News Column

BB&T CORP - 10-Q - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

July 28, 2014

BB&T is a financial holding company organized under the laws of North Carolina. BB&T conducts operations through its principal bank subsidiary, Branch Bank, and its nonbank subsidiaries. Forward-Looking Statements This Quarterly Report on Form 10-Q contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995, regarding the financial condition, results of operations, business plans and the future performance of BB&T that are based on the beliefs and assumptions of the management of BB&T and the information available to management at the time that these disclosures were prepared. Words such as "anticipates," "believes," "estimates," "expects," "forecasts," "intends," "plans," "projects," "may," "will," "should," "could," and other similar expressions are intended to identify these forward-looking statements. Such statements are subject to factors that could cause actual results to differ materially from anticipated results. Such factors include, but are not limited to, the following:



general economic or business conditions, either nationally or regionally, may

be less favorable than expected, resulting in, among other things, a

deterioration in credit quality and/or a reduced demand for credit, insurance

or other services;



disruptions to the credit and financial markets, either nationally or globally,

including the impact of a downgrade of U.S. government obligations by one of

the credit ratings agencies and the adverse effects of the ongoing sovereign

debt crisis in Europe;



changes in the interest rate environment and cash flow reassessments may reduce

NIM and/or the volumes and values of loans made or held as well as the value of

other financial assets held;



competitive pressures among depository and other financial institutions may

increase significantly;



legislative, regulatory or accounting changes, including changes resulting from

the adoption and implementation of the Dodd-Frank Act may adversely affect the

businesses in which BB&T is engaged;



local, state or federal taxing authorities may take tax positions that are

adverse to BB&T;



a reduction may occur in BB&T's credit ratings;

adverse changes may occur in the securities markets;

competitors of BB&T may have greater financial resources and develop products

that enable them to compete more successfully than BB&T and may be subject to

different regulatory standards than BB&T;



natural or other disasters could have an adverse effect on BB&T in that such

events could materially disrupt BB&T's operations or the ability or willingness

of BB&T's customers to access the financial services BB&T offers;



costs or difficulties related to the integration of the businesses of BB&T and

its merger partners may be greater than expected;



expected cost savings or revenue growth associated with completed mergers and

acquisitions may not be fully realized or realized within the expected time

frames;



deposit attrition, customer loss and/or revenue loss following completed

mergers and acquisitions may be greater than expected;



cyber-security risks, including "denial of service," "hacking" and "identity

theft," that could adversely affect our business and financial performance, or

our reputation; and



failure to implement part or all of the Company's new ERP system could result

in impairment charges that adversely impact BB&T's financial condition and

results of operations and could result in significant additional costs to BB&T.

45 Table of Contents

These and other risk factors are more fully described in this report and in BB&T's Annual Report on Form 10-K for the year ended December 31, 2013 under the sections entitled "Item 1A. Risk Factors" and from time to time, in other filings with the SEC. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this report. Actual results may differ materially from those expressed in or implied by any forward-looking statements. Except to the extent required by applicable law or regulation, BB&T undertakes no obligation to revise or update publicly any forward-looking statements for any reason. Regulatory Considerations

BB&T and its affiliates are subject to numerous examinations by federal and state banking regulators, as well as the SEC, FINRA, and various state insurance and securities regulators. BB&T has from time to time received requests for information from regulatory authorities in various states, including state insurance commissions and state attorneys general, securities regulators and other regulatory authorities, concerning their business practices. Such requests are considered incidental to the normal conduct of business. Refer to BB&T's Annual Report on Form 10-K for the year ended December 31, 2013 for additional disclosures with respect to laws and regulations affecting BB&T.



Enhanced Prudential Standards for Bank Holding Companies and Foreign Banking

The FRB has adopted amendments to Regulation YY to implement certain components of the enhanced prudential standards required to be established under Section 165 of the Dodd-Frank Act. The enhanced prudential standards include risk-based and leverage capital requirements, liquidity standards, requirements for overall risk management, stress-test requirements, and a 15-to-1 debt-to-equity limit for companies that the Financial Stability Oversight Counsel has determined pose a grave threat to financial stability. The amendments also establish risk-committee requirements and capital stress-testing requirements for certain BHCs and foreign banking organizations with total consolidated assets of $10 billion or more. The amendments became effective on June 1, 2014, and BB&T is on schedule to comply with all subsections of subpart D by the end of 2014.



Foreign Account Tax Compliance Act and Conforming Regulations

In May 2014, the IRS issued Notice 2014-33 (the "Notice") regarding the Foreign Account Tax Compliance Act and its related withholding provisions. The Notice announces that calendar years 2014 and 2015 will be regarded as a transition period for purposes of IRS enforcement and administration with respect to the implementation of FATCA by withholding agents, foreign financial institutions and other entities with IRC chapter 4 responsibilities. The Notice also announces the IRS's intention to further amend the regulations under Sections 1441, 1442, 1471, and 1472 of the IRC. Prior to the IRS issuing these amendments, taxpayers may rely on the provisions of the Notice regarding the proposed amendments to the regulations. The transition period and other guidance described in the Notice are intended to facilitate an orderly transition for withholding agent and foreign financial institution compliance with FATCA's requirements and respond to comments regarding certain aspects of the regulations under chapters 3 and 4 of the IRC. BB&T expects to be in compliance with FATCA and its related provisions by the applicable effective dates. Critical Accounting Policies The accounting and reporting policies of BB&T are in accordance with GAAP and conform to the accounting and reporting guidelines prescribed by bank regulatory authorities. BB&T's financial position and results of operations are affected by management's application of accounting policies, including estimates, assumptions and judgments made to arrive at the carrying value of assets and liabilities and amounts reported for revenues and expenses. Different assumptions in the application of these policies could result in material changes in the consolidated financial position and/or consolidated results of operations and related disclosures. The more critical accounting and reporting policies include accounting for the ACL, determining fair value of financial instruments, intangible assets, costs and benefit obligations associated with pension and postretirement benefit plans, and income taxes. Understanding BB&T's accounting policies is fundamental to understanding the consolidated financial position and consolidated results of operations. Accordingly, the critical accounting policies are discussed in detail in "Management's Discussion and Analysis of Financial Condition and Results of Operations" in BB&T's Annual Report on Form 10-K for the year ended December 31, 2013. Significant accounting policies and changes in accounting principles and effects of new accounting pronouncements are discussed in detail in Note 1 in the "Notes to Consolidated Financial Statements" in BB&T's Annual Report on Form 10-K for the year ended December 31, 2013. There have been no changes to the significant accounting policies during 2014. Additional disclosures regarding the effects of new accounting pronouncements are included in Note 1 "Basis of Presentation" included herein. 46 Table of Contents Executive Summary Consolidated net income available to common shareholders for the second quarter of 2014 was $425 million, a decrease of $122 million compared to the same quarter of 2013. Financial results for the second quarter were negatively impacted by after-tax adjustments totaling $88 million, or $0.12 per diluted share, that were recorded in connection with the identification of potential exposures related to FHA-insured residential mortgage loans originated by BB&T, and in connection with certain new information that impacted a previously recorded income tax reserve. These adjustments are more fully described below. In June 2014, BB&T was notified that its FHA-insured loan origination process would be the subject of an audit survey by the HUD-OIG. While there are no findings at this time, in light of announcements made by other financial institutions related to the outcomes of similar audits and related matters and after further review of the exposure, an $85 million reserve was established, which had a $53 million negative impact on BB&T's after-tax results of operations. In the second quarter of 2014, BB&T also recognized a $33 million adjustment related to its 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. This adjustment had a $21 million negative impact on BB&T's after-tax results of operations. In June 2014, BB&T was also notified of a change in the Internal Revenue Service's stance related to an income tax position currently under examination. As a result, BB&T recognized a $14 million income tax adjustment in the second quarter of 2014. On a diluted per common share basis, earnings for the second quarter of 2014 were $0.58, compared to $0.77 for the same period in 2013. Excluding the impact of the previously described adjustments, diluted earnings per share for the second quarter of 2014 were $0.70. BB&T's results of operations for the second quarter of 2014 produced an annualized return on average assets of 1.04%, an annualized return on average risk-weighted assets of 1.37%, and an annualized return on average common shareholders' equity of 8.03%, compared to prior year ratios of 1.27%, 1.68% and 11.39%, respectively. Total revenues, which include net interest income on a FTE basis and noninterest income, were $2.3 billion for the second quarter of 2014, a decrease of $187 million compared to the second quarter of 2013. The decrease in total revenues included a $74 million decrease in FTE net interest income and a $113 million decrease in noninterest income. The decrease in FTE net interest income reflects a $108 million decrease in interest income, which primarily reflects lower yields on new loans, the continued runoff of higher yielding covered loans, and the sale of a consumer lending subsidiary during the fourth quarter of 2013. The decrease in interest income was partially offset by a $34 million decrease in funding costs compared to the same quarter of the prior year. NIM was 3.43%, down 27 basis points compared to the second quarter of 2013. The decrease in noninterest income reflects declines in mortgage banking income, net securities gains and other income totaling $82 million, $23 million, and $11 million, respectively. The decrease in mortgage banking income reflects a decline in the volume of residential mortgage loan production and sales and tighter margins. The decrease in net securities gains reflects gains in the earlier quarter that totaled $23 million. The $11 million decrease in other income primarily reflects increased write-downs on affordable housing investments and decreased income from assets related to certain post-employment benefits, which is offset in personnel expense. The provision for credit losses, excluding covered loans, declined $96 million, or 53.6%, compared to the second quarter of 2013, due to improved credit quality. Net charge-offs, excluding covered loans, for the second quarter of 2014 were $98 million lower than the earlier quarter, a decline of 45.6%. Excluding the reserve for unfunded lending commitments, the reserve release was $39 million for the second quarter of 2014, compared to $61 million in the earlier quarter. Management currently expects minimal reserve release, if any, in the third quarter of 2014 and none thereafter unless credit improves substantially. Noninterest expense was $1.6 billion for the second quarter of 2014, an increase of $55 million compared to the second quarter of 2013. This increase reflects the impact of $118 million in adjustments related to the previously described FHA-insured loan exposures, which were partially offset by decreases in personnel expense, merger-related and restructuring charges and professional services totaling $35 million, $14 million and $13 million, respectively. The provision for income taxes was $173 million for the second quarter of 2014, compared to $221 million for the same quarter of the prior year. This produced an effective tax rate for the second quarter of 2014 of 26.6%, compared to 27.7% for the earlier quarter. The decrease in the effective tax rate primarily reflects a higher level of federal tax credits and permanent tax differences relative to pre-tax earnings, which was partially offset by the tax charge

previously mentioned. 47 Table of Contents NPAs, excluding covered foreclosed real estate, decreased $70 million compared to March 31, 2014, reflecting declines in NPLs and foreclosed property totaling $62 million and $8 million, respectively. At June 30, 2014, nonperforming loans and leases represented 0.70% of total loans and leases, excluding covered assets, compared to 0.78% at March 31, 2014. Average loans held for investment for the second quarter of 2014 totaled $117.1 billion, an increase of $2.1 billion, or 7.2% on an annualized basis, compared to the first quarter of 2014. This increase was driven by growth in the commercial and industrial, sales finance and other lending subsidiaries portfolios of $962 million, $600 million and $317 million, respectively. Growth in average loans held for investment was negatively impacted by continued runoff in the covered loan portfolio of $135 million, or 28.9% on an annualized basis. Average deposits for the second quarter of 2014 totaled $129.6 billion, an increase of $3.9 billion, or an annualized 12.4%, compared to the first quarter of 2014. Deposit mix remained relatively stable, with average noninterest-bearing deposits increasing slightly to 28.3% of total average deposits for the second quarter of 2014, compared to 28.2% for the prior quarter. The cost of interest-bearing deposits was 0.26% for the second quarter of 2014, a decrease of one basis point from the prior quarter. Total shareholders' equity increased $1.2 billion compared to December 31, 2013. This increase was primarily driven by net income of $1.1 billion, net proceeds related to the issuance of equity awards totaling $248 million, and a net change in AOCI that totaled $187 million, which primarily reflects a net increase in unrealized gains on AFS securities. These increases were partially offset by common and preferred dividends totaling $336 million and $74 million, respectively. The Tier 1 common ratio, Tier 1 risk-based capital and total risk-based capital ratios were 10.2%, 12.0% and 14.3% at June 30, 2014, respectively. These risk-based capital ratios remain well above regulatory standards for well-capitalized banks. As of June 30, 2014, the Tier 1 common equity ratio was not required by the regulators and, therefore, was considered a non-GAAP measure. Refer to the section titled "Capital" herein for a discussion of how BB&T calculates and uses this measure in the evaluation of the Company. BB&T completed the acquisition of 21 retail branches in Texas during the second quarter of 2014, which resulted in the addition of $1.2 billion in deposits

and $112 million in loans.

