UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q

Quarterly Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934

For the quarterly period ended:

June 30, 2002

Commission file number: 1-10853

BB&T CORPORATION
(exact name of registrant as specified in its charter)


North Carolina	56-0939887
(State of Incorporation)	(I.R.S. Employer Identification No.)

200 West Second Street	27101
Winston-Salem, North Carolina	(Zip Code)
(Address of Principal Executive Offices)

(336) 733-2000
(Registrant's Telephone Number, Including Area Code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [ X ] No [__]

At July 31, 2002, 476,241,929 shares of the registrant's common stock, $5 par value, were outstanding.

This Form 10-Q has 50 pages. The Exhibit Index begins on page 42.

BB&T CORPORATION

FORM 10-Q

June 30, 2002

INDEX

	Page No.


Part I. FINANCIAL INFORMATION

Item 1. Financial Statements (Unaudited)	2

Consolidated Financial Statements	2

Notes to Consolidated Financial Statements	6

Item 2. Management's Discussion and Analysis of Financial Condidion and Results of Operations	17

Analysis of Financial Condition	19

Market Risk Management	25

Capital Adequacy and Resources	28

Analysis of Results of Operations	30

Item 3. Quantitative and Qualitative Disclosures About Market Risk	25

Part II. OTHER INFORMATION

Item 1. Legal Proceedings	41

Item 4. Submission of Matters to a Vote of Security Holders	41

Item 6. Exhibits and Reports on Form 8-K	42

SIGNATURES	50

BB&T Corporation Page 1 Second Quarter 2002 10-Q

Part I. FINANCIAL INFORMATION

Item 1. Financial Statements

BB&T CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands, except per share data)

	June 30,			December 31,
	2002			2001

	(unaudited)
Assets
Cash and due from banks	$	1,675,484		$	1,871,437
Interest-bearing deposits with banks		82,331			114,749
Federal funds sold and securities purchased under resale agreements or
similar arrangements		248,224			246,040
Trading securities at fair value		132,305			97,675
Securities available for sale at fair value		18,076,387			16,621,684
Securities held to maturity (fair values of $47,375 at
June 30, 2002, and $40,488 at December 31, 2001)		47,366			40,496
Loans held for sale, lower of cost or fair value		962,664			1,907,416
Loans and leases, net of unearned income		49,567,270			45,535,757
Allowance for loan and lease losses		(706,446	)		(644,418	)

Loans and leases, net		48,860,824			44,891,339

Premises and equipment, net of accumulated depreciation		1,033,590			989,611
Goodwill		1,457,257			879,903
Other assets		3,757,009			3,209,595

Total assets	$	76,333,441		$	70,869,945


Liabilities and Shareholders' Equity
Deposits:
Noninterest-bearing deposits	$	7,625,530		$	6,939,640
Savings and interest checking		3,290,255			3,013,702
Money rate savings		14,632,630			13,902,088
Certificates of deposit and other time deposits		25,360,774			20,877,845

Total deposits		50,909,189			44,733,275

Short-term borrowed funds		4,930,434			6,649,100
Long-term debt		10,979,492			11,721,076
Accounts payable and other liabilities		2,385,970			1,616,285

Total liabilities		69,205,085			64,719,736

Shareholders' equity:
Preferred stock, $5 par, 5,000,000 shares authorized, none issued and
outstanding		--			--
Common stock, $5 par, 1,000,000,000 shares authorized;
issued and outstanding 475,535,863 at June 30, 2002, and
455,682,560 at December 31, 2001		2,377,679			2,278,413
Additional paid-in capital		953,670			418,565
Retained earnings		3,522,727			3,148,501
Unvested restricted stock		(892	)		(2,669	)
Accumulated other comprehensive income, net of income
taxes of $176,929 at June 30, 2002, and $201,207 at December 31, 2001		275,172			307,399

Total shareholders' equity		7,128,356			6,150,209

Total liabilities and shareholders' equity	$	76,333,441		$	70,869,945

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

BB&T Corporation Page 2 Second Quarter 2002 10-Q

BB&T CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
(Dollars in thousands, except per share data)

		For the Three Months Ended				For the Six Months Ended
		June 30,				June 30,

		2002		2001		2002		2001

Interest Income
Interest and fees on loans and leases	$	869,116	$	968,842	$	1,700,567	$	1,973,269
Interest and dividends on securities		251,595		254,187		499,284		514,854
Interest on short-term investments		1,554		4,988		4,047		11,443

Total interest income		1,122,265		1,228,017		2,203,898		2,499,566

Interest Expense
Interest on deposits		258,187		421,861		517,789		869,328
Interest on short-term borrowed funds		26,540		58,251		52,989		146,951
Interest on long-term debt		147,442		153,438		295,752		303,366

Total interest expense		432,169		633,550		866,530		1,319,645

Net Interest Income		690,096		594,467		1,337,368		1,179,921
Provision for loan and lease losses		58,500		48,798		115,000		90,818

Net Interest Income After Provision for Loan and Lease Losses		631,596		545,669		1,222,368		1,089,103

Noninterest Income
Service charges on deposit accounts		101,476		87,992		191,638		167,444
Investment banking and brokerage fees and commissions		56,039		42,904		108,932		86,612
Mortgage banking income		43,963		51,482		94,525		57,674
Trust income		24,197		23,929		47,325		49,005
Agency insurance commissions		74,063		45,049		137,946		87,002
Other insurance commissions		3,986		3,549		7,471		6,389
Other nondeposit fees and commissions		52,480		47,750		96,596		92,190
Securities gains (losses), net		19,666		16,644		33,073		89,328
Other income		28,197		27,368		61,281		43,034

Total noninterest income		404,067		346,667		778,787		678,678

Noninterest Expense
Personnel expense		319,622		282,484		624,515		556,793
Occupancy and equipment expense		84,688		75,102		168,139		150,274
Amortization of intangibles		6,258		18,404		10,609		36,275
Merger-related and restructuring charges		1,554		54,191		16,173		108,047
Other noninterest expense		164,730		133,661		305,726		250,951

Total noninterest expense		576,852		563,842		1,125,162		1,102,340

Earnings
Income before income taxes and change in accounting principle		458,811		328,494		875,993		665,441
Provision for income taxes		130,859		91,265		248,176		191,712

Income before cumulative effect of change in accounting principle		327,952		237,229		627,817		473,729
Cumulative effect of change in accounting principle		--		--		9,780		--

