | | | | NA | | | | | | 3.22 | | % | | | | NA | | |\n| Expected long-term rate of return on plan assets | | | | | | | | | NA | | | | | | 6.90 | | | | | | NA | | |\n\n","source":"TFC\/10-K\/0000092230-21-000032"} {"title":"Defined Benefit Retirement Plans","text":"(1)The assumed rate for qualified and nonqualified plans is 3.50% in 2021 and increases to 4.50% thereafter.","markdown_table":"\n\n| | | | | | | | | | | | | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| Year Ended December 31,(Dollars in millions) | | | Qualified Plan | | | | | | | | | | | | Nonqualified Plans | | | | | | | | |\n| 2020 | | | | | | 2019 | | | | | | 2020 | | | | | | 2019 | | |\n| Projected benefit obligation, January 1 | | | $ | 8,819 | | | | | $ | 4,697 | | | | | $ | 557 | | | | | $ | 386 | |\n| Service cost | | | 479 | | | | | | 199 | | | | | | 39 | | | | | | 15 | | |\n| Interest cost | | | 294 | | | | | | 216 | | | | | | 19 | | | | | | 17 | | |\n| Actuarial loss | | | 985 | | | | | | 1,042 | | | | | | 68 | | | | | | 79 | | |\n| Benefits paid | | | (300) | | | | | | (135) | | | | | | (22) | | | | | | (13) | | |\n| | | | | | | | | | | | | | | | | | | | | | | | |\n| Projected benefit obligation from Merger | | | \u2014 | | | | | | 2,800 | | | | | | \u2014 | | | | | | 72 | | |\n| Special termination benefits | | | \u2014 | | | | | | \u2014 | | | | | | \u2014 | | | | | | 1 | | |\n| Projected benefit obligation, December 31 | | | $ | 10,277 | | | | | $ | 8,819 | | | | | $ | 661 | | | | | $ | 557 | |\n| Accumulated benefit obligation, December 31 | | | $ | 9,044 | | | | | $ | 7,859 | | | | | $ | 503 | | | | | $ | 432 | |\n| Weighted average assumptions used to determine projected benefit obligations: | | | | | | | | | | | | | | | | | | | | | | | |\n| Weighted average assumed discount rate | | | 2.94 | | % | | | | 3.45 | | % | | | | 2.94 | | % | | | | 3.45 | | % |\n| Assumed rate of annual compensation increases (1) | | | 3.50 | | | | | | 4.50 | | | | | | 3.50 | | | | | | 4.50 | | |\n| Weighted average assumptions used to determine projected benefit obligations for SunTrust plans prior to being combined: | | | | | | | | | | | | | | | | | | | | | | | |\n| Weighted average assumed discount rate | | | NA | | | | | | 3.22 | | % | | | | NA | | | | | | 3.22 | | % |\n\n","source":"TFC\/10-K\/0000092230-21-000032"} {"title":"Defined Benefit Retirement Plans","text":"The following are the pre-tax amounts recognized in AOCI:","markdown_table":"\n\n| | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Year Ended December 31,(Dollars in millions) | | | | | | Qualified Plan | | | | | | | | | | | | Nonqualified Plans | | | | | | | | |\n| | | | 2020 | | | | | | 2019 | | | | | | 2020 | | | | | | 2019 | | |\n| Fair value of plan assets, January 1 | | | | | | $ | 12,398 | | | | | $ | 5,968 | | | | | $ | \u2014 | | | | | $ | \u2014 | |\n| Actual return on plan assets | | | | | | 2,164 | | | | | | 1,566 | | | | | | \u2014 | | | | | | \u2014 | | |\n| Employer contributions | | | | | | 373 | | | | | | 1,696 | | | | | | 22 | | | | | | 13 | | |\n| Benefits paid | | | | | | (300) | | | | | | (135) | | | | | | (22) | | | | | | (13) | | |\n| Fair value of plan assets from Merger | | | | | | \u2014 | | | | | | 3,303 | | | | | | \u2014 | | | | | | \u2014 | | |\n| Fair value of plan assets, December 31 | | | | | | $ | 14,635 | | | | | $ | 12,398 | | | | | $ | \u2014 | | | | | $ | \u2014 | |\n| Funded status, December 31 | | | | | | $ | 4,358 | | | | | $ | 3,579 | | | | | $ | (661) | | | | | $ | (557) | |\n\n","source":"TFC\/10-K\/0000092230-21-000032"} {"title":"Defined Benefit Retirement Plans","text":"The following table presents the amount expected to be amortized from AOCI into net periodic pension cost during 2021:","markdown_table":"\n\n| | | | | | | | | | | | | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| Year Ended December 31,(Dollars in millions) | | | Qualified Plan | | | | | | | | | | | | Nonqualified Plans | | | | | | | | |\n| 2020 | | | | | | 2019 | | | | | | 2020 | | | | | | 2019 | | |\n| Prior service credit (cost) | | | $ | (90) | | | | | $ | (114) | | | | | $ | 77 | | | | | $ | 96 | |\n| Net actuarial loss | | | (858) | | | | | | (1,218) | | | | | | (263) | | | | | | (217) | | |\n| Net amount recognized | | | $ | (948) | | | | | $ | (1,332) | | | | | $ | (186) | | | | | $ | (121) | |\n\n","source":"TFC\/10-K\/0000092230-21-000032"} {"title":"Defined Benefit Retirement Plans","text":"Truist makes contributions to the qualified pension plan in amounts between the minimum required for funding and the maximum amount deductible for federal income tax purposes. Truist made discretionary contributions of $387 million during the first quarter of 2021. Management may make additional contributions in 2021. For the nonqualified plans, the employer contributions are based on benefit payments.","markdown_table":"\n\n| | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| (Dollars in millions) | | | Qualified Plan | | | | | | Nonqualified Plans | | |\n| Net actuarial loss | | | $ | \u2014 | | | | | $ | (28) | |\n| Prior service credit (cost) | | | (25) | | | | | | 19 | | |\n| Net amount expected to be amortized | | | $ | (25) | | | | | $ | (9) | |\n\n","source":"TFC\/10-K\/0000092230-21-000032"} {"title":"Defined Benefit Retirement Plans","text":"The Company's primary total return objective is to achieve returns that, over the long term, will fund retirement liabilities and provide for the desired plan benefits in a manner that satisfies the fiduciary requirements of the ERISA. The plan assets have a long-term time horizon that runs concurrent with the average life expectancy of the participants. As such, the Plan can assume a time horizon that extends well beyond a full market cycle, and can assume an above-average level of risk, as measured by the standard deviation of annual return. The investments are broadly diversified among economic sector, industry, quality and size in order to reduce risk and to produce incremental return. Within approved guidelines and restrictions, investment managers have wide discretion over the timing and selection of individual investments.Truist periodically reviews its asset allocation and investment policy and makes changes to its target asset allocation. Truist has established guidelines within each asset category to ensure the appropriate balance of risk and reward. The following table presents the fair values of the qualified pension plan assets by asset category:","markdown_table":"\n\n| | | | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| (Dollars in millions) | | | | | | Qualified Plan | | | | | | Nonqualified Plans | | |\n| 2021 | | | | | | $ | 305 | | | | | $ | 22 | |\n| 2022 | | | | | | 324 | | | | | | 23 | | |\n| 2023 | | | | | | 342 | | | | | | 31 | | |\n| 2024 | | | | | | 360 | | | | | | 26 | | |\n| 2025 | | | | | | 381 | | | | | | 27 | | |\n| 2026-2030 | | | | | | 2,205 | | | | | | 160 | | |\n\n","source":"TFC\/10-K\/0000092230-21-000032"} {"title":"Defined Benefit Retirement Plans","text":"(1)The plan may hold up to 10% of its assets in Truist common stock.","markdown_table":"\n\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| December 31,(Dollars in millions) | | | Target Allocation | | | | | | | | | | | | 2020 | | | | | | | | | | | | | | | | | | 2019 | | | | | | | | | | | | | | |\n| Min | | | | | | Max | | | | | | Total | | | | | | Level 1 | | | | | | Level 2 | | | | | | Total | | | | | | Level 1 | | | | | | Level 2 | | |\n| Cash and cash-equivalents | | | | | | | | | | | | | | | $ | 290 | | | | | $ | 290 | | | | | $ | \u2014 | | | | | $ | 295 | | | | | $ | 295 | | | | | $ | \u2014 | |\n| U.S. equity securities (1) | | | 30 | | % | | | | 50 | | % | | | | 6,587 | | | | | | 3,531 | | | | | | 3,056 | | | | | | 5,336 | | | | | | 3,629 | | | | | | 1,707 | | |\n| International equity securities | | | 11 | | | | | | 18 | | | | | | 1,614 | | | | | | 360 | | | | | | 1,254 | | | | | | 1,752 | | | | | | 328 | | | | | | 1,424 | | |\n| Fixed income securities | | | 35 | | | | | | 53 | | | | | | 5,368 | | | | | | 11 | | | | | | 5,357 | | | | | | 4,629 | | | | | | 11 | | | | | | 4,618 | | |\n| Total | | | | | | | | | | | | | | | $ | 13,859 | | | | | $ | 4,192 | | | | | $ | 9,667 | | | | | $ | 12,012 | | | | | $ | 4,263 | | | | | $ | 7,749 | |\n\n","source":"TFC\/10-K\/0000092230-21-000032"} {"title":"Equity-Based Compensation Plans","text":"The following table presents a summary of selected data related to equity-based compensation costs:","markdown_table":"\n\n| | | | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| December 31, 2020 | | | | | | | | | | | | | | |\n| Shares available for future grants (in thousands) | | | | | | 19,815 | | | | | | | | |\n| Vesting period, minimum | | | | | | 1.0 year | | | | | | | | |\n| Vesting period, maximum | | | | | | 5.0 years | | | | | | | | |\n| | | | | | | | | | | | | | | |\n\n","source":"TFC\/10-K\/0000092230-21-000032"} {"title":"Equity-Based Compensation Plans","text":"The following table presents the activity related to awards of RSUs, PSUs and restricted shares:","markdown_table":"\n\n| | | | | | | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| As of \/ For the Year Ended December 31,(Dollars in millions) | | | 2020 | | | | | | 2019 | | | | | | 2018 | | |\n| Equity-based compensation expense | | | $ | 353 | | | | | $ | 165 | | | | | $ | 141 | |\n| Income tax benefit from equity-based compensation expense | | | 84 | | | | | | 38 | | | | | | 34 | | |\n| Intrinsic value of options exercised, and RSUs and PSUs that vested during the year | | | 412 | | | | | | 216 | | | | | | 260 | | |\n| Grant date fair value of equity-based awards that vested during the year | | | 420 | | | | | | 134 | | | | | | 139 | | |\n| Unrecognized compensation cost related to equity-based awards | | | 234 | | | | | | 274 | | | | | | 135 | | |\n| Weighted-average life over which compensation cost is expected to be recognized | | | 2.3 years | | | | | | 2.3 years | | | | | | 2.4 years | | |\n\n","source":"TFC\/10-K\/0000092230-21-000032"} {"title":"Tax Credit and Certain Equity Investments","text":"The following table presents a summary of tax credits and amortization associated with the Company's tax credit investment activity:","markdown_table":"\n\n| | | | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | | | | | | | | | | | | | |\n| December 31,(Dollars in millions) | | | Balance Sheet Location | | | 2020 | | | | | | 2019 | | |\n| Investments in affordable housing projects: | | | | | | | | | | | | | | |\n| Carrying amount | | | Other assets | | | $ | 3,823 | | | | | $ | 3,684 | |\n| Amount of future funding commitments included in carrying amount | | | Other liabilities | | | 1,057 | | | | | | 1,271 | | |\n| Lending exposure | | | NA | | | 546 | | | | | | 647 | | |\n| | | | | | | | | | | | | | | |\n| Renewable energy investments: | | | | | | | | | | | | | | |\n| Carrying amount | | | Other assets | | | 167 | | | | | | 81 | | |\n| Amount of future funding commitments not included in carrying amount | | | NA | | | 76 | | | | | | 246 | | |\n| Private equity and certain other equity method investments: | | | | | | | | | | | | | | |\n| Carrying amount | | | Other assets | | | 1,574 | | | | | | 1,556 | | |\n| Amount of future funding commitments not included in carrying amount | | | NA | | | 471 | | | | | | 331 | | |\n\n","source":"TFC\/10-K\/0000092230-21-000032"} {"title":"Letters of Credit and Financial Guarantees","text":"134 Truist Financial Corporation","markdown_table":"\n\n| | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | | | | | | | |\n| | | | | | | | | |\n| | | | | | | | | | | | |\n| December 31,(Dollars in millions) | | | 2020 | | | | | | 2019 | | |\n| Commitments to extend, originate or purchase credit | | | $ | 186,731 | | | | | $ | 177,598 | |\n| Residential mortgage loans sold with recourse | | | 328 | | | | | | 371 | | |\n| CRE mortgages serviced for others covered by recourse provisions | | | 9,019 | | | | | | 8,676 | | |\n| Letters of credit | | | 5,066 | | | | | | 5,181 | | |\n| | | | | | | | | | | | |\n\n","source":"TFC\/10-K\/0000092230-21-000032"} {"title":"NOTE 17. Regulatory Requirements and Other Restrictions","text":"(1)The leverage ratio is calculated using end of period Tier 1 capital and quarterly average tangible assets. The timing of the Merger impacted the 4Q19 result.(2)Truist became subject to the supplementary leverage ratio as of January 1, 2020.","markdown_table":"\n\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| December 31,(Dollars in millions) | | | | | | 2020 | | | | | | | | | | | | 2019 | | | | | | | | |\n| | | | Ratio | | | | | | Amount | | | | | | | | | | | | | | | | | | Ratio | | | | | | Amount | | | | | | | | | | | | | | |\n| Truist Financial Corporation | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| CET1 | | | | | | 10.0 | | % | | | | $ | 37,869 | | | | | | | | | | | | | | | | | 9.5 | | % | | | | $ | 35,643 | | | | | | | | | | | | | |\n| Tier 1 capital | | | | | | 12.1 | | | | | | 45,915 | | | | | | | | | | | | | | | | | | 10.8 | | | | | | 40,743 | | | | | | | | | | | | | | |\n| Total capital | | | | | | 14.5 | | | | | | 55,011 | | | | | | | | | | | | | | | | | | 12.6 | | | | | | 47,511 | | | | | | | | | | | | | | |\n| Leverage (1) | | | | | | 9.6 | | | | | | 45,915 | | | | | | | | | | | | | | | | | | 14.7 | | | | | | 40,743 | | | | | | | | | | | | | | |\n| Supplementary leverage (2) | | | | | | 8.7 | | | | | | 45,915 | | | | | | | | | | | | | | | | | | NA | | | | | | NA | | | | | | | | | | | | | | |\n| Truist Bank | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| CET1 | | | | | | 11.0 | | | | | | 40,642 | | | | | | | | | | | | | | | | | | 10.6 | | | | | | 38,739 | | | | | | | | | | | | | | |\n| Tier 1 capital | | | | | | 11.0 | | | | | | 40,642 | | | | | | | | | | | | | | | | | | 10.6 | | | | | | 38,739 | | | | | | | | | | | | | | |\n| Total capital | | | | | | 13.0 | | | | | | 47,882 | | | | | | | | | | | | | | | | | | 12.0 | | | | | | 43,984 | | | | | | | | | | | | | | |\n| Leverage (1) | | | | | | 8.7 | | | | | | 40,642 | | | | | | | | | | | | | | | | | | 14.5 | | | | | | 38,739 | | | | | | | | | | | | | | |\n| Supplementary leverage (2) | | | | | | 7.5 | | | | | | 40,642 | | | | | | | | | | | | | | | | | | NA | | | | | | NA | | | | | | | | | | | | | | |\n\n","source":"TFC\/10-K\/0000092230-21-000032"} {"title":"Recurring Fair Value Measurements","text":"138 Truist Financial Corporation","markdown_table":"\n\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| December 31, 2020(Dollars in millions) | | | | | | Total | | | | | | Level 1 | | | | | | Level 2 | | | | | | Level 3 | | | | | | Netting Adjustments (1) | | |\n| Assets: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Trading assets: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| U.S. Treasury | | | | | | $ | 793 | | | | | $ | \u2014 | | | | | $ | 793 | | | | | $ | \u2014 | | | | | $ | \u2014 | |\n| GSE | | | | | | 164 | | | | | | \u2014 | | | | | | 164 | | | | | | \u2014 | | | | | | \u2014 | | |\n| Agency MBS - residential | | | | | | 599 | | | | | | \u2014 | | | | | | 599 | | | | | | \u2014 | | | | | | \u2014 | | |\n| Agency MBS - commercial | | | | | | 21 | | | | | | \u2014 | | | | | | 21 | | | | | | \u2014 | | | | | | \u2014 | | |\n| States and political subdivisions | | | | | | 34 | | | | | | \u2014 | | | | | | 34 | | | | | | \u2014 | | | | | | \u2014 | | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Corporate and other debt securities | | | | | | 545 | | | | | | \u2014 | | | | | | 545 | | | | | | \u2014 | | | | | | \u2014 | | |\n| Loans | | | | | | 1,586 | | | | | | \u2014 | | | | | | 1,586 | | | | | | \u2014 | | | | | | \u2014 | | |\n| Other | | | | | | 130 | | | | | | 123 | | | | | | 7 | | | | | | \u2014 | | | | | | \u2014 | | |\n| Total trading assets | | | | | | 3,872 | | | | | | 123 | | | | | | 3,749 | | | | | | \u2014 | | | | | | \u2014 | | |\n| AFS securities: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| U.S. Treasury | | | | | | 1,746 | | | | | | \u2014 | | | | | | 1,746 | | | | | | \u2014 | | | | | | \u2014 | | |\n| GSE | | | | | | 1,917 | | | | | | \u2014 | | | | | | 1,917 | | | | | | \u2014 | | | | | | \u2014 | | |\n| Agency MBS - residential | | | | | | 113,541 | | | | | | \u2014 | | | | | | 113,541 | | | | | | \u2014 | | | | | | \u2014 | | |\n| Agency MBS - commercial | | | | | | 3,057 | | | | | | \u2014 | | | | | | 3,057 | | | | | | \u2014 | | | | | | \u2014 | | |\n| States and political subdivisions | | | | | | 493 | | | | | | \u2014 | | | | | | 493 | | | | | | \u2014 | | | | | | \u2014 | | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Other | | | | | | 34 | | | | | | \u2014 | | | | | | 34 | | | | | | \u2014 | | | | | | \u2014 | | |\n| Total AFS securities | | | | | | 120,788 | | | | | | \u2014 | | | | | | 120,788 | | | | | | \u2014 | | | | | | \u2014 | | |\n| LHFS at fair value | | | | | | 4,955 | | | | | | \u2014 | | | | | | 4,955 | | | | | | \u2014 | | | | | | \u2014 | | |\n| MSRs at fair value | | | | | | 2,023 | | | | | | \u2014 | | | | | | \u2014 | | | | | | 2,023 | | | | | | \u2014 | | |\n| Other assets: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Derivative assets | | | | | | 3,837 | | | | | | 752 | | | | | | 4,903 | | | | | | 186 | | | | | | (2,004) | | |\n| Equity securities | | | | | | 1,054 | | | | | | 996 | | | | | | 58 | | | | | | \u2014 | | | | | | \u2014 | | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Total assets | | | | | | $ | 136,529 | | | | | $ | 1,871 | | | | | $ | 134,453 | | | | | $ | 2,209 | | | | | $ | (2,004) | |\n| Liabilities: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Derivative liabilities | | | | | | $ | 555 | | | | | $ | 386 | | | | | $ | 3,263 | | | | | $ | 14 | | | | | $ | (3,108) | |\n| Securities sold short | | | | | | 1,115 | | | | | | 3 | | | | | | 1,112 | | | | | | \u2014 | | | | | | \u2014 | | |\n| Total liabilities | | | | | | $ | 1,670 | | | | | $ | 389 | | | | | $ | 4,375 | | | | | $ | 14 | | | | | $ | (3,108) | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n\n","source":"TFC\/10-K\/0000092230-21-000032"} {"title":"Recurring Fair Value Measurements","text":"(1)Refer to \"Note 19. Derivative Financial Instruments\" for additional discussion on netting adjustments.","markdown_table":"\n\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| December 31, 2019(Dollars in millions) | | | | | | Total | | | | | | Level 1 | | | | | | Level 2 | | | | | | Level 3 | | | | | | Netting Adjustments (1) | | |\n| Assets: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Trading assets: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| U.S. Treasury | | | | | | $ | 227 | | | | | $ | \u2014 | | | | | $ | 227 | | | | | $ | \u2014 | | | | | $ | \u2014 | |\n| GSE | | | | | | 296 | | | | | | \u2014 | | | | | | 296 | | | | | | \u2014 | | | | | | \u2014 | | |\n| Agency MBS - residential | | | | | | 497 | | | | | | \u2014 | | | | | | 497 | | | | | | \u2014 | | | | | | \u2014 | | |\n| Agency MBS - commercial | | | | | | 68 | | | | | | \u2014 | | | | | | 68 | | | | | | \u2014 | | | | | | \u2014 | | |\n| States and political subdivisions | | | | | | 82 | | | | | | \u2014 | | | | | | 82 | | | | | | \u2014 | | | | | | \u2014 | | |\n| Non-agency MBS | | | | | | 277 | | | | | | \u2014 | | | | | | 277 | | | | | | \u2014 | | | | | | \u2014 | | |\n| Corporate and other debt securities | | | | | | 1,204 | | | | | | \u2014 | | | | | | 1,204 | | | | | | \u2014 | | | | | | \u2014 | | |\n| Loans | | | | | | 2,948 | | | | | | \u2014 | | | | | | 2,948 | | | | | | \u2014 | | | | | | \u2014 | | |\n| Other | | | | | | 134 | | | | | | 90 | | | | | | 44 | | | | | | \u2014 | | | | | | \u2014 | | |\n| Total trading assets | | | | | | 5,733 | | | | | | 90 | | | | | | 5,643 | | | | | | \u2014 | | | | | | \u2014 | | |\n| AFS securities: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| U.S. Treasury | | | | | | 2,276 | | | | | | \u2014 | | | | | | 2,276 | | | | | | \u2014 | | | | | | \u2014 | | |\n| GSE | | | | | | 1,881 | | | | | | \u2014 | | | | | | 1,881 | | | | | | \u2014 | | | | | | \u2014 | | |\n| Agency MBS - residential | | | | | | 68,236 | | | | | | \u2014 | | | | | | 68,236 | | | | | | \u2014 | | | | | | \u2014 | | |\n| Agency MBS - commercial | | | | | | 1,341 | | | | | | \u2014 | | | | | | 1,341 | | | | | | \u2014 | | | | | | \u2014 | | |\n| States and political subdivisions | | | | | | 585 | | | | | | \u2014 | | | | | | 585 | | | | | | \u2014 | | | | | | \u2014 | | |\n| Non-agency MBS | | | | | | 368 | | | | | | \u2014 | | | | | | \u2014 | | | | | | 368 | | | | | | \u2014 | | |\n| Other | | | | | | 