Refer to BB&T's Annual Report on Form 10-K for the year ended December 31, 2013 for additional information with respect to BB&T's recent accomplishments and significant challenges. 48 Table of Contents



Analysis Of Results Of Operations

The following table sets forth selected financial ratios for the last five calendar quarters. Table 1 Annualized Performance Measures Three Months Ended (1) (2) 6/30/14 3/31/14 12/31/13 9/30/13 6/30/13 Rate of return on: Average assets 1.04 % 1.29 % 1.30 % 0.68 % 1.27 % Average common shareholders' equity 8.03 9.87 10.85 5.44 11.39 NIM (FTE) 3.43 3.52 3.56 3.68 3.70



(1) Includes the impact of after-tax adjustments totaling $88 million that were recorded in connection with the previously described

FHA-insured loan exposures and new information that impacted a previously recorded income tax reserve. (2) Includes the impact of an adjustment for uncertain income tax positions of $235 million related to a ruling issued by the U.S. Court

of Federal Claims on September 20, 2013 regarding the IRS's disallowance of tax deductions and foreign tax credits taken in

connection with a financing transaction entered into by BB&T in 2002.

Consolidated net income available to common shareholders for the first six months of 2014 totaled $926 million, compared to $757 million earned during the corresponding period of the prior year. Financial results for the first six months of 2014 were negatively impacted by the previously described after-tax adjustments totaling $88 million, while the financial results for the corresponding period of the prior year were negatively impacted by an adjustment to the provision for income taxes totaling $281 million. On a diluted per common share basis, earnings for the first six months of 2014 were $1.27, compared to $1.06 earned during the first six months of 2013.



Net Interest Income and NIM

Second Quarter 2014 compared to Second Quarter 2013

Net interest income on a FTE basis was $1.4 billion for the second quarter of 2014, a decrease of 5.1% compared to the same period in 2013. The decrease in net interest income was driven by a $108 million decrease in interest income, partially offset by a $34 million decrease in funding costs compared to the same quarter of the prior year. Average earning assets for the second quarter of 2014 increased $3.9 billion, or 2.5%, compared to the same period of 2013, while average interest-bearing liabilities decreased $1.7 billion, or 1.4%. The NIM was 3.43% for the second quarter of 2014, compared to 3.70% for the same period of 2013. The 27 basis point decline in the NIM was primarily driven by lower earning asset yields and continued runoff of covered assets, partially offset by improved funding costs.



The annualized FTE yield on the average securities portfolio for the second quarter of 2014 was 2.43%, which was six basis points lower than the earlier period.

The annualized FTE yield for the total loan portfolio for the second quarter of 2014 was 4.45%, compared to 4.90% in the second quarter of 2013. The decrease in the FTE yield on the total loan portfolio was primarily driven by lower yields on new loans, the continued runoff of higher yielding covered loans, and the sale of a consumer lending subsidiary during the fourth quarter of 2013. The annualized cost of interest-bearing deposits for the second quarter of 2014 was 0.26%, compared to 0.32% for the same period in the prior year. This decrease was driven by a 20 basis point improvement in the cost of certificates and other time deposits and an improvement in deposit mix. For the second quarter of 2014, the average annualized FTE rate paid on short-term borrowings was 0.16%, compared to 0.18% during the second quarter of 2013. The average annualized rate paid on long-term debt for the second quarter of 2014 was 2.38%, compared to 3.23% for the same period in 2013. This decrease was primarily the result of lower rates on new issues during the last twelve months. Management expects NIM to decrease by approximately five to ten basis points during the third quarter of 2014, mainly due to covered asset runoff. Net interest income for the third quarter of 2014 is expected to be relatively flat compared to the current quarter. 49 Table of Contents



Six Months of 2014 compared to Six Months of 2013

Net interest income on a FTE basis was $2.8 billion for the six months ended June 30, 2014, a decrease of $150 million, or 5.2%, compared to the same period in 2013. The decrease in net interest income reflects a $223 million decrease in interest income, which was partially offset by a $73 million decline in funding costs. For the six months ended June 30, 2014, average earning assets increased $2.9 billion, or 1.8%, compared to the same period of 2013, while average interest-bearing liabilities decreased $2.7 billion, or 2.2%. The NIM was 3.47% for the six months ended June 30, 2014, compared to 3.73% for the same period of 2013. The 26 basis point decrease in the NIM was due to lower yields on new earning assets and runoff of covered assets, partially offset by lower funding costs. The annualized FTE yield on the average securities portfolio for the six months ended June 30, 2014 was 2.46%, a decrease of two basis points compared to the annualized yield earned during the same period of 2013. The annualized FTE yield for the total loan portfolio for the six months ended June 30, 2014 was 4.51%, compared to 4.97% in the corresponding period of 2013. The decrease in the FTE yield on the total loan portfolio was primarily due to lower yields on new loans due to the low interest-rate environment and the runoff of covered loans.



The average annualized cost of interest-bearing deposits for the six months ended June 30, 2014 was 0.26%, compared to 0.34% for the same period in the prior year, reflecting improvements in mix.

For the six months ended June 30, 2014, the average annualized FTE rate paid on short-term borrowings was 0.13%, a five basis point decline from the rate paid for the same period of 2013. The average annualized rate paid on long-term debt for the six months of 2014 was 2.44%, compared to 3.23% for the same period in 2013. The decrease in the average rate paid on long-term debt primarily reflects lower rates on new debt issuances that have occurred over the last twelve months. The following tables set forth the major components of net interest income and the related annualized yields and rates for the three and six months ended June 30, 2014 compared to the same periods in 2013, as well as the variances between the periods caused by changes in interest rates versus changes in volumes. Changes attributable to the mix of assets and liabilities have been allocated proportionally between the changes due to rate and the changes due to volume. 50 Table of Contents Table 2-1



FTE Net Interest Income and Rate / Volume Analysis (1)

Three Months Ended June 30, 2014 and 2013 Average Balances (7) Annualized Yield/Rate

Income/Expense Increase Change due to 2014 2013 2014 2013 2014 2013 (Decrease) Rate Volume (Dollars in millions) Assets



Total securities, at amortized cost (2)

U.S. Treasury $ 1,932 $ 360 1.50 % 0.23 % $ 7 $ - $ 7 $ 4$ 3 GSE 5,604 4,872 2.08 2.01 29 25 4 1 3 MBS issued by GSE 29,627 27,803 1.97 1.97 146 138 8 - 8 States and political subdivisions 1,831 1,836 5.78 5.81 27 26 1 1 - Non-agency MBS 250 289 7.65 5.57 4 4 - 1 (1) Other 464 466 1.46 1.51 2 1 1 1 - Covered 948 1,093 13.56 12.48 32 34 (2) 3 (5) Total securities 40,656 36,719 2.43 2.49 247 228 19 11 8 Other earning assets (3) 1,977 2,626 1.60 1.40 8 9 (1) 1 (2)



Loans and leases, net of unearned income (4)(5)

Commercial: Commercial and industrial 39,397 38,359 3.38 3.67 332 351 (19) (28) 9 CRE - income producing properties 10,382 9,864 3.50 3.75 90 92 (2) (7) 5 CRE - construction and development 2,566 2,668 3.57 3.82 23 26 (3) (2) (1) Direct retail lending (6) 7,666 15,936 4.24 4.67 80 186 (106) (16) (90) Sales finance 10,028 8,520 2.67 3.25 67 69 (2) (13) 11 Revolving credit 2,362 2,268 8.64 8.48 51 48 3 1 2 Residential mortgage (6) 32,421 23,391 4.22 4.21 342 246 96 1 95 Other lending subsidiaries 10,553 10,407 9.26 10.54 244 274 (30) (34) 4 Total loans and leases held for investment (excluding covered loans) 115,375 111,413 4.27 4.64 1,229 1,292 (63) (98) 35 Covered 1,739 2,858 16.77 16.95 73 121 (48) (1) (47) Total loans and leases held for investment 117,114 114,271 4.46 4.95 1,302 1,413 (111) (99) (12) LHFS 1,396 3,581 4.21 3.42 15 30 (15) 6 (21) Total loans and leases 118,510 117,852 4.45 4.90 1,317 1,443 (126) (93) (33) Total earning assets 161,143 157,197 3.91 4.28 1,572 1,680 (108) (81) (27) Nonearning assets 23,922 25,311 Total assets $ 185,065$ 182,508 Liabilities and Shareholders' Equity Interest-bearing deposits: Interest-checking $ 18,406$ 19,276 0.06 0.08 3 3 - - - Money market and savings 48,965 48,140 0.14 0.13 18 15 3 3 - Certificates and other time deposits 25,010 28,034 0.64 0.84 39 60 (21) (15) (6) Foreign deposits - interest-bearing 584 947 0.08 0.09 - - - - - Total interest-bearing deposits 92,965 96,397 0.26 0.32 60 78 (18) (12) (6) Short-term borrowings 2,962 5,118 0.16 0.18 1 2 (1) - (1) Long-term debt 22,206 18,287 2.38 3.23 133 148 (15) (43) 28 Total interest-bearing liabilities 118,133 119,802 0.66 0.76 194 228 (34) (55) 21 Noninterest-bearing deposits 36,634 33,586 Other liabilities 6,422 7,331 Shareholders' equity 23,876 21,789 Total liabilities and shareholders' equity $ 185,065$ 182,508

Average interest rate spread 3.25 % 3.52 % NIM/net interest income 3.43 % 3.70 % $ 1,378$ 1,452$ (74)$ (26)$ (48) Taxable-equivalent adjustment $ 35$ 37

(1) Yields are stated on a FTE basis assuming tax rates in effect for the periods presented. (2) Total securities include AFS securities 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) During the first quarter of 2014, $8.3 billion in loans were transferred from direct retail lending to residential mortgage. (7) Excludes basis adjustments for fair value hedges. 51 Table of Contents Table 2-2



FTE Net Interest Income and Rate / Volume Analysis (1)

Six Months Ended June 30, 2014 and 2013 Average Balances (7) Annualized Yield/Rate

Income/Expense Increase Change due to 2014 2013 2014 2013 2014 2013 (Decrease) Rate Volume (Dollars in millions) Assets



Total securities, at amortized cost (2)

U.S. Treasury $ 1,784 $ 332 1.50 % 0.23 % $ 13 $ - $ 13$ 7$ 6 GSE 5,603 4,547 2.08 2.00 58 46 12 2 10 MBS issued by GSE 29,484 28,169 2.01 1.95 296 275 21 9 12 States and political subdivisions 1,832 1,837 5.78 5.80 53 53 - - - Non-agency MBS 255 294 7.32 5.57 9 8 1 2 (1) Other 470 472 1.51 1.46 4 3 1 1 - Covered 960 1,109 13.21 12.84 63 71 (8) 2 (10) Total securities 40,388 36,760 2.46 2.48 496 456 40 23 17 Other earning assets (3) 1,927 2,731 2.43 1.53 23 21 2 9 (7)



Loans and leases, net of unearned income (4)(5)

Commercial: Commercial and industrial 38,919 38,139 3.40 3.72 657 704 (47) (61) 14 CRE - income producing properties 10,338 9,863 3.54 3.79 181 186 (5) (14) 9 CRE - construction and development 2,511 2,733 3.60 3.85 45 52 (7) (3) (4) Direct retail lending (6) 8,503 15,847 4.26 4.70 179 370 (191) (32) (159) Sales finance 9,729 8,181 2.75 3.38 133 137 (4) (28) 24 Revolving credit 2,359 2,273 8.71 8.49 102 96 6 3 3 Residential mortgage (6) 31,533 23,504 4.24 4.23 667 497 170 1 169 Other lending subsidiaries 10,395 10,198 9.33 10.68 482 541 (59) (69) 10 Total loans and leases held for investment (excluding covered loans) 114,287 110,738 4.31 4.69 2,446 2,583 (137) (203) 66 Covered 1,806 2,995 17.74 17.23 159 256 (97) 7 (104) Total loans and leases held for investment 116,093 113,733 4.52 5.02 2,605 2,839 (234) (196) (38) LHFS 1,354 3,686 4.33 3.35 30 61 (31) 14 (45) Total loans and leases 117,447 117,419 4.51 4.97 2,635 2,900 (265) (182) (83) Total earning assets 159,762 156,910 3.97 4.33 3,154 3,377 (223) (150) (73) Nonearning assets 23,977 25,352 Total assets $ 183,739$ 182,262 Liabilities and Shareholders' Equity Interest-bearing deposits: Interest-checking $ 18,510$ 19,720 0.07 0.09 6 8 (2) (1) (1) Money market and savings 48,866 48,285 0.14 0.14 33 33 - - - Certificates and other time deposits 23,481 28,481 0.69 0.87 81 123 (42) (22) (20) Foreign deposits - interest-bearing 795 668 0.07 0.10 - - - - - Total interest-bearing deposits 91,652 97,154 0.26 0.34 120 164 (44) (23) (21) Short-term borrowings 3,638 4,670 0.13 0.18 2 4 (2) (1) (1) Long-term debt 22,318 18,488 2.44 3.23 271 298 (27) (81) 54 Total interest-bearing liabilities 117,608 120,312 0.67 0.78 393 466 (73) (105) 32 Noninterest-bearing deposits 36,017 33,055 Other liabilities 6,543 7,342 Shareholders' equity 23,571 21,553 Total liabilities and shareholders' equity $ 183,739$ 182,262

Average interest rate spread 3.30 % 3.55 % NIM/net interest income 3.47 % 3.73 % $ 2,761$ 2,911$ (150)$ (45)$ (105) Taxable-equivalent adjustment $ 71$ 74

(1) Yields are stated on a FTE basis assuming tax rates in effect for the periods presented. (2) Total securities include AFS securities 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) During the first quarter of 2014, $8.3 billion in loans were transferred from direct retail lending to residential mortgage. (7) Excludes basis adjustments for fair value hedges. 52 Table of Contents



FDIC Loss Share Receivable and the Net Revenue Impact from Covered Assets

In connection with the Colonial acquisition, Branch Bank entered into loss sharing agreements with the FDIC that outline the terms and conditions under which the FDIC will reimburse Branch Bank for a portion of the losses incurred on certain loans, OREO, investment securities and other assets. Refer to BB&T's Annual Report on Form 10-K for the year ended December 31, 2013 for additional information regarding the loss sharing agreements. The following table presents the carrying amount of assets covered by each loss share agreement: Table 3 Covered Assets by Loss Share Agreement June 30, 2014 Commercial Single Family Total (Dollars in millions) Loans and leases $ 939 $ 714 $ 1,653 AFS securities 1,333 - 1,333 Other assets 63 35 98 Total covered assets $ 2,335 $ 749 $ 3,084



The commercial loss sharing agreement expires in the third quarter of 2014; however, Branch Bank must reimburse the FDIC for gains and recoveries, net of related expenses, through the third quarter of 2017.