Net income	$	327,952	$	237,229	$	637,597	$	473,729

Per Common Share
Basic Earnings:
Income before cumulative effect of change in accounting principle	$	.69	$	.53	$	1.33	$	1.05
Cumulative effect of change in accounting principle		--		--		.02		--

Net Income	$	.69	$	.53	$	1.35	$	1.05

Diluted Earnings:
Income before cumulative effect of change in accounting principle	$	.68	$	.52		1.32		1.03
Cumulative effect of change in accounting principle		--		--		.02		--

Net Income	$	.68	$	.52	$	1.34	$	1.03

Cash dividends paid	$	.26	$	.23	$	.52	$	.46

Average Shares Outstanding
Basic		478,121,878		451,712,342		470,554,054		452,171,070

Diluted		484,009,961		457,879,467		476,349,694		458,649,989

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

BB&T Corporation Page 3 Second Quarter 2002 10-Q

BB&T CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY

For the Six Months Ended June 30, 2002 and 2001
(Unaudited)
(Dollars in thousands)

													Accumulated
	Shares of						Additional			Retained			Other			Total
	Common			Common			Paid-In			Earnings			Comprehensive			Shareholders'
	Stock			Stock			Capital			and Other*			Income			Equity

Balance, December 31, 2000		453,307,379		$	2,266,537		$	423,404		$	2,625,571		$	104,297		$	5,419,809
Add (Deduct)
Comprehensive income:
Net income		--			--			--			473,729			--			473,729
Unrealized holding gains (losses) arising during
the period		--			--			--			--			204,314			204,314
Less: reclassification adjustment, net of tax
of $31,265		--			--			--			--			58,063			58,063

Net unrealized gains (losses) on securities		--			--			--			--			146,251			146,251
Unrecognized gain on cash flow hedges, net of
tax of $2,593		--			--			--			--			4,816			4,816

Total comprehensive income		--			--			--			473,729			151,067			624,796

Common stock issued		11,468,897			57,344			271,712			--			--			329,056
Redemption of common stock		(8,744,800	)		(43,724	)		(272,203	)		--			--			(315,927	)
Cash dividends declared on common stock		--			--			--			(221,396	)		--			(221,396	)
Other, net		--			--			16,408			2,953			--			19,361

Balance, June 30, 2001		456,031,476		$	2,280,157		$	439,321		$	2,880,857		$	255,364		$	5,855,699

Balance, December 31, 2001		455,682,560		$	2,278,413		$	418,565		$	3,145,832		$	307,399		$	6,150,209
Add (Deduct)
Comprehensive income:
Net income		--			--			--			637,597			--			637,597
Unrealized holding gains (losses) arising during
the period		--			--			--			--			24,491			24,491
Less: reclassification adjustment, net of tax
of $11,576		--			--			--			--			21,497			21,497

Net unrealized gains (losses) on securities		--			--			--			--			2,994			2,994
Unrecognized loss on cash flow hedge, net of
tax of $22,979		--			--			--			--			(35,221	)		(35,221	)

Total comprehensive income		--			--			--			637,597			(32,227	)		605,370

Common stock issued		26,838,203			134,191			755,225			--			--			889,416
Redemption of common stock		(6,984,900	)		(34,925	)		(230,345	)		--			--			(265,270	)
Cash dividends declared on common stock		--			--			--			(263,371	)		--			(263,371	)
Other, net		--			--			10,225			1,777			--			12,002

Balance, June 30, 2002		475,535,863		$	2,377,679		$	953,670		$	3,521,835		$	275,172		$	7,128,356

* Other includes unvested restricted stock.

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

BB&T Corporation Page 4 Second Quarter 2002 10-Q

BB&T CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

For the Six Months Ended June 30, 2002 and 2001
(Unaudited)
(Dollars in thousands)

	2002			2001

Cash Flows From Operating Activities:
Net income	$	637,597		$	473,729
Adjustments to reconcile net income to net cash provided
by operating activities:
Provision for loan and lease losses		115,000			90,818
Depreciation of premises and equipment		68,033			61,576
Amortization of intangibles		10,609			36,275
Adjustment / Accretion of negative goodwill		(9,780	)		(3,121	)
Amortization of unearned stock compensation		1,777			7,287
Discount accretion and premium amortization on securities, net		(1,153	)		(3,354	)
Net decrease (increase) in trading account securities		(34,630	)		(23,662	)
Loss (gain) on sales of securities, net		(33,073	)		(89,328	)
Loss (gain) on sales of loans held for sale		(46,523	)		--
Loss (gain) on disposals of premises and equipment, net		(6,853	)		(6,182	)
Proceeds from sales of loans held for sale		4,446,990			3,243,488
Purchases of loans held for sale		(832,266	)		(1,014,445	)
Origination of loans held for sale, net of principal collected		(2,623,449	)		(3,038,973	)
Tax benefit from exercise of stock options		10,225			12,967
Decrease (increase) in:
Accrued interest receivable		220			23,297
Other assets		(285,269	)		508,659
Increase (decrease) in:
Accrued interest payable		(11,243	)		(26,634	)
Accounts payable and other liabilities		499,700			151,567
Other, net		36			(26,611	)

Net cash provided by (used in) operating activities		1,905,948			377,353

Cash Flows From Investing Activities:
Proceeds from sales of securities available for sale		913,004			668,832
Proceeds from maturities, calls and paydowns of securities available for sale		1,485,569			1,008,167
Purchases of securities available for sale		(3,233,986	)		(1,082,734	)
Proceeds from maturities, calls and paydowns of securities held to maturity		10			124,295
Purchases of securities held to maturity		(6,880	)		(4,810	)
Leases made to customers		(103,573	)		(68,499	)
Principal collected on leases		71,962			51,119
Loan originations, net of principal collected		(935,344	)		(1,379,542	)
Purchases of loans		(139,787	)		(66,200	)
Net cash acquired (paid) in transactions accounted for under the purchase method		611,545			113,125
Purchases and originations of mortgage servicing rights		(98,856	)		(102,945	)
Proceeds from disposals of premises and equipment		20,769			10,168
Purchases of premises and equipment		(69,716	)		(99,980	)
Proceeds from sales of foreclosed property		22,316			21,654
Proceeds from sales of other real estate held for development or sale		4,964			3,688

Net cash used in (provided by) investing activities		(1,458,003	)		(803,662	)