40 | | | | | | \u2014 | | | | | | 40 | | | | | | \u2014 | | | | | | \u2014 | | |\n| Total AFS securities | | | | | | 74,727 | | | | | | \u2014 | | | | | | 74,359 | | | | | | 368 | | | | | | \u2014 | | |\n| LHFS | | | | | | 5,673 | | | | | | \u2014 | | | | | | 5,673 | | | | | | \u2014 | | | | | | \u2014 | | |\n| MSRs | | | | | | 2,618 | | | | | | \u2014 | | | | | | \u2014 | | | | | | 2,618 | | | | | | \u2014 | | |\n| Other assets: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Derivative assets | | | | | | 2,053 | | | | | | 606 | | | | | | 3,620 | | | | | | 34 | | | | | | (2,207) | | |\n| Equity securities | | | | | | 817 | | | | | | 815 | | | | | | 2 | | | | | | \u2014 | | | | | | \u2014 | | |\n| Private equity investments | | | | | | 440 | | | | | | \u2014 | | | | | | \u2014 | | | | | | 440 | | | | | | \u2014 | | |\n| Total assets | | | | | | $ | 92,061 | | | | | $ | 1,511 | | | | | $ | 89,297 | | | | | $ | 3,460 | | | | | $ | (2,207) | |\n| Liabilities: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Derivative liabilities | | | | | | $ | 366 | | | | | $ | 204 | | | | | $ | 3,117 | | | | | $ | 15 | | | | | $ | (2,970) | |\n| Securities sold short | | | | | | 1,074 | | | | | | 18 | | | | | | 1,056 | | | | | | \u2014 | | | | | | \u2014 | | |\n| Total liabilities | | | | | | $ | 1,440 | | | | | $ | 222 | | | | | $ | 4,173 | | | | | $ | 15 | | | | | $ | (2,970) | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n\n","source":"TFC\/10-K\/0000092230-21-000032"} {"title":"Recurring Fair Value Measurements","text":"During 2020, Truist sold non-agency MBS previously categorized as Level 3 that represented ownership interests in various tranches of Re-REMIC trusts. The Re-REMIC tranches did not have an active market and therefore were categorized as Level 3.During 2020, as a result of a change in control of the funds\u2019 manager, the Company deconsolidated certain SBIC funds for which it had previously concluded that it was the primary beneficiary. Following the deconsolidation, the investments in SBIC funds are valued based on net asset value per unit, as provided by the fund manager as a practical expedient, which approximates the fair value, and have not been classified in the fair value hierarchy. The SBIC funds in which the Company invests primarily focus on equity and subordinated debt investments in privately-held middle market companies. The majority of these VIE investments are not redeemable and distributions are received as the underlying assets of the funds liquidate. The timing of distributions, which are expected to occur on various dates over the next 10 years, is uncertain and dependent on various events such as recapitalizations, refinance transactions and ownership changes among others. As of December\u00a031, 2020, restrictions on the ability to sell the investments include, but are not limited to, consent of a majority of members or general partner approval for transfer of ownership. These investments are spread over numerous privately-held middle market companies, and thus the sensitivity to a change in fair value for any single investment is limited. Refer to \"Note 8. Loan Servicing\" for additional information on valuation techniques and inputs for MSRs.","markdown_table":"\n\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| (Dollars in millions) | | | Trading Assets | | | | | | Non-agency MBS | | | | | | MSRs | | | | | | Net Derivatives | | | | | | Private Equity Investments | | |\n| Balance at January 1, 2018 | | | $ | \u2014 | | | | | $ | 432 | | | | | $ | 1,056 | | | | | $ | 3 | | | | | $ | 404 | |\n| Total realized and unrealized gains (losses): | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Included in earnings | | | \u2014 | | | | | | 9 | | | | | | 71 | | | | | | 11 | | | | | | 66 | | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Purchases | | | 5 | | | | | | \u2014 | | | | | | \u2014 | | | | | | \u2014 | | | | | | 91 | | |\n| Issuances | | | \u2014 | | | | | | \u2014 | | | | | | 152 | | | | | | 24 | | | | | | \u2014 | | |\n| Sales | | | (2) | | | | | | \u2014 | | | | | | \u2014 | | | | | | \u2014 | | | | | | (112) | | |\n| Settlements | | | \u2014 | | | | | | (50) | | | | | | (171) | | | | | | (26) | | | | | | (56) | | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Balance at December 31, 2018 | | | 3 | | | | | | 391 | | | | | | 1,108 | | | | | | 12 | | | | | | 393 | | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Total realized and unrealized gains (losses): | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Included in earnings | | | \u2014 | | | | | | 13 | | | | | | (105) | | | | | | 63 | | | | | | 47 | | |\n| Included in unrealized net holding gains (losses) in OCI | | | \u2014 | | | | | | 4 | | | | | | \u2014 | | | | | | \u2014 | | | | | | \u2014 | | |\n| Purchases | | | 23 | | | | | | \u2014 | | | | | | 31 | | | | | | (1) | | | | | | 137 | | |\n| Issuances | | | \u2014 | | | | | | \u2014 | | | | | | 170 | | | | | | 63 | | | | | | \u2014 | | |\n| Sales | | | (26) | | | | | | \u2014 | | | | | | (27) | | | | | | \u2014 | | | | | | (91) | | |\n| Settlements | | | \u2014 | | | | | | (40) | | | | | | (164) | | | | | | (118) | | | | | | (46) | | |\n| Transfers into Level 3 | | | \u2014 | | | | | | \u2014 | | | | | | \u2014 | | | | | | (10) | | | | | | \u2014 | | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Merger additions | | | \u2014 | | | | | | \u2014 | | | | | | 1,605 | | | | | | 10 | | | | | | \u2014 | | |\n| Balance at December 31, 2019 | | | \u2014 | | | | | | 368 | | | | | | 2,618 | | | | | | 19 | | | | | | 440 | | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Total realized and unrealized gains (losses): | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Included in earnings | | | \u2014 | | | | | | 306 | | | | | | (550) | | | | | | 467 | | | | | | 2 | | |\n| Included in unrealized net holding gains (losses) in OCI | | | \u2014 | | | | | | (178) | | | | | | \u2014 | | | | | | \u2014 | | | | | | \u2014 | | |\n| Purchases | | | \u2014 | | | | | | \u2014 | | | | | | \u2014 | | | | | | \u2014 | | | | | | 27 | | |\n| Issuances | | | \u2014 | | | | | | \u2014 | | | | | | 711 | | | | | | 780 | | | | | | \u2014 | | |\n| Sales | | | \u2014 | | | | | | (481) | | | | | | \u2014 | | | | | | \u2014 | | | | | | \u2014 | | |\n| Settlements | | | \u2014 | | | | | | (15) | | | | | | (756) | | | | | | (1,094) | | | | | | (21) | | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Transfers out of level 3 and other | | | \u2014 | | | | | | \u2014 | | | | | | \u2014 | | | | | | \u2014 | | | | | | (448) | | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Balance at December 31, 2020 | | | $ | \u2014 | | | | | $ | \u2014 | | | | | $ | 2,023 | | | | | $ | 172 | | | | | $ | \u2014 | |\n| Change in unrealized gains (losses) included in earnings for the period, attributable to assets and liabilities still held at December 31, 2020 | | | $ | \u2014 | | | | | $ | \u2014 | | | | | $ | (535) | | | | | $ | 179 | | | | | $ | \u2014 | |\n| Primary income statement location of realized gains (losses) included in earnings | | | Net interest income | | | | | | Gain on sale of securities | | | | | | Residential mortgage income and Commercial real estate related income | | | | | | Residential mortgage income and Commercial real estate related income | | | | | | Other income | | |\n\n","source":"TFC\/10-K\/0000092230-21-000032"} {"title":"Nonrecurring Fair Value Measurements","text":"LHFS with valuation adjustments in the table above consisted primarily of residential mortgages and commercial loans that were valued using market prices and measured at the lower of cost or market. LHFS as of December 31, 2020 includes the small ticket loan and lease portfolio. The table above excludes $125\u00a0million of LHFS carried at cost at December\u00a031, 2020 that did not require a valuation adjustment during the period. The remainder of LHFS is carried at fair value. Excluding government guaranteed loans, the Company held $5\u00a0million in nonperforming LHFS at December\u00a031, 2020 and $107\u00a0million of nonperforming LHFS at December 31, 2019. LHFS that were 90 days or more past due and still accruing interest were not material at December\u00a031, 2020. Loans and leases are primarily collateral dependent and may be subject to liquidity adjustments. Refer to \"Note 1. Basis of Presentation\" for additional discussion of individually evaluated loans and leases. Other includes foreclosed real estate, other foreclosed property, ROU assets, premises and equipment and OREO, and consists primarily of residential homes, commercial properties, vacant lots and automobiles. ROU assets are measured based on the fair value of the assets, which considers the potential for future sublease income. The remaining assets are measured at the lower of cost or fair value less costs to sell.","markdown_table":"\n\n| | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | | | | | | 2020 | | | | | | | | | | | | 2019 | | | | | | | | |\n| As of \/ For The Year Ended December 31,(Dollars in millions) | | | | | | Carrying Value | | | | | | Valuation Adjustments | | | | | | Carrying Value | | | | | | Valuation Adjustments | | |\n| LHFS | | | | | | $ | 979 | | | | | $ | (101) | | | | | $ | 2,700 | | | | | $ | (17) | |\n| Loans and leases | | | | | | 142 | | | | | | (52) | | | | | | 95 | | | | | | (23) | | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Other | | | | | | 92 | | | | | | (175) | | | | | | 84 | | | | | | (253) | | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | |\n\n","source":"TFC\/10-K\/0000092230-21-000032"} {"title":"Financial Instruments Not Recorded at Fair Value","text":"The carrying value of the RUFC, which approximates the fair value of unfunded commitments, was $364\u00a0million and $373\u00a0million at December\u00a031, 2020 and December\u00a031, 2019, respectively. Prior to the adoption of CECL, the carrying value includes deferred fees.","markdown_table":"\n\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | | | | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| December 31,(Dollars in millions) | | | | | | | | | 2020 | | | | | | | | | | | | 2019 | | | | | | | | |\n| Fair Value Hierarchy | | | | | | Carrying Amount | | | | | | Fair Value | | | | | | Carrying Amount | | | | | | Fair Value | | |\n| Financial assets: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Loans and leases HFI, net of ALLL | | | Level 3 | | | | | | $ | 293,899 | | | | | $ | 295,461 | | | | | $ | 298,293 | | | | | $ | 298,586 | |\n| Financial liabilities: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Time deposits | | | Level 2 | | | | | | 21,941 | | | | | | 22,095 | | | | | | 35,896 | | | | | | 35,885 | | |\n| Long-term debt | | | Level 2 | | | | | | 39,597 | | | | | | 40,864 | | | | | | 41,339 | | | | | | 42,051 | | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n\n","source":"TFC\/10-K\/0000092230-21-000032"} {"title":"Impact of Derivatives on the Consolidated Balance Sheets","text":"144 Truist Financial Corporation","markdown_table":"\n\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | | | | | | | | | | |\n| | | | | | | | | | | | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | | | 2020 | | | | | | | | | | | | | | | | | | 2019 | | | | | | | | | | | | | | |\n| December 31,(Dollars in millions) | | | Notional Amount | | | | | | Fair Value | | | | | | | | | | | | Notional Amount | | | | | | Fair Value | | | | | | | | |\n| | | | Gain | | | | | | Loss | | | | | | | | | Gain | | | | | | Loss | | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Fair value hedges: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Interest rate contracts: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Swaps hedging long-term debt | | | $ | \u2014 | | | | | $ | \u2014 | | | | | $ | \u2014 | | | | | $ | 23,701 | | | | | $ | 113 | | | | | $ | (25) | |\n| Options hedging long-term debt | | | \u2014 | | | | | | \u2014 | | | | | | \u2014 | | | | | | 3,407 | | | | | | \u2014 | | | | | | (2) | | |\n| Swaps hedging commercial loans | | | \u2014 | | | | | | \u2014 | | | | | | \u2014 | | | | | | 44 | | | | | | \u2014 | | | | | | \u2014 | | |\n| Swaps hedging AFS securities | | | 17,765 | | | | | | \u2014 | | | | | | \u2014 | | | | | | \u2014 | | | | | | \u2014 | | | | | | \u2014 | | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Total | | | 17,765 | | | | | | \u2014 | | | | | | \u2014 | | | | | | 27,152 | | | | | | 113 | | | | | | (27) | | |\n| Not designated as hedges: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Client-related and other risk management: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Interest rate contracts: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Swaps | | | 156,338 | | | | | | 3,399 | | | | | | (862) | | | | | | 144,473 | | | | | | 1,817 | | | | | | (673) | | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Options | | | 25,386 | | | | | | 45 | | | | | | (18) | | | | | | 25,938 | | | | | | 28 | | | | | | (19) | | |\n| Forward commitments | | | 4,847 | | | | | | 9 | | | | | | (11) | | | | | | 7,907 | | | | | | 6 | | | | | | (7) | | |\n| Other | | | 2,573 | | | | | | \u2014 | | | | | | \u2014 | | | | | | 1,807 | | | | | | \u2014 | | | | | | \u2014 | | |\n| Equity contracts | | | 31,152 | | | | | | 1,856 | | | | | | (2,297) | | | | | | 38,426 | | | | | | 1,988 | | | | | | (2,307) | | |\n| Credit contracts: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Loans and leases | | | 1,056 | | | | | | \u2014 | | | | | | (5) | | | | | | 894 | | | | | | \u2014 | | | | | | (34) | | |\n| Risk participation agreements | | | 7,802 | | | | | | 1 | | | | | | (13) | | | | | | 6,696 | | | | | | \u2014 | | | | | | (2) | | |\n| Total return swaps | | | 1,296 | | | | | | 13 | | | | | | (33) | | | | | | 2,531 | | | | | | 27 | | | | | | (11) | | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Foreign exchange contracts | | | 12,066 | | | | | | 189 | | | | | | (219) | | | | | | 12,986 | | | | | | 144 | | | | | | (164) | | |\n| Commodity | | | 2,872 | | | | | | 130 | | | | | | (124) | | | | | | 2,659 | | | | | | 67 | | | | | | (65) | | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Total | | | 245,388 | | | | | | 5,642 | | | | | | (3,582) | | | | | | 244,317 | | | | | | 4,077 | | | | | | (3,282) | | |\n| Mortgage banking: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Interest rate contracts: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Swaps | | | 687 | | | | | | \u2014 | | | | | | \u2014 | | | | | | 535 | | | | | | \u2014 | | | | | | \u2014 | | |\n| Interest rate lock commitments | | | 8,609 | | | | | | 186 | | | | | | (3) | | | | | | 4,427 | | | | | | 34 | | | | | | (2) | | |\n| When issued securities, forward rate agreements and forward commitments | | | 11,691 | | | | | | 6 | | | | | | (73) | | | | | | 11,997 | | | | | | 10 | | | | | | (18) | | |\n| Other | | | 466 | | | | | | \u2014 | | | | | | \u2014 | | | | | | 603 | | | | | | 2 | | | | | | \u2014 | | |\n| Total | | | 21,453 | | | | | | 192 | | | | | | (76) | | | | | | 17,562 | | | | | | 46 | | | | | | (20) | | |\n| MSRs: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Interest rate contracts: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Swaps | | | 36,161 | | | | | | \u2014 | | | | | | (5) | | | | | | 19,196 | | | | | | \u2014 | | | | | | \u2014 | | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Options | | | 101 | | | | | | \u2014 | | | | | | \u2014 | | | | | | 1,519 | | | | | | 22 | | | | | | (2) | | |\n| When issued securities, forward rate agreements and forward commitments | | | 1,314 | | | | | | 7 | | | | | | \u2014 | | | | | | 5,560 | | | | | | 2 | | | | | | (5) | | |\n| Other | | | 760 | | | | | | \u2014 | | | | | | \u2014 | | | | | | 567 | | | | | | \u2014 | | | | | | \u2014 | | |\n| Total | | | 38,336 | | | | | | 7 | | | | | | (5) | | | | | | 26,842 | | | | | | 24 | | | | | | (7) | | |\n| Total derivatives not designated as hedges | | | 305,177 | | | | | | 5,841 | | | | | | (3,663) | | | | | | 288,721 | | | | | | 4,147 | | | | | | (3,309) | | |\n| Total derivatives | | | $ | 322,942 | | | | | 5,841 | | | | | | (3,663) | | | | | | $ | 315,873 | | | | | 4,260 | | | | | | (3,336) | | |\n| Gross amounts in the Consolidated Balance Sheets: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Amounts subject to master netting arrangements | | | | | | | | | (1,561) | | | | | | 1,561 | | | | | | | | | | | | (1,708) | | | | | | 1,708 | | |\n| Cash collateral (received) posted for amounts subject to master netting arrangements | | | | | | | | | (443) | | | | | | 1,547 | | | | | | | | | | | | (499) | | | | | | 1,262 | | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Net amount | | | | | | | | | $ | 3,837 | | | | | $ | (555) | | | | | | | | | | | $ | 2,053 | | | | | $ | (366) | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n\n","source":"TFC\/10-K\/0000092230-21-000032"} {"title":"Impact of Derivatives on the Consolidated Balance Sheets","text":"The following table presents the carrying value of hedged items in fair value hedging relationships:","markdown_table":"\n\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| December 31, 2020(Dollars in millions) | | | Gross Amount | | | | | | Amount Offset | | | | | | Net Amount in Consolidated Balance Sheets | | | | | | Held\/Pledged Financial Instruments | | | | | | Net Amount | | |\n| Derivative assets: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Derivatives subject to master netting arrangement or similar arrangement | | | $ | 4,383 | | | | | $ | (1,618) | | | | | $ | 2,765 | | | | | $ | (2) | | | | | $ | 2,763 | |\n| Derivatives not subject to master netting arrangement or similar arrangement | | | 705 | | | | | | \u2014 | | | | | | 705 | | | | | | (1) | | | | | | 704 | | |\n| Exchange traded derivatives | | | 753 | | | | | | (386) | | | | | | 367 | | | | | | \u2014 | | | | | | 367 | | |\n| Total derivative assets | | | $ | 5,841 | | | | | $ | (2,004) | | | | | $ | 3,837 | | | | | $ | (3) | | | | | $ | 3,834 | |\n| Derivative liabilities: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Derivatives subject to master netting arrangement or similar arrangement | | | $ | (3,103) | | | | | $ | 2,722 | | | | | $ | (381) | | | | | $ | 35 | | | | | $ | (346) | |\n| Derivatives not subject to master netting arrangement or similar arrangement | | | (174) | | | | | | \u2014 | | | | | | (174) | | | | | | \u2014 | | | | | | (174) | | |\n| Exchange traded derivatives | | | (386) | | | | | | 386 | | | | | | \u2014 | | | | | | \u2014 | | | | | | \u2014 | | |\n| Total derivative liabilities | | | $ | (3,663) | | | | | $ | 3,108 | | | | | $ | (555) | | | | | $ | 35 | | | | | $ | (520) | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| December 31, 2019(Dollars in millions) | | | Gross Amount | | | | | | Amount Offset | | | | | | Net Amount in Consolidated Balance Sheets | | | | | | Held\/Pledged Financial Instruments | | | | | | Net Amount | | |\n| Derivative assets: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Derivatives subject to master netting arrangement or similar arrangement | | | $ | 3,516 | | | | | $ | (2,003) | | | | | $ | 1,513 | | | | | $ | (17) | | | | | $ | 1,496 | |\n| Derivatives not subject to master netting arrangement or similar arrangement | | | 138 | | | | | | \u2014 | | | | | | 138 | | | | | | (1) | | | | | | 137 | | |\n| Exchange traded derivatives | | | 606 | | | | | | (204) | | | | | | 402 | | | | | | \u2014 | | | | | | 402 | | |\n| Total derivative assets | | | $ | 4,260 | | | | | $ | (2,207) | | | | | $ | 2,053 | | | | | $ | (18) | | | | | $ | 2,035 | |\n| Derivative liabilities: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Derivatives subject to master netting arrangement or similar arrangement | | | $ | (2,939) | | | | | $ | 2,761 | | | | | $ | (178) | | | | | $ | 22 | | | | | $ | (156) | |\n| Derivatives not subject to master netting arrangement or similar arrangement | | | (193) | | | | | | 5 | | | | | | (188) | | | | | | 11 | | | | | | (177) | | |\n| Exchange traded derivatives | | | (204) | | | | | | 204 | | | | | | \u2014 | | | | | | \u2014 | | | | | | \u2014 | | |\n| Total derivative liabilities | | | $ | (3,336) | | | | | $ | 2,970 | | | | | $ | (366) | | | | | $ | 33 | | | | | $ | (333) | |\n\n","source":"TFC\/10-K\/0000092230-21-000032"} {"title":"Derivatives Designated as Hedging Instruments under GAAP","text":"The following table summarizes the impact on net interest income related to fair value hedges:","markdown_table":"\n\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | | | | | | | | | | | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Year