The indemnification related to AFS securities is based upon a stipulated value less any paydowns, redemptions or maturities and totaled approximately $705 million at June 30, 2014. The securities are carried at fair value, which totaled $1.3 billion at June 30, 2014. As a result, any decline in fair value down to the stipulated amount would be offset at the applicable loss sharing percentage by reducing the liability to the FDIC should the securities be sold before October 1, 2017. Any further declines below the stipulated amount would not be subject to loss sharing.



The following table provides information related to the carrying amounts and fair values of the components of the FDIC loss share receivable (payable):

Table 4 FDIC Loss Share Receivable (Payable) June 30, 2014 December 31, 2013 Attributable to: Carrying Amount Fair Value Carrying Amount Fair Value (Dollars in millions) Covered loans $ 688 $ 356 $ 843 $ 464 Covered securities (576) (539) (565) (521) Aggregate loss calculation (120) (153) (104) (131) Total $ (8) $ (336) $ 174 $ (188) The decrease in the carrying amount attributable to covered loans was due to the receipt of cash from the FDIC and negative accretion due to the credit loss improvement, partially reduced by the offset to the provision for covered loans and the FDIC's share of losses on foreclosed property. The change in the carrying amount attributable to covered securities was due to the offsets to the accretion of the discount and the amount of changes in unrealized gains of covered securities. The change in the carrying amount attributable to the aggregate loss calculation is primarily due to accretion of the expected payment, which is included in "Accretion due to credit loss improvement" below. The fair values were based upon a discounted cash flow methodology that was consistent with the acquisition date methodology. The fair values attributable to covered loans and the aggregate loss calculation change over time due to the receipt of cash from the FDIC, updated credit loss assumptions and the passage of time. The fair value attributable to covered securities was based upon the timing and amount that would be payable to the FDIC should they settle at the current fair value at the conclusion of the loss share agreement. 53 Table of Contents The cumulative amount related to covered securities recognized through earnings resulted in a liability of $213 million as of June 30, 2014. Covered securities are classified as AFS and carried at fair market value, and the changes in unrealized gains/losses are offset by the applicable loss share percentage in AOCI, which resulted in a pre-tax liability of $362 million as of June 30, 2014. BB&T would only owe these amounts to the FDIC if BB&T were to sell these securities prior to the third quarter of 2017. BB&T does not currently intend to dispose of the covered securities. Following the conclusion of the ten year loss share period in 2019, should actual aggregate losses, excluding securities, be less than an amount determined in accordance with these agreements, BB&T will pay the FDIC a portion of the difference. As of June 30, 2014, BB&T projects that Branch Bank would owe the FDIC approximately $171 million under the aggregate loss calculation. This liability is expensed over time and BB&T has recognized total expense of $120 million through June 30, 2014. The following table provides information related to the income statement impact of covered loans and securities and the FDIC loss sharing receivable/payable. The table excludes all amounts related to other assets acquired and liabilities assumed in the acquisition. Table 5 Revenue Impact from Covered Assets, Net Three Months Ended June 30, Six Months Ended June 30, 2014 2013 2014 2013



(Dollars in millions)

Interest income-covered loans $ 73 $ 121 $ 159$ 256 Interest income-covered securities 32 34 63 71 Total interest income-covered assets 105 155 222 327 Provision for covered loans 9 11 16 (14) FDIC loss share income, net (88) (85) (172) (144) Adjusted net revenue $ 26 $ 81 $ 66 $ 169FDIC loss share income, net Offset to provision for covered loans $ (7) $ (9) $ (12) $ 11 Accretion due to credit loss improvement (70) (66) (139) (133) Accretion for securities (11) (10) (21) (22) Total $ (88) $ (85) $ (172)$ (144)



Second Quarter 2014 compared to Second Quarter 2013

Interest income on covered loans and securities for the second quarter of 2014 decreased $50 million compared to the second quarter of 2013, primarily resulting from decreased interest income related to covered loans totaling $48 million. The decline in interest income relating to covered loans primarily reflects lower average covered loan balances. The yield on covered loans for the second quarter of 2014 was 16.77%, compared to 16.95% in the earlier quarter.



Six Months of 2014 compared to Six Months of 2013

Interest income on covered loans and securities for the six months ended June 30, 2014 decreased $105 million compared to the six months ended June 30, 2013. This decrease was driven by a 39.7% reduction in the average loan balance for the six months ended June 30, 2014, compared to the same period of the prior year. The yield on covered loans for the six months ended June 30, 2014 was 17.74%, compared to 17.23% in the corresponding period of 2013. The provision for covered loans was a recovery of $16 million for the six months ended June 30, 2014, compared to a provision of $14 million for the same period of the prior year. FDIC loss share income, net was a negative $172 million for the six months ended June 30, 2014, $28 million worse than the corresponding period of 2013, which primarily reflects the offset to the improvement in the provision for covered loans. 54 Table of Contents Provision for Credit Losses



Second Quarter 2014 compared to Second Quarter 2013

The provision for credit losses, excluding covered loans, totaled $83 million for the second quarter of 2014, a decrease of $96 million compared to the same period of the prior year. This decrease reflects improvement in loss frequencies related to the CRE - construction and development and income producing properties portfolios, which resulted in provision decreases totaling $74 million and $31 million, respectively. The provision for credit losses related to the residential mortgage-government guaranteed portfolio declined $23 million, primarily the result of an update to loss severity estimates related to certain loans within this portfolio. These decreases were partially offset by a $39 million increase in the provision for credit losses related to the commercial and industrial portfolio, which primarily reflects a provision release in the earlier quarter. Net charge-offs, excluding covered loans, were $98 million lower than the second quarter of 2013. This decrease in net charge-offs was broad-based in nature, with notable declines in net charge-offs related to the commercial and industrial, direct retail lending and CRE-construction and development portfolios that totaled $30 million, $23 million and $22 million, respectively. Net charge-offs were 0.41% of average loans and leases on an annualized basis (0.40% excluding covered loans) for the second quarter of 2014, compared to 0.74% of average loans and leases (0.75% excluding covered loans) for the same period in 2013. Management expects net charge-offs to remain below the normalized range for net charge-offs (which ranges from 50 to 70 basis points) for the next few quarters.



Six Months of 2014 compared to Six Months of 2013

The provision for credit losses, excluding covered loans, totaled $150 million for the six months ended June 30, 2014, compared to $426 million for the same period of 2013. The improvement in the provision for credit losses was broad-based, including decreases in the commercial and industrial, CRE - income producing properties, and residential mortgage-government guaranteed portfolios of $110 million, $50 million and $40 million, respectively. These decreases primarily reflect improvement in loss frequency estimates in these portfolios. The provision related to the reserve for unfunded lending commitments declined $55 million, which also reflects an improvement in loss frequency estimates. Net charge-offs, excluding covered loans, for the six months ended June 30, 2014 were $217 million lower than the comparable period of the prior year. The decrease in net charge-offs was broad based, with significant reductions in the commercial and industrial, direct retail lending, CRE - construction and development and CRE - income producing properties portfolios totaling $88 million, $46 million, $40 million and $39 million, respectively. Net charge-offs were 0.48% of average loans and leases on an annualized basis (0.48% excluding covered loans) for the six months ended June 30, 2014 compared to 0.87% of average loans and leases (or 0.86% excluding covered loans) for the same period in 2013. Noninterest Income



Second Quarter 2014 compared to Second Quarter 2013

Noninterest income for the second quarter of 2014 declined $113 million, or 10.8%, compared to the earlier quarter. This decrease was primarily driven by declines in mortgage banking income, net securities gains and other income totaling $82 million, $23 million, and $11 million, respectively.

The decrease in mortgage banking income reflects a decline in the volume of residential mortgage loan production and sales and tighter margins. The decrease in net securities gains reflects gains in the earlier quarter that totaled $23 million. The $11 million decrease in other income primarily reflects increased write-downs on affordable housing investments and decreased income from assets related to certain post-employment benefits, which is offset in personnel expense.



Other categories of noninterest income, including insurance income, service charges on deposits, investment banking and brokerage fees and commissions, bankcard fees and merchant discounts, trust and investment advisory revenues, checkcard fees, income from bank-owned life insurance, and FDIC loss share income, net totaled $777 million for the three months ended June 30, 2014, compared to $774 million for the same period of 2013.

Noninterest income is expected to be relatively flat in the third quarter of 2014, which primarily reflects a seasonal decrease in insurance income partially offset by other fee items. 55 Table of Contents



Six Months of 2014 compared to Six Months of 2013

Noninterest income for the six months ended June 30, 2014 totaled $1.8 billion, compared to $2.0 billion for the same period in 2013, a decrease of $203 million. The change was primarily driven by a decrease in mortgage banking income of $188 million, which reflects a decline in the volume of residential mortgage loan production and sales and tighter margins. Net securities gains for the six months ended June 30, 2014 totaled $2 million, compared to $46 million in the same period of the prior year. FDIC loss share income, net for the first six months of 2014 was $28 million lower than the same period of the prior year, which primarily reflects the offset related to an improvement in the provision for covered loans. Other income for the first six months of 2014 was $18 million lower than the same period of the prior year, primarily the result of decreased income from assets related to certain post-employment benefits, which is offset in personnel expense.



Insurance income totaled $849 million for the six months ended June 30, 2014, an increase of $58 million compared to the corresponding period of 2013. This increase primarily reflects higher performance-based commission income, the impact of an improved process for estimating certain commission income and firming market conditions for insurance premiums.

Other categories of noninterest income, including service charges on deposits, investment banking and brokerage fees and commissions, bankcard fees and merchant discounts, trust and investment advisory revenues, checkcard fees, and income from bank-owned life insurance totaled $864 million during the six months ended June 30, 2014, compared with $847 million for the same period of 2013. Noninterest Expense



Second Quarter 2014 compared to Second Quarter 2013

Noninterest expense totaled $1.6 billion for the second quarter of 2014, an increase of $55 million compared to the same period of 2013. Other expense, loan-related expense and outside IT services increased by $79 million, $37 million and $10 million, respectively, compared to the earlier quarter. The increases in other expense and loan-related expense primarily reflect the impact of the adjustments related to the previously described FHA-insured loan exposures. The increase in outside IT services is primarily due to work related to various system enhancement and replacement projects. Personnel expense, merger-related and restructuring charges and professional services expense for the second quarter of 2014 decreased $35 million, $14 million and $13 million, respectively, compared to the same period of the prior year. The decrease in personnel expense reflects a $30 million decrease in qualified pension plan expense that was driven by lower amortization of net actuarial losses, and lower post-employment benefits expense, which is offset in other income. Merger-related and restructuring charges were $14 million lower than the same quarter of the prior year, primarily the result of optimization activities related to the Community Bank that were initiated in the earlier quarter. Professional fees were $13 million lower than the earlier quarter, which reflects lower legal fees and decreased expenses related to systems and process-related enhancements. Other categories of noninterest expenses, including occupancy and equipment, software, regulatory charges, amortization of intangibles and foreclosed property expense totaled $273 million for the current quarter, compared to $282 million for the same period of 2013.



Management is targeting an efficiency ratio in the 56% range for the fourth quarter of 2014.