Cash Flows From Financing Activities:
Net increase (decrease) in deposits		2,972,690			214,868
Net increase (decrease) in short-term borrowed funds		(2,424,045	)		(1,566,751	)
Proceeds from issuance of long-term debt		43,697			2,610,833
Repayments of long-term debt		(798,355	)		(390,969	)
Net proceeds from common stock issued		41,523			88,134
Redemption of common stock		(265,270	)		(315,927	)
Cash dividends paid on common stock		(244,372	)		(204,734	)

Net cash provided by (used in) financing activities		(674,132	)		435,454

Net Increase (Decrease) in Cash and Cash Equivalents		(226,187	)		9,145
Cash and Cash Equivalents at Beginning of Period		2,232,226			2,123,602

Cash and Cash Equivalents at End of Period	$	2,006,039		$	2,132,747

Supplemental Disclosure of Cash Flow Information:
Cash paid during the period for:
Interest	$	872,713		$	1,263,255
Income taxes		98,642			32,859
Noncash financing and investing activities:
Transfer of securities held to maturity to available for sale		--			53,739
Transfer of loans to foreclosed property		28,136			19,793
Transfer of other real estate owned to fixed assets		--			143
Transfer of fixed assets to other real estate owned		10,847			4,413
Securitization of mortgage loans		--			122,616

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

BB&T Corporation Page 5 Second Quarter 2002 10-Q

Back to Index

BB&T CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2002
(Unaudited)

A. Basis of Presentation

In the opinion of management, the accompanying unaudited consolidated financial statements contain all adjustments, consisting only of normal recurring adjustments, necessary to present fairly the consolidated balance sheets of BB&T Corporation and subsidiaries (referred to herein as “BB&T”, “the Corporation” or “the Company”) as of June 30, 2002, and December 31, 2001; the consolidated statements of income for the three and six months ended June 30, 2002 and 2001; the consolidated statements of changes in shareholders’ equity for the six months ended June 30, 2002 and 2001; and the consolidated statements of cash flows for the six months ended June 30, 2002 and 2001.

The consolidated financial statements and notes are presented in accordance with the instructions for Form 10-Q. The information contained in the footnotes included in BB&T’s 2001 Annual Report on Form 10-K should be referred to in connection with the reading of these unaudited interim consolidated financial statements. In certain instances, amounts reported in the 2001 financial statements have been reclassified to conform to the 2002 statement presentation. Such reclassifications had no effect on shareholders’ equity or net income.

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates. Material estimates that are particularly susceptible to significant change in the near term relate to the determination of the allowance for loan and lease losses, valuation of mortgage servicing rights, purchase accounting adjustments and deferred tax assets or liabilities.

B. Nature of Operations

BB&T is a financial holding company headquartered in Winston-Salem, North Carolina. BB&T conducts its business operations primarily through its commercial banking subsidiaries, which do business in North Carolina, South Carolina, Virginia, Maryland, West Virginia, Kentucky, Tennessee, Georgia, Alabama, Indiana and Washington, D.C. BB&T’s principal banking subsidiaries, Branch Banking and Trust Company (“Branch Bank”), Branch Banking and Trust Company of South Carolina (“BB&T-SC”) and Branch Banking and Trust Company of Virginia (“BB&T-VA”), provide a wide range of banking services to individuals and businesses. At June 30, 2002, BB&T was also the parent company for two subsidiary banks acquired through mergers with AREA Bancshares Corporation (“AREA”) and MidAmerica Bancorp (“MidAmerica”). These banks are expected to be merged with and into Branch Bank. BB&T’s subsidiary banks offer a variety of loans to businesses and consumers, including an array of mortgage loan products. BB&T’s loans are primarily to individuals residing in the market areas described above or to businesses that are located in this geographic area. BB&T’s banking subsidiaries also market a wide range of deposit services to individuals and businesses. Subsidiaries of BB&T’s commercial banking units offer lease financing to businesses and municipal governments; discount brokerage services and sales of annuities and mutual funds; life insurance, property and casualty insurance, health insurance and commercial general liability insurance on an agency basis; insurance premium financing; arranging permanent financing for commercial real estate and providing loan servicing for third-party investors; and asset management. Direct nonbank subsidiaries of BB&T provide a variety of financial services including automobile lending, equipment financing, factoring, full-service securities brokerage and capital markets services.

BB&T Corporation Page 6 Second Quarter 2002 10-Q

C. New Accounting Pronouncements

In June 2001, the FASB issued SFAS No. 141, “Business Combinations,” which supersedes Accounting Principles Board (“APB”) Opinion No. 16, “Business Combinations,” and SFAS No. 38, “Accounting for Preacquisition Contingencies of Purchased Enterprises.” The provisions of the Statement apply to all business combinations initiated after June 30, 2001. SFAS No. 141 requires that all business combinations be accounted for by the purchase method of accounting. This method requires the accounts of an acquired business to be included with the acquirer’s accounts as of the date of acquisition with any excess of purchase price over the fair value of the net assets acquired to be capitalized as goodwill or other intangibles. The Statement requires that the assets of an acquired company be recognized as assets apart from goodwill if they meet specific criteria presented in the Statement. The Statement ends the use of the pooling-of-interests method of accounting for business combinations, which required the restatement of all prior period information for the accounts of the acquired institution. BB&T has historically been a frequent acquirer and has used both the pooling-of-interests and purchase methods of accounting. As a result of the adoption of this statement, BB&T will account for all mergers and acquisitions initiated after June 30, 2001, using the purchase method.

In June 2001, the FASB issued SFAS No. 142, “Goodwill and Other Intangible Assets,” which supersedes APB Opinion No. 17, “Intangible Assets.” SFAS 142 addresses how intangible assets that are acquired individually or with a group of other assets (but not those acquired in a business combination) should be accounted for in financial statements upon their acquisition, and addresses how goodwill and other intangible assets should be accounted for after they have been initially recognized in the financial statements. The Statement eliminates the requirement to amortize goodwill and other intangible assets that have indefinite useful lives, instead requiring that the assets be tested at least annually for impairment based on the specific guidance in the Statement. BB&T adopted the provisions of the Statement effective January 1, 2002, as required, and applied the provisions of the Statement to all goodwill and other intangible assets recognized in the financial statements. The impact of adoption was reflected as a cumulative effect of a change in accounting principle in the Consolidated Statements of Income, resulting in the reversal of unamortized negative goodwill as required by paragraph 62 of SFAS No. 141. Following the adoption of SFAS No. 142, BB&T expects the amortization of goodwill and other intangibles to be reduced by approximately $50 million for 2002. SFAS No. 142 also requires a transitional impairment test of all goodwill and other indefinite-lived intangible assets in conjunction with its initial application. The Statement required this test to be performed prior to June 30, 2002, with any resulting impairment loss to be reported as a change in accounting principle. No impairment was recorded based on the results of these tests.