Ended December 31,(Dollars in millions) | | | | | | | | | | | | | | | 2020 | | | | | | 2019 | | | | | | 2018 | | |\n| Pre-tax gain (loss) recognized in\u00a0OCI: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Deposits | | | | | | | | | | | | | | | $ | \u2014 | | | | | $ | (42) | | | | | $ | 15 | |\n| Short-term borrowings | | | | | | | | | | | | | | | \u2014 | | | | | | 2 | | | | | | (3) | | |\n| Long-term debt | | | | | | | | | | | | | | | \u2014 | | | | | | (76) | | | | | | 57 | | |\n| Total | | | | | | | | | | | | | | | $ | \u2014 | | | | | $ | (116) | | | | | $ | 69 | |\n| Pre-tax gain (loss) reclassified from AOCI into interest expense: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Deposits | | | | | | | | | | | | | | | $ | (8) | | | | | $ | (1) | | | | | $ | (1) | |\n| Short-term borrowings | | | | | | | | | | | | | | | (19) | | | | | | (10) | | | | | | 1 | | |\n| Long-term debt | | | | | | | | | | | | | | | (21) | | | | | | (14) | | | | | | (12) | | |\n| Total | | | | | | | | | | | | | | | $ | (48) | | | | | $ | (25) | | | | | $ | (12) | |\n\n","source":"TFC\/10-K\/0000092230-21-000032"} {"title":"Derivatives Designated as Hedging Instruments under GAAP","text":"The following table presents information about the Company's cash flow and fair value hedges:","markdown_table":"\n\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Year Ended December 31,(Dollars in millions) | | | | | | | | | | | | | | | 2020 | | | | | | 2019 | | | | | | 2018 | | | | | |\n| AFS securities: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Amounts related to interest settlements | | | | | | | | | | | | | | | $ | (3) | | | | | $ | \u2014 | | | | | $ | (5) | | | | |\n| Recognized on derivatives | | | | | | | | | | | | | | | 29 | | | | | | (16) | | | | | | 12 | | | | | |\n| Recognized on hedged items | | | | | | | | | | | | | | | (41) | | | | | | 8 | | | | | | (15) | | | | | |\n| Net income (expense) recognized | | | | | | | | | | | | | | | (15) | | | | | | (8) | | | | | | $ | (8) | | | | |\n| Loans and leases: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Amounts related to interest settlements | | | | | | | | | | | | | | | (1) | | | | | | \u2014 | | | | | | (2) | | | | | |\n| Recognized on derivatives | | | | | | | | | | | | | | | (3) | | | | | | (21) | | | | | | (1) | | | | | |\n| Recognized on hedged items | | | | | | | | | | | | | | | 1 | | | | | | 19 | | | | | | 2 | | | | | |\n| Net income (expense) recognized | | | | | | | | | | | | | | | (3) | | | | | | (2) | | | | | | (1) | | | | | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Long-term debt: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Amounts related to interest settlements | | | | | | | | | | | | | | | 182 | | | | | | (56) | | | | | | (30) | | | | | |\n| Recognized on derivatives | | | | | | | | | | | | | | | 831 | | | | | | 170 | | | | | | (122) | | | | | |\n| Recognized on hedged items | | | | | | | | | | | | | | | (732) | | | | | | (151) | | | | | | 165 | | | | | |\n| Net income (expense) recognized | | | | | | | | | | | | | | | 281 | | | | | | (37) | | | | | | 13 | | | | | |\n| Net income (expense) recognized, total | | | | | | | | | | | | | | | $ | 263 | | | | | $ | (47) | | | | | $ | 4 | | | | |\n\n","source":"TFC\/10-K\/0000092230-21-000032"} {"title":"Credit Derivative Instruments","text":"The following table summarizes collateral positions with counterparties:","markdown_table":"\n\n| | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | | | | | | | | | | |\n| December\u00a031,(Dollars in millions) | | | 2020 | | | | | | 2019 | | |\n| Risk participation agreements: | | | | | | | | | | | |\n| | | | | | | | | | | | |\n| | | | | | | | | | | | |\n| Maximum potential amount of exposure | | | $ | 530 | | | | | $ | 291 | |\n| Total return swaps: | | | | | | | | | | | |\n| | | | | | | | | | | | |\n| Cash collateral held | | | 374 | | | | | | 653 | | |\n\n","source":"TFC\/10-K\/0000092230-21-000032"} {"title":"Other, Treasury & Corporate","text":"(1)Includes financial data from business units below the quantitative and qualitative thresholds requiring disclosure.","markdown_table":"\n\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Year Ended December 31,(Dollars in millions) | | | CB&W | | | | | | | | | | | | | | | | | | C&CB | | | | | | | | | | | | | | | | | | IH | | | | | | | | | | | | | | | | | | OT&C (1) | | | | | | | | | | | | | | | | | | Total | | | | | | | | | | | | | | |\n| 2020 | | | | | | 2019 | | | | | | 2018 | | | | | | 2020 | | | | | | 2019 | | | | | | 2018 | | | | | | 2020 | | | | | | 2019 | | | | | | 2018 | | | | | | 2020 | | | | | | 2019 | | | | | | 2018 | | | | | | 2020 | | | | | | 2019 | | | | | | 2018 | | |\n| Net interest income (expense) | | | $ | 7,377 | | | | | $ | 3,633 | | | | | $ | 3,410 | | | | | $ | 5,391 | | | | | $ | 3,153 | | | | | $ | 2,723 | | | | | $ | 126 | | | | | $ | 146 | | | | | $ | 119 | | | | | $ | 932 | | | | | $ | 381 | | | | | $ | 430 | | | | | $ | 13,826 | | | | | $ | 7,313 | | | | | $ | 6,682 | |\n| Net intersegment interest income (expense) | | | 1,424 | | | | | | 923 | | | | | | 406 | | | | | | (213) | | | | | | (409) | | | | | | (110) | | | | | | (32) | | | | | | (44) | | | | | | (32) | | | | | | (1,179) | | | | | | (470) | | | | | | (264) | | | | | | \u2014 | | | | | | \u2014 | | | | | | \u2014 | | |\n| Segment net interest income | | | 8,801 | | | | | | 4,556 | | | | | | 3,816 | | | | | | 5,178 | | | | | | 2,744 | | | | | | 2,613 | | | | | | 94 | | | | | | 102 | | | | | | 87 | | | | | | (247) | | | | | | (89) | | | | | | 166 | | | | | | 13,826 | | | | | | 7,313 | | | | | | 6,682 | | |\n| Allocated provision for credit losses | | | 1,004 | | | | | | 513 | | | | | | 506 | | | | | | 1,304 | | | | | | 102 | | | | | | 111 | | | | | | 9 | | | | | | 9 | | | | | | 3 | | | | | | 18 | | | | | | (9) | | | | | | (54) | | | | | | 2,335 | | | | | | 615 | | | | | | 566 | | |\n| Segment net interest income after provision | | | 7,797 | | | | | | 4,043 | | | | | | 3,310 | | | | | | 3,874 | | | | | | 2,642 | | | | | | 2,502 | | | | | | 85 | | | | | | 93 | | | | | | 84 | | | | | | (265) | | | | | | (80) | | | | | | 220 | | | | | | 11,491 | | | | | | 6,698 | | | | | | 6,116 | | |\n| Noninterest income | | | 4,056 | | | | | | 2,316 | | | | | | 2,047 | | | | | | 2,476 | | | | | | 1,168 | | | | | | 1,019 | | | | | | 2,241 | | | | | | 2,112 | | | | | | 1,872 | | | | | | 106 | | | | | | (341) | | | | | | (62) | | | | | | 8,879 | | | | | | 5,255 | | | | | | 4,876 | | |\n| Amortization of intangibles | | | 419 | | | | | | 58 | | | | | | 41 | | | | | | 175 | | | | | | 31 | | | | | | 19 | | | | | | 72 | | | | | | 74 | | | | | | 71 | | | | | | 19 | | | | | | 1 | | | | | | \u2014 | | | | | | 685 | | | | | | 164 | | | | | | 131 | | |\n| Other noninterest expense | | | 7,431 | | | | | | 3,970 | | | | | | 3,408 | | | | | | 3,272 | | | | | | 1,509 | | | | | | 1,471 | | | | | | 1,713 | | | | | | 1,703 | | | | | | 1,544 | | | | | | 1,796 | | | | | | 588 | | | | | | 378 | | | | | | 14,212 | | | | | | 7,770 | | | | | | 6,801 | | |\n| Income (loss) before income taxes | | | 4,003 | | | | | | 2,331 | | | | | | 1,908 | | | | | | 2,903 | | | | | | 2,270 | | | | | | 2,031 | | | | | | 541 | | | | | | 428 | | | | | | 341 | | | | | | (1,974) | | | | | | (1,010) | | | | | | (220) | | | | | | 5,473 | | | | | | 4,019 | | | | | | 4,060 | | |\n| Provision (benefit) for income taxes | | | 944 | | | | | | 566 | | | | | | 473 | | | | | | 582 | | | | | | 479 | | | | | | 433 | | | | | | 134 | | | | | | 110 | | | | | | 88 | | | | | | (679) | | | | | | (373) | | | | | | (191) | | | | | | 981 | | | | | | 782 | | | | | | 803 | | |\n| Segment net income (loss) | | | $ | 3,059 | | | | | $ | 1,765 | | | | | $ | 1,435 | | | | | $ | 2,321 | | | | | $ | 1,791 | | | | | $ | 1,598 | | | | | $ | 407 | | | | | $ | 318 | | | | | $ | 253 | | | | | $ | (1,295) | | | | | $ | (637) | | | | | $ | (29) | | | | | $ | 4,492 | | | | | $ | 3,237 | | | | | $ | 3,257 | |\n| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Identifiable assets (period end) | | | $ | 163,548 | | | | | $ | 169,970 | | | | | $ | 74,974 | | | | | $ | 186,555 | | | | | $ | 185,855 | | | | | $ | 85,985 | | | | | $ | 7,932 | | | | | $ | 7,325 | | | | | $ | 6,622 | | | | | $ | 151,193 | | | | | $ | 109,928 | | | | | $ | 58,116 | | | | | $ | 509,228 | | | | | $ | 473,078 | | | | | $ | 225,697 | |\n\n","source":"TFC\/10-K\/0000092230-21-000032"} {"title":"NOTE 22. Parent Company Financial Information","text":"152 Truist Financial Corporation","markdown_table":"\n\n| | | | | | | | | | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| Parent Company - Condensed Income and Comprehensive Income Statements(Dollars in millions) | | | | | | Year Ended December 31, | | | | | | | | | | | | | | |\n| | | | 2020 | | | | | | 2019 | | | | | | 2018 | | |\n| Income: | | | | | | | | | | | | | | | | | | | | |\n| Dividends from subsidiaries: | | | | | | | | | | | | | | | | | | | | |\n| Banking | | | | | | $ | 2,800 | | | | | $ | 1,650 | | | | | $ | 2,825 | |\n| Nonbank | | | | | | 5 | | | | | | 35 | | | | | | 147 | | |\n| Total dividends from subsidiaries | | | | | | 2,805 | | | | | | 1,685 | | | | | | 2,972 | | |\n| Interest and other income from subsidiaries | | | | | | 170 | | | | | | 217 | | | | | | 164 | | |\n| Other income | | | | | | 12 | | | | | | \u2014 | | | | | | 7 | | |\n| Total income | | | | | | 2,987 | | | | | | 1,902 | | | | | | 3,143 | | |\n| Expenses: | | | | | | | | | | | | | | | | | | | | |\n| Interest expense | | | | | | 333 | | | | | | 475 | | | | | | 364 | | |\n| Other expenses | | | | | | 174 | | | | | | 250 | | | | | | 82 | | |\n| Total expenses | | | | | | 507 | | | | | | 725 | | | | | | 446 | | |\n| Income before income taxes and equity in undistributed earnings of subsidiaries | | | | | | 2,480 | | | | | | 1,177 | | | | | | 2,697 | | |\n| Income tax benefit | | | | | | 56 | | | | | | 92 | | | | | | 52 | | |\n| Income before equity in undistributed earnings of subsidiaries | | | | | | 2,536 | | | | | | 1,269 | | | | | | 2,749 | | |\n| Equity in undistributed earnings of subsidiaries in excess of dividends from subsidiaries | | | | | | 1,956 | | | | | | 1,968 | | | | | | 508 | | |\n| Net income | | | | | | 4,492 | | | | | | 3,237 | | | | | | 3,257 | | |\n| Total OCI | | | | | | 1,560 | | | | | | 871 | | | | | | (248) | | |\n| Total comprehensive income | | | | | | $ | 6,052 | | | | | $ | 4,108 | | | | | $ | 3,009 | |\n| | | | | | | | | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | | | | | | | |\n\n","source":"TFC\/10-K\/0000092230-21-000032"} {"title":"NOTE 22. Parent Company Financial Information","text":"The transfer of funds in the form of dividends, loans or advances from bank subsidiaries to the Parent Company is restricted. Federal law requires loans to the Parent Company or its affiliates to be secured and at market terms and generally limits loans to the Parent Company or an individual affiliate to 10% of Truist Bank's unimpaired capital and surplus. In the aggregate, loans to the Parent Company and all affiliates cannot exceed 20% of the bank's unimpaired capital and surplus.Dividend payments to the Parent Company by Truist Bank are subject to regulatory review and statutory limitations and, in some instances, regulatory approval. In general, dividends from Truist Bank to the Parent Company are limited by rules which compare dividends to net income for regulatory-defined periods. Furthermore, dividends are restricted by regulatory minimum capital constraints.","markdown_table":"\n\n| | | | | | | | | | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| Parent Company - Statements of Cash Flows(Dollars in millions) | | | | | | Year Ended December 31, | | | | | | | | | | | | | | |\n| | | | 2020 | | | | | | 2019 | | | | | | 2018 | | |\n| Cash Flows From Operating Activities: | | | | | | | | | | | | | | | | | | | | |\n| Net income | | | | | | $ | 4,492 | | | | | $ | 3,237 | | | | | $ | 3,257 | |\n| Adjustments to reconcile net income to net cash from operating activities: | | | | | | | | | | | | | | | | | | | | |\n| Equity in earnings of subsidiaries in excess of dividends from subsidiaries | | | | | | (1,956) | | | | | | (1,968) | | | | | | (508) | | |\n| | | | | | | | | | | | | | | | | | | | | |\n| Other, net | | | | | | (704) | | | | | | 84 | | | | | | (28) | | |\n| Net cash from operating activities | | | | | | 1,832 | | | | | | 1,353 | | | | | | 2,721 | | |\n| Cash Flows From Investing Activities: | | | | | | | | | | | | | | | | | | | | |\n| Proceeds from maturities, calls, and paydowns of AFS securities | | | | | | 79 | | | | | | 157 | | | | | | 33 | | |\n| Purchases of AFS securities | | | | | | (22) | | | | | | (79) | | | | | | (28) | | |\n| | | | | | | | | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | | | | | | | |\n| Investment in subsidiaries | | | | | | (79) | | | | | | (1) | | | | | | \u2014 | | |\n| Advances to subsidiaries | | | | | | (6,711) | | | | | | (5,358) | | | | | | (4,639) | | |\n| Proceeds from repayment of advances to subsidiaries | | | | | | 5,499 | | | | | | 8,304 | | | | | | 3,665 | | |\n| Net cash from acquisitions and divestitures | | | | | | \u2014 | | | | | | 1,903 | | | | | | \u2014 | | |\n| Other, net | | | | | | 14 | | | | | | (1) | | | | | | (4) | | |\n| Net cash from investing activities | | | | | | (1,220) | | | | | | 4,925 | | | | | | (973) | | |\n| Cash Flows From Financing Activities: | | | | | | | | | | | | | | | | | | | | |\n| Net change in short-term borrowings | | | | | | 18 | | | | | | 53 | | | | | | (5) | | |\n| Net change in long-term debt | | | | | | 397 | | | | | | 370 | | | | | | 1,746 | | |\n| Repurchase of common stock | | | | | | \u2014 | | | | | | \u2014 | | | | | | (1,205) | | |\n| | | | | | | | | | | | | | | | | | | | | |\n| Net proceeds from preferred stock issued | | | | | | 3,449 | | | | | | 1,683 | | | | | | \u2014 | | |\n| Redemption of preferred stock | | | | | | (500) | | | | | | (1,725) | | | | | | \u2014 | | |\n| Cash dividends paid on common and preferred stock | | | | | | (2,725) | | | | | | (1,459) | | | | | | (1,378) | | |\n| Other, net | | | | | | 479 | | | | | | (40) | | | | | | (52) | | |\n| Net cash from financing activities | | | | | | 1,118 | | | | | | (1,118) | | | | | | (894) | | |\n| Net Change in Cash and Cash Equivalents | | | | | | 1,730 | | | | | | 5,160 | | | | | | 854 | | |\n| Cash and Cash Equivalents, January 1 | | | | | | 12,392 | | | | | | 7,232 | | | | | | 6,378 | | |\n| Cash and Cash Equivalents, December 31 | | | | | | $ | 14,122 | | | | | $ | 12,392 | | | | | $ | 7,232 | |\n| | | | | | | | | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | | | | | | | |\n\n","source":"TFC\/10-K\/0000092230-21-000032"} {"title":"SIGNATURES","text":"160 Truist Financial Corporation","markdown_table":"\n\n| | | | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| \/s\/ Thomas E. Skains | | | | | | Director | | | | | | February 24, 2021 | | |\n| Thomas E. Skains | | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | |\n| \/s\/ Bruce L. Tanner | | | | | | Director | | | | | | February 24, 2021 | | |\n| Bruce L. Tanner | | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | |\n| \/s\/ Thomas N. Thompson | | | | | | Director | | | | | | February 24, 2021 | | |\n| Thomas N. Thompson | | | | | | | | | | | | | | |\n| | | | | | | | | | | | | | | |\n| \/s\/ Steven C. Voorhees | | | | | | Director | | | | | | February 24, 2021 | | |\n| Steven C. Voorhees | | | | | | | | | | | | | | |\n\n","source":"TFC\/10-K\/0000092230-21-000032"} {"title":"Submitted Applications","text":"2018 compared to 2017\u2014Medicare submitted applications grew 39% for the year ended December 31, 2018 compared to the year ended December 31, 2017. The increase was primarily due to direct-to consumer marketing initiatives, our flexible call center capabilities, an improved online experience and our acquisition of GoMedigap. Individual and family plan submitted applications declined 56% for the year ended December 31, 2018 compared to the year ended December 31, 2017, due to the continuing turmoil in the individual and family plan market as a result of the Affordable Care Act and our continued focus on the Medicare market in 2018. 16% of all Medicare Advantage and Medicare Supplement applications were submitted online for the year ended December 31, 2018, compared to 10% for the year ended December 31, 2017.The decline in individual and family plan submitted applications has also limited our ability to cross-sell ancillary plans, resulting in a decline of 6% in submitted applications for all ancillary products combined for the year ended December 31, 2018 compared to the year ended December 31, 2017. Small business submitted applications grew 35% for the year ended December 31, 2018 compared to the year ended December 31, 2017, due to progress in implementing a focused marketing strategy for this market, technology enhancements and an increased conversion rate. 2017 compared to 2016\u2014Medicare submitted applications grew 10% for the year ended December 31, 2017 compared to the year ended December 31, 2016. a deceleration from prior years\u2019 growth, driven primarily by the change in our marketing strategy as we de-emphasized less profitable customer acquisition channels and worked on building out the more efficient direct and strategic partner channels. As a result of this strategy, we experienced an improvement in conversion of leads to applications and lower cost of acquisition in the second half of 2017 compared to the first half of 2017 and the same period a year ago, and anticipate that we will see higher growth in Medicare submitted applications in 2018.