Six Months of 2014 compared to Six Months of 2013

Noninterest expenses totaled $3.0 billion for the six months ended June 30, 2014, an increase of $44 million, or 1.5%, over the same period of the prior year. Primary drivers for the increase in noninterest expense include higher loan-related expense, outside IT services and other expense, partially offset by declines in personnel expense, professional services, regulatory charges, foreclosed property expense and merger-related and restructuring charges. Loan-related expense, outside IT services and other expense increased by $48 million, $22 million and $89 million, respectively, compared to the earlier quarter. The increases in other expense and loan-related expense primarily reflect the impact of the adjustments related to the previously described FHA-insured loan exposures. The increase in outside IT services is primarily due to work related to various system enhancement and replacement projects. 56 Table of Contents

Personnel expense was $1.6 billion for the six months ended June 30, 2014, a decrease of $70 million compared to the same period of the prior year, which primarily resulted from a decrease in qualified pension plan expense that was driven by lower amortization of net actuarial losses. Professional services declined $16 million from the same period of the prior year, which reflects lower legal fees and decreased expenses related to systems and process-related enhancements. Regulatory charges, foreclosed property expense and merger-related and restructuring charges declined $11 million each. The decline in regulatory charges reflects improved credit quality, and the beneficial impact associated with the issuance of bank notes over the last twelve months. The decline in foreclosed property expense was primarily the result of lower maintenance and repossession expense, which reflects a lower level of foreclosed property. Merger-related and restructuring charges were $11 million lower than the same period of the prior year, primarily the result of optimization activities undertaken by the Community Bank during the second quarter of 2013. Other categories of noninterest expense, including occupancy and equipment expense, software expense and amortization of intangibles totaled $475 million for the six months ended June 30, 2014 compared to $471 million for the same period of 2013. Provision for Income Taxes



Second Quarter 2014 compared to Second Quarter 2013

The provision for income taxes was $173 million for the second quarter of 2014, compared to $221 million for the same quarter of the prior year. This produced an effective tax rate for the first quarter of 2014 of 26.6%, compared to 27.7% for the same quarter of the prior year. The decrease in the effective tax rate primarily reflects a higher level of federal tax credits and permanent tax differences relative to pre-tax earnings, which was partially offset by a $14 million tax charge related to a change in the IRS's stance related to an income tax position currently under examination. Management is expecting an effective tax rate in the approximately 27% range during the second half of 2014.



Six Months of 2014 compared to Six Months of 2013

The provision for income taxes was $390 million for the six months ended June 30, 2014, compared to $702 million for the six months 2013. This decrease primarily reflects a $281 million adjustment to the provision for income taxes in the first quarter of 2013, which related to a ruling issued by the U.S. Tax Court that had implications on positions that BB&T had taken related to a financing transaction in 2002. BB&T's effective income tax rate for the six months ended June 30, 2014 was 27.0%, compared to 45.8% for the same period of the prior year. The decrease in the effective tax rate is primarily due to the adjustment described above.



Refer to Note 9 "Income Taxes" in the "Notes to Consolidated Financial Statements" for a discussion of uncertain tax positions and other tax matters.

Segment Results See Note 15 "Operating Segments" in the "Notes to Consolidated Financial Statements" contained herein and BB&T's Annual Report on Form 10-K for the year ended December 31, 2013, for additional disclosures related to BB&T's reportable business segments. Fluctuations in noninterest income and noninterest expense incurred directly by the segments are more fully discussed in the "Noninterest Income" and "Noninterest Expense" sections above. During January 2014, approximately $8.3 billion of closed-end, first and second lien position residential mortgage loans were transferred from Community Banking to Residential Mortgage Banking based on a change in how these loans are managed as a result of new qualified mortgage regulations. The following discussion gives retrospective effect to the transfer. 57 Table of Contents Table 6 BB&T Corporation Net Income by Reportable Segments Three Months Ended June 30, Six Months Ended June 30, 2014 2013 2014 2013 (Dollars in millions) Community Banking $ 222$ 194$ 439$ 387 Residential Mortgage Banking (21) 97 42 234 Dealer Financial Services 63 59 98 99 Specialized Lending 60 68 119 118 Insurance Services 58 71 133 106 Financial Services 68 71 136 142 Other, Treasury and Corporate 28 16 89 (254) BB&T Corporation $ 478$ 576$ 1,056$ 832



Second Quarter 2014 compared to Second Quarter 2013

Community Banking



Community Banking serves individual and business clients by offering a variety of loan and deposit products and other financial services. The segment is primarily responsible for acquiring and maintaining client relationships.

Community Banking net income was $222 million in the second quarter of 2014, an increase of $28 million over the earlier quarter. The allocated provision for credit losses decreased $73 million driven by lower business and consumer loan charge-offs. The $48 million decrease in noninterest expense was primarily attributable to lower personnel, occupancy and equipment and restructuring expense. Segment net interest income decreased $37 million, primarily due to lower yields on new loans and lower funding spreads earned on deposits, partially offset by improvements in deposit mix. Intersegment net referral fees decreased $22 million driven by lower mortgage banking referrals. Allocated corporate expenses increased $24 million driven by internal business initiatives. Residential Mortgage Banking

Residential Mortgage Banking retains and services mortgage loans originated by BB&T as well as those purchased from various correspondent originators. Mortgage loan products include fixed and adjustable-rate government guaranteed and conventional loans for the purpose of constructing, purchasing, or refinancing residential properties. Substantially all of the properties are owner-occupied. Residential Mortgage Banking generated a net loss of $21 million in the second quarter of 2014 compared to net income of $97 million in the earlier quarter. Segment net interest income decreased $25 million, primarily the result of lower credit spreads on loans. Noninterest income decreased $83 million driven by lower gains on residential mortgage loan production and sales due to significantly lower mortgage loan originations and tighter pricing due to competitive factors. Noninterest expense increased $108 million, which primarily reflects the impact of adjustments totaling $118 million related to the previously described FHA-insured loan exposures. The allocated provision for credit losses was a net recovery of $1 million in the current quarter compared to a $30 million provision in the earlier quarter, which reflects an improvement in credit trends compared to the earlier quarter. The provision for income taxes was $71 million lower than the earlier quarter primarily due to lower pre-tax income. Dealer Financial Services Dealer Financial Services primarily originates loans to consumers for the purchase of automobiles. These loans are originated on an indirect basis through approved franchised and independent automobile dealers throughout BB&T's market area through BB&T Dealer Finance, and on a national basis through Regional Acceptance Corporation. Dealer Financial Services also originates loans for the purchase of recreational and marine vehicles and provides financing and servicing to dealers for their inventories. 58 Table of Contents

Dealer Financial Services net income was $63 million in the second quarter of 2014, an increase of $4 million over the earlier quarter, primarily due to a decrease in the allocated provision for credit losses. The allocated provision for credit losses decreased $10 million reflecting improved loss frequency in the prime automobile lending portfolio compared to the earlier quarter. Dealer Financial Services grew average loans by $1.2 billion, or 11.1%, compared to the earlier quarter. Specialized Lending BB&T's Specialized Lending segment consists of businesses that provide specialty finance alternatives to commercial and consumer clients including: commercial finance, mortgage warehouse lending, tax-exempt financing for local governments and special-purpose districts, equipment leasing, full-service commercial mortgage banking, commercial and retail insurance premium finance, dealer-based financing of equipment for consumers and small businesses, and direct consumer finance. Specialized Lending net income was $60 million in the second quarter of 2014, a decrease of $8 million from the earlier quarter. Segment net interest income decreased $39 million compared to the earlier quarter, which primarily reflects the sale of a consumer lending subsidiary in the fourth quarter of 2013. The sale of this subsidiary also had a beneficial impact on the allocated provision for credit losses, which decreased $15 million. Noninterest expense decreased $12 million driven by lower personnel, occupancy and equipment, loan processing and professional services expense. Small ticket consumer finance, equipment finance, governmental finance and commercial mortgage businesses experienced strong growth compared to the earlier quarter. Insurance Services BB&T's insurance agency / brokerage network is the fifth largest in the United States and sixth largest in the world. Insurance Services provides property and casualty, life, and health insurance to business and individual clients. It also provides small business and corporate products, such as workers compensation and professional liability, as well as surety coverage and title insurance. In addition, Insurance Services underwrites a limited amount of property and casualty coverage. Insurance Services net income was $58 million in the second quarter of 2014, a decrease of $13 million compared to the earlier quarter primarily due to higher noninterest expense of $17 million driven by higher salary and performance-based incentives. Financial Services

Financial Services provides personal trust administration, estate planning, investment counseling, wealth management, asset management, employee benefits services, corporate banking and corporate trust services to individuals, corporations, institutions, foundations and government entities. In addition, Financial Services offers clients investment alternatives, including discount brokerage services, equities, fixed-rate and variable-rate annuities, mutual funds and governmental and municipal bonds through BB&T Investment Services, Inc. The segment also includes BB&T Securities, a full-service brokerage and investment banking firm, the Corporate Banking Division, which originates and services large corporate relationships, syndicated lending relationships, and client derivatives, and BB&T Capital Partners, which manages the company's SBIC private equity investments. Financial Services net income was $68 million in the second quarter of 2014, a decrease of $3 million from the earlier quarter. Segment net interest income decreased $5 million, primarily due to lower credit spreads on loans and funding spreads on deposits. Noninterest expense increased $8 million compared to the earlier quarter, driven by higher occupancy and equipment, professional services, sub-advisory fee, and litigation-related expense. The allocated provision for credit losses decreased $10 million, reflecting improved loss frequency in the large corporate loan portfolio as the result of improved credit metrics. Financial Services continues to generate significant loan growth, with Corporate Banking's average loan balances increasing $1.7 billion, or 22.9%, over the earlier quarter while BB&T Wealth's average loan balances increased $195 million, or 22.2%. Other, Treasury & Corporate



Net income in Other, Treasury & Corporate can vary due to the changing needs of the Company, including the size of the investment portfolio, the need for wholesale funding, and income received from derivatives used to hedge the balance sheet.

59 Table of Contents In the second quarter of 2014, Other, Treasury & Corporate generated net income of $28 million, an increase of $12 million over the earlier quarter. Segment net interest income increased $36 million primarily due to an increase in the size of the investment portfolio and lower corporate borrowing costs. Intersegment net referral fee expense decreased $25 million as the result of a lower level of mortgage banking referral income that was allocated to both the Community Banking and Financial Services segments. Allocated corporate expenses decreased $33 million compared to the earlier quarter. The allocated provision for credit losses was a net recovery of $7 million in the current quarter compared to a net recovery of $52 million in the earlier quarter, which primarily reflects a reduction in the unallocated allowance for credit losses in the earlier quarter based on continued improvement in credit trends. Noninterest income decreased $34 million primarily due to lower securities gains in the investment portfolio, lower FDIC loss share income and increased write-downs on affordable housing investments.



Six Months of 2014 compared to Six Months of 2013

Community Banking net income was $439 million for the six months ended June 30, 2014, compared to $387 million in the same period of the prior year. The allocated provision for credit losses decreased $174 million driven by lower business and consumer loan charge-offs. The $79 million decrease in noninterest expense was primarily attributable to lower personnel, occupancy and equipment, restructuring, and regulatory expense. Segment net interest income decreased $89 million, primarily due to lower yields on new loans and lower funding spreads earned on deposits, partially offset by loan and noninterest-bearing deposit growth. Intersegment net referral fees decreased $50 million driven by lower mortgage banking referrals. Allocated corporate expenses increased $48 million driven by internal business initiatives. Residential Mortgage Banking generated net income of $42 million for the six months ended June 30, 2014, compared to $234 million in the same period of the prior year. Segment net interest income decreased $45 million, primarily the result of lower average balances in the LHFS portfolio, partially offset by higher credit spreads. Noninterest income decreased $184 million driven by lower gains on residential mortgage loan production and sales due to significantly lower mortgage loan originations and tighter pricing due to competitive factors. The decrease in noninterest income was partially offset by an increase in net servicing income of $26 million, primarily due to slower prepayment speeds and a $7.7 billion, or 9.6%, increase in in the investor-owned servicing portfolio. Noninterest expense increased $116 million, which primarily reflects the impact of adjustments totaling $118 million related to the previously described FHA-insured loan exposures. The allocated provision for credit losses was a net recovery of $21 million in the first six months of 2014 compared to a $23 million provision in the same period of the prior year, which reflects lower charge-offs and an improvement in credit trends. The provision for income taxes decreased $117 million, primarily due to lower pre-tax income. Dealer Financial Services net income was $98 million for the six months ended June 30, 2014, compared to $99 million in the same period of the prior year. Segment net interest income decreased $4 million, primarily due to lower credit spreads on loans. The allocated provision for credit losses decreased $5 million reflecting improved loss frequency in the prime automobile lending portfolio. Dealer Financial Services grew average loans by $1.2 billion, or 11.7%, compared to the same period of the prior year. Specialized Lending net income was $119 million for the first six months of 2014, compared to $118 million in the same period of the prior year. Segment net interest income decreased $77 million compared to the same period in the prior year, which primarily reflects the sale of a consumer lending subsidiary in the fourth quarter of 2013. The sale of this subsidiary also had a beneficial impact on the allocated provision for credit losses, which decreased $57 million. This decrease was also partially attributable to recoveries in the commercial finance portfolio in the current period. Noninterest expense decreased $25 million driven by lower personnel, occupancy and equipment, loan processing and professional services expense. Small ticket consumer finance, equipment finance, and commercial finance experienced strong growth compared to the same period of the prior year.