BB&T Corporation Page 7 Second Quarter 2002 10-Q

In June 2001, the FASB issued SFAS No. 143, “Accounting for Asset Retirement Obligations,” which addresses financial accounting and reporting for obligations associated with the retirement of tangible long-lived assets and the associated asset retirement costs. The Statement is effective beginning January 1, 2003. Management does not expect the implementation of the Statement to have a material impact on either BB&T’s consolidated financial position or consolidated results of operations.

In August 2001, the FASB issued SFAS No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets,” which supercedes SFAS No. 121, “Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of,” and the accounting and reporting provisions of APB Opinion No. 30, “Reporting the Results of Operations–Reporting the Effects of Disposal of a Segment of a Business, and Extraordinary, Unusual and Infrequently Occurring Events and Transactions.” The Statement establishes a single accounting model for long-lived assets to be disposed of by a sale, and resolves significant implementation issues related to SFAS No. 121. The provisions of the Statement were adopted by BB&T on January 1, 2002. The implementation did not have a material impact on either BB&T’s consolidated financial position or consolidated results of operations.

In May 2002, the FASB issued SFAS No. 145, “Rescission of FASB Statements No. 4, 44, and 64, Amendment of FASB Statement No. 13, and Technical Corrections as of April 2002". This Statement rescinds SFAS No. 4, “Reporting Gains and Losses from Extinguishment of Debt”, and an amendment of that Statement, SFAS No. 64, “Extinguishments of Debt Made to Satisfy Sinking-Fund Requirements.” This Statement also rescinds SFAS No. 44, “Accounting for Intangible Assets of Motor Carriers” and amends SFAS No. 13, “Accounting for Leases”, to eliminate an inconsistency between the required accounting for sale-leaseback transactions and the required accounting for certain lease modifications that have economic effects that are similar to sale-leaseback transactions. This Statement also amends other existing authoritative pronouncements to make various technical corrections, clarify meanings, or describe their applicability under changed conditions. BB&T will adopt the provisions of this Statement effective January 1, 2003. Management does not anticipate that the implementation of this Statement will have a material impact on BB&T’s consolidated financial position or consolidated results of operations.

In August 2002, the FASB issued SFAS No. 146, “Accounting for Costs Associated with Exit or Disposal Activities”. SFAS No. 146 requires that a liability for a cost that is associated with an exit or disposal activity be recognized when the liability is incurred. This Statement nullifies the guidance of the Emerging Issues Task Force (“EITF”) in EITF Issue No. 94-3, “Liability Recognition for Certain Employee Termination Benefits and Other Costs to Exit an Activity (including Certain Costs Incurred in a Restructuring)”. Under EITF Issue No. 94-3, an entity recognized a liability for an exit cost on the date that the entity committed itself to an exit plan. In SFAS No. 146, the Board acknowledges that an entity’s commitment to a plan does not, by itself, create a present obligation to other parties that meets the definition of a liability. SFAS No. 146 also establishes that fair value is the objective for the initial measurement of the liability. SFAS No. 146 will be effective for exit or disposal activities that are initiated after December 31, 2002. BB&T will adopt the provisions of this Statement effective January 1, 2003. Management does not anticipate that the implementation of this Statement will have a material impact on BB&T’s consolidated financial position or consolidated results of operations.

BB&T Corporation Page 8 Second Quarter 2002 10-Q

D. Mergers and Acquisitions

The following table presents summary information with respect to significant mergers and acquisitions completed by BB&T Corporation during 2001 and thus far during 2002:

Summary of Completed Mergers and Acquisitions
(Dollars in millions)

											BB&T Common
									Total		Shares Issued
Date of			Total		Accounting		Intangibles		Purchase		to Complete
Acquisition	Acquired Company	Headquarters	Assets		Method		Recorded		Price		Transaction

March 20, 2002	Area Bancshares Corporation	Owensboro, Ky.	$	2.9 billion		Purchase	$	283.4 million	$	448.9 million	$	13.2 million
March 8, 2002	MidAmerica Bancorp	Louisville, Ky.		2.0 billion		Purchase		203.3 million		379.8 million		8.2 million (1)
January 1, 2002	Cooney, Rikard & Curtin, Inc.	Birmingham, Al.		108.6 million		Purchase		101.9 million		85.6 million		2.5 million

December 12, 2001	Community First Banking
	Company	Carrollton, Ga.	$	548.1 million		Purchase	$	102.1 million	$	132.2 million		3.5 million
August 9, 2001	F&M National Corporation	Winchester, Va.		4.0 billion		Pooling		N/A		N/A		31.1 million
June 27, 2001	Virginia Capital Bancshares, Inc.	Fredericksburg, Va.		532.7 million		Purchase		15.2 million		15.2 million		4.7 million
June 7, 2001	Century South Banks, Inc.	Alpharetta, Ga.		1.7 billion		Pooling		N/A		N/A		12.7 million
March 2, 2001	FirstSpartan Financial Corp.	Spartanburg, S.C.		591.0 million		Purchase		42.9 million		107.6 million		3.8 million
January 8, 2001	FCNB Corp.	Frederick, Md.		1.6 billion		Pooling		N/A		N/A		8.7 million

N/A - Not applicable or terms not disclosed.

(1) BB&T also paid cash totaling $68.2 million to complete this acquistion.

The table above does not include mergers and acquisitions of acquired companies prior to their acquisition by BB&T or insurance agency acquisitions, which are summarized below.

During the six months ended June 30, 2002, BB&T acquired four insurance agencies that were accounted for as purchases. In conjunction with these transactions, BB&T issued approximately .3 million shares of common stock and paid $1.4 million in cash, recording approximately $17.1 million in intangible assets. The total purchase price of these four insurance agencies was $12.7 million. BB&T acquired seven insurance agencies during 2001, which were accounted for as purchases. In conjunction with these 2001 transactions, BB&T issued .3 million shares of common stock and recorded $16.5 million in goodwill and other intangible assets. The total purchase price of these seven insurance agencies was $15.7 million.

BB&T typically provides an allocation period, not to exceed one year, to identify and quantify the fair value of the assets acquired and liabilities assumed in business combinations accounted for as purchases. Management currently does not anticipate any material adjustments to the assigned values of the assets and liabilities of acquired companies.