\u00a0 Individual and family plan submitted applications declined 51% for the year ended December 31, 2017 compared to the year ended December 31, 2016, due to a continuing challenging environment in this market, as well as our reduction in marketing spend. The decline in individual and family plan submitted applications has also limited our ability to cross-sell ancillary plans, resulting in a decline of 16% in submitted applications for all ancillary products combined for the year ended December 31, 2017 compared to the year ended December 31, 2016. Small business submitted applications grew 9% for the year ended December 31, 2017 compared to the year ended December 31, 2016, due to progress in implementing a focused marketing strategy for this market, technology enhancements and an increased conversion rate.","markdown_table":"\n\n| | |\n| --- | --- |\n| | |\n| (1) | Medicare-related health insurance applications submitted on our website or through our customer care center during the period, including Medicare Advantage, Medicare Part D prescription drug and Medicare Supplement plans. |\n| (2) | Major medical Individual and Family plan (\"IFP\") health insurance applications submitted on our website during the period. An applicant may submit more than one application. We define our IFP offerings as major medical individual and family health insurance plans, which does not include Medicare-related, small business or ancillary plans. |\n| (3) | Ancillary Plans consists primarily of short-term, dental and vision insurance plans submitted on our website during the period. |\n| (4) | Applications for small business health insurance applications are counted as submitted when the applicant completes the application, the employees complete their applications, the applicant submits the application to us and we submit the application to the carrier. |\n\n","source":"EHTH\/10-K\/0001628280-19-002899"} {"title":"Approved Members","text":"2018 compared to 2017\u2014Medicare approved members grew 36% for the year ended December 31, 2018 compared to the year ended December 31, 2017. The increase was primarily due to 39% growth in Medicare submitted applications mainly driven by our investment in Medicare-related marketing initiatives, call center capabilities and an improved online experience and our acquisition of GoMedigap. Individual and Family Plan approved members declined 46% for the year ended December 31, 2018 compared to the year ended December 31, 2017, due to the state of the individual and family health insurance plan market. Approved members for all ancillary products combined for the year ended December 31, 2018 increased 1% compared to the year ended December 31, 2017, despite a decrease in submitted applications of 6%, due to improved conversion rates year-over-year. Small business approved members grew 28% for the year ended December 31, 2018 compared to the year ended December 31, 2017, due to improved focus on key partnerships, technology enhancements and increased conversion rates.2017 compared to 2016\u2014Medicare approved members grew 8% for the year ended December 31, 2017 compared to the year ended December 31, 2016. The increase was primarily due to 10% growth in Medicare submitted applications mainly driven by our investment in Medicare platforms and call center capabilities. Individual and Family Plan approved members declined 55% for the year ended December 31, 2017 compared to the year ended December 31, 2016, due to the state of the individual and family health insurance plan market. The decline in Individual and Family Plan approved members has also limited our ability to cross-sell ancillary plans, resulting in a decline of 16% in approved members for all ancillary products combined for the year ended December 31, 2017 compared to the year ended December 31, 2016. Small business approved members grew 75% for the year ended December 31, 2017 compared to the year ended December 31, 2016, due to improved focus on key partnerships, technology enhancements and an increased conversion rate.","markdown_table":"\n\n| | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | | | | | | | |\n| | Year Ended December 31, | | | | | | | |\n| | 2018 | | | 2017 | | | 2016 | |\n| Medicare: | | | | | | | | |\n| Medicare Advantage | 148,478 | | | 118,055 | | | 116,681 | |\n| Medicare Supplement | 29,837 | | | 15,992 | | | 12,314 | |\n| Medicare Part D | 61,373 | | | 41,618 | | | 32,968 | |\n| Total Medicare | 239,688 | | | 175,665 | | | 161,963 | |\n| Individual and Family: | | | | | | | | |\n| Non-Qualified Health Plans | 23,075 | | | 50,111 | | | 97,983 | |\n| Qualified Health Plans | 19,575 | | | 28,442 | | | 77,865 | |\n| Total Individual and Family | 42,650 | | | 78,553 | | | 175,848 | |\n| Ancillary: | | | | | | | | |\n| Short-term | 107,846 | | | 85,106 | | | 100,319 | |\n| Dental | 47,343 | | | 67,924 | | | 95,137 | |\n| Vision | 24,638 | | | 31,360 | | | 38,942 | |\n| Other | 33,500 | | | 26,485 | | | 15,422 | |\n| Total Ancillary | 213,327 | | | 210,875 | | | 249,820 | |\n| Small Business | 19,550 | | | 15,302 | | | 8,744 | |\n| Total | 515,215 | | | 480,395 | | | 596,375 | |\n\n","source":"EHTH\/10-K\/0001628280-19-002899"} {"title":"Constrained Lifetime Value of Commissions Per Approved Member","text":"2018 compared to 2017\u2014The constrained lifetime value of commissions per approved member improved 7% and 8% for Medicare Advantage and Medicare Supplement, respectively, for the year ended December 31, 2018 compared to the year ended December 31, 2017. The improvement in constrained lifetime value per approved member for Medicare Advantage was driven by higher commission rates and customer retention, and the improvement in constrained lifetime value for Medicare Supplement was driven by an improvement in commission rates and our acquisition of GoMedigap in January 2018. The constrained lifetime value of commissions per approved member for Non-Qualified Health Plans and Qualified Health Plans increased 11% and 8%, respectively, mostly driven by improved churn, for the year ended December 31, 2018 compared to the year ended December 31, 2017, while the constrained lifetime value of commissions per approved member for Medicare Part D, Short Term and Small Business plans decreased 9%, 14% and 1%, respectively, for the year ended December 31, 2018 compared to the year ended December 31, 2017. The decrease in Medicare Part D was due to higher churn year-over-year. The decrease in Short Term constrained lifetime value was mainly driven by a regulatory change issued in April 2017 that reduced the maximum length of a short-term policy from one year to 90 days. The change year-over-year in Small Business was not material.2017 compared to 2016\u2014The constrained lifetime value of commissions per approved member improved 9% and 3% for Medicare Advantage and Medicare Supplement, respectively, for the year ended December 31, 2017 compared to the year ended December 31, 2016. The improvement in constrained lifetime value per approved member for Medicare Advantage was driven by higher commission rates and customer retention, and the improvement in constrained lifetime value for Medicare Supplement was driven by an improvement in commission rates. The constrained lifetime value of commissions per approved member for Medicare Part D, Non-Qualified and Qualified Health Plans, Dental and Vision remained relatively unchanged for the year ended December 31, 2017 compared to the year ended December 31, 2016. The constrained lifetime value of commissions per approved member decreased 11% for Short-term for the year ended December 31, 2017 compared to the year ended December 31, 2016, mainly driven by a regulatory change that reduced the maximum length of a short-term policy from one year to 90 days. The constrained lifetime value of commissions per approved member improved 6% for Small Business for the year ended December 31, 2017 compared to the year ended December 31, 2016 due to improved customer retention and higher commission rates.","markdown_table":"\n\n| | |\n| --- | --- |\n| | |\n| (1) | Constrained lifetime value of commissions per approved member represents commissions estimated to be collected over the estimated life of an approved member\u2019s policy after applying constraints in accordance with our revenue recognition policy. The estimate is driven by multiple factors, including but not limited to, contracted commission rates, carrier mix, expected policy churn and applied constraints. These factors may result in varying values from period to period. For additional information on constraints see Note 1 - Summary of Business and Significant Accounting Policies in the Notes to Consolidated Financial Statements. |\n| (2) | For small business the amount represents the estimated commissions we expect to collect from the plan over the following 12-months. The estimate is driven by multiple factors, including but not limited to, contracted commission rates, carrier mix, expected policy churn and applied constraints. These factors may result in varying values from period to period. |\n\n","source":"EHTH\/10-K\/0001628280-19-002899"} {"title":"Estimated Membership","text":"Health insurance carriers bill and collect insurance premiums paid by our members. The carriers do not report to us the number of members that we have as of a given date. The majority of our members who terminate their policies do so by discontinuing their premium payments to the carrier and do not inform us of the cancellation. Also, some of our members pay their premiums less frequently than monthly. Given the number of months required to observe non-payment of commissions in order to confirm cancellations, we estimate the number of members who are active on insurance policies as of a specified date.After we have estimated membership for a period, we may receive information from health insurance carriers that would have impacted the estimate if we had received the information prior to the date of estimation. We may receive commission payments or other information that indicates that a member who was not included in our estimates for a prior period was in fact an active member at that time, or that a member who was included in our estimates was in fact not an active member of ours. For instance, we reconcile information carriers provide to us and may determine that we were not historically paid commissions owed to us, which would cause us to have underestimated membership. Conversely, carriers may require us to return commission payments paid in a prior period due to policy cancellations for members we previously estimated as being active. We do not update our estimated membership numbers reported in previous periods. Instead, we reflect updated information regarding our historical membership in the membership estimate for the current period. As a result of the delay in our receipt of information from insurance carriers, actual trends in our membership are most discernible over periods longer than from one quarter to the next. As a result of the delay we experience in receiving information about our membership, it is difficult for us to determine with any certainty the impact of current conditions on our membership retention. Health care reform and its impacts as well as other factors could cause the assumptions and estimates that we make in connection with estimating our membership to be inaccurate, which would cause our membership estimates to be inaccurate.2018 compared to 2017\u2014Medicare estimated membership grew 26% as of December 31, 2018 compared to December 31, 2017 primarily due to our continued investment in Medicare-related marketing activities, call center capabilities and an improved online experience and our acquisition of GoMedigap. Individual and Family Plan estimated membership declined 32% as of December 31, 2018 compared to December 31, 2017 due to the state of the Individual and Family Plan market as a result of health care reform and our continued shift in focus on the Medicare market. Ancillary plan estimated membership declined 7% as of December 31, 2018 compared to December 31, 2017 as a result of the decline in our ability to cross-sell dental and vision plans as a result of the decline in Individual and Family Plan membership. Small Business estimated membership grew 23% as of December 31, 2018 compared to December 31, 2017 due to improved focus on technology enhancements and an increased conversion rate.2017 compared to 2016\u2014Medicare estimated membership grew 26% as of December 31, 2017 compared to December 31, 2016 primarily due to our continued investment in the Medicare market. Individual and Family Plan estimated membership declined 38% as of December 31, 2017 compared to December 31, 2016 due to the state of the Individual and Family Plan market as a result of health care reform. Ancillary plan estimated membership declined 8% as of December 31, 2017 compared to December 31, 2016 as a result of the decline in our ability to cross-sell dental and vision plans as a result of the decline in Individual and Family Plan membership. Small Business estimated membership grew 7% as of December 31, 2017 compared to December 31, 2016 due to improved focus on technology enhancements and an increased conversion rate.","markdown_table":"\n\n| | |\n| --- | --- |\n| | |\n| (1) | For Medicare-related health insurance plans, we take the sum of (i) the number of members for whom we have received or applied a commission payment for a month that is up to two months prior to the date of estimation (after reducing that number using historical experience for assumed member cancellations over the period being estimated); and (ii) the number of approved members over that period (after reducing that number using historical experience for an assumed number of members who do not accept their approved policy from the same month of the previous year and for estimated member cancellations through the date of the estimate). To the extent we determine we have received substantially all of the commission payments related to a given month during the period being estimated, we will take the number of members for whom we have received or applied a commission payment during the month of estimation. Estimated number of members active on Medicare-related health insurance as of the date indicated based on the number of members for whom we have received or applied a commission payment during the month of estimation. |\n| (2) | To estimate the number of members on Individual and Family health insurance plans (\"IFP\"), we take the sum of (i) the number of IFP members for whom we have received or applied a commission payment for a month that is up to six months prior to the date of estimation after reducing that number using historical experience for assumed member cancellations over the period being estimated; and (ii) the number of approved members over that period (after reducing that number by the percentage of members who do not accept their approved policy from the same month of the previous year for estimated member cancellations through the date of the estimate). To the extent we determine we have received substantially all of the commission payments related to a given month during the period being estimated, we will take the number of members for whom we have received or applied a commission payment during the month of estimation. For IFP health insurance plans, a member who purchases and is active on multiple standalone insurance plans will be counted as a member more than once. For example, a member who is active on both an individual and family health insurance plan and a standalone dental plan will be counted as two continuing members. |\n| (3) | For ancillary health insurance plans (such as short-term, dental and vision insurance), we take the sum of (i) the number of members for whom we have received or applied a commission payment for a month that is up to three months prior to the date of estimation (after reducing that number using historical experience for assumed member cancellations over the period being estimated); and (ii) the number of approved members over that period (after reducing that number using historical experience for an assumed number of members who do not accept their approved policy from the same month of the previous year and for estimated member cancellations through the date of the estimate). To the extent we determine we have received substantially all of the commission payments related to a given month during the period being estimated, we will take the number of members for whom we have received or applied a commission payment during the month of estimation. The one to three-month period varies by insurance product and is largely dependent upon the timeliness of commission payment and related reporting from the related carriers. |\n| (4) | For small business health insurance plans, we estimate the number of members using the number of initial members at the time the group is approved, and we update this number for changes in membership if such changes are reported to us by the group or carrier in the period it is reported. However, groups generally notify the carrier directly of policy cancellations and increases or decreases in group size without informing us. Health insurance carriers often do not communicate policy cancellation information or group size changes to us. We often are made aware of policy cancellations and group size changes at the time of annual renewal and update our membership statistics accordingly in the period they are reported. |\n\n","source":"EHTH\/10-K\/0001628280-19-002899"} {"title":"Member Acquisition","text":"2018 compared to 2017\u2014Medicare CC&E expense per approved MA-equivalent member decreased 5% for the year ended December\u00a031, 2018 compared to the year ended December\u00a031, 2017 due to the scalability of a flexible agent staffing model. Variable marketing cost per approved MA-equivalent member decreased 12% for the year ended December 31, 2018 due to an increase in demand generated from direct channels, including direct mail, television, search engine optimization, and paid search advertising, while reducing the purchases of customer leads from third-party lead generation sources. Variable marketing cost per approved IFP-equivalent member increased 18% for the year ended December\u00a031, 2018 compared to the year ended December 31, 2017 due to higher marketing spend. IFP CC&E expense per approved IFP-equivalent member decreased 18% for the year ended December\u00a031, 2018 compared to the year ended December 31, 2017 due to cost saving efforts. 2017 compared to 2016\u2014Medicare CC&E expense per approved MA-equivalent member increased 15% for the year ended December\u00a031, 2017 compared to the year ended December\u00a031, 2016 due to increased sales agent and training costs. Variable marketing cost per approved MA-equivalent member decreased 9% for the year ended December 31, 2017 due to our focus on marketing optimization efforts to enhance the quality of demand we generate and enhance conversions through our direct and paid search advertising channels while reducing marketing spend with certain marketing partners. Variable marketing cost per approved IFP-equivalent member decreased 9% for the year ended December\u00a031, 2017 compared to the year ended December 31, 2016 due to lower marketing spend. IFP CC&E expense per approved IFP-equivalent member increased 131% for the year ended December\u00a031, 2017 compared to the year ended December 31, 2016 due to continuing adverse market conditions in the Individual and Family Plan market.","markdown_table":"\n\n| | |\n| --- | --- |\n| | |\n| (1) | Variable marketing cost per approved MA-equivalent member represents direct costs incurred in member acquisition for Medicare Advantage, Medicare Supplement and Medicare Part D plans from our direct, marketing partners and online advertising channels divided by MA-equivalent approved members in a given period. MA-equivalent members is a derived metric and is equal to the sum of (i) the number of Medicare Part D approved members divided by 4, (ii) the number of Medicare Advantage approved members and (iii) the number of Medicare Supplement approved members in the given period. |\n| (2) | Variable marketing cost per approved IFP-equivalent member represents direct costs incurred in member acquisition for IFP plans from our direct, marketing partners and online advertising channels divided by IFP-equivalent approved members in a given period. IFP-equivalent approved members is a derived metric and is equal to the sum of (i) the number of short-term approved members divided by 3 and (ii) the IFP approved members in the given period. |\n| (3) | Medicare CC&E expense per approved MA-equivalent member is equal to the CC&E expense of our Medicare business included in our operating costs and reported in our Consolidated Statements of Comprehensive Income divided by MA-equivalent approved members in a given period. MA-equivalent approved members is a derived metric and is equal to the sum of (i) the number of Medicare Part D approved members divided by 4, (ii) the number of Medicare Advantage approved members and (iii) the number of Medicare Supplement approved members in the given period. |\n| (4) | IFP CC&E expense per approved IFP-equivalent member is equal to the CC&E expense of our IFP business included in our operating costs and reported in our consolidated statement of comprehensive income divided by IFP-equivalent approved members in a given period. IFP-equivalent approved members is a derived metric and is equal to the sum of (i) the number of short-term approved members divided by 3 and (ii) the IFP approved members in the given period. |\n\n","source":"EHTH\/10-K\/0001628280-19-002899"} {"title":"Results of Operations","text":"(1)Financial data for 2017 and 2016 have been adjusted to reflect the impact of the adoption of ASC 606.Operating costs and expenses include the following amounts of stock-based compensation expense (in thousands):","markdown_table":"\n\n| | | | | | | | | | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | | | | | | | | | | | | | | | | | | | |\n| | Year Ended December 31, | | | | | | | | | | | | | | | | | | | |\n| | 2018 | | | | | | | 2017 (1) | | | | | | | 2016 (1) | | | | | |\n| Revenue | | | | | | | | | | | | | | | | | | | | |\n| Commission | $ | 227,211 | | | 90 | % | | $ | 176,883 | | | 93 | % | | $ | 177,234 | | | 92 | % |\n| Other | 24,184 | | | | 10 | % | | 13,823 | | | | 7 | % | | 16,090 | | | | 8 | % |\n| Total revenue | 251,395 | | | | 100 | % | | 190,706 | | | | 100 | % | | 193,324 | | | | 100 | % |\n| Operating costs and expenses: | | | | | | | | | | | | | | | | | | | | |\n| Cost of revenue | 1,228 | | | | \u2014 | % | | 582 | | | | \u2014 | % | | 862 | | | | \u2014 | % |\n| Marketing and advertising | 82,939 | | | | 33 | % | | 65,874 | | | | 35 | % | | 72,213 | | | | 37 | % |\n| Customer care and enrollment | 70,547 | | | | 28 | % | | 59,183 | | | | 31 | % | | 48,718 | | | | 25 | % |\n| Technology and content | 31,970 | | | | 13 | % | | 32,889 | | | | 17 | % | | 32,749 | | | | 17 | % |\n| General and administrative | 45,828 | | | | 18 | % | | 39,969 | | | | 21 | % | | 35,216 | | | | 18 | % |\n| Acquisition costs | 76 | | | | \u2014 | % | | 621 | | | | \u2014 | % | | \u2014 | | | | \u2014 | % |\n| Change in fair value of earnout liability | 12,300 | | | | 5 | % | | \u2014 | | | | \u2014 | % | | \u2014 | | | | \u2014 | % |\n| Restructuring charge (benefit) | 1,865 | | | | 1 | % | | \u2014 | | | | \u2014 | % | | (297 | | ) | | \u2014 | % |\n| Amortization of intangible assets | 2,091 | | | | 1 | % | | 1,040 | | | | 1 | % | | 1,040 | | | | 1 | % |\n| Total operating costs and expenses | 248,844 | | | | 99 | % | | 200,158 | | | | 105 | % | | 190,501 | | | | 99 | % |\n| Income (loss) from operations | 2,551 | | | | 1 | % | | (9,452 | | ) | | (5 | )% | | 2,823 | | | | 1 | % |\n| Other income, net | 755 | | | | \u2014 | % | | 1,182 | | | | 1 | % | | 1,149 | | | | 1 | % |\n| Income (loss) before provision (benefit) for income taxes | 3,306 | | | | 1 | % | | (8,270 | | ) | | (4 | )% | | 3,972 | | | | 2 | % |\n| Provision (benefit) for income taxes | 3,065 | | | | 1 | % | | (33,696 | | ) | | (18 | )% | | 3,668 | | | | 2 | % |\n| Net income | $ | 241 | | | \u2014 | % | | $ | 25,426 | | | 13 | % | | $ | 304 | | | \u2014 | % |\n\n","source":"EHTH\/10-K\/0001628280-19-002899"} {"title":"Revenue","text":"2018 compared to\u00a02017\u2014Commission revenue increased\u00a0$50.3 million, or\u00a028%, in 2018, due to an increase of $57.2 million, or 42%, in Medicare commission revenue, partially offset by a $5.0 million decrease in Individual, Family and Small Business commission revenue. The increase in Medicare commission revenue was due to an increase in approved members of 36%, as well as increases in the lifetime value of commissions per Medicare Supplement and Medicare Advantage approved members for the year ended December 31, 2018 compared to December 31, 2017. The decrease in Individual, Family and Small Business commission revenue was primarily due to a 46% decline in individual and family health insurance approved members as of December 31, 2018 compared to December 31, 2017 due to the state of the individual and family health insurance plan market as a result of health care reform. Commission revenue was higher in the fourth quarter for both of the years ended December 31, 2018 and 2017 due to the seasonality of enrollments.Other revenue increased $10.4 million, or\u00a075% in 2018 due primarily to increases of $7.7 million in sponsorship and advertising revenue and $4.6 million in lead generation revenue, offset partially by a decrease of $1.9 million in licensing revenue.2017 compared to\u00a02016\u2014Commission revenue decreased\u00a0$0.4 million, or\u00a00.2%, in 2017, due to a $19.1 million, or 31%, decrease in Individual, Family and Small Business commission revenue, partially offset by an\u00a0$18.7 million, or 16% increase in Medicare commission revenue. The decrease in Individual, Family and Small Business commission revenue was primarily due to a 55% decline in individual and family health insurance approved members as of December 31, 2017 compared to December 31, 2016 due to the state of the individual and family health insurance plan market as a result of health care reform. The increase in Medicare commission revenue was primarily attributable to the increase in lifetime value of commissions per Medicare Supplement and Medicare Advantage approved members and an 8% increase in Medicare approved members as of December 31, 2017 compared to December 31, 2016, in part due to growth in our sale of Medicare Advantage and Medicare Supplement plans. Commission revenue was higher in the fourth quarter for both of the years ended December 31, 2017 and 2016 due to the seasonality of enrollments.Other revenue decreased\u00a0$2.3 million, or\u00a014%, in 2017 due primarily to decreases of $1.5 million in online sponsorship and advertising revenue, $0.5 million in lead generation revenue and $0.3 million in licensing revenue.","markdown_table":"\n\n| | | | | | | | | | | | | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | | | | | | | | | | | | | | | | | | | | | | |\n| | Year Ended | | | | Change | | | | | | Year Ended | | | | Change | | | | | | Year Ended | | |\n| | December 31, 2018 | | | | $ | | | | % | | December 31, 2017 | | | | $ | | | | % | | December 31, 2016 | | |\n| Commission | $ | 227,211 | | | $ | 50,328 | | | 28% | | $ | 176,883 | | | $ | (351 | ) | | \u2014% | | $ | 177,234 | |\n| Percentage of total revenue | 90 | | % | | | | | | | | 93 | | % | | | | | | | | 92 | | % |\n| Other | 24,184 | | | | 10,361 | | | | 75% | | 13,823 | | | | (2,267 | | ) | | (14)% | | 16,090 | | |\n| Percentage of total revenue | 10 | | % | | | | | | | | 7 | | % | | | | | | | | 8 | | % |\n| Total revenue | $ | 251,395 | | | $ | 60,689 | | | 32% | | $ | 190,706 | | | (2,618 | | ) | | (1)% | | $ | 193,324 | |\n\n","source":"EHTH\/10-K\/0001628280-19-002899"} {"title":"Cost of Revenue","text":"2018\u00a0compared to\u00a02017\u2014Cost of revenue increased $0.6 million\u00a0in 2018 compared to\u00a02017, due primarily to an increased volume of Medicare submitted applications related to marketing partners with whom we have revenue sharing arrangements.2017\u00a0compared to\u00a02016\u2014Cost of revenue decreased\u00a0$0.3 million\u00a0in 2017 compared to\u00a02016, due primarily to a decrease in payments to marketing partners with whom we have revenue sharing arrangements.","markdown_table":"\n\n| | | | | | | | | | | | | | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | | | | | | | | | | | | | | | | | | | | | | | |\n| | Year Ended | | | | Change | | | | | | | Year Ended | | | | Change | | | | | | | Year Ended | |\n| | December 31, 2018 | | | | $ | | | | % | | | December 31, 2017 | | | | $ | | | | % | | | December 31, 2016 | |\n| Cost of revenue | $ | 1,228 | | | $ | 646 | | | 111 | % | | $ | 582 | | | $ | (280 | ) | | (32 | )% | | 862 | |\n| Percentage of total revenue | \u2014 | | % | | | | | | | | | \u2014 | | % | | | | | | | | | \u2014 | % |\n\n","source":"EHTH\/10-K\/0001628280-19-002899"} {"title":"Marketing and Advertising","text":"2018\u00a0compared\u00a02017\u2014Marketing and advertising expenses increased $17.1 million, or\u00a026%, in 2018, primarily due to our investment in Medicare-related marketing initiatives partially offset by a decline in IFP-related marketing costs. In 2018 we saw increases of $9.5 million in variable advertising costs, $5.7 million in personnel costs due to additional headcount, and $1.2 million in stock-based compensation expenses. Marketing expenses were higher in the fourth quarter for both of the years ended December 31, 2018 and 2017 due to the seasonality of enrollments.\u00a02017\u00a0compared\u00a02016\u2014Marketing and advertising expenses decreased\u00a0$6.3 million, or\u00a09%, in 2017, primarily due to decreases of $7.8 million in variable advertising costs and $0.3 million in stock-based compensation, partially offset by increases of $1.2 million in personnel costs due to additional headcount and $0.6 million in consulting expenses. The decrease in variable advertising costs was largely attributable to decreases of $13.3 million in online advertising costs and $9.2 million in marketing partner channel costs, partially offset by a $14.7 million increase in direct marketing costs and was driven primarily by our strategy to shift our demand generation in the Medicare market to more cost-effective channels, as well as the lower volume of submitted individual and family applications compared to 2016. Marketing expenses were higher in the fourth quarter for both of the years ended December 31, 2017 and 2016 due to the seasonality of enrollments.","markdown_table":"\n\n| | | | | | | | | | | | | | | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | Year Ended | | | | Change | | | | | | | Year Ended | | | | Change | | | | | | | Year Ended | | |\n| | December 31, 2018 | | | | $ | | | | % | | | December 31, 2017 | | | | $ | | | | % | | | December 31, 2016 | | |\n| Marketing and advertising | $ | 82,939 | | | $ | 17,065 | | | 26 | % | | $ | 65,874 | | | $ | (6,339 | ) | | (9 | )% | | $ | 72,213 | |\n| Percentage of total revenue | 33 | | % | | | | | | | | | 35 | | % | | | | | | | | | 37 | | % |\n\n","source":"EHTH\/10-K\/0001628280-19-002899"} {"title":"Customer Care and Enrollment","text":"2018\u00a0compared to\u00a02017\u2014Customer care and enrollment expenses increased\u00a0$11.4 million, or\u00a019%, in 2018 compared to\u00a02017, primarily due to growth in our Medicare and small group businesses, which resulted in increases of $6.3 million in personnel costs, $4.3 million in consulting costs, and $0.4 million in stock-based compensation expense, partially offset by a decrease of $0.4 million in facilities and other operating costs.2017\u00a0compared to\u00a02016\u2014Customer care and enrollment expenses increased\u00a0$10.5 million, or\u00a021%, in 2017 compared to\u00a02016, primarily due to growth in our Medicare and small group businesses, which resulted in increases of $6.3 million in personnel costs, $2.1 million in external call center costs, $1.2 million in licensing costs and $0.8 million in facilities and other operating costs.","markdown_table":"\n\n| | | | | | | | | | | | | | | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | Year Ended | | | | Change | | | | | | | Year Ended | | | | Change | | | | | | | Year Ended | | |\n| | December 31, 2018 | | | | $ | | | | % | | | December 31, 2017 | | | | $ | | | | % | | | December 31, 2016 | | |\n| Customer care and enrollment | $ | 70,547 | | | $ | 11,364 | | | 19 | % | | $ | 59,183 | | | $ | 10,465 | | | 21 | % | | $ | 48,718 | |\n| Percentage of total revenue | 28 | | % | | | | | | | | | 31 | | % | | | | | | | | | 25 | | % |\n\n","source":"EHTH\/10-K\/0001628280-19-002899"} {"title":"Technology and Content","text":"2018\u00a0compared\u00a02017\u2014Technology and content expenses decreased $0.9 million, or 3%, in 2018 as a result of a $2.8 million decrease in personnel costs, $0.4 million in depreciation and amortization expense, and $0.1 million in other professional fees, partially offset by increases of $1.0 million in consulting expenses, $0.4 million in facilities and other operating costs, and $0.3 million in stock-based compensation expense.2017\u00a0compared\u00a02016\u2014Technology and content expenses remained relatively flat in 2017 as a result of a $1.2 million increase in personnel costs, offset by decreases of $0.7 million in facilities and other operating costs and $0.4 million in stock-based compensation expense.","markdown_table":"\n\n| | | | | | | | | | | | | | | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | Year Ended | | | | Change | | | | | | | Year Ended | | | | Change | | | | | | | Year Ended | | |\n| | December 31, 2018 | | | | $ | | | | % | | | December 31, 2017 | | | | $ | | | | % | | | December 31, 2016 | | |\n| Technology and content | $ | 31,970 | | | $ | (919 | ) | | (3 | )% | | $ | 32,889 | | | $ | 140 | | | \u2014 | % | | $ | 32,749 | |\n| Percentage of total revenue | 13 | | % | | | | | | | | | 17 | | % | | | | | | | | | 17 | | % |\n\n","source":"EHTH\/10-K\/0001628280-19-002899"} {"title":"General and Administrative","text":"2018\u00a0compared to\u00a02017\u2014General and administrative expenses increased\u00a0$5.9 million, or\u00a015%, in 2018, primarily due to increases of $3.2 million in personnel costs, $1.0 million in stock-based compensation expense, $1.1 million in legal and other professional fees, and $0.5 million in facilities and other operating costs. 2017\u00a0compared to\u00a02016\u2014General and administrative expenses increased\u00a0$4.8 million, or\u00a013%, in 2017, primarily due to increases of $3.2 million in stock-based compensation expense, $1.9 million in personnel costs largely due to higher headcount, $0.7 million in lobbying fees, and $0.4 million in facilities and other operating costs, partially offset by decreases of $1.2 million in legal fees and $0.4 million in consulting expenses.","markdown_table":"\n\n| | | | | | | | | | | | | | | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | Year Ended | | | | Change | | | | | | | Year Ended | | | | Change | | | | | | | Year Ended | | |\n| | December 31, 2018 | | | | $ | | | | % | | | December 31, 2017 | | | | $ | | | | % | | | December 31, 2016 | | |\n| General and administrative | $ | 45,828 | | | $ | 5,859 | | | 15 | % | | $ | 39,969 | | | $ | 4,753 | | | 13 | % | | $ | 35,216 | |\n| Percentage of total revenue | 18 | | % | | | | | | | | | 21 | | % | | | | | | | | | 18 | | % |\n\n","source":"EHTH\/10-K\/0001628280-19-002899"} {"title":"Amortization of Intangible Assets","text":"2018\u00a0compared to\u00a02017\u2014Amortization expense was driven by intangible assets purchased through our acquisitions of PlanPrescriber and GoMedigap. Amortization expense for the year ended December 31, 2018 increased year over year due to the amortization of intangible assets from the GoMedigap acquisition, which was completed on January 22, 2018.2017\u00a0compared to\u00a02016\u2014Amortization expense related to intangible assets purchased through our acquisition of PlanPrescriber was flat in 2017 compared to 2016.","markdown_table":"\n\n| | | | | | | | | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | | | | | | | | | | | | | | | | | | |\n| | Year Ended | | | | Change | | | | Year Ended | | | | Change | | | | Year Ended | | |\n| | December 31, 2018 | | | | $ | | | | December 31, 2017 | | | | $ | | | | December 31, 2016 | | |\n| Amortization of intangible assets | $ | 2,091 | | | $ | 1,051 | | | $ | 1,040 | | | $ | \u2014 | | | $ | 1,040 | |\n| Percentage of total revenue | 1 | | % | | | | | | 1 | | % | | | | | | 1 | | % |\n\n","source":"EHTH\/10-K\/0001628280-19-002899"} {"title":"Other Income, Net","text":"Other income, net, for the years ended December 31, 2018, 2017 and 2016 primarily consisted of margin earned on commissions received from Medicare plan members transferred to us in 2010 through 2012 by a broker partner, whereby we became the broker of record on the underlying policies. In addition, other income, net included interest income earned on our invested cash, cash equivalents and marketable securities balances, offset by administrative bank fees, investment management fees and interest expense on capital lease obligations and our debt facility.2018 compared to 2017\u2014Other income, net, decreased by $427,000 in 2018, primarily due to an increase in interest expense as a result of a new debt facility entered into in the year ended December 31, 2018 and realized losses.2017 compared to 2016\u2014Other income, net, increased $33,000 in 2017, primarily due to an increase in interest income.","markdown_table":"\n\n| | | | | | | | | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | | | | | | | | | | | | | | | | | | |\n| | Year Ended | | | | Change | | | | Year Ended | | | | Change | | | | Year Ended | | |\n| | December 31, 2018 | | | | $ | | | | December 31, 2017 | | | | $ | | | | December 31, 2016 | | |\n| Other income, net | $ | 755 | | | $ | (427 | ) | | $ | 1,182 | | | $ | 33 | | | $ | 1,149 | |\n| Percentage of total revenue | \u2014 | | % | | | | | | 1 | | % | | | | | | 1 | | % |\n\n","source":"EHTH\/10-K\/0001628280-19-002899"} {"title":"Provision (Benefit) for Income Taxes","text":"2018 compared to 2017\u2014For the year ended December 31, 2018, we recorded a provision for income taxes of $3.1 million, representing an effective tax rate of 92.7%, which was higher than the statutory federal rate due primarily to a one-time increase of $2.4 million in the valuation allowance related to deferred tax assets related to state net operating loss carryforwards that are expected to expire unutilized. The remaining $0.7 million of provision for income taxes was impacted by lobbying and other non-deductible expenses, partially offset by research and development tax credits and stock-based compensation windfalls.2017 compared to 2016\u2014For the year ended December 31, 2017, we recorded a benefit from income taxes of $33.7 million, representing an effective tax rate of 407.6%, which was higher than the statutory federal rate due primarily to the Tax Cuts and Jobs Act of 2017, or the Jobs Act, which was signed into law on December 22, 2017 resulting in significant changes to the Internal Revenue Code. The Jobs Act reduces the federal corporate income tax rate from 35% to 21% effective for tax periods beginning after December 31, 2017; changes U.S international taxation from a worldwide tax system to a territorial system; and imposes a one-time transition tax on untaxed cumulative foreign earnings and profits as of December 31, 2017. We calculated our best estimate of the impact of the Jobs Act in our 2017 year end income tax provision in accordance with our understanding of the Jobs Act as of the filing date of the 2017 10-K. The 2017 benefit from income taxes was largely due to the remeasurement of the net U.S. deferred tax liability based on the rate at which it is expected to reverse in the future, which resulted in a one-time benefit of $29.4 million. The 2017 benefit also includes a $1.7 million decrease in our liability for unrecognized tax benefits due to the expiration of the related statute of limitations. The remaining benefit of $2.6 million was impacted by research and development credits and stock-based compensation windfalls, partially offset by lobbying and other non-deductible expenses.","markdown_table":"\n\n| | | | | | | | | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | | | | | | | | | | | | | | | | | | |\n| | Year Ended | | | | Change | | | | Year Ended | | | | Change | | | | Year Ended | | |\n| | December 31, 2018 | | | | $ | | | | December 31, 2017 | | | | $ | | | | December 31, 2016 | | |\n| Provision (benefit) for income taxes | $ | 3,065 | | | $ | 36,761 | | | $ | (33,696 | ) | | $ | (37,364 | ) | | $ | 3,668 | |\n| Effective tax rate | 92.7 | | % | | | | | | 407.6 | | % | | | | | | 92.2 | | % |\n\n","source":"EHTH\/10-K\/0001628280-19-002899"} {"title":"Segment Information","text":"(1)As adjusted for the adoption of ASC 606 using the full retrospective method","markdown_table":"\n\n| | | | | | | | | | | | | | | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | Year Ended | | | | Change | | | | | | | Year Ended | | | | Change | | | | | | | Year Ended | | |\n| | December 31, 2018 | | | | $ | | | | % | | | December 31, 2017 (1) | | | | $ | | | | % | | | December 31, 2016 (1) | | |\n| Revenue | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Medicare | $ | 210,570 | | | $ | 68,122 | | | 48 | % | | $ | 142,448 | | | $ | 20,292 | | | 17 | % | | $ | 122,156 | |\n| Individual, Family and Small Business | 40,825 | | | | $ | (7,433 | ) | | (15 | )% | | 48,258 | | | | $ | (22,910 | ) | | (32 | )% | | 71,168 | | |\n| Total revenue | $ | 251,395 | | | $ | 60,689 | | | 32 | % | | $ | 190,706 | | | $ | (2,618 | ) | | (1 | )% | | $ | 193,324 | |\n| Segment profit | | | | | | | | | | | | | | | | | | | | | | | | | |\n| Medicare segment profit | $ | 60,844 | | | $ | 38,707 | | | 175 | % | | $ | 22,137 | | | $ | 11,743 | | | 113 | % | | $ | 10,394 | |\n| Individual, Family and Small Business segment profit | 5,803 | | | | $ | (3,770 | ) | | (39 | )% | | 9,573 | | | | $ | (23,477 | ) | | (71 | )% | | 33,050 | | |\n| Total segment profit | 66,647 | | | | 34,937 | | | | 110 | % | | 31,710 | | | | (11,734 | | ) | | (27 | )% | | 43,444 | | |\n| Corporate | (32,996 | | ) | | $ | (6,026 | ) | | 22 | % | | (26,970 | | ) | | $ | 2,103 | | | (7 | )% | | (29,073 | | ) |\n| Stock-based compensation expense | (12,289 | | ) | | $ | (2,595 | ) | | 27 | % | | (9,694 | | ) | | $ | (2,428 | ) | | 33 | % | | (7,266 | | ) |\n| Depreciation and amortization | (2,479 | | ) | | $ | 358 | | | (13 | )% | | (2,837 | | ) | | $ | 702 | | | (20 | )% | | (3,539 | | ) |\n| Change in fair value of earnout liability | (12,300 | | ) | | $ | (12,300 | ) | | 100 | % | | \u2014 | | | | $ | \u2014 | | | \u2014 | % | | \u2014 | | |\n| Restructuring (charge) benefit | (1,865 | | ) | | $ | (1,865 | ) | | 100 | % | | \u2014 | | | | $ | (297 | ) | | (100 | )% | | 297 | | |\n| Acquisition costs | (76 | | ) | | $ | 545 | | | (88 | )% | | (621 | | ) | | $ | (621 | ) | | 100 | % | | \u2014 | | |\n| Amortization of intangible assets | (2,091 | | ) | | $ | (1,051 | ) | | 101 | % | | (1,040 | | ) | | $ | \u2014 | | | \u2014 | % | | (1,040 | | ) |\n| Other income, net | 755 | | | | $ | (427 | ) | | (36 | )% | | 1,182 | | | | $ | 33 | | | 3 | % | | 1,149 | | |\n| Income (loss) before provision (benefit) for income taxes | $ | 3,306 | | | $ | 11,576 | | | (140 | )% | | $ | (8,270 | ) | | $ | (12,242 | ) | | (308 | )% | | $ | 3,972 | |\n\n","source":"EHTH\/10-K\/0001628280-19-002899"} {"title":"Summary of Selected Application