Insurance Services net income was $133 million for the first six months of 2014, compared to $106 million in the same period of the prior year. Insurance Service's noninterest income increased $62 million, primarily due to higher performance-based commissions, increased commissions on certain new and renewal business and an increase in employee benefit commissions of $19 million due to a refinement to the process used to estimate commission income on certain policies invoiced by the insurance carrier but not yet received by BB&T. Noninterest expense increased $32 million driven by higher salaries, performance-based incentives, and business referral expense. 60 Table of Contents

Financial Services net income was $136 million for the first six months of 2014, compared to $142 million in the same period in the prior year. Segment net interest income decreased $14 million, primarily due to lower credit spreads on loans and funding spreads on deposits, partially offset by loan and deposit growth. Allocated corporate expenses increased $10 million driven by internal business initiatives. The allocated provision for credit losses decreased $19 million, reflecting improved loss frequency in the large corporate loan portfolio as the result of improved credit metrics. Financial Services continues to generate significant loan growth, with Corporate Banking's average loan balances increasing $1.5 billion, or 20.4%, compared to the same period in the prior year, while BB&T Wealth's average loan balances increased $177 million, or 20.9%. BB&T Wealth also grew transaction account balances by $337 million, or 14.6%, and money market and savings balances by $483 million, or 8.0%, compared to the same period in the prior year. Other, Treasury & Corporate net income was $89 million for the first six months of 2014, compared to a net loss of $254 million in the same period of the prior year. Results in the prior year include a $281 million adjustment to the income tax provision as previously described. Segment net interest income increased $82 million, primarily due to lower funding credits on deposits allocated to the Community Banking and Financial Services and lower corporate borrowing costs, partially offset by runoff in the covered loan portfolio. The credit for allocated corporate expenses increased $68 million compared to the prior year related to investments in application systems and internal business initiatives allocated to the other segments. Intersegment net referral fee expense decreased $54 million as the result of a lower level of mortgage banking referral income that was allocated to both the Community Banking and Financial Services segments. Noninterest income decreased $93 million primarily due to lower securities gains in the investment portfolio and lower FDIC loss share income.



Analysis Of Financial Condition

Investment Activities The total securities portfolio was $41.4 billion at June 30, 2014, an increase of $1.2 billion, compared with December 31, 2013. As of June 30, 2014, the securities portfolio included $20.9 billion of AFS securities (at fair value) and $20.4 billion of HTM securities (at amortized cost). The effective duration of the securities portfolio decreased to 4.7 years at June 30, 2014, compared to 5.5 years at December 31, 2013, primarily the result of lower interest rates. The duration of the securities portfolio excludes equity securities, auction rate securities and certain non-agency residential MBS that were acquired in the Colonial acquisition.



See Note 3 "Securities" in the "Notes to Consolidated Financial Statements" herein for additional disclosures related to BB&T's evaluation of securities for OTTI.

Lending Activities Average loans held for investment for the second quarter of 2014 increased $2.1 billion, or an annualized 7.2%, compared to the prior quarter. The increase in average loans held for investment was primarily driven by growth in the commercial and industrial, sales finance and other lending subsidiaries portfolios of $962 million, $600 million and $317 million, respectively. Growth in average loans held for investment was negatively impacted by continued runoff in the covered loan portfolio of $135 million, or 28.9% on an annualized basis.



Management expects that average loan growth during the second half of 2014 will range from 3% to 5%, with stronger growth during the third quarter of 2014.

61 Table of Contents



The following table presents the composition of average loans and leases:

Table 7 Composition of Average Loans and Leases For the Three Months Ended 6/30/14 3/31/14 12/31/13 9/30/13 6/30/13 (Dollars in millions) Commercial:



Commercial and industrial $ 39,397$ 38,435$ 38,101$ 38,446$ 38,359

CRE - income producing properties 10,382 10,293 10,031 9,907 9,864

CRE - construction and development 2,566 2,454 2,433 2,459 2,668 Direct retail lending 7,666 9,349 15,998 16,112 15,936 Sales finance 10,028 9,428 9,262 8,992 8,520 Revolving credit 2,362 2,357 2,357 2,308 2,268 Residential mortgage 32,421 30,635 23,979 23,403 23,391

Other lending subsidiaries 10,553 10,236



10,448 11,018 10,407

Total average loans and leases

held for

investment (excluding covered

loans) 115,375 113,187



112,609 112,645 111,413

Covered 1,739 1,874



2,186 2,502 2,858

Total average loans and leases

held for investment 117,114 115,061 114,795 115,147 114,271 LHFS 1,396 1,311 2,206 3,118 3,581



Total average loans and leases $ 118,510$ 116,372$ 117,001$ 118,265$ 117,852

Average residential mortgage loans increased $1.8 billion, and average direct retail lending loans decreased $1.7 billion compared to the prior quarter. The impact of the transfer of approximately $8.3 billion of closed-end, first and second lien position, residential mortgage loans in January 2014 from the direct retail lending portfolio to the residential mortgage lending portfolio was only partially reflected in average loan balances for the first quarter due to the timing of the transfer. Adjusted for the estimated impact of this transfer, average direct retail loans were up approximately 8% annualized and average residential mortgage loans were essentially flat compared to the prior quarter. This transfer was completed in order to facilitate compliance with a series of new rules related to mortgage servicing associated with first and second lien position mortgages collateralized by real estate. Average commercial and industrial loans increased $962 million, or an annualized 10.0%, compared to the prior quarter, driven by growth in middle-market corporate and mortgage warehouse lending. The CRE - construction and development and CRE - income producing properties portfolios reported annualized growth rates of 18.3% and 3.5%, respectively. The average sales finance portfolio increased $600 million, or 25.5% annualized, based on continued strength in the prime automobile lending market. Average other lending subsidiaries loans increased $317 million, or 12.4% annualized, compared to the prior quarter. This increase was driven by growth in the small ticket consumer finance portfolio, which totaled $186 million, or 26.0% on an annualized basis, along with growth in the insurance premium finance and non-prime automobile finance portfolios of $50 million and $43 million,

respectively. Asset Quality The following discussion excludes assets covered by FDIC loss sharing agreements that provide for reimbursement to BB&T for the majority of losses incurred on those assets. Covered loans, which are considered performing due to the application of the expected cash flows method, were $1.7 billion and $2.0 billion at June 30, 2014 and December 31, 2013, respectively. Covered foreclosed real estate totaled $56 million and $121 million at June 30, 2014 and December 31, 2013, respectively.

Asset quality continued to improve during the second quarter of 2014. NPAs, which include foreclosed real estate, repossessions, NPLs and nonperforming TDRs, totaled $916 million at June 30, 2014, compared to $1.1 billion at December 31, 2013. The decrease in NPAs included declines in nonperforming loans and leases and foreclosed property of $94 million and $43 million, respectively. NPAs have decreased for 17 consecutive quarters and are at their lowest level since December 31, 2007. NPAs as a percentage of loans and leases plus foreclosed property were 0.76% at June 30, 2014, compared with 0.91% at December 31, 2013. Management expects NPAs to decline modestly in the third quarter

of 2014. 62 Table of Contents



The following table presents activity in NPAs:

Table 8 Rollforward of NPAs Six Months Ended June 30, 2014 2013 (Dollars in millions) Beginning balance $ 1,053$ 1,536 New NPAs 656 914 Advances and principal increases 40 95 Disposals of foreclosed assets (250) (275) Disposals of NPLs (1) (110) (203) Charge-offs and losses (157) (329) Payments (212) (345) Transfers to performing status (114) (117) Other, net 10 - Ending balance $ 916$ 1,276



(1) Includes charge-offs and losses recorded upon sale of $20 million and $45 million for the six months ended

June 30, 2014 and 2013, respectively.



Table 9 and Table 10 summarize asset quality information for the last five quarters. As more fully described below, the information has been adjusted to exclude past due covered loans and government guaranteed GNMA mortgage loans:

In accordance with regulatory reporting standards, covered loans that are

contractually past due are recorded as past due and still accruing based on the

number of days past due. However, due to the application of the accretion

method, BB&T has concluded that it is appropriate to adjust Table 9 to exclude

covered loans in summarizing total loans 90 days or more past due and still

accruing and total loans 30-89 days past due and still accruing.



BB&T has also concluded that the inclusion of covered loans in certain asset

quality ratios summarized in Table 10 including "Loans 30-89 days past due and

still accruing as a percentage of total loans and leases," "Loans 90 days or

more past due and still accruing as a percentage of total loans and leases,"

"NPLs as a percentage of total loans and leases" and certain other asset

quality ratios that reflect NPAs in the numerator or denominator (or both)

results in significant distortion to these ratios. In addition, because loan

level charge-offs related to the acquired loans are not recognized in the

financial statements until the cumulative amounts exceed the original loss

projections on a pool basis, the net charge-off ratio for the acquired loans is

not consistent with the net charge-off ratio for other loan portfolios. The

inclusion of these loans in the asset quality ratios described above could

result in a lack of comparability across quarters or years and could negatively

impact comparability with other portfolios that were not impacted by

acquisition accounting. BB&T believes that the presentation of asset quality

measures excluding covered loans and related amounts from both the numerator

and denominator provides better perspective into underlying trends related to

the quality of its loan portfolio. Accordingly, the asset quality measures in

Table 10 present asset quality information both on a consolidated basis as well

as excluding the covered assets and related amounts.

In addition, BB&T has recorded certain amounts related to government guaranteed

GNMA mortgage loans that BB&T has the option, but not the obligation, to

repurchase and has effectively regained control. The amount of government

guaranteed GNMA mortgage loans that have been excluded are noted in the footnotes to Table 9. 63 Table of Contents



The following tables summarize asset quality information, excluding covered assets, for the past five quarters:

Table 9 Asset Quality (Excluding Covered Assets) Three Months Ended 6/30/2014 3/31/2014 12/31/2013 9/30/2013 6/30/2013 (Dollars in millions) NPAs (1) NPLs: Commercial: Commercial and industrial $ 298$ 334$ 363$ 415$ 457 CRE - income producing properties 84 98 113 127 146 CRE - construction and development 38 49 51 66 100 Direct retail lending (2) 49 52 109 110 119 Sales finance 5 4 5 5 5 Residential mortgage (2)(3) 320 319 243 238 254 Other lending subsidiaries (3)(4) 47 47 51 69 68 Total NPLs held for investment (4) 841 903 935 1,030 1,149 Foreclosed real estate (5) 56 59 71 85 89 Other foreclosed property 19 24 47 47 38 Total NPAs (4)(5) $ 916$ 986$ 1,053$ 1,162$ 1,276



Performing TDRs (6)

Commercial: Commercial and industrial $ 86$ 76$ 77$ 74$ 59 CRE - income producing properties 27 42 50 50 44 CRE - construction and development 30 32 39 44 43 Direct retail lending (2) 91 93 187 185 188 Sales finance 18 19 17 18 17 Revolving credit 46 47 48 51 53 Residential mortgage-nonguaranteed (2)(3) 814 836 785 720 726 Residential mortgage-government guaranteed 433 387 376 382 365 Other lending subsidiaries (3)(4) 141 132 126 200 183 Total performing TDRs (4) $ 1,686$ 1,664$ 1,705$ 1,724$ 1,678



Loans 90 days or more past due and still accruing

Commercial: Commercial and industrial $ - $ - $ - $ - $ 3 Direct retail lending (2) 11 10 33 34 30 Sales finance 3 4 5 5 5 Revolving credit 8 9 10 11 13 Residential mortgage-nonguaranteed (2) 80 76 69 68 68 Residential mortgage-government guaranteed (7) 254 305 296 266 243 Other lending subsidiaries - 4 5 4 4 Total loans 90 days or more past due and still accruing (7)(8) $ 356$ 408$ 418$ 388$ 366



Loans 30-89 days past due

Commercial: Commercial and industrial $ 21$ 26$ 35$ 27$ 32 CRE - income producing properties 7 14 8 13 9 CRE - construction and development 2 3 2 2 3 Direct retail lending (2) 41 50 132 121 123 Sales finance 49 45 56 46 47 Revolving credit 20 21 23 22 20 Residential mortgage-nonguaranteed (2)(3) 513 485 454 402 445 Residential mortgage-government guaranteed (9) 87 73 88 95 93 Other lending subsidiaries (3)(4) 197 133 221 268 241 Total loans 30 - 89 days past due (4)(9)(10) $ 937$ 850$ 1,019$ 996$ 1,013 64 Table of Contents



(1) Covered loans are considered to be performing due to the application of the

accretion method. Covered loans that are contractually past due are noted

below.

(2) During the first quarter of 2014, approximately $55 million of nonaccrual

loans, $94 million of performing TDRs, $22 million of loans 90 days or more

past due and $83 million of loans 30-89 days past due were transferred from

direct retail lending to residential mortgage.

(3) During the fourth quarter of 2013, approximately $16 million of nonaccrual

loans, $66 million of performing TDRs and $40 million of loans 30-89 days

past due were transferred from other lending subsidiaries to residential

mortgage.