Pending Mergers and Acquisitions

On May 22, 2002, BB&T announced plans to acquire Regional Financial Corporation (“Regional”) of Tallahassee, Florida. Regional is the holding company for First South Bank, a $1.6 billion thrift, which operates 11 full-service retail branches, three limited-service branches, and eight mortgage loan production offices. BB&T will issue 7.265 million shares of its stock in exchange for all outstanding shares of Regional. The transaction, which is subject to regulatory approval, is expected to close in the third quarter.

BB&T Corporation Page 9 Second Quarter 2002 10-Q

E. Calculation of Earnings Per Common Share

BB&T’s basic and diluted earnings per common share amounts were calculated as follows:

BB&T CORPORATION AND SUBSIDIARIES
COMPUTATION OF EARNINGS PER SHARE

	For the Three Months				For the Six Months
	Ended June 30,				Ended June 30,

	2002		2001		2002		2001

	(Dollars in thousands, except per share data)
Basic Earnings Per Share:
Weighted average number of common shares outstanding during the period		478,121,878		451,712,342		470,554,054		452,171,070

Income before cumulative effect of change in accounting principle	$	327,952	$	237,229	$	627,817	$	473,729
Cumulative effect of change in accounting principle		--		--		9,780		--

Net income	$	327,952	$	237,229	$	637,597	$	473,729

Basic earnings per share
Income before cumulative effect of change in accounting principle	$	.69	$	.53	$	1.33	$	1.05
Cumulative effect of change in accounting principle		--		--		.02		--

Net income	$	.69	$	.53	$	1.35	$	1.05

Diluted Earnings Per Share:
Weighted average number of common shares		478,121,878		451,712,342		470,554,054		452,171,070
Add:
Dilutive effect of outstanding options (as determined by application of
treasury stock method)		5,888,083		6,167,125		5,795,640		6,478,919

Weighted average number of common shares, as adjusted		484,009,961		457,879,467		476,349,694		458,649,989

Income before cumulative effect of change in accounting principle	$	327,952	$	237,229	$	627,817	$	473,729
Cumulative effect of change in accounting principle		--		--		9,780		--

Net income	$	327,952	$	237,229	$	637,597	$	473,729

Diluted earnings per share
Income before cumulative effect of change in accounting principle	$	.68	$	.52	$	1.32	$	1.03
Cumulative effect of change in accounting principle		--		--		.02		--

Net income	$	.68	$	.52	$	1.34	$	1.03

F. Segment Disclosures

BB&T’s operations are divided into six reportable business segments: the Banking Network, Mortgage Banking, Trust Services, Agency Insurance, Investment Banking and Brokerage, and Treasury. These operating segments have been identified based primarily on BB&T’s existing organizational structure. The segments require unique technology and marketing strategies and offer different products and services. While BB&T is managed as an integrated organization, individual executive managers are held accountable for the operations of the business segments that report to them.

BB&T’s strategies for revenue growth are focused on developing and expanding client relationships through quality service delivery and an effective sales culture. The segment results presented herein are based on internal management accounting policies that are designed to support these strategic objectives. Unlike financial accounting, there is no comprehensive authoritative body of guidance for management accounting equivalent to generally accepted accounting principles. Therefore, the performance of the individual segments is not comparable with BB&T’s consolidated results or with similar information presented by any other financial institution. Additionally, because of the interrelationships of the various segments, the information presented is not necessarily indicative of the segments’ financial performance if they operated as independent entities.

BB&T Corporation Page 10 Second Quarter 2002 10-Q

Please refer to BB&T’s Annual Report on Form 10-K for the year ended December 31, 2001, for a description of internal accounting policies and the basis of segmentation, including a description of the segments presented in the accompanying tables. There have been no significant changes from the methods used to develop the segment disclosures contained therein.

The following tables disclose selected financial information for BB&T’s reportable business segments for the periods as indicated:

BB&T Corporation Page 11 Second Quarter 2002 10-Q

BB&T Corporation
Reportable Segments
For the Three Months Ended June 30, 2002 and 2001

	Banking Network				Mortgage Banking						Trust Services						Agency Insurance

	2002		2001		2002			2001			2002			2001			2002		2001

	(Dollars in thousands)
Net interest income (expense)
from external customers	$	388,107	$	384,461	$	153,069		$	153,116		$	(5,068	)	$	(9,086	)	$	278	$	303
Net intersegment interest income (expense)		155,759		167,279		(87,557	)		(118,117	)		11,753			12,367			--		--

Net interest income		543,866		551,740		65,512			34,999			6,685			3,281			278		303

Provision for loan and lease losses		52,987		52,895		712			819			--			--			--		--
Noninterest income from external customers		152,631		134,806		44,293			43,351			27,242			24,288			71,528		41,218
Intersegment noninterest income		68,749		53,067		--			--			--			--			--		--
Noninterest expense		285,231		304,755		31,567			14,109			20,147			13,767			49,368		29,495
Intersegment noninterest expense		140,368		129,037		7,403			6,235			2,314			776			3,200		1,057

Income before income taxes		286,660		252,926		70,123			57,187			11,466			13,026			19,238		10,969
Provision for income taxes		82,770		76,157		19,844			16,238			3,758			4,602			7,582		4,321

Net income	$	203,890	$	176,769	$	50,279		$	40,949		$	7,708		$	8,424		$	11,656	$	6,648

Identifiable segment assets	$	41,002,922	$	39,650,976	$	8,761,041		$	8,511,201		$	76,287		$	50,404		$	592,677	$	112,581

	Investment Banking
	and Brokerage				Treasury				All Other Segments (1)					Total Segments

	2002		2001		2002		2001		2002			2001		2002		2001

Net interest income (expense)
from external customers	$	1,834	$	2,295	$	53,687	$	47,746	$	90,183		$	70,587	$	682,090	$	649,422
Net intersegment interest income (expense)		--		--		8,204		8,806		(1,321	)		--		86,838		70,335

Net interest income		1,834		2,295		61,891		56,552		88,862			70,587		768,928		719,757

Provision for loan and lease losses		--		--		36		34		20,011			16,390		73,746		70,138
Noninterest income from external customers		57,248		46,319		37,812		9,331		40,519			23,088		431,273		322,401
Intersegment noninterest income		--		--		--		--		--			--		68,749		53,067
Noninterest expense		50,144		46,624		3,762		1,783		30,956			22,681		471,175		433,214
Intersegment noninterest expense		3,691		380		424		486		5,925			2,850		163,325		140,821

Income before income taxes		5,247		1,610		95,481		63,580		72,489			51,754		560,704		451,052
Provision for income taxes		2,016		1,439		26,422		16,977		19,067			4,612		161,459		124,346

Net income	$	3,231	$	171	$	69,059	$	46,603	$	53,422		$	47,142	$	399,245	$	326,706

Identifiable segment assets	$	777,583	$	658,067	$	21,310,220	$	19,304,014	$	7,722,190		$	4,212,077	$	80,242,920	$	72,499,320


(1)	Financial data from segments below the quantitative thresholds requiring disclosure are attributable to nonbank consumer finance and other specialized lending operations, factoring, leasing and other smaller subsidiaries.