and Membership Metrics","text":"Health insurance carrier\u2019s bill and collect insurance premiums paid by our members. The carriers do not report to us the number of members that we have as of a given date. The majority of our members who terminate their policies do so by discontinuing their premium payments to the carrier and do not inform us of the cancellation. Also, some of our members pay their premiums less frequently than monthly. Given the number of months required to observe non-payment of commissions in order to confirm cancellations, we estimate the number of members who are active on insurance policies as of a specified date. After we have estimated membership for a period, we may receive information from health insurance carriers that would have impacted the estimate if we had received the information prior to the date of estimation. We may receive commission payments or other information that indicates that a member who was not included in our estimates for a prior period was in fact an active member at that time, or that a member who was included in our estimates was in fact not an active member of ours. For instance, we reconcile information carriers provide to us and may determine that we were not historically paid commissions owed to us, which would cause us to have underestimated membership. Conversely, carriers may require us to return commission payments paid in a prior period due to policy cancellations for members we previously estimated as being active. We do not update our estimated membership numbers reported in previous periods. Instead, we reflect updated information regarding our historical membership in the membership estimate for the current period. As a result of the delay in our receipt of information from insurance carriers, actual trends in our membership are most discernible over periods longer than from one quarter to the next. As a result of the delay we experience in receiving information about our membership, it is difficult for us to determine with any certainty the impact of current conditions on our membership retention. Health care reform and its impacts as well as other factors could cause the assumptions and estimates that we make in connection with estimating our membership to be inaccurate, which would cause our membership estimates to be inaccurate.","markdown_table":"\n\n| | | |\n| --- | --- | --- |\n| | | |\n| Notes: | | |\n| (1) | | Medicare-related health insurance applications submitted on our website or through our customer care center during the period, including Medicare Advantage, Medicare Part D prescription drug and Medicare Supplement plans. Applications are counted as submitted when the applicant completes the application and either clicks the submit button on our website or provides verbal authorization to submit the application. The applicant may have additional actions to take before the application will be reviewed by the insurance carrier, such as providing additional information. In addition, an applicant may submit more than one application. |\n| (2) | | Major medical Individual and Family plan (\"IFP\") health insurance applications submitted on our website during the period. Applications are counted as submitted when the applicant completes the application, clicks the submit button on our website and submits the application to us. The applicant may have additional actions to take before the application will be reviewed by the insurance carrier, such as providing additional information. In addition, an applicant may submit more than one application. We define our IFP offerings as major medical individual and family health insurance plans, which does not include Medicare-related, small business or ancillary plans (primarily consisting of short-term, dental, life, vision, and accident insurance plans). |\n| (3) | | Applications for health insurance plans other than Medicare and IFP submitted on our website during the period. Applications for ancillary plans are counted as submitted when the applicant completes the application, clicks the submit button on our website and submits the application to us. Applications for small business plans are counted as submitted when the applicant completes the application, the employees complete their applications, the applicant submits the application to us and we submit the application to the carrier. The applicant may have additional actions to take before the application will be reviewed by the insurance carrier, such as providing additional information. In addition, an applicant may submit more than one application. |\n| (4) | | Applications for all health insurance plans submitted on our website or through our customer care center during the period. See notes (1), (2) and (3) above for more information as to what constitutes a submitted application. |\n| (5) | | Medicare Advantage plan health insurance applications submitted on our website or through our customer care center during the period. Applications are counted as submitted when the applicant completes the application and either clicks the submit button on our website or provides verbal authorization to submit the application. The applicant may have additional actions to take before the application will be reviewed by the insurance carrier, such as providing additional information. In addition, an applicant may submit more than one application. Medicare Advantage submitted applications are included in Medicare submitted applications - See Note1 above for more detail. |\n| (6) | | Estimated number of members active on Medicare-related health insurance as of the date indicated based on the number of members for whom we have received or applied a commission payment during the month of estimation. |\n| (7) | | Estimated number of members active on IFP health insurance plans as of the date indicated. To determine the estimate, we take the sum of (i) the number of IFP members for whom we have received or applied a commission payment for a month that is up to six months prior to the date of estimation after reducing that number using historical experience for assumed member cancellations over the period being estimated; and (ii) the number of approved members over that period (after reducing that number by the percentage of members who do not accept their approved policy from the same month of the previous year for estimated member cancellations through the date of the estimate). To the extent we determine we have received substantially all of the commission payments related to a given month during the period being estimated, we will take the number of members for whom we have received or applied a commission payment during the month of estimation. For IFP health insurance plans, a member who purchases and is active on multiple standalone insurance plans will be counted as a member more than once. For example, a member who is active on both an individual and family health insurance plan and a standalone dental plan will be counted as two continuing members. |\n| (8) | | Estimated number of members active on insurance plans other than Medicare-related health insurance and IFP health insurance plans as of the date indicated. For ancillary health insurance plans (such as short-term, dental, vision, accident and student), we take the sum of (i) the number of members for whom we have received or applied a commission payment for a month that is up to three months prior to the date of estimation (after reducing that number using historical experience for assumed member cancellations over the period being estimated); and (ii) the number of approved members over that period (after reducing that number using historical experience for an assumed number of members who do not accept their approved policy from the same month of the previous year and for estimated member cancellations through the date of the estimate). To the extent we determine we have received substantially all of the commission payments related to a given month during the period being estimated, we will take the number of members for whom we have received or applied a commission payment during the month of estimation. The one to three-month period varies by insurance product and is largely dependent upon the timeliness of commission payment and related reporting from the related carriers. For small business health insurance plans, we estimate the number of members using the number of initial members at the time the group is approved, and we update this number for changes in membership if such changes are reported to us by the group or carrier in the period it is reported. However, groups generally notify the carrier directly of policy cancellations and increases or decreases in group size without informing us. Health insurance carriers often do not communicate policy cancellation information or group size changes to us. We often are made aware of policy cancellations and group size changes at the time of annual renewal and update our membership statistics accordingly in the period they are reported. |\n| (9) | | Estimated number of members active on all insurance plans as of the date indicated. See the notes (6), (7) and (8) above for additional information regarding our calculation of total estimated membership. |\n\n","source":"EHTH\/10-K\/0001333493-18-000025"} {"title":"Results of Operations","text":"Operating costs and expenses include the following amounts of stock-based compensation expense (in thousands):","markdown_table":"\n\n| | | | | | | | | | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | | | | | | | | | | | | | | | | | | | |\n| | Year Ended December 31, | | | | | | | | | | | | | | | | | | | |\n| | 2015 | | | | | | | 2016 | | | | | | | 2017 | | | | | |\n| Revenue | | | | | | | | | | | | | | | | | | | | |\n| Commission | $ | 171,257 | | | 90 | % | | $ | 170,850 | | | 91 | % | | $ | 158,424 | | | 92 | % |\n| Other | 18,284 | | | | 10 | % | | 16,110 | | | | 9 | % | | 13,931 | | | | 8 | % |\n| Total revenue | 189,541 | | | | 100 | % | | 186,960 | | | | 100 | % | | 172,355 | | | | 100 | % |\n| Operating costs and expenses: | | | | | | | | | | | | | | | | | | | | |\n| Cost of revenue | 4,178 | | | | 2 | % | | 3,176 | | | | 2 | % | | 2,273 | | | | 1 | % |\n| Marketing and advertising | 75,571 | | | | 40 | % | | 72,213 | | | | 39 | % | | 65,874 | | | | 38 | % |\n| Customer care and enrollment | 43,159 | | | | 23 | % | | 48,718 | | | | 26 | % | | 59,183 | | | | 35 | % |\n| Technology and content | 36,351 | | | | 19 | % | | 32,749 | | | | 17 | % | | 32,889 | | | | 19 | % |\n| General and administrative | 30,239 | | | | 16 | % | | 35,216 | | | | 19 | % | | 39,969 | | | | 23 | % |\n| Acquisition costs | \u2014 | | | | \u2014 | % | | \u2014 | | | | \u2014 | % | | 621 | | | | \u2014 | % |\n| Restructuring charge (benefit) | 4,541 | | | | 3 | % | | (297 | | ) | | \u2014 | % | | \u2014 | | | | \u2014 | % |\n| Amortization of intangible assets | 1,153 | | | | 1 | % | | 1,040 | | | | 1 | % | | 1,040 | | | | 1 | % |\n| Total operating costs and expenses | 195,192 | | | | 104 | | | 192,815 | | | | 103 | | | 201,849 | | | | 117 | |\n| Loss from operations | (5,651 | | ) | | (3 | )% | | (5,855 | | ) | | (3 | )% | | (29,494 | | ) | | (17 | )% |\n| Other income (expense), net | 45 | | | | \u2014 | % | | 102 | | | | \u2014 | % | | 327 | | | | \u2014 | % |\n| Loss before benefit from income taxes | (5,606 | | ) | | (3 | )% | | (5,753 | | ) | | (3 | )% | | (29,167 | | ) | | (17 | )% |\n| Benefit from income taxes | (843 | | ) | | \u2014 | % | | (871 | | ) | | \u2014 | % | | (3,755 | | ) | | (2 | )% |\n| Net loss | $ | (4,763 | ) | | (3 | )% | | $ | (4,882 | ) | | (3 | )% | | $ | (25,412 | ) | | (15 | )% |\n\n","source":"EHTH\/10-K\/0001333493-18-000025"} {"title":"Revenue","text":"2017 compared to 2016\u2014Commission revenue decreased $12.4 million, or 7%, in 2017, due to a $33.2 million or 34% decrease in Individual, Family and Small Business commission revenue, partially offset by a\u00a0$20.8 million, or 28% increase in Medicare commission revenue. The decrease in Individual, Family and Small Business commission revenue was primarily due to a 38% decline in estimated individual and family health insurance membership as of December 31, 2017 compared to December 31, 2016, primarily attributable to lower submitted application volumes and a decline in our membership retention rate in 2017. The increase in Medicare commission revenue was primarily attributable to a 26% increase in estimated Medicare membership as of December 31, 2017 compared to December 31, 2016, in part due to growth in our sale of Medicare Advantage and Medicare Supplement plans and improved retention rates.Other revenue decreased $2.2 million, or 14%, in 2017 due primarily to decreases of $1.5 million in online sponsorship and advertising revenue, $0.4 million in lead generation revenue and $0.2 million in licensing fees.2016 compared to 2015\u2014Commission revenue decreased $0.4 million in 2016, due to a $17.2 million decrease in Individual, Family and Small Business commission revenue, partially offset by a\u00a0$16.8 million increase in Medicare commission revenue. The decrease in Individual, Family and Small Business commission revenue was primarily due to a 28% decrease in individual and family health insurance estimated membership as of December 31, 2017 compared to December 31, 2016. The increase in Medicare commission revenue was primarily due to a 33% increase in Medicare estimated membership as of December\u00a031, 2017 compared to December 31, 2016.Other revenue decreased $2.2 million, or 12%, in 2016, due to decreases of $1.4 million in licensing fees, $0.5 million in online sponsorship and advertising revenue and $0.3 million in lead generation revenue.","markdown_table":"\n\n| | | | | | | | | | | | | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | | | | | | | | | | | | | | | | | | | | | | |\n| | Year Ended | | | | Change | | | | | | Year Ended | | | | Change | | | | | | Year Ended | | |\n| | December\u00a031, 2015 | | | | $ | | | | % | | December\u00a031, 2016 | | | | $ | | | | % | | December\u00a031, 2017 | | |\n| Commission | $ | 171,257 | | | $ | (407 | ) | | \u2014% | | $ | 170,850 | | | $ | (12,426 | ) | | (7)% | | $ | 158,424 | |\n| Percentage of total revenue | 90 | | % | | | | | | | | 91 | | % | | | | | | | | 92 | | % |\n| Other | 18,284 | | | | (2,174 | | ) | | (12)% | | 16,110 | | | | (2,179 | | ) | | (14)% | | 13,931 | | |\n| Percentage of total revenue | 10 | | % | | | | | | | | 9 | | % | | | | | | | | 8 | | % |\n| Total revenue | $ | 189,541 | | | $ | (2,581 | ) | | (1)% | | $ | 186,960 | | | $ | (14,605 | ) | | (8)% | | $ | 172,355 | |\n\n","source":"EHTH\/10-K\/0001333493-18-000025"} {"title":"Cost of Revenue","text":"2017 compared to 2016\u2014Cost of revenue decreased $0.9 million in the 2017 compared to 2016, due primarily to a $0.4 million decrease in amortization expense associated with the consideration we paid to a broker partner in connection with the transfer of several Medicare plan books-of-business to us whereby we became the broker of record on the underlying plans and a $0.4 million decrease in payments to marketing partners with whom we have revenue sharing arrangements for health insurance plans sold to members who were referred to our website. 2016 compared to 2015\u2014Cost of revenue decreased $1.0 million, or 24%, in 2016 compared to 2015, due primarily to a $0.5 million decrease in payments related to health insurance policies sold to members who were referred to our website by marketing partners with whom we have revenue-sharing arrangements and a $0.4 million decrease in amortization expense associated with the consideration we paid to a broker partner in connection with the transfer of several Medicare plan books-of-business to us whereby we became the broker of record on the underlying policies.","markdown_table":"\n\n| | | | | | | | | | | | | | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | | | | | | | | | | | | | | | | | | | | | | | |\n| | Year Ended | | | | Change | | | | | | | Year Ended | | | | Change | | | | | | | Year Ended | |\n| | December 31, 2015 | | | | $ | | | | % | | | December 31, 2016 | | | | $ | | | | % | | | December 31, 2017 | |\n| Cost of revenue | $ | 4,178 | | | $ | (1,002 | ) | | (24 | )% | | $ | 3,176 | | | $ | (903 | ) | | (28 | )% | | 2,273 | |\n| Percentage of total revenue | 2 | | % | | | | | | | | | 2 | | % | | | | | | | | | 1 | % |\n\n","source":"EHTH\/10-K\/0001333493-18-000025"} {"title":"Marketing and Advertising","text":"2017 compared 2016\u2014Marketing and advertising expenses decreased $6.3 million, or 9%, in 2017, primarily due to decreases of $7.8 million in variable advertising costs and $0.3 million in stock-based compensation, partially offset by increases of $1.2 million in personnel costs due to additional headcount and $0.6 million in consulting expenses. The decrease in variable advertising costs was largely attributable to decreases of $13.3 million in online advertising costs and $9.2 million in marketing partner channel costs, partially offset by a $14.7 million increase in direct marketing costs and was driven primarily by our strategy to shift our demand generation in the Medicare market to more cost-effective channels, as well as the lower volume of submitted individual and family applications compared to 2016.\u00a02016 compared to 2015\u2014Marketing and advertising expenses decreased $3.4 million, or 4%, in 2016, primarily due to decreases of $1.9 million in personnel costs resulting from lower headcount, including executive officer departures, $0.8 million in variable advertising costs and $0.7 million in stock-based compensation expense, largely due to reversal of stock-based compensation resulting from executive officer departures. The decrease in variable advertising costs resulted from decreases of $2.7 million in direct marketing expenses and $2.3 million in marketing partner channel costs, partially offset by a $4.2 million increase in online advertising costs.","markdown_table":"\n\n| | | | | | | | | | | | | | | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | Year Ended | | | | Change | | | | | | | Year Ended | | | | Change | | | | | | | Year Ended | | |\n| | December\u00a031, 2015 | | | | $ | | | | % | | | December\u00a031, 2016 | | | | $ | | | | % | | | December\u00a031, 2017 | | |\n| Marketing and advertising | $ | 75,571 | | | $ | (3,358 | ) | | (4 | )% | | $ | 72,213 | | | $ | (6,339 | ) | | (9 | )% | | $ | 65,874 | |\n| Percentage of total revenue | 40 | | % | | | | | | | | | 39 | | % | | | | | | | | | 38 | | % |\n\n","source":"EHTH\/10-K\/0001333493-18-000025"} {"title":"Customer Care and Enrollment","text":"2017 compared to 2016 \u2014Customer care and enrollment expenses increased $10.5 million, or 21%, in 2017 compared to 2016, primarily due to growth in our Medicare and small group businesses, which resulted in increases of $6.2 million in personnel costs, $2.1 million in external call center costs, $1.2 million in licensing costs and $0.8 million in facilities and other operating costs.2016 compared to 2015\u2014Customer care and enrollment expenses increased $5.6 million, or 13%, in 2016 compared to 2015, largely due to increases of $4.1 million in personnel costs primarily relating to our Medicare business and $1.0 million in facilities and other operating costs.","markdown_table":"\n\n| | | | | | | | | | | | | | | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | Year Ended | | | | Change | | | | | | | Year Ended | | | | Change | | | | | | | Year Ended | | |\n| | December\u00a031, 2015 | | | | $ | | | | % | | | December\u00a031, 2016 | | | | $ | | | | % | | | December\u00a031, 2017 | | |\n| Customer care and enrollment | $ | 43,159 | | | $ | 5,559 | | | 13 | % | | $ | 48,718 | | | $ | 10,465 | | | 21 | % | | $ | 59,183 | |\n| Percentage of total revenue | 23 | | % | | | | | | | | | 26 | | % | | | | | | | | | 35 | | % |\n\n","source":"EHTH\/10-K\/0001333493-18-000025"} {"title":"Technology and Content","text":"2017 compared 2016 \u2014Technology and content expenses remained relatively flat in 2017 as a result of a $1.2 million increase in personnel costs, offset by decreases of $0.7 million in facilities and other operating costs and $0.4 million in stock-based compensation expense. 