(4) During the fourth quarter of 2013, approximately $9 million of nonaccrual

loans, $24 million of performing TDRs and $26 million of loans 30-89 days

past due were sold in connection with the sale of a consumer lending

subsidiary.

(5) Excludes covered foreclosed real estate totaling $56 million, $98 million,

$121 million, $148 million, and $181 million at June 30, 2014, March 31,

2014, December 31, 2013, September 30, 2013, and June 30, 2013, respectively.

(6) Excludes TDRs that are nonperforming totaling $192 million, $213 million,

$193 million, $191 million and $211 million at June 30, 2014, March 31, 2014,

December 31, 2013, September 30, 2013, and June 30, 2013, respectively. These

amounts are included in total nonperforming assets.

(7) Excludes government guaranteed GNMA mortgage loans that BB&T has the right

but not the obligation to repurchase that are 90 days or more past due

totaling $423 million, $486 million, $511 million, $497 million and $492

million at June 30, 2014, March 31, 2014, December 31, 2013, September 30,

2013, and June 30, 2013, respectively.

(8) Excludes covered loans past due 90 days or more totaling $249 million, $258

million, $304 million, $364 million and $401 million at June 30, 2014, March

31, 2014, December 31, 2013, September 30, 2013, and June 30, 2013,

respectively.

(9) Excludes government guaranteed GNMA mortgage loans that BB&T has the right

but not the obligation to repurchase that are past due 30-89 days totaling $3

million, $2 million, $4 million, $5 million and $5 million at June 30, 2014,

March 31, 2014, December 31, 2013, September 30, 2013, and June 30, 2013,

respectively.

(10) Excludes covered loans past due 30-89 days totaling $84 million, $85

million, $88 million, $104 million and $102 million at June 30, 2014, March

31, 2014, December 31, 2013, September 30, 2013, and June 30, 2013, respectively. 65 Table of Contents Table 10 Asset Quality Ratios As



of / For the Three Months Ended

6/30/2014 3/31/2014 12/31/2013 9/30/2013 6/30/2013 Asset Quality Ratios (including covered assets)



Loans 30 - 89 days past due and still accruing as a

percentage of total loans and leases (1) 0.85 %



0.80 % 0.96 % 0.96 % 0.97 %

Loans 90 days or more past due and still accruing as

a

percentage of total loans and leases (1) 0.50



0.57 0.62 0.64 0.65

NPLs as a percentage of total loans and leases 0.69



0.77 0.80 0.87 0.97

NPAs as a percentage of:

Total assets 0.52



0.59 0.64 0.72 0.79

Loans and leases plus foreclosed property 0.80



0.92 1.00 1.10 1.23

Net charge-offs as a percentage of average loans and

leases 0.41



0.56 0.48 0.48 0.74

ALLL as a percentage of loans and leases held for

investment 1.33 1.41 1.49 1.59 1.64 Ratio of ALLL to: Net charge-offs 3.28 x 2.54 x 3.06 x 3.22 x 2.18 x Nonperforming loans and leases held for investment 1.89 1.82 1.85 1.78 1.66



Asset Quality Ratios (excluding covered assets) (2)

Loans 30 - 89 days past due and still accruing as a

percentage of total loans and leases (1) 0.79 %



0.74 % 0.90 % 0.89 % 0.90 %

Loans 90 days or more past due and still accruing as

a

percentage of total loans and leases (1) 0.30



0.35 0.36 0.33 0.32

NPLs as a percentage of total loans and leases 0.70



0.78 0.81 0.89 0.99

NPAs as a percentage of:

Total assets 0.49



0.54 0.58 0.65 0.71

Loans and leases plus foreclosed property 0.76



0.85 0.91 1.00 1.10

Net charge-offs as a percentage of average loans and

leases 0.40



0.55 0.49 0.49 0.75

ALLL as a percentage of loans and leases held for

investment 1.27 1.34 1.42 1.51 1.57 Ratio of ALLL to: Net charge-offs 3.19 x 2.42 x 2.88 x 3.03 x 2.07 x Nonperforming loans and leases held for investment 1.78 1.70 1.73 1.66 1.55 As of / For the Six Months Ended June 30, 2014 2013 Asset Quality Ratios

Including covered loans: Net charge-offs as a percentage of average loans and leases 0.48 % 0.87 % Ratio of ALLL to net charge-offs 2.81 x 1.87 x Excluding covered loans: Net charge-offs as a percentage of average loans and leases 0.48 % 0.86 % Ratio of ALLL to net charge-offs 2.72 x 1.80 x



Applicable ratios are annualized.

(1) Excludes government guaranteed GNMA mortgage loans that BB&T has the right

but not the obligation to repurchase. Refer to the footnotes of Table 9 for

amounts related to these loans.

(2) These asset quality ratios have been adjusted to remove the impact of covered

loans and covered foreclosed property. Appropriate adjustments to the

numerator and denominator have been reflected in the calculation of these

ratios. Management believes the inclusion of covered assets in certain asset

quality ratios that include nonperforming assets, past due loans or net

charge-offs in the numerator or denominator results in distortion of these

ratios and they may not be comparable to other periods presented or to other

portfolios that were not impacted by loss share accounting. 66 Table of Contents Problem loans include loans on nonaccrual status or loans that are 90 days or more past due and still accruing as disclosed in Table 9. 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 4 "Loans and ACL" in the "Notes to Consolidated Financial Statements" herein for additional disclosures related to these potential problem loans. 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. At June 30, 2014, approximately 4.8% of the outstanding balances of residential mortgage loans were in the interest-only phase, compared to 7.2% at December 31, 2013. This reduction is primarily due to the decline in mortgage originations during recent quarters. Approximately 69.1% of the interest-only balances will begin amortizing within the next three years. Approximately 5.0% of interest-only loans are 30 days or more past due and still accruing and 2.5% are on nonaccrual status. Home equity lines, which are a component of the direct retail portfolio, generally require the payment of interest only 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 June 30, 2014, approximately 66.2% of the outstanding balances of home equity lines were in the interest-only phase. Approximately 9.2% of these balances will begin amortizing within the next three years. The delinquency rate of interest-only lines is similar to amortizing lines. 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. Refer to Note 1 "Summary of Significant Accounting Policies" in the "Notes to Consolidated Financial Statements" in the Annual Report on Form 10-K for the year ended December 31, 2013 for additional policy information regarding TDRs.



Performing TDRs totaled $1.7 billion at June 30, 2014, a decrease of $17 million compared to December 31, 2013. The following table provides a summary of performing TDR activity:

Table 11 Rollforward of Performing TDRs Six Months Ended June 30, 2014 2013 (Dollars in millions) Beginning balance $ 1,705$ 1,640 Inflows 314 319 Payments and payoffs (142) (113) Charge-offs (36) (27) Transfers to nonperforming TDRs, net (33) (33) Removal due to the passage of time (108) (82) Non-concessionary re-modifications (11) (25) Other (3) - Ending balance $ 1,686$ 1,679 67 Table of Contents



The following table provides further details regarding the payment status of TDRs outstanding at June 30, 2014:

Table 12 TDRs June 30, 2014 Past Due Past Due Current Status 30-89 Days 90 Days Or More Total (Dollars in millions)



Performing TDRs (1):

Commercial: Commercial and industrial $ 86 100.0 % $ - - % $ - - % $ 86 CRE - income producing properties 27 100.0 - - - - 27 CRE - construction and development 30 100.0 - - - - 30 Direct retail lending 87 95.6 4 4.4 - - 91 Sales finance 17 94.4 1 5.6 - - 18 Revolving credit 40 86.9 5 10.9 1 2.2 46 Residential mortgage - nonguaranteed 693 85.1 103 12.7 18 2.2 814 Residential mortgage - government guaranteed 225 52.0 73 16.9 135 31.1 433 Other lending subsidiaries 123 87.2 18 12.8 - - 141 Total performing TDRs 1,328 78.8 204 12.1 154 9.1 1,686 Nonperforming TDRs (2) 64 33.3 20 10.4 108 56.3 192 Total TDRs $ 1,392 74.1 $ 224 11.9 $ 262 14.0 $ 1,878



(1) Past due performing TDRs are included in past due disclosures.

(2) Nonperforming TDRs are included in NPL disclosures.

Allowance for Credit Losses The ACL, which consists of the ALLL and the RUFC, totaled $1.7 billion at June 30, 2014, a decline of $146 million compared to December 31, 2013. The ALLL amounted to 1.33% of loans and leases held for investment at June 30, 2014 (1.27% excluding covered loans), compared to 1.49% (1.42% excluding covered loans) at December 31, 2013. The decrease in the ALLL as a percentage of loans and leases reflects continued improvement in the credit quality of the loan portfolio. The ratio of the ALLL to nonperforming loans held for investment, excluding covered loans, was 1.78 times nonperforming loans and leases held for investment at June 30, 2014 compared to 1.73 times at December 31, 2013. BB&T monitors the performance of its home equity loans and lines secured by second liens similar to other consumer loans and utilizes assumptions specific to these loans in determining the necessary allowance. Notification is received when the first lien holder has initiated foreclosure proceedings against the borrower. When notified that the first lien holder is in the process of foreclosure, valuations are obtained 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 adjusted for current trends, the volume of second lien positions where the first lien is delinquent is estimated and the allowance is adjusted to reflect the increased risk of loss on these credits. Finally, additional reserves are provided on second lien positions for which the estimated combined current loan to value ratio exceeds 100%. As of June 30, 2014, BB&T held or serviced the first lien on 38% of its second lien positions. Net charge-offs totaled $121 million for the second quarter of 2014 and amounted to 0.41% of average loans and leases (0.40% excluding covered loans), compared to $159 million, or 0.56% of average loans and leases (0.55% excluding covered loans), in the prior quarter. For the six months ended June 30, 2014, net charge-offs were $280 million and amounted to 0.48% of average loans and leases (0.48% excluding covered loans), compared to $506 million, or 0.87% of average loans and leases (0.86% excluding covered loans), in the same period of 2013.



Charge-offs related to covered loans represent realized losses in certain acquired loan pools that exceed the amounts originally estimated at the acquisition date. This impairment, which is subject to the loss sharing agreements, was provided for in prior quarters and therefore the charge-offs have no impact on the Consolidated Statements of Income.

Refer to Note 4 "Loans and ACL" in the "Notes to Consolidated Financial Statements" for additional disclosures.

68 Table of Contents The following table presents an allocation of the allowance for loan and lease losses at June 30, 2014 and December 31, 2013. This allocation of the allowance for loan and lease losses 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. Table 13 Allocation of ALLL by Category June 30, 2014 December 31, 2013 % Loans % Loans in each in each Amount category Amount category (Dollars in millions) Commercial: Commercial and industrial $ 423 33.8 % $ 454 33.2 % CRE - income producing properties 127 8.7 149 8.8 CRE - construction and development 59 2.2 76 2.1 Direct retail lending 124 6.5 209 13.7 Sales finance 44 8.7 45 8.1 Revolving credit 112 2.0 115 2.1 Residential mortgage-nonguaranteed 324 26.5



269 20.3

Residential mortgage-government guaranteed 51 0.9

62 1.0

Other lending subsidiaries 235 9.3 239 9.0 Covered 91 1.4 114 1.7 Total ALLL 1,590 100.0 % 1,732 100.0 % RUFC 85 89 Total ACL $ 1,675$ 1,821 69 Table of Contents



Information related to the ACL is presented in the following table:

Table 14 Analysis of ACL Three Months Ended 6/30/2014 3/31/2014 12/31/2013 9/30/2013 6/30/2013 (Dollars in millions) Beginning balance $ 1,722$ 1,821$ 1,930$ 1,982$ 2,031 Provision for credit losses (excluding covered loans) 83 67 71 90 179 Provision for covered loans (9) (7) (11) 2 (11) Charge-offs: Commercial loans and leases Commercial and industrial (40) (33) (45) (42) (70) CRE - income producing properties (11) (8) (6) (10) (24) CRE - construction and development (3) (4) (4) (7) (25) Direct retail lending (1) (19) (19) (29) (35) (42) Sales finance (4) (7) (7) (5) (5) Revolving credit (18) (18) (22) (22) (20) Residential mortgage-nonguaranteed (1) (20) (21) (16) (15) (16) Residential mortgage-government guaranteed (1) - (1) - - Other lending subsidiaries (47) (85) (60) (66) (61) Covered loans (4) (3) (1) (2) (2) Total charge-offs (167) (198) (191) (204) (265) Recoveries: Commercial loans and leases Commercial and industrial 10 9 13 17 10 CRE - income producing properties 3 2 5 7 6 CRE - construction and development 10 3 8 11 4 Direct retail lending (1) 7 8 9 11 10 Sales finance 2 3 2 3 2 Revolving credit 5 5 4 3 5 Residential mortgage-nonguaranteed (1) - 1 1 - 1 Other lending subsidiaries 9 8 7 8 10 Total recoveries 46 39 49 60 48 Net charge-offs (121) (159) (142) (144) (217) Other changes, net - - (27) - - Ending balance $ 1,675$ 1,722$ 1,821$ 1,930$ 1,982 ALLL (excluding covered loans) $ 1,499 $

1,538 $ 1,618$ 1,712$ 1,775 Allowance for covered loans 91 104 114 126 126 RUFC 85 80 89 92 81 Total ACL $ 1,675$ 1,722$ 1,821$ 1,930$ 1,982



(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.