BB&T Corporation Page 12 Second Quarter 2002 10-Q

BB&T Corporation
Reportable Segments
For the Six Months Ended June 30, 2002 and 2001

	Banking Network				Mortgage Banking						Trust Services						Agency Insurance

	2002		2001		2002			2001			2002			2001			2002		2001

	(Dollars in thousands)
Net interest income (expense)
from external customers	$	733,231	$	758,988	$	308,352		$	299,831		$	(10,049	)	$	(19,007	)	$	641	$	327
Net intersegment interest income (expense)		304,427		314,394		(187,337	)		(231,066	)		22,949			25,260			--		--

Net interest income		1,037,658		1,073,382		121,015			68,765			12,900			6,253			641		327

Provision for loan and lease losses		103,282		94,253		1,488			1,519			--			--			--		--
Noninterest income from external customers		281,916		265,871		94,992			47,785			52,340			48,861			132,886		79,509
Intersegment noninterest income		136,863		92,161		--			--			--			--			--		--
Noninterest expense		522,756		552,387		62,065			32,792			38,899			29,115			100,859		59,631
Intersegment noninterest expense		276,909		243,707		14,843			13,052			4,426			1,551			6,408		2,114

Income before income taxes		553,490		541,067		137,611			69,187			21,915			24,448			26,260		18,091
Provision for income taxes		158,618		153,159		39,152			20,297			6,594			6,802			10,441		7,167

Net income	$	394,872	$	387,908	$	98,459		$	48,890		$	15,321		$	17,646		$	15,819	$	10,924

Identifiable segment assets	$	41,002,922	$	39,650,976	$	8,761,041		$	8,511,201		$	76,287		$	50,404		$	592,677	$	112,581

	Investment Banking
	and Brokerage				Treasury				All Other Segments (1)					Total Segments

	2002		2001		2002		2001		2002			2001		2002		2001

Net interest income (expense)
from external customers	$	3,722	$	4,667	$	106,364	$	80,787	$	175,180		$	141,546	$	1,317,441	$	1,267,139
Net intersegment interest income (expense)		--		--		14,607		21,838		(1,321	)		--		153,325		130,426

Net interest income		3,722		4,667		120,971		102,625		173,859			141,546		1,470,766		1,397,565

Provision for loan and lease losses		--		--		71		67		42,407			29,006		147,248		124,845
Noninterest income from external customers		111,225		89,253		64,894		15,730		80,046			63,504		818,299		610,513
Intersegment noninterest income		--		--		--		--		--			--		136,863		92,161
Noninterest expense		97,589		88,847		7,244		3,553		59,989			50,777		889,401		817,102
Intersegment noninterest expense		7,386		761		847		972		11,752			5,700		322,571		267,857

Income before income taxes		9,972		4,312		177,703		113,763		139,757			119,567		1,066,708		890,435
Provision for income taxes		3,808		2,487		48,816		27,391		34,656			14,710		302,085		232,013

Net income	$	6,164	$	1,825	$	128,887	$	86,372	$	105,101		$	104,857	$	764,623	$	658,422

Identifiable segment assets	$	777,583	$	658,067	$	21,310,220	$	19,304,014	$	7,722,190		$	4,212,077	$	80,242,920	$	72,499,320


(1)	Financial data from segments below the quantitative thresholds requiring disclosure are attributable to nonbank consumer finance and other specialized lending operations, factoring, leasing and other smaller subsidiaries.

BB&T Corporation Page 13 Second Quarter 2002 10-Q

The following table presents a reconciliation of total segment results to consolidated results:

	For the Three Months Ended						For the Six Months Ended
	June 30,						June 30,
	2002			2001			2002			2001

Net Interest Income
Net interest income from segments	$	768,928		$	719,757		$	1,470,766		$	1,397,565
Other net interest income (1)		(123,724	)		33,629			(243,293	)		69,720
Elimination of net intersegment interest income (2)		44,892			(158,919	)		109,895			(287,364	)

Consolidated net interest income	$	690,096		$	594,467		$	1,337,368		$	1,179,921

Net income
Net income from segments	$	399,245		$	326,706		$	764,623		$	658,422
Other net income (loss) (1)		157,595			335,208			297,706			333,129
Elimination of intersegment net income (2)		(228,888	)		(424,685	)		(424,732	)		(517,822	)

Consolidated net income	$	327,952		$	237,229		$	637,597		$	473,729


								June 30,			June 30,
								2002			2001

Total Assets
Total assets from segments							$	80,242,920		$	72,499,320
Other assets (1)								18,949,037			9,824,948
Elimination of intersegment assets (2)								(22,858,516	)		(13,512,898	)

Consolidated total assets							$	76,333,441		$	68,811,370

(1)

Other net interest income (expense), other net income (loss) and other assets include amounts associated with BB&T’s support functions not allocated to the various reportable segments.

(2)

BB&T’s reconciliation of total segment results to consolidated results requires the elimination of internal management accounting practices. These adjustments include the elimination of funds transfer pricing credits and charges and the elimination of intersegment noninterest income and noninterest expense, which are allocated to the various segments using BB&T’s internal accounting methods.

BB&T Corporation Page 14 Second Quarter 2002 10-Q

G. Goodwill and Other Intangible Assets

The changes in the carrying amounts of goodwill attributable to each of BB&T’s operating segments for the twelve months ended December 31, 2001, and the six months ended June 30, 2002, are as follows:

Goodwill Activity by Operating Segment
(Dollars in thousands)

													Investment
	Banking			Mortgage			Trust			Agency			Banking			All Other
	Network			Banking			Services			Insurance			and Brokerage			Segments			Total

Balance, January 1, 2001	$	536,681		$	1,039		$	8,691		$	115,916		$	70,974		$	30,576		$	763,877
Acquired goodwill		156,875			764			5,105			15,099			5,063			--			182,906
Amortization expense		(48,122	)		(35	)		(691	)		(9,292	)		(5,443	)		(3,297	)		(66,880	)

Balance, December 31, 2001		645,434			1,768			13,105			121,723			70,594			27,279			879,903

Acquired goodwill		499,401			6,347			4,997			68,688			312			--			579,745
Amortization expense (1)		(2,391	)		--			--			--			--			--			(2,391	)

Balance, June 30, 2002	$	1,142,444		$	8,115		$	18,102		$	190,411		$	70,906		$	27,279		$	1,457,257

(1) This amortization expense relates to goodwill recorded under SFAS No. 72.