2016 compared to 2015\u2014Technology and content expenses decreased $3.6 million, or 10%, in 2016 compared to 2015, due to a decrease in personnel costs resulting from lower headcount.","markdown_table":"\n\n| | | | | | | | | | | | | | | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | Year Ended | | | | Change | | | | | | | Year Ended | | | | Change | | | | | | | Year Ended | | |\n| | December\u00a031, 2015 | | | | $ | | | | % | | | December\u00a031, 2016 | | | | $ | | | | % | | | December\u00a031, 2017 | | |\n| Technology and content | $ | 36,351 | | | $ | (3,602 | ) | | (10 | )% | | $ | 32,749 | | | $ | 140 | | | \u2014 | % | | $ | 32,889 | |\n| Percentage of total revenue | 19 | | % | | | | | | | | | 17 | | % | | | | | | | | | 19 | | % |\n\n","source":"EHTH\/10-K\/0001333493-18-000025"} {"title":"General and Administrative","text":"2017 compared to 2016 \u2014 General and administrative expenses increased $4.8 million, or 13%, in 2017, primarily due to increases of $3.2 million in stock-based compensation expense, $2.1 million in personnel costs largely due to higher headcount, $0.7 million in lobbying fees, and $0.4 million in facilities and other operating costs, partially offset by decreases of $1.2 million in legal fees and $0.4 million in consulting expenses. 2016 compared to 2015\u2014General and administrative expenses increased $5.0 million, or 16%, in 2016 compared to 2015, due to increases of $1.9 million in personnel costs primarily resulting from severance and relocation costs related to executive officer changes, $0.9 million in stock-based compensation expense resulting from executive officer changes, $0.9 million in third party fees related to a review and analysis of strategic plans, $0.8 million in legal fees and $0.2 million in lobbying fees.","markdown_table":"\n\n| | | | | | | | | | | | | | | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | Year Ended | | | | Change | | | | | | | Year Ended | | | | Change | | | | | | | Year Ended | | |\n| | December\u00a031, 2015 | | | | $ | | | | % | | | December\u00a031, 2016 | | | | $ | | | | % | | | December\u00a031, 2017 | | |\n| General and administrative | $ | 30,239 | | | $ | 4,977 | | | 16 | % | | $ | 35,216 | | | $ | 4,753 | | | 13 | % | | $ | 39,969 | |\n| Percentage of total revenue | 16 | | % | | | | | | | | | 19 | | % | | | | | | | | | 23 | | % |\n\n","source":"EHTH\/10-K\/0001333493-18-000025"} {"title":"Restructuring Charge (Benefit)","text":"In the second and third quarters of 2016, we reversed $0.3 million related to facility exit costs as we reoccupied office space we had previously vacated and were also released from a lease for other office space we had previously vacated.","markdown_table":"\n\n| | | | | | | | | | | | | | | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | Year Ended | | | | Change | | | | | | | Year Ended | | | | Change | | | | | | | Year Ended | | |\n| | December\u00a031, 2015 | | | | $ | | | | % | | | December\u00a031, 2016 | | | | $ | | | | % | | | December\u00a031, 2017 | | |\n| Restructuring | $ | 4,541 | | | $ | (4,838 | ) | | (107 | )% | | $ | (297 | ) | | $ | 297 | | | (100 | )% | | $ | \u2014 | |\n| Percentage of total revenue | 3 | | % | | | | | | | | | \u2014 | | % | | | | | | | | | \u2014 | | |\n\n","source":"EHTH\/10-K\/0001333493-18-000025"} {"title":"Amortization of Intangible Assets","text":"2017 compared to 2016\u2014Amortization expense related to intangible assets purchased through our acquisition of PlanPrescriber was flat in 2017 compared to 2016.2016 compared to 2015\u2014Amortization expense related to intangible assets purchased through our acquisition of PlanPrescriber decreased in 2016 compared to 2015, due to certain assets that were fully amortized compared to the prior period.","markdown_table":"\n\n| | | | | | | | | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | | | | | | | | | | | | | | | | | | |\n| | Year Ended | | | | Change | | | | Year Ended | | | | Change | | | | Year Ended | | |\n| | December 31, 2015 | | | | $ | | | | December 31, 2016 | | | | $ | | | | December 31, 2017 | | |\n| Amortization of intangible assets | $ | 1,153 | | | $ | (113 | ) | | $ | 1,040 | | | $ | \u2014 | | | $ | 1,040 | |\n| Percentage of total revenue | 1 | | % | | | | | | 1 | | % | | | | | | 1 | | % |\n\n","source":"EHTH\/10-K\/0001333493-18-000025"} {"title":"Other Income (Expense), Net","text":"Other income (expense), net, for the years ended 2015, 2016 and 2017 primarily consisted of interest income earned on our invested cash,\u00a0cash equivalents and marketable securities balances, offset by administrative bank fees, investment management fees and interest expense on capital lease obligations.\u00a0\u00a02017 compared to 2016\u2014Other income (expense), net increased $0.2 million in 2017, primarily due to an increase in interest income.2016 compared to 2015\u2014 Other income (expense), net increased $0.1 million in 2016, primarily due to an increase in interest income.","markdown_table":"\n\n| | | | | | | | | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | | | | | | | | | | | | | | | | | | |\n| | Year Ended | | | | Change | | | | Year Ended | | | | Change | | | | Year Ended | | |\n| | December\u00a031, 2015 | | | | $ | | | | December\u00a031, 2016 | | | | $ | | | | December\u00a031, 2017 | | |\n| Other income (expense), net | $ | 45 | | | $ | 57 | | | $ | 102 | | | $ | 225 | | | $ | 327 | |\n| Percentage of total revenue | \u2014 | | % | | | | | | \u2014 | | % | | | | | | \u2014 | | % |\n\n","source":"EHTH\/10-K\/0001333493-18-000025"} {"title":"Benefit from Income Taxes","text":"2017 compared to 2016\u2014On December 22, 2017, the Tax Cuts and Jobs Act of 2017, or the Jobs Act, was signed into law resulting in significant changes to the Internal Revenue Code. The Jobs Act reduces the federal corporate income tax rate from 35% to 21% effective for tax periods beginning after December 31, 2017; changes U.S international taxation from a worldwide tax system to a territorial system; and imposes a one-time transition tax on untaxed cumulative foreign earnings and profits as of December 31, 2017. The Act also includes provisions for the elimination of the Alternative Minimum Tax, or AMT, among other changes. We calculated our best estimate of the impact of the Jobs Act in our year end income tax provision in accordance with our understanding of the Jobs Act and guidance available as of the filing date of this Annual Report on Form 10-K and recorded $2.3 million as additional income tax benefit in the fourth quarter of 2017, the period in which the legislation was enacted. Of the $2.3 million, we recorded a provisional amount for 2017 included a benefit of $1.8 million related to the reversal of AMT credits, which are now refundable credits under the provisions of the Jobs Act and recorded as long-term receivables, which are included in other assets in the Consolidated Balance Sheets. We have also remeasured the deferred tax assets and liabilities based on the rate at which they are expected to reverse in the future and recorded a $0.5 million benefit as a result of this remeasurement. The effects of other provisions of the Jobs Act are not expected to have a material impact on our consolidated financial statements, however, the final impact of the Jobs Act may differ from our estimates, due to, among other things, changes in our interpretations and assumptions, additional guidance that may be issued, and resulting actions we may take. In addition, the benefit from income taxes in 2017, includes a $1.7 million decrease in our liability for unrecognized tax benefits due to the expiration of the related statute of limitations, partially offset by a provision for income taxes related to a minimum taxes and a foreign tax rate differential. 2016 compared to 2015\u2014We recorded a benefit from income taxes of $0.8 million and $0.9 million during the years ended December 31, 2015 and 2016, respectively.\u00a0The benefit from income taxes in 2015 and 2016, primarily related to a decrease in our liability for unrecognized tax benefits due to the expiration of the related statute of limitations, partially offset by a provision for income taxes related to a minimum taxes and a foreign tax rate differential.","markdown_table":"\n\n| | | | | | | | | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | | | | | | | | | | | | | | | | | | |\n| | Year Ended | | | | Change | | | | Year Ended | | | | Change | | | | Year Ended | | |\n| | December 31, 2015 | | | | $ | | | | December 31, 2016 | | | | $ | | | | December 31, 2017 | | |\n| Benefit from income taxes | $ | (843 | ) | | $ | (28 | ) | | $ | (871 | ) | | $ | (2,884 | ) | | $ | (3,755 | ) |\n| Percentage of total revenue | \u2014 | | % | | | | | | \u2014 | | % | | | | | | (2 | | )% |\n\n","source":"EHTH\/10-K\/0001333493-18-000025"} {"title":"Summary of Selected Metrics","text":"Our insurance carrier partners bill and collect insurance premiums paid by our members. Carrier partners do not report to us the number of members that we have as of a given date.\u00a0The majority of our non-Medicare members who terminate their policies do so by discontinuing their premium payments to the carrier and do not inform us of the cancellation.\u00a0Also, some of our non-Medicare members pay their premiums less frequently than monthly. Given the number of months required to observe non-payment of commissions in order to confirm cancellations, we estimate the number of members who are active on insurance policies as of a specified date. We estimate the number of continuing members on all policies as of a specific date as follows:\u2022Historically, to calculate the estimated number of members active on individual and family plan health insurance policies, we have taken the sum of (i) the number of IFP members for whom we have received or applied a commission payment for the month that is six months prior to the date of estimation after reducing that number using historical experience (for which the experience for the period from July 1 to December 31, 2013 was used for the calculation of membership as of December 31, 2014) for assumed member cancellations over the six-month period and (ii) the number of approved members over the six-month period prior to the date of estimation after reducing that number using historical experience for an assumed number of members who do not accept their approved policy and for estimated member cancellations through the date of the estimate. Historically, the percentage of our members who did not accept their approved policy remained at a relatively constant rate. However, we observed an increase in the number of members who ultimately did not accept their approved policies, compared to our historical experience, beginning with policies that were submitted in the quarter ended March 31, 2014. This lower acceptance rate was used to estimate the assumed number of members who did not accept their approved policy for the six months ended December 31, 2014. As a result, for the purpose of estimating the number of members active on individual and family plan insurance policies as of December 31, 2014, we have assumed and applied a higher percentage of members who do not accept their approved policy as compared to the assumption used in prior years.\u2022For ancillary insurance policies (such as short-term, dental, vision, accident and student), we take the sum of (i) the number of members for whom we have received or applied a commission payment for the month that is one to three months prior to the date of estimation (after reducing that number using historical experience for assumed member cancellations over the one to three-month period); and (ii) the number of approved members over the one to three-month period prior to the date of estimation (after reducing that number using historical experience for an assumed number of members who do not accept their approved policy and for estimated member cancellations through the date of the estimate).\u00a0\u00a0The one to three-month period varies by insurance product and is largely dependent upon the timeliness of commission payment and related reporting from the related carriers.\u2022For Medicare-related insurance policies, we take the number of members for whom we have received or applied a commission payment prior to the date of estimation (after reducing that number using historical experience for assumed member cancellations, including rapid disenrollment).\u2022For small business health insurance policies, we estimate the number of members using the number of initial members at the time the group is approved, and we update this number for changes in membership if such changes are reported to us by the group or carrier in the period it is reported. However, groups generally notify the carrier directly of policy cancellations and increases or decreases in group size without informing us.During the portion of the second open enrollment period for individual and family health insurance plans that ran from November 15, 2014 through December 31, 2014, we were only able to sell individual and family health insurance plans with a 2015 effective date, did not receive commission payment on these plans until 2015 and therefore included none of the members on these plans in our estimated number of members active on individual and family health insurance plans at December 31, 2014. This difference from the prior year, when we were able to sell a substantial number of individual and family health insurance plans with a 2013 effective date during the portion of the initial open enrollment period for individual and family health insurance plans that ran from October 1, 2013 through December 31, 2013, received commission payment on a significant portion of these plans during the fourth quarter of 2013 and therefore included the members on these plans in our estimated number of members active on individual and family health insurance plans at December 31, 2013. Additionally, our carrier partners often do not communicate policy cancellation information to us. We often are made aware of policy cancellations at the time of annual renewal and update our membership statistics accordingly in the period they are reported.\u00a0\u00a0A member who purchases and is active on multiple standalone insurance policies will be counted as a member more than once.\u00a0\u00a0For example, a member who is active on both an individual and family health insurance policy and a standalone dental policy will be counted as two continuing members.After we have estimated membership for a period, we may receive information from health insurance carriers that would have impacted the estimate if we had received the information prior to the date of estimation. We may receive commission payments or other information that indicates that a member who was not included in our estimates for a prior period was in fact an active member at that time, or that a member who was included in our estimates was in fact not an active member of ours. For instance, we reconcile information carriers provide to us and may determine that we were not historically paid commissions owed to us, which would cause us to have underestimated membership. Conversely, carriers may require us to return commission payments paid in a prior period due to policy cancellations for members we previously estimated as being active. We do not update our estimated membership numbers reported in previous periods. Instead, we reflect updated information regarding our membership in the membership estimate for the period we receive such updated information, if applicable. As a result of the delay in our receipt of information from insurance carriers, actual trends in our membership are most discernible over periods longer than from one quarter to the next. In addition, and as a result of the delay we experience in receiving information about our membership, it is difficult for us to determine with any certainty the impact of current conditions such as health care reform implementation on our membership retention. Health care reform and other factors could cause the assumptions and estimates that we make in connection with estimating our membership to be inaccurate, which would cause our membership estimates to be inaccurate.","markdown_table":"\n\n| | | |\n| --- | --- | --- |\n| | | |\n| Notes: | | |\n| (1) | | Net cash provided by operating activities for the period from the consolidated statements of cash flows. |\n| (2) | | IFP applications submitted on eHealth\u2019s website during the period. Applications are counted as submitted when the applicant completes the application, provides a method for payment and clicks the submit button on our website and submits the application to us. The applicant generally has additional actions to take before the application will be reviewed by the insurance carrier, such as providing additional information and providing an electronic signature. In addition, an applicant may submit more than one application. We include applications for IFP plans for which we receive commissions as well as other forms of payment.\u00a0We define our \u201cIFP\u201d offerings as major medical individual and family health insurance plans, which does not include small business, short-term, stand-alone dental, life, student or Medicare-related health insurance plans. |\n| (3) | | New IFP members reported to eHealth as approved during the period. Some members that are approved by a carrier do not accept the approval and therefore do not become paying members. |\n| (4) | | New members for all products reported to eHealth as approved during the period. Some members that are approved by a carrier do not accept the approval and therefore do not become paying members. |\n| (5) | | Commission revenue (from all sources) recognized during the period from the consolidated statements of comprehensive income. |\n| (6) | | Calculated as commission revenue recognized during the period (see note (5) above) divided by average estimated membership for the period (calculated as beginning and ending estimated membership for all plans for the period, divided by two). |\n| (7) | | Estimated number of members active on IFP insurance policies as of the date indicated. |\n| (8) | | Estimated number of members active on Medicare-related\u00a0insurance policies as of the date indicated. |\n| (9) | | Estimated number of members active on insurance policies other than IFP and Medicare-related\u00a0policies as of the date indicated. |\n| (10) | | Estimated number of members active on all insurance policies, including Medicare-related\u00a0policies, as of the date indicated. |\n| (11) | | Percentage of IFP submitted applications from applicants who came directly to the eHealth website through algorithmic search engine results or otherwise. See note (2) above for further information as to what constitutes a submitted application. |\n| (12) | | Percentage of IFP submitted applications from applicants sourced through eHealth\u2019s network of marketing partners. See note (2) above for further information as to what constitutes a submitted application. |\n| (13) | | Percentage of IFP submitted applications from applicants sourced through paid search and other online advertising activities. See note (2) above for further information as to what constitutes a submitted application. |\n\n","source":"EHTH\/10-K\/0001333493-15-000016"} {"title":"Results of Operations","text":"Operating costs and expenses include the following amounts of stock-based compensation expense (in thousands):","markdown_table":"\n\n| | | | | | | | | | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | | | | | | | | | | | | | | | | | | | |\n| | Year Ended December 31, | | | | | | | | | | | | | | | | | | | |\n| | 2012 | | | | | | | 2013 | | | | | | | 2014 | | | | | |\n| Revenue: | | | | | | | | | | | | | | | | | | | | |\n| Commission | $ | 130,663 | | | 84 | % | | $ | 153,383 | | | 86 | % | | $ | 158,626 | | | 88 | % |\n| Other | 24,810 | | | | 16 | | | 25,797 | | | | 14 | | | 21,051 | | | | 12 | |\n| Total revenue | 155,473 | | | | 100 | | | 179,180 | | | | 100 | | | 179,677 | | | | 100 | |\n| Operating costs and expenses: | | | | | | | | | | | | | | | | | | | | |\n| Cost of revenue | 4,783 | | | | 3 | | | 5,461 | | | | 3 | | | 4,494 | | | | 3 | |\n| Marketing and advertising | 57,789 | | | | 37 | | | 71,660 | | | | 40 | | | 69,732 | | | | 39 | |\n| Customer care and enrollment | 30,282 | | | | 19 | | | 35,099 | | | | 20 | | | 42,745 | | | | 24 | |\n| Technology and content | 21,406 | | | | 14 | | | 32,579 | | | | 18 | | | 40,390 | | | | 22 | |\n| General and administrative | 26,169 | | | | 17 | | | 29,235 | | | | 16 | | | 27,549 | | | | 15 | |\n| Amortization of intangible assets | 1,615 | | | | 1 | | | 1,414 | | | | 1 | | | 1,529 | | | | 1 | |\n| Total operating costs and expenses | 142,044 | | | | 91 | | | 175,448 | | | | 98 | | | 186,439 | | | | 104 | |\n| Income from operations | 13,429 | | | | 9 | | | 3,732 | | | | 2 | | | (6,762 | | ) | | (4 | ) |\n| Other income (expense), net | 23 | | | | 0 | | | (92 | | ) | | 0 | | | (98 | | ) | | 0 | |\n| Income (loss) before provision for income taxes | 13,452 | | | | 9 | | | 3,640 | | | | 2 | | | (6,860 | | ) | | (4 | ) |\n| Provision for income taxes | 6,370 | | | | 4 | | | 1,917 | | | | 1 | | | 9,345 | | | | 5 | |\n| Net income (loss) | $ | 7,082 | | | 5 | % | | $ | 1,723 | | | 1 | % | | $ | (16,205 | ) | | (9 | )% |\n\n","source":"EHTH\/10-K\/0001333493-15-000016"} {"title":"Revenue","text":"2014 compared to 2013\u2014Commission revenue increased $5.2 million, or 3%, in the year ended December 31, 2014 compared to the year ended December 31, 2013, primarily due to a\u00a0$8.1 million increase in Medicare-related commission revenue, partially offset by a $2.8 million decrease in non-Medicare plan commission revenue, consisting primarily of individual and family health insurance commission revenue. \u00a0The increase in Medicare related commission revenue is due to increased Medicare estimated membership for the year ended December 31, 2014 compared to the year ended December 31, 2013. The decrease in non-Medicare plan related commission revenue is primarily due to decreased individual and family plan estimated membership for the year ended December 31, 2014 compared to the year ended December 31, 2013.Other revenue decreased $4.7 million, or 18%, in the year ended December 31, 2014 compared to the year ended December 31, 2013, due primarily to a $5.4 million decrease in online sponsorship and advertising revenue, partially offset by a $0.5 million increase in technology licensing revenue.We expect commission revenue to decline in absolute dollars in 2015 compared to 2014, primarily as a result of a decrease in non-Medicare plan related commission revenue, partially offset by a continued increase in Medicare plan related commission revenue. We expect other revenue to decline in absolute dollars in 2015 compared to 2014, primarily due to a continued decrease in online sponsorship and advertising revenue.2013 compared to 2012\u2014Commission revenue increased $22.7 million, or 17%, in the year ended December 31, 2013 compared to the year ended December 31, 2012, due to a $13.8 million increase in non-Medicare plan related commission revenue, consisting primarily of individual and family health insurance commission revenue and ancillary product commission revenue, and an\u00a0$8.9 million increase in Medicare plan related commission revenue.