70 Table of Contents Six Months Ended June 30, 2014 2013 (Dollars in millions) Beginning balance $ 1,821$ 2,048 Provision for credit losses (excluding covered loans) 150 426 Provision for covered loans (16) 14 Charge-offs: Commercial loans and leases Commercial and industrial (73) (161) CRE - income producing properties (19) (58) CRE - construction and development (7) (47) Direct retail lending (1) (38) (84) Sales finance (11) (11) Revolving credit (36) (41) Residential mortgage-nonguaranteed (1) (41) (48) Residential mortgage-government guaranteed (1) (1) Other lending subsidiaries (132) (129) Covered loans (7) (16) Total charge-offs (365) (596) Recoveries: Commercial loans and leases Commercial and industrial 19 17 CRE - income producing properties 5 9 CRE - construction and development 13 11 Direct retail lending (1) 15 18 Sales finance 5 4 Revolving credit 10 10 Residential mortgage-nonguaranteed (1) 1 2 Other lending subsidiaries 17 19 Total recoveries 85 90 Net charge-offs (280) (506) Ending balance $ 1,675$ 1,982



(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. Deposits The following table presents the composition of average deposits for the last five quarters: Table 15 Composition of Average Deposits For the Three Months Ended 6/30/14 3/31/14 12/31/13 9/30/13 6/30/13 (Dollars in millions)

Noninterest-bearing deposits $ 36,634$ 35,392 $



35,347 $ 34,244$ 33,586

Interest checking 18,406 18,615



18,969 18,826 19,276

Money market and savings 48,965 48,767



49,298 48,676 48,140

Certificates and other time deposits 25,010 21,935 21,580 25,562 28,034

Foreign office deposits -

interest-bearing 584 1,009 712 640 947 Total average deposits $ 129,599$ 125,718$ 125,906$ 127,948$ 129,983 71 Table of Contents

Average deposits for the second quarter were $129.6 billion, a $3.9 billion increase, or 12.4% on an annualized basis, compared to the prior quarter. The previously described Texas branch acquisition had a nominal impact on average deposits as it was completed late in the second quarter. The growth in average deposits included a $3.1 billion increase in average certificates and other time deposits, a $1.2 billion increase in average noninterest-bearing deposits and a $198 million increase in average money market and savings deposits. This growth was partially offset by decreases in average interest checking and foreign office deposits - interest-bearing of $209 million and $425 million, respectively. Deposit mix remained relatively stable, with average noninterest-bearing deposits increasing slightly to 28.3% of total average deposits for the second quarter compared to 28.2% for the prior quarter. The growth in average noninterest-bearing deposits was driven by increases in average commercial and retail accounts totaling $1.1 billion and $385 million, respectively. These increases were partially offset by a decrease in noninterest-bearing public funds accounts totaling $106 million. The increase in average certificates and other time deposits was driven by a $3.7 billion increase in commercial balances, which was partially offset by decreases in retail and public funds accounts totaling $428 million and $179 million, respectively.



The cost of interest-bearing deposits was 0.26% for the second quarter, a decrease of one basis point compared to the prior quarter.

Borrowings

At June 30, 2014, short-term borrowings totaled $4.0 billion, a decrease of $159 million compared to December 31, 2013. Long-term debt totaled $21.9 billion at June 30, 2014, an increase of $434 million from the balance at December 31, 2013. The increase in long-term debt reflects the issuance of $2.4 billion of senior notes during the first quarter of 2014, partially offset by payments

and maturities. Shareholders' Equity

Total shareholders' equity at June 30, 2014 was $24.0 billion, an increase of $1.2 billion compared to December 31, 2013. This increase was primarily driven by net income of $1.1 billion, net stock issuances of $288 million and a $187 million improvement in AOCI, partially offset by common and preferred dividends totaling $410 million. The AOCI improvement primarily reflects an increase in unrealized net gains on AFS securities totaling $165 million. BB&T's book value per common share at June 30, 2014 was $29.57, compared to $28.52 at December 31, 2013.



Merger-Related and Restructuring Activities

At June 30, 2014 and December 31, 2013, merger-related and restructuring accruals totaled $26 million and $25 million, respectively. Merger-related and restructuring accruals are re-evaluated periodically and adjusted as necessary. The remaining accruals at June 30, 2014 are expected to be utilized within one year, unless they relate to specific contracts that expire later. Risk Management BB&T has defined and established an enterprise-wide risk culture that places an emphasis on effective risk management through a strong tone at the top by the Board of Directors and Executive Management, accountability at all levels of the organization, an effective challenge environment and incentives to encourage strong risk management behavior. The risk culture promotes judicious risk-taking and discourages rampant revenue generation without consideration of corresponding risks. Risk management begins with the LOBs, and as such, BB&T has established clear expectations for the LOBs in regards to the identification, monitoring, reporting and response to current and emerging risks. Centrally, risk oversight is managed at the corporate level through oversight, policies and reporting. The Board of Directors and Executive Management established BB&T's risk culture and promoted appropriate risk-taking behaviors. It is the responsibility of senior leadership to clearly communicate the organizational values that support the desired risk culture, recognize and reward behavior that reflects the defined risk culture and monitor and assess the current risk culture of BB&T. Regardless of financial gain or loss, employees are held accountable if they do not follow the established risk management policies and procedures. BB&T's risk culture encourages transparency and open dialogue between all levels in the performance of bank functions, such as the development, marketing and implementation of a product or service. An effective challenge environment is reflected in BB&T's decision-making processes. 72 Table of Contents

The Chief Risk Officer leads the RMO, which designs, organizes and manages BB&T's risk framework. The RMO is responsible for ensuring effective risk management oversight, measurement, monitoring, reporting and consistency. The RMO has direct access to the Board of Directors and Executive Management to communicate any risk issues (identified or emerging) as well as the performance of the risk management activities throughout the Company.



The principal types of inherent risk include compliance, credit, liquidity, market, operational, reputation and strategic risks. Refer to BB&T's Annual Report on Form 10-K for the year ended December 31, 2013 for disclosures related to each of these risks under the section titled "Risk Management."

Market Risk Management The effective management of market risk is essential to achieving BB&T's strategic financial objectives. As a financial institution, BB&T's most significant market risk exposure is interest rate risk in its balance sheet; however, market risk also includes product liquidity risk, price risk and volatility risk in BB&T's LOBs. The primary objectives of market risk management are to minimize any adverse effect that changes in market risk factors may have on net interest income, net income and capital and to offset the risk of price changes for certain assets recorded at fair value. At BB&T, market risk management also includes the enterprise-wide IPV function.



Interest Rate Market Risk (Other than Trading)

BB&T actively manages market risk associated with asset and liability portfolios with a focus on the strategic pricing of asset and liability accounts and management of appropriate maturity mixes of assets and liabilities. The goal of these activities is the development of appropriate maturity and repricing opportunities in BB&T's portfolios of assets and liabilities that will produce reasonably consistent net interest income during periods of changing interest rates. These portfolios are analyzed for proper fixed-rate and variable-rate mixes under various interest rate scenarios. The asset/liability management process is designed to achieve relatively stable NIM and assure liquidity by coordinating the volumes, maturities or repricing opportunities of earning assets, deposits and borrowed funds. Among other things, this process gives consideration to prepayment trends related to securities, loans and leases and certain deposits that have no stated maturity. Prepayment assumptions are developed using a combination of market data and internal historical prepayment experience for residential mortgage-related loans and securities, and internal historical prepayment experience for client deposits with no stated maturity and loans that are not residential mortgage related. These assumptions are subject to monthly back-testing, and are adjusted as deemed necessary to reflect changes in interest rates relative to the reference rate of the underlying assets or liabilities. On a monthly basis, BB&T evaluates the accuracy of its Simulation model, which includes an evaluation of its prepayment assumptions, to ensure that all significant assumptions inherent in the model appropriately reflect changes in the interest rate environment and related trends in prepayment activity. It is the responsibility of the MRLCC to determine and achieve the most appropriate volume and mix of earning assets and interest-bearing liabilities, as well as to ensure an adequate level of liquidity and capital, within the context of corporate performance goals. The MRLCC also sets policy guidelines and establishes long-term strategies with respect to interest rate risk exposure and liquidity. The MRLCC meets regularly to review BB&T's interest rate risk and liquidity positions in relation to present and prospective market and business conditions, and adopts funding and balance sheet management strategies that are intended to ensure that the potential impacts on earnings and liquidity as a result of fluctuations in interest rates are within acceptable tolerance guidelines. BB&T uses derivatives primarily to manage economic risk related to securities, commercial loans, MSRs and mortgage banking operations, long-term debt and other funding sources. BB&T also uses derivatives to facilitate transactions on behalf of its clients. As of June 30, 2014, BB&T had derivative financial instruments outstanding with notional amounts totaling $61.5 billion, with a net fair value gain of $55 million. See Note 13 "Derivative Financial Instruments" in the "Notes to Consolidated Financial Statements" herein for additional disclosures. The majority of BB&T's assets and liabilities are monetary in nature and, therefore, differ greatly from most commercial and industrial companies that have significant investments in fixed assets or inventories. Fluctuations in interest rates and actions of the FRB to regulate the availability and cost of credit have a greater effect on a financial institution's profitability than do the effects of higher costs for goods and services. Through its balance sheet management function, which is monitored by the MRLCC, management believes that BB&T is positioned to respond to changing needs for liquidity, changes in interest rates and inflationary trends. 73 Table of Contents Management uses the Simulation to measure the sensitivity of projected earnings to changes in interest rates. The Simulation projects net interest income and interest rate risk for a rolling two-year period of time. The Simulation takes into account the current contractual agreements that BB&T has made with its customers on deposits, borrowings, loans, investments and commitments to enter into those transactions. Furthermore, the Simulation considers the impact of expected customer behavior. Management monitors BB&T's interest sensitivity by means of a model that incorporates the current volumes, average rates earned and paid, and scheduled maturities and payments of asset and liability portfolios, together with multiple scenarios that include projected prepayments, repricing opportunities and anticipated volume growth. Using this information, the model projects earnings based on projected portfolio balances under multiple interest rate scenarios. This level of detail is needed to simulate the effect that changes in interest rates and portfolio balances may have on the earnings of BB&T. This method is subject to the accuracy of the assumptions that underlie the process, but management believes that it provides a better illustration of the sensitivity of earnings to changes in interest rates than other analyses such as static or dynamic gap. In addition to the Simulation, BB&T uses EVE analysis to focus on projected changes in capital given potential changes in interest rates. This measure also allows BB&T to analyze interest rate risk that falls outside the analysis window contained in the Simulation. 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 the economic value of equity. The asset/liability management process requires a number of key assumptions. Management determines the most likely outlook for the economy and interest rates by analyzing external factors, including published economic projections and data, the effects of likely monetary and fiscal policies, as well as any enacted or prospective regulatory changes. BB&T's current and prospective liquidity position, current balance sheet volumes and projected growth, accessibility of funds for short-term needs and capital maintenance are also considered. This data is combined with various interest rate scenarios to provide management with the information necessary to analyze interest sensitivity and to aid in the development of strategies to reach performance goals. The following table shows the effect that the indicated changes in interest rates would have on net interest income as projected for the next twelve months assuming a gradual change in interest rates as described below. 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, deposit sensitivity, customer preferences and capital plans. The resulting change in net interest income reflects the level of sensitivity that interest sensitive income has in relation to changing interest rates. Table 16 Interest Sensitivity Simulation Analysis Annualized Hypothetical Interest Rate Scenario Percentage Change in Linear Prime Rate Net Interest Income Change in June 30, June 30, Prime Rate 2014 2013 2014 2013 Up 200 bps 5.25 % 5.25 % 2.10 % 3.94 % Up 100 4.25 4.25 1.37 2.47 No Change 3.25 3.25 - - Down 25 3.00 3.00 0.35 (0.11) 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:



Maximum negative impact on net interest income of 2% for the next 12 months

assuming a linear change in interest rates totaling 100 basis points over four

months followed by a flat interest rate scenario for the remaining eight month

period.