The following table presents the gross carrying amounts and accumulated amortization for BB&T’s intangible assets subject to amortization at the dates presented:

Acquired Intangible Assets
(Dollars in thousands)

	As of June 30, 2002					As of December 31, 2001

	Gross					Gross
	Carrying		Accumulated			Carrying		Accumulated
	Amount		Amortization			Amount		Amortization

Amortizing intangible assets
Core deposit intangibles	$	85,701	$	(33,075	)	$	69,574	$	(31,021	)
Other		72,290		(5,383	)		18,963		(3,060	)

Totals	$	157,991	$	(38,458	)	$	88,537	$	(34,081	)

During the quarters ended June 30, 2002 and 2001, BB&T incurred $6.3 million and $18.4 million, respectively, in pretax amortization expenses associated with goodwill, core deposit intangibles and other intangible assets.

BB&T Corporation Page 15 Second Quarter 2002 10-Q

The following table presents estimated amortization expense for each of the next five years.

Estimated Amortization Expense
(Dollars in thousands)

For the Year Ended December 31:
2002		$ 23,953
2003		24,953
2004		22,534
2005		21,757
2006		21,143

The following tables present actual results for the three months and six months ended June 30, 2002, and adjusted net income and adjusted earnings per share for the three months and six months ended June 30, 2001, assuming the nonamortization provisions of SFAS No. 142 were effective January 1, 2001:

	For the Three Months Ended June 30,				For the Six Months Ended June 30,

	2002		2001		2002		2001

	(Dollars in thousands)				(Dollars in thousands)
Reported Net Income	$	327,952	$	237,229	$	637,597	$	473,729
Add back: Goodwill amortization		--		17,005		--		33,495

Adjusted Net Income	$	327,952	$	254,234	$	637,597	$	507,224

Basic earnings per share:
Reported net income	$	0.69	$	0.53	$	1.35	$	1.05
Add back: Goodwill amortization		--		0.04		--		0.07

Adjusted net income	$	0.69	$	0.57	$	1.35	$	1.12

Diluted earnings per share:
Reported net income	$	0.68	$	0.52	$	1.34	$	1.03
Add back: Goodwill amortization		--		0.04		--		0.07

Adjusted net income	$	0.68	$	0.56	$	1.34	$	1.10

BB&T Corporation Page 16 Second Quarter 2002 10-Q

Back to Index

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

Forward-Looking Statements

This report contains forward-looking statements with respect to the financial condition, results of operations and business of BB&T. These forward-looking statements involve risks and uncertainties and are based on the beliefs and assumptions of the management of BB&T, and on the information available to management at the time that these disclosures were prepared. Factors that may cause actual results to differ materially from those contemplated by such forward-looking statements include, among others, the following possibilities: (1) competitive pressures among depository and other financial institutions may increase significantly; (2) changes in the interest rate environment may reduce margins; (3) general economic 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; (4) legislative or regulatory changes, including changes in accounting standards, may adversely affect the businesses in which BB&T is engaged; (5) costs or difficulties related to the integration of the businesses of BB&T and its merger partners may be greater than expected; (6) expected cost savings associated with pending mergers may not be fully realized or realized within the expected time frame; (7) deposit attrition, customer loss or revenue loss following pending mergers or recently completed mergers may be greater than expected; (8) competitors may have greater financial resources and develop products that enable such competitors to compete more successfully than BB&T; and (9) adverse changes may occur in the securities markets.

Critical Accounting Policies

The accounting and reporting policies of BB&T Corporation and its subsidiaries are in accordance with accounting principles generally accepted in the United States and conform to general practices within the banking industry. BB&T’s financial position and results of operations are affected by management’s application of accounting policies, including judgments made to arrive at the carrying value of assets and liabilities and amounts reported for revenues, expenses and related disclosures. Different assumptions in the application of these policies could result in material changes in BB&T’s consolidated financial position and/or consolidated results of operations. The more critical accounting and reporting policies include BB&T’s accounting for securities, loans and leases, the allowance for loan and lease losses, valuation of mortgage servicing rights, mergers and acquisitions and income taxes. BB&T’s accounting policies are fundamental to understanding Management’s Discussion and Analysis of Financial Condition and Results of Operations. Accordingly, BB&T’s significant accounting policies are discussed in detail in BB&T’s 2001 Annual Report on Form 10-K filed with the Securities and Exchange Commission.

The following is a summary of BB&T’s more subjective and complex accounting policies.

BB&T Corporation Page 17 Second Quarter 2002 10-Q

The allowance for loan and lease losses is established and maintained at levels management deems adequate to cover losses inherent in the portfolio as of the balance sheet date and is based on management’s evaluation of the risks in the loan portfolio and change in the nature and volume of loan activity. Estimates for loan losses are determined by analyzing historical loan losses, current trends in delinquencies and charge-offs, plans for problem loan administration, the opinions of our regulators, changes in the size and composition of the loan portfolio and peer group information. Also included in management’s estimates for loan losses are considerations with respect to the impact of economic events, the outcome of which are uncertain. These events may include, but are not limited to, a general slowdown in the economy, fluctuations in overall lending rates, political conditions, legislation that may directly or indirectly affect the banking industry and economic conditions affecting specific geographical areas in which BB&T conducts business.

BB&T has a significant loan servicing portfolio and has capitalized the associated mortgage servicing rights. Mortgage servicing rights represent the present value of the future servicing fees arising from the right to service loans in the portfolio. The most critical accounting policy associated with mortgage servicing is the methodology used to determine the valuation of mortgage servicing rights. Application of this methodology requires the development of a number of estimates, including anticipated principal amortization and prepayments of principal. The value of mortgage servicing rights is significantly affected by interest rates, mortgage loan prepayment speeds and the payment performance of the underlying loans. In general, during periods of declining interest rates, the value of mortgage servicing assets declines due to increasing prepayments attributable to increased mortgage refinance activity. Conversely, during periods of rising interest rates, the value of servicing assets generally increases due to reduced refinance activity. BB&T amortizes mortgage servicing rights over the period of estimated net servicing income based on projections of the amount and timing of future cash flows. The amount and timing of servicing asset amortization is adjusted periodically based on actual results and updated projections.

