Securities

6 Months Ended

Jun. 30, 2013

Securities

Securities

NOTE 2. Securities

			Amortized		Gross Unrealized				Fair
June 30, 2013			Cost		Gains		Losses		Value
			(Dollars in millions)
AFS securities:
	GSE securities		$	441	$	—	$	—	$	441
	RMBS issued by GSE			20,473		142		272		20,343
	States and political subdivisions			1,901		81		94		1,888
	Non-agency RMBS			284		11		10		285
	Other securities			5		—		—		5
	Covered securities			1,080		435		—		1,515
		Total AFS securities	$	24,184	$	669	$	376	$	24,477
HTM securities:
	GSE securities		$	5,200	$	—	$	272	$	4,928
	RMBS issued by GSE			8,059		27		68		8,018
	States and political subdivisions			33		1		—		34
	Other securities			459		6		—		465
		Total HTM securities	$	13,751	$	34	$	340	$	13,445

			Amortized		Gross Unrealized				Fair
December 31, 2012			Cost		Gains		Losses		Value
			(Dollars in millions)
AFS securities:
	GSE securities		$	290	$	—	$	—	$	290
	RMBS issued by GSE			20,482		466		18		20,930
	States and political subdivisions			1,948		153		90		2,011
	Non-agency RMBS			307		16		11		312
	Other securities			3		—		—		3
	Covered securities			1,147		444		—		1,591
		Total AFS securities	$	24,177	$	1,079	$	119	$	25,137
HTM securities:
	GSE securities		$	3,808	$	17	$	1	$	3,824
	RMBS issued by GSE			9,273		238		1		9,510
	States and political subdivisions			34		1		1		34
	Other securities			479		4		3		480
		Total HTM securities	$	13,594	$	260	$	6	$	13,848

As of June 30, 2013 and December 31, 2012, the fair value of covered securities included $1.2 billion and $1.3 billion, respectively, of non-agency RMBS and $316 million and $326 million, respectively, of municipal securities.

As of June 30, 2013 and December 31, 2012, securities with carrying values of approximately $18.3 billion and $19.0 billion, respectively, were pledged to secure municipal deposits, securities sold under agreements to repurchase, other borrowings, and for other purposes as required or permitted by law.

BB&T had certain investments in marketable debt securities and RMBS issued by FNMA and FHLMC that exceeded ten percent of shareholders' equity at June 30, 2013. The FNMA investments had total amortized cost and fair value of $14.2 billion and $13.9 billion, respectively. The FHLMC investments had total amortized cost and fair value of $7.8 billion and $7.7 billion, respectively.

The gross realized gains and losses on securities are reflected in the following table:
		Three Months Ended				Six Months Ended
		June 30,				June 30,
			2013		2012		2013		2012
		(Dollars in millions)
	Gross gains	$	23	$	―	$	46	$	―
	Gross losses		―		―		―		(4)
	Net realized gains (losses)	$	23	$	―	$	46	$	(4)

The following table reflects changes in credit losses on securities with OTTI (excluding covered), which were primarily non-agency RMBS, where a portion of the unrealized loss was recognized in OCI. OTTI of $4 million related to covered securities during 2012 is not reflected in this table.

	Three Months Ended				Six Months Ended
	June 30,				June 30,
		2013		2012		2013		2012
	(Dollars in millions)
Balance at beginning of period	$	101	$	114	$	105	$	129
Credit losses on securities with previously recognized OTTI		―		2		―		3
Reductions for securities sold/settled during the period		(5)		(4)		(9)		(20)
Balance at end of period	$	96	$	112	$	96	$	112

The amortized cost and estimated fair value of the securities portfolio by contractual maturity are shown in the following table.The expected life of RMBS may differ from contractual maturities because borrowers have the right to prepay the underlying mortgage loans with or without prepayment penalties.

		AFS				HTM
		Amortized		Fair		Amortized		Fair
June 30, 2013		Cost		Value		Cost		Value
		(Dollars in millions)
Due in one year or less		$	259	$	259	$	―	$	―
Due after one year through five years			305		312		―		―
Due after five years through ten years			536		555		4,555		4,326
Due after ten years			23,084		23,351		9,196		9,119
	Total debt securities	$	24,184	$	24,477	$	13,751	$	13,445

The following tables present the fair values and gross unrealized losses of BB&T’s investments based on the length of time that individual securities have been in a continuous unrealized loss position:
				Less than 12 months				12 months or more				Total
				Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
	June 30, 2013			Value		Losses		Value		Losses		Value		Losses
				(Dollars in millions)
	AFS securities:
		RMBS issued by GSE		$	11,392	$	272	$	1	$	—	$	11,393	$	272
		States and political subdivisions			239		9		423		85		662		94
		Non-agency RMBS			—		—		105		10		105		10
			Total	$	11,631	$	281	$	529	$	95	$	12,160	$	376
	HTM securities:
		GSE securities		$	4,812	$	272	$	—	$	—	$	4,812	$	272
		RMBS issued by GSE			5,966		68		48		—		6,014		68
			Total	$	10,778	$	340	$	48	$	—	$	10,826	$	340

			Less than 12 months				12 months or more				Total
			Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
December 31, 2012			Value		Losses		Value		Losses		Value		Losses
			(Dollars in millions)
AFS securities:
	RMBS issued by GSE		$	2,662	$	18	$	—	$	—	$	2,662	$	18
	States and political subdivisions			52		1		478		89		530		90
	Non-agency RMBS			—		—		113		11		113		11
		Total	$	2,714	$	19	$	591	$	100	$	3,305	$	119
HTM securities:
	GSE securities		$	805	$	1	$	—	$	—	$	805	$	1
	RMBS issued by GSE			593		1		—		—		593		1
	States and political subdivisions			22		1		—		—		22		1
	Other securities			266		3		—		—		266		3
		Total	$	1,686	$	6	$	—	$	—	$	1,686	$	6

BB&T conducts periodic reviews to identify and evaluate each investment with an unrealized loss for OTTI. An unrealized loss exists when the current fair value of an individual security is less than its amortized cost basis. Unrealized losses that are determined to be temporary in nature are recorded, net of tax, in AOCI for AFS securities.

BB&T uses cash flow modeling to evaluate non-agency RMBS in an unrealized loss position for potential credit impairment. These models give consideration to long-term macroeconomic factors applied to current security default rates, prepayment rates and recovery rates and security-level performance. At June 30, 2013, three non-agency RMBS with an unrealized loss were below investment grade. None of the unrealized losses were significant.

At June 30, 2013, $76 million of unrealized loss on municipal securities was the result of fair value hedge basis adjustments that are a component of amortized cost. Municipal securities in an unrealized loss position are evaluated for credit impairment through a qualitative analysis of issuer performance and the primary source of repayment. The evaluation of municipal securities indicated there were no credit losses evident.