Maximum negative impact on net interest income of 4% for the next 12 months

assuming a linear change of 200 basis points over eight months followed by a

flat interest rate scenario for the remaining four month period. 74 Table of Contents If a rate change of 200 basis points cannot be modeled due to a low level of rates, a proportional limit applies. Management currently only models a negative 25 basis point decline because larger declines would have resulted in a Federal funds rate of less than zero. In a situation such as this, 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 1% or the proportional limit. Management has also established a maximum negative impact on net interest income of 4% for an immediate 100 basis points change in rates and 8% for an immediate 200 basis points 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 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'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 80% to its managed rate deposits for determining its interest rate sensitivity. Managed rate deposits are high beta, premium money market and interest checking accounts, which attract significant client funds when needed to support balance sheet growth. 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 effect that the loss of demand deposits and an associated increase in managed rate deposits would have on BB&T's 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%. Table 17 Deposit Mix Sensitivity Analysis Results Assuming a Decrease in Linear Change Base Scenario Noninterest



Bearing Demand Deposits

at June 30, 2014 in Rates (1) $1 Billion$5 Billion Up 200 bps 2.10 % 1.83 % 0.77 % Up 100 1.37 1.20 0.54



(1) The base scenario is equal to the annualized hypothetical percentage change in net interest income at June

30, 2014 as presented in the preceding table. If rates increased 200 basis points, BB&T could absorb the loss of $7.9 billion, or 21.1%, 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. Table 18 EVE Simulation Analysis Hypothetical Percentage EVE/Assets Change in EVE Change in June 30, June 30, Interest Rates 2014 2013 2014 2013 Up 200 bps 10.7 % 8.3 % (1.4) % 2.1 % Up 100 10.9 8.4 0.3 2.5 No Change 10.9 8.2 - - Down 25 10.8 8.1 (0.8) (1.4) 75 Table of Contents



Market Risk from Trading Activities

BB&T also manages market risk from trading activities which consists of acting as a financial intermediary to provide its customers access to derivatives, foreign exchange and securities markets. Trading market risk is managed through the use of statistical and non-statistical risk measures and limits. BB&T utilizes a historical VaR methodology to measure and aggregate risks across its covered trading LOBs. This methodology uses two years of historical data to estimate economic outcomes for a one-day time horizon at a 99% confidence level. The average 99% one-day VaR and the maximum daily VaR for the three months ended June 30, 2014 and 2013 were each less than $1 million. Market risk disclosures under Basel II.5 are available in the Additional Disclosures section of the Investor Relations site on www.bbt.com.



Contractual Obligations, Commitments, Contingent Liabilities, Off-Balance Sheet Arrangements and Related Party Transactions

Refer to BB&T's Annual Report on Form 10-K for the year ended December 31, 2013 for discussion with respect to BB&T's quantitative and qualitative disclosures about its fixed and determinable contractual obligations. Additional disclosures about BB&T's contractual obligations, commitments and derivative financial instruments are included in Note 11 "Commitments and Contingencies" and Note 12 "Fair Value Disclosures" in the "Notes to Consolidated Financial Statements."



The following table presents activity in residential mortgage indemnification, recourse and repurchase reserves:

Table 19 Mortgage Indemnification, Recourse and



Repurchase Reserves Activity (1)

Three Months Ended June 30, Six Months Ended June 30, 2014 2013 2014 2013



(Dollars in millions)

Balance, at beginning of period $ 61 $ 71 $ 72$ 71 Payments (4) (9) (16) (14) Expense 41 9 42 14 Balance, at end of period $ 98 $ 71 $ 98$ 71



(1) Excludes the FHA-insured mortgage loan reserve of $85 million established during the second quarter of 2014.

Liquidity Liquidity represents the continuing ability to meet funding needs, including deposit withdrawals, timely repayment of borrowings and other liabilities, and funding of loan commitments. In addition to the level of liquid assets, such as cash, cash equivalents and AFS securities, many other factors affect the ability to meet liquidity needs, including access to a variety of funding sources, maintaining borrowing capacity in national money markets, growing core deposits, the repayment of loans and the ability to securitize or package loans for sale. BB&T monitors the ability to meet customer demand for funds under both normal and stressed market conditions. In considering its liquidity position, management evaluates BB&T's funding mix based on client core funding, client rate-sensitive funding and non-client rate-sensitive funding. In addition, management also evaluates exposure to rate-sensitive funding sources that mature in one year or less. Management also measures liquidity needs against 30 days of stressed cash outflows for Branch Bank. To ensure a strong liquidity position, management maintains a liquid asset buffer of cash on hand and highly liquid unpledged securities. The Company has established a policy that the liquid asset buffer would be a minimum of 5% of total assets, but intends to maintain the ratio well in excess of this level. As of June 30, 2014 and December 31, 2013, BB&T's liquid asset buffer was 16.2% and 14.6%, respectively, of total assets. In November 2013, the FDIC, FRB and OCC released a joint statement providing a notice of proposed rulemaking concerning the U.S. implementation of the Basel III liquidity coverage ratio rule. BB&T continues to evaluate the impact and has implemented balance sheet changes to support its compliance with the rule. These actions include changing the mix of the investment portfolio to include more GNMA and U.S. Treasury securities, which qualify as Level 1 under the rule, and changing its deposit mix to increase retail and commercial deposits. Based on management's interpretation of the proposed rules that will be effective January 1, 2015, BB&T's liquidity coverage ratio was approximately 93% at June 30, 2014, compared to the regulatory minimum of 80%. 76 Table of Contents Parent Company The purpose of the Parent Company is to serve as the primary capital financing vehicle for the operating subsidiaries. The assets of the Parent Company primarily consist of cash on deposit with Branch Bank, equity investments in subsidiaries, advances to subsidiaries, accounts receivable from subsidiaries, and other miscellaneous assets. The principal obligations of the Parent Company are principal and interest payments on long-term debt. The main sources of funds for the Parent Company are dividends and management fees from subsidiaries, repayments of advances to subsidiaries, and proceeds from the issuance of equity and long-term debt. The primary uses of funds by the Parent Company are for investments in subsidiaries, advances to subsidiaries, dividend payments to common and preferred shareholders, retirement of common stock and interest and principal payments due on long-term debt. Liquidity at the Parent Company is more susceptible to market disruptions. BB&T prudently manages cash levels at the Parent Company to cover a minimum of one year of projected contractual cash outflows which includes unfunded external commitments, debt service, preferred dividends and scheduled debt maturities without the benefit of any new cash infusions. Generally, BB&T maintains a significant buffer above the projected one year of contractual cash outflows. In determining the buffer, BB&T considers cash requirements for common and preferred dividends, unfunded commitments to affiliates, being a source of strength to its banking subsidiaries and being able to withstand sustained market disruptions that could limit access to the capital markets. As of June 30, 2014 and December 31, 2013, the Parent Company had 35 months and 27 months, respectively, of cash on hand to satisfy projected contractual cash outflows as described above. Branch Bank

BB&T carefully manages liquidity risk at Branch Bank. Branch Bank's primary source of funding is customer deposits. Continued access to customer deposits is highly dependent on the confidence the public has in the stability of the bank and its ability to return funds to the client when requested. BB&T maintains a strong focus on its reputation in the market to ensure continued access to client deposits. BB&T integrates its risk appetite into its overall risk management framework to ensure the bank does not exceed its risk tolerance through its lending and other risk taking functions and thus risk becoming undercapitalized. BB&T believes that sufficient capital is paramount to maintaining the confidence of its depositors and other funds providers. BB&T has extensive capital management processes in place to ensure it maintains sufficient capital to absorb losses and maintain a highly capitalized position that will instill confidence in the bank and allow continued access to deposits and other funding sources. Branch Bank monitors many liquidity metrics at the bank including funding concentrations, diversification, maturity distribution, contingent funding needs and ability to meet liquidity requirements under times of stress. Branch Bank has several major sources of funding to meet its liquidity requirements, including access to capital markets through issuance of senior or subordinated bank notes and institutional CDs, access to the FHLB system, dealer repurchase agreements and repurchase agreements with commercial clients, access to the overnight and term Federal funds markets, use of a Cayman branch facility, access to retail brokered CDs and a borrower in custody program with the FRB for the discount window. As of June 30, 2014, BB&T has approximately $66.5 billion of secured borrowing capacity, which represents approximately 437% of one year wholesale funding maturities. Capital The maintenance of appropriate levels of capital is a management priority and is monitored on a regular basis. BB&T's principal goals related to the maintenance of capital are to provide adequate capital to support BB&T's risk profile consistent with the Board-approved risk appetite, provide financial flexibility to support future growth and client needs, comply with relevant laws, regulations, and supervisory guidance, achieve optimal credit ratings for BB&T and its subsidiaries and provide a competitive return to shareholders. Management regularly monitors the capital position of BB&T on both a consolidated and bank level basis. In this regard, management's overriding policy is to maintain capital at levels that are in excess of the operating capital guidelines, which are above the regulatory "well capitalized" levels. Management has implemented stressed capital ratio minimum guidelines to evaluate whether capital ratios calculated with planned capital actions are likely to remain above minimums specified by the FRB for the annual CCAR. Breaches of stressed minimum guidelines prompt a review of the planned capital actions included in BB&T's capital plan. 77 Table of Contents Table 20 BB&T's Internal Capital Guidelines Prior to Basel III Operating Stressed Tier 1 Capital Ratio 10.0 % 7.5 % Total Capital Ratio 12.0 9.5 Tier 1 Leverage Capital Ratio 7.0 5.0 Tangible Common Equity Ratio 6.0 4.0 Tier 1 Common Equity Ratio 8.5 6.0

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 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's overall capital policy provided the Company and Branch Bank remain "well-capitalized."



During the second quarter of 2014, BB&T increased the quarterly dividend from $0.23 per share to $0.24 per share.

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.

Table 21 Capital Ratios (1) June 30, 2014December 31, 2013



(Dollars in millions, except per share

data, shares in thousands) Risk-based: Tier 1 12.0 % 11.8 % Total 14.3 14.3 Leverage capital 9.5 9.3 Non-GAAP capital measures (2) Tangible common equity as a percentage of tangible assets 7.7 % 7.3 % Tier 1 common equity as a percentage of risk-weighted assets 10.2 9.9 Tangible common equity per common share $ 19.26$ 18.08 Calculations of tangible common equity, Tier 1 common equity and tangible assets (2): Total shareholders' equity $ 23,965$ 22,809 Less: Preferred stock 2,603 2,603 Noncontrolling interests 85 50 Intangible assets 7,420 7,383 Tangible common equity 13,857 12,773 Add: Regulatory adjustments 524 698 Tier 1 common equity (Basel I) $ 14,381$ 13,471 Total assets $ 188,012$ 183,010 Less: Intangible assets 7,420 7,383 Tangible assets $ 180,592$ 175,627 Risk-weighted assets $ 141,436$ 136,489 Common shares outstanding at end of period 719,584 706,620



(1) Regulatory capital information is preliminary.

(2) Tangible common equity, Tier 1 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. 78 Table of Contents Table 22 Basel III Capital Ratios (1) December 31, June 30, 2014 2013



(Dollars in millions)

Tier 1 common equity under Basel I definition $



14,381 $ 13,471

Net impact of differences between Basel I and Basel III

definitions 92 98 Common equity Tier 1 under Basel III definition $



14,473 $ 13,569

Risk-weighted assets under Basel III definition $



145,062 $ 140,670

Common equity Tier 1 ratio under Basel III 10.0 % 9.7 %



(1) Regulatory capital information is preliminary. The Basel III amounts are based upon management's

preliminary interpretation of the rules adopted by the FRB on July 2, 2013 and are subject to change.

Table 23 Capital



Requirements Under Basel III

Minimum Well-



Minimum Capital Plus Capital Conservation Buffer BB&T

Capital Capitalized 2016 2017 2018 2019 (1) Target Common equity Tier 1 to risk-weighted assets 4.5 % 6.5



% 5.125 % 5.750 % 6.375 % 7.000 % 8.5 % Tier 1 capital to risk-weighted assets

6.0 8.0 6.625 7.250 7.875 8.500 10.0 Total capital to risk-weighted assets 8.0 10.0

8.625 9.250 9.875 10.500 12.0 Leverage ratio 4.0 5.0 N/A N/A N/A N/A 7.0



(1) Upon Basel III becoming effective on January 1, 2015, BB&T's goal is to maintain capital levels above the 2019 requirements.

Share Repurchase Activity No shares were repurchased in connection with the 2006 Repurchase Plan during 2014. Table 24 Share Repurchase Activity Maximum Remaining Number of Shares Total Average Total Shares Purchased Available for Repurchase Shares Price Paid Pursuant to Pursuant to Repurchased (1) Per Share (2)



Publicly-Announced Plan Publicly-Announced Plan

(Shares in thousands) April 2014 4 $ 39.74 - 44,139 May 2014 9 37.31 - 44,139 June 2014 9 38.94 - 44,139 Total 22 38.39 - 44,139



(1) Repurchases reflect shares exchanged or surrendered in connection with the

exercise of equity-based awards under BB&T's equity-based compensation plans.

(2) Excludes commissions. 79 Table of Contents Non-GAAP Information Diluted EPS has been presented that excludes the effects of certain adjustments related to FHA-insured loans and a tax-related reserve recognized during the second quarter of 2014. BB&T believes this adjusted measure is meaningful as excluding the adjustments increases the comparability of certain period-to-period results. The following table reconciles this adjusted measure to its corresponding GAAP amount. Quarter Ended June 30, 2014 FHA-insured Mortgage Reserve Indemnification Reported Adjustment Reserve Adjustment Tax Adjustment Adjusted Net income available to common shareholders $ 425$ 53 $ 21 $ 14 $ 513 Weighted average number of diluted common shares 728,452 - - - 728,452 Diluted EPS $ 0.58$ 0.70


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