\u00a0The increase in revenue of both Medicare plan related and non-Medicare plan related commission revenue is due to increased membership for the year ended December 31, 2013 compared to the year ended December 31, 2012.Other revenue increased $1.0 million, or 4%, in the year ended December 31, 2013 compared to the year ended December 31, 2012, due primarily to a $1.7 million increase in online sponsorship and advertising revenue and a $0.5 million increase in technology licensing revenue, partially offset by a $1.2 million decrease in revenue related to our Medicare lead referral revenue. \u00a0The increase in online sponsorship and advertising revenue was primarily related to individual and family health insurance plan carriers. The decrease in lead referral revenue was the result of our strategic decision to reduce the number of Medicare leads sold to third parties and to instead act as a health insurance agent to those leads.","markdown_table":"\n\n| | | | | | | | | | | | | | | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | Year Ended | | | | Change | | | | | | | Year Ended | | | | Change | | | | | | | Year Ended | | |\n| | December 31, 2012 | | | | $ | | | | % | | | December 31, 2013 | | | | $ | | | | % | | | December 31, 2014 | | |\n| Commission | $ | 130,663 | | | $ | 22,720 | | | 17 | % | | $ | 153,383 | | | $ | 5,243 | | | 3 | % | | $ | 158,626 | |\n| Percentage of total revenue | 84 | | % | | | | | | | | | 86 | | % | | | | | | | | | 88 | | % |\n| Other | 24,810 | | | | 987 | | | | 4 | % | | 25,797 | | | | (4,746 | | ) | | (18 | )% | | 21,051 | | |\n| Percentage of total revenue | 16 | | % | | | | | | | | | 14 | | % | | | | | | | | | 12 | | % |\n| Total revenue | $ | 155,473 | | | $ | 23,707 | | | 15 | % | | $ | 179,180 | | | $ | 497 | | | \u2014 | % | | $ | 179,677 | |\n\n","source":"EHTH\/10-K\/0001333493-15-000016"} {"title":"Cost of Revenue","text":"2014 compared to 2013\u2014Cost of revenue decreased $1.0 million, or 18%, in the year ended December 31, 2014 compared to the year ended December 31, 2013, due primarily to a decrease in amortization expense associated with the consideration we paid to a broker partner in connection with the transfer of several Medicare plan books-of-business to us whereby we became the broker of record on the underlying policies. \u00a02013 compared to 2012\u2014Cost of revenue increased $0.7 million, or 14%, in the year ended December 31, 2013 compared to the year ended December 31, 2012, \u00a0due primarily to an increase in amortization expense associated with the consideration we paid to a broker partner in connection with the transfer of several Medicare plan books-of-business to us whereby we became the broker of record on the underlying policies.","markdown_table":"\n\n| | | | | | | | | | | | | | | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | Year Ended | | | | Change | | | | | | | Year Ended | | | | Change | | | | | | | Year Ended | | |\n| | December 31, 2012 | | | | $ | | | | % | | | December 31, 2013 | | | | $ | | | | % | | | December 31, 2014 | | |\n| Cost of revenue | $ | 4,783 | | | $ | 678 | | | 14 | % | | $ | 5,461 | | | $ | (967 | ) | | (18 | )% | | $ | 4,494 | |\n| Percentage of total revenue | 3 | | % | | | | | | | | | 3 | | % | | | | | | | | | 3 | | % |\n\n","source":"EHTH\/10-K\/0001333493-15-000016"} {"title":"Marketing and Advertising","text":"2014\u00a0compared to 2013\u2014Marketing and advertising expenses decreased $1.9 million, or 3%, in the year ended December 31, 2014 compared to the year ended December 31, 2013, \u00a0primarily due to a decrease of $4.1 million in fees we pay to marketing partners for referrals that result in the submission of a health insurance application on our website and a decrease of $1.8 million in compensation, benefits, stock-based compensation and other personnel costs, partially offset by an increase of $2.5 million in online advertising costs and an increase of $0.4 million in\u00a0other direct marketing costs.\u00a0We expect our marketing and advertising expenses to increase in absolute dollars in 2015 compared to 2014 due primarily to increased variable advertising costs associated with the second open enrollment period for individual and family health insurance plans, which ended on February 15, 2015, and the upcoming open enrollment periods for individual and family health insurance and Medicare-related health insurance, which are scheduled to commence on November 1, 2015 and October 15, 2015, respectively, partially offset by a decrease in compensation and benefits due to the reduction in force announced in March 2015.2013\u00a0compared to 2012\u2014Marketing and advertising expenses increased $13.9 million, or 24%, in the year ended December 31, 2013 compared to the year ended December 31, 2012, primarily due to an increase of $6.6 million in fees we pay to marketing partners for referrals that result in the submission of a health insurance application on our website, an increase of $2.7 million in online advertising costs, and an increase of $1.8 million in\u00a0direct marketing costs.\u00a0Also contributing to the increase was an increase of $2.0 million in compensation, benefits, stock-based compensation and other personnel costs associated with an increase in employee headcount.","markdown_table":"\n\n| | | | | | | | | | | | | | | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | Year Ended | | | | Change | | | | | | | Year Ended | | | | Change | | | | | | | Year Ended | | |\n| | December 31, 2012 | | | | $ | | | | % | | | December 31, 2013 | | | | $ | | | | % | | | December 31, 2014 | | |\n| Marketing and advertising | $ | 57,789 | | | $ | 13,871 | | | 24 | % | | $ | 71,660 | | | $ | (1,928 | ) | | (3 | )% | | $ | 69,732 | |\n| Percentage of total revenue | 37 | | % | | | | | | | | | 40 | | % | | | | | | | | | 39 | | % |\n\n","source":"EHTH\/10-K\/0001333493-15-000016"} {"title":"Customer Care and Enrollment","text":"2014\u00a0compared to 2013\u2014Customer care and enrollment expenses increased $7.6 million, or 22%, in the year ended December 31, 2014 compared to the year ended December 31, 2013, due primarily to additional customer care center personnel hired in connection with the open enrollment periods for individual and family health insurance and Medicare-related health insurance. As a result, compensation, benefits, stock-based compensation, licensing and other personnel costs increased $7.2 million.We expect customer care and enrollment expenses to significantly decrease in absolute dollars in 2015 compared to 2014 as a result of a decrease in compensation and benefits due to the reduction in force announced in March 2015, partially offset by the cost of seasonal customer care center staffing necessary to handle the volume of applications during the upcoming open enrollment periods for individual and family health insurance and Medicare-related health insurance, which are scheduled to commence on November 1, 2015 and October 15, 2015, respectively.2013\u00a0compared to 2012\u2014Customer care and enrollment expenses increased $4.8 million, or 16%, in the year ended December 31, 2013 compared to the year ended December 31, 2012, due primarily to additional customer care center personnel hired to service the increased enrollment in individual and family health insurance plans and Medicare-related health insurance plans. As a result, compensation, benefits, stock-based compensation, licensing and other personnel costs increased $4.2 million.","markdown_table":"\n\n| | | | | | | | | | | | | | | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | Year Ended | | | | Change | | | | | | | Year Ended | | | | Change | | | | | | | Year Ended | | |\n| | December 31, 2012 | | | | $ | | | | % | | | December 31, 2013 | | | | $ | | | | % | | | December 31, 2014 | | |\n| Customer care and enrollment | $ | 30,282 | | | $ | 4,817 | | | 16 | % | | $ | 35,099 | | | $ | 7,646 | | | 22 | % | | $ | 42,745 | |\n| Percentage of total revenue | 19 | | % | | | | | | | | | 20 | | % | | | | | | | | | 24 | | % |\n\n","source":"EHTH\/10-K\/0001333493-15-000016"} {"title":"Technology and Content","text":"2014\u00a0compared to 2013\u2014Technology and content expenses increased $7.8 million, or 24%, in the year ended December 31, 2014 compared to the year ended December 31, 2013, due primarily to an increase of $6.9 million in compensation, benefits, stock-based compensation, and other personnel costs, as a result of an increase in technology and content personnel. The remainder of the increase is due to increased spending to support website operations and increases in data center infrastructure maintenance costs and depreciation expense. We expect technology and content expenses to decrease in absolute dollars in 2015 compared in 2014 as a result of a decrease in compensation and benefits due to the reduction in force announced in March 2015. 2013\u00a0compared to 2012\u2014Technology and content expenses increased $11.2 million, or 52%, in the year ended December 31, 2013 compared to the year ended December 31, 2012, due primarily to an increase of $8.9 million in compensation, benefits, stock-based compensation, and other personnel costs, as a result of an increase in technology and content personnel. Additionally, data center infrastructure maintenance costs and depreciation expense increased\u00a0$0.7 million and $0.5 million, respectively. The remainder of the increase is due to increased spending to support website operations.","markdown_table":"\n\n| | | | | | | | | | | | | | | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | Year Ended | | | | Change | | | | | | | Year Ended | | | | Change | | | | | | | Year Ended | | |\n| | December 31, 2012 | | | | $ | | | | % | | | December 31, 2013 | | | | $ | | | | % | | | December 31, 2014 | | |\n| Technology and content | $ | 21,406 | | | $ | 11,173 | | | 52 | % | | $ | 32,579 | | | $ | 7,811 | | | 24 | % | | $ | 40,390 | |\n| Percentage of total revenue | 14 | | % | | | | | | | | | 18 | | % | | | | | | | | | 22 | | % |\n\n","source":"EHTH\/10-K\/0001333493-15-000016"} {"title":"General and Administrative","text":"2014\u00a0compared to 2013\u2014General and administrative expenses decreased $1.7 million, or 6%, in the year ended December 31, 2014 compared to the year ended December 31, 2013, due primarily to the non-achievement of performance bonuses for fiscal 2014 and the reversal of stock-based compensation expense associated with performance-based restricted stock units granted to executives within the general and administrative group as a result of related financial metrics not being achieved for the year ended December 31, 2014.We expect our general and administrative expenses to increase in absolute dollars in\u00a02015 compared to 2014 as a result of the accrual of annual performance bonuses for fiscal 2015 and anticipated increases in both legal fees and stock-based compensation expense, partially offset by a decrease in compensation and benefits due to the reduction in force announced in March 2015.2013\u00a0compared to 2012\u2014General and administrative expenses increased $3.1 million, or 12%, in the year ended December 31, 2013 compared to the year ended December 31, 2012, due primarily to an increase of $3.0 million in compensation,\u00a0benefits, stock-based compensation and other personnel costs as a result of an increase in general and administrative personnel as we add infrastructure to support company growth.","markdown_table":"\n\n| | | | | | | | | | | | | | | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | | | | | | | | | | | | | | | | | | | | | | | | |\n| | Year Ended | | | | Change | | | | | | | Year Ended | | | | Change | | | | | | | Year Ended | | |\n| | December 31, 2012 | | | | $ | | | | % | | | December 31, 2013 | | | | $ | | | | % | | | December 31, 2014 | | |\n| General and administrative | $ | 26,169 | | | $ | 3,066 | | | 12 | % | | $ | 29,235 | | | $ | (1,686 | ) | | (6 | )% | | $ | 27,549 | |\n| Percentage of total revenue | 17 | | % | | | | | | | | | 16 | | % | | | | | | | | | 15 | | % |\n\n","source":"EHTH\/10-K\/0001333493-15-000016"} {"title":"Amortization of Intangible Assets","text":"2014\u00a0compared to 2013\u2014Amortization expense related to intangible assets purchased through our acquisition of PlanPrescriber increased for the year ended December 31, 2014 compared to the year ended December 31, 2013 due to a $0.1 impairment charge recorded during the fourth quarter of 2014 related to certain acquired intangible assets that will not be utilized in future periods.We expect a slight decrease in the amortization of intangible assets in\u00a02015 compared to 2014.2013\u00a0compared to 2012\u2014Amortization expense related to intangible assets purchased through our acquisition of PlanPrescriber decreased for the year ended December 31, 2013 compared to the year ended December 31, 2012 due to certain acquired intangible assets becoming fully amortized in May 2012.","markdown_table":"\n\n| | | | | | | | | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | | | | | | | | | | | | | | | | | | |\n| | Year Ended | | | | Change | | | | Year Ended | | | | Change | | | | Year Ended | | |\n| | December 31, 2012 | | | | $ | | | | December 31, 2013 | | | | $ | | | | December 31, 2014 | | |\n| Amortization of intangible assets | $ | 1,615 | | | $ | (201 | ) | | $ | 1,414 | | | $ | 115 | | | $ | 1,529 | |\n| Percentage of total revenue | 1 | | % | | | | | | 1 | | % | | | | | | 1 | | % |\n\n","source":"EHTH\/10-K\/0001333493-15-000016"} {"title":"Other Income (Expense), Net","text":"Other income (expense), net, in 2012, \u00a02013 and 2014 primarily consisted of interest income earned on our invested cash, \u00a0cash equivalents and marketable securities balances, offset by administrative bank fees, investment management fees and interest expense on capital lease obligations.\u00a0\u00a02014\u00a0compared to\u00a02013\u00a0and 2013\u00a0compared to 2012\u2014Other income (expense), remained relatively flat in 2014 compared to 2013 and net decreased in 2013 compared to 2012 due primarily to a decrease in investment interest income due to lower cash balances and declining average yields as well as higher bank fees. We expect other income (expense), net to be flat in 2015 compared to 2014.","markdown_table":"\n\n| | | | | | | | | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | | | | | | | | | | | | | | | | | | |\n| | Year Ended | | | | Change | | | | Year Ended | | | | Change | | | | Year Ended | | |\n| | December 31, 2012 | | | | $ | | | | December 31, 2013 | | | | $ | | | | December 31, 2014 | | |\n| Other income (expense), net | $ | 23 | | | $ | (115 | ) | | $ | (92 | ) | | $ | (6 | ) | | $ | (98 | ) |\n| Percentage of total revenue | \u2014 | | % | | | | | | \u2014 | | % | | | | | | \u2014 | | % |\n\n","source":"EHTH\/10-K\/0001333493-15-000016"} {"title":"Provision for Income Taxes","text":"2014 compared to 2013\u2014In 2014, we recorded a provision for income taxes of $9.3 million, representing an effective tax rate of (136.25%). Our effective tax rate changed from 52.7% in 2013 to (136.25%) in 2014 due primarily to valuation allowance adjustments in 2014. \u00a0We expect our provision for income taxes to decrease in 2015 compared to 2014.2013 compared to 2012\u2014In 2013, we recorded a provision for income taxes of $1.9 million, representing an effective tax rate of 52.7%. Our effective tax rate in 2013 was higher than our effective tax rate in 2012 of 47.4%, due primarily to a decrease in pre-tax income, which resulted in\u00a0non-deductible expenses having a more significant impact on the effective tax rate during 2013.","markdown_table":"\n\n| | | | | | | | | | | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | | | | | | | | | | | | | | | | | | |\n| | Year Ended | | | | Change | | | | Year Ended | | | | Change | | | | Year Ended | | |\n| | December 31, 2012 | | | | $ | | | | December 31, 2013 | | | | $ | | | | December 31, 2014 | | |\n| Provision for income taxes | $ | 6,370 | | | $ | (4,453 | ) | | $ | 1,917 | | | $ | 7,428 | | | $ | 9,345 | |\n| Percentage of total revenue | 4 | | % | | | | | | 1 | | % | | | | | | 5 | | % |\n\n","source":"EHTH\/10-K\/0001333493-15-000016"} {"title":"Liquidity and Capital Resources","text":"(1)Cumulative balances at December 31, 2013\u00a0consist of shares repurchased in connection with our previous stock repurchase plans announced in 2013, 2012, 2011, 2010 and 2008. \u00a0(2)Cumulative balances at December 31, 2014\u00a0consist of shares repurchased in connection with our stock repurchase programs announced on March 31, 2014, as well as a previous stock repurchase plan announced in 2013, 2012, 2011, 2010 and 2008. \u00a0(3)Average price paid per share includes commissions.In addition to the shares repurchased under our repurchase programs as of December 31, 2014, we have in treasury 0.3 million shares that were surrendered by employees to satisfy tax withholdings due in connection with the vesting of certain restricted stock units. As of December 31, 2013\u00a0and 2014, we had a total of 9.5 million shares and 10.9 million shares, respectively, held in treasury.\u00a0The following table presents a summary of our cash flows for the years ended December 31, \u00a02012, \u00a02013 and 2014 (in thousands):","markdown_table":"\n\n| | | | | | | | | | | |\n| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |\n| | | | | | | | | | | |\n| | Total Number of Shares Purchased | | | Average Price Paid per Share\u00a0(3) | | | | Amount of Repurchase | | |\n| Cumulative balance at December\u00a031, 2013\u00a0(1) | 9,309,269 | | | $ | 16.11 | | | $ | 149,998 | |\n| Repurchases of common stock | 1,354,619 | | | $ | 36.91 | | | 50,000 | | |\n| Cumulative balance at December 31, 2014\u00a0(2) | 10,663,888 | | | $ | 18.75 | | | $ | 199,998 | |\n\n","source":"EHTH\/10-K\/0001333493-15-000016"}