BB&T’s growth in business, profitability and market share over the past several years has been enhanced significantly by mergers and acquisitions. BB&T’s acquisition strategy has historically utilized the pooling-of-interests and purchase business combination methods of accounting. Effective July 1, 2001, BB&T adopted SFAS No. 141, “Business Combinations,” which allows only the use of the purchase combination method of accounting. For purchase acquisitions, BB&T is required to record the assets acquired and liabilities assumed at their fair value, which in many instances involves estimates based on third party valuations, such as appraisals, or internal valuations based on discounted cash flow analyses or other valuation techniques. These estimates also include the establishment of various reserves based on planned facilities dispositions and employee benefit related considerations, among other acquisition-related items. In addition, purchase acquisitions typically result in goodwill or other intangible assets, which are subject to ongoing periodic impairment tests based on the fair value of net assets acquired compared to the carrying value of goodwill and other intangibles. Furthermore, the determination of which intangible assets have finite lives is subjective, as well as the determination of the amortization period for such intangible assets.

BB&T Corporation Page 18 Second Quarter 2002 10-Q

The determination of BB&T’s overall income tax provision is complex and requires careful analysis. As part of the Company’s overall business strategy, BB&T may enter into business transactions that require management to consider tax laws and regulations that apply to the specific facts and circumstances under consideration. This analysis includes evaluating the amount and timing of the realization of income tax liabilities or benefits. Management closely monitors tax developments as they affect the Company’s overall tax position.

ANALYSIS OF FINANCIAL CONDITION

BB&T’s total assets at June 30, 2002, were $76.3 billion, a $5.5 billion, or 7.7%, increase from December 31, 2001. The asset category that produced the majority of the increase was loans and leases, including loans held for sale, which grew $3.1 billion, or 6.5%. Average total loans for the six months ended June 30, 2002, were $49.1 billion, or 7.0% greater than the average for the first six months of 2001. Additionally, securities available for sale increased $1.5 billion, or 8.8%, from December 31, 2001.

Total deposits at June 30, 2002, increased $6.2 billion, or 13.8%, from December 31, 2001. Short-term borrowed funds declined $1.7 billion, or 25.8%, and long-term debt decreased $741.6 million, or 6.3%, during the first six months of 2002. Total shareholders’ equity increased $978.1 million, or 15.9%, during the same time frame.

The factors causing the fluctuations in the major balance sheet categories are further discussed in the following sections.

Loans and Leases

Management emphasizes lending to small and medium-sized businesses and consumer lending in order to improve the overall profitability of the loan portfolio. For the first six months of 2002, average total loans were $49.1 billion, an increase of $3.2 billion, or 7.0%, compared to the same period in 2001. During the first six months of 2002, average commercial loans and leases totaled $27.3 billion, an increase of $2.4 billion, or 9.6%, compared to the same period in 2001 and composed 55.6% of the loan and lease portfolio compared to 54.2% for the first six months of 2001. Average mortgage loans totaled $9.1 billion and composed 18.5% of the loan and lease portfolio compared to 19.8% for the first six months of 2001. Average consumer loans, which include sales finance, revolving credit and direct retail, totaled $12.7 billion, an increase of $806.3 million, or 6.8%, compared to the same period in 2001. Consumer loans composed the remaining 25.9% of the loan and lease portfolio compared to 26.0% for the first six months of 2001. BB&T is a large originator of mortgage loans, with second quarter 2002 originations totaling $2.3 billion and has also historically been a frequent acquirer of community banks and thrift institutions. The combination of these factors results in a high percentage of mortgage loans in BB&T’s portfolio. To improve the overall yield and profitability of the loan portfolio and to mitigate interest rate risk, BB&T sells most of its fixed-rate mortgage loans in the secondary market or securitizes the loans and transfers them to the securities portfolio. However, due to the continued low interest rate environment and resulting high volumes of mortgage loan originations and the inventory of mortgage loans held for sale, the mix of the consolidated loan portfolio, as indicated above, was very similar to that of one year ago.

BB&T Corporation Page 19 Second Quarter 2002 10-Q

For the second quarter of 2002, average total loans were $50.3 billion, an increase of $3.8 billion, or 8.3%, compared to the same period in 2001. Average commercial loans and leases for the second quarter of 2002 totaled $28.2 billion, an increase of $3.1 billion, or 12.3%, compared to the same period in 2001 and composed 56.0% of the loan and lease portfolio compared to 54.0% for the second quarter of 2001. Average mortgage loans totaled $9.0 billion and composed 17.8% of the loan and lease portfolio compared to 20.1% for the second quarter of 2001. Average consumer loans, which include sales finance, revolving credit and direct retail, totaled $13.1 billion, an increase of $1.2 billion, or 9.6%, compared to the same period in 2001 and composed the remaining 26.2% of the loan and lease portfolio compared to 25.9% for the second quarter of 2001.

The growth rates of the average loans described above were affected by securitization programs and by loan portfolios held by companies that were acquired in purchase transactions during the last six months of 2001 and the first six months of 2002. During the first six months of 2002, loans totaling $1.9 billion and $1.2 billion were acquired through the purchases of AREA and MidAmerica, respectively. During the last six months of 2001, loans totaling $368.8 million were acquired through the purchase of Community First Banking Company (“CFBC”). Excluding the effect of purchase accounting transactions completed during 2001 and 2002 and mortgage loan securitizations, average “internal” loan growth for the three months ended June 30, 2002, was .8% compared to the second quarter of 2001. By category, excluding the effects of purchase accounting transactions and loan securitizations, average mortgage loans, including loans held for sale, decreased 11.3%, average commercial loans and leases grew 4.3%, and average consumer loans increased 3.5% in the second quarter of 2002 compared to the same period of 2001.

The annualized fully taxable equivalent (“FTE”) yields on commercial, consumer and mortgage loans for the first six months of 2002 were 6.26%, 8.67%, and 7.31%, respectively, resulting in an annualized yield on the total loan portfolio of 7.08%. The FTE yields on commercial, consumer and mortgage loans for the first six months of 2001 were 8.86%, 10.01%, and 7.55%, respectively, resulting in an annualized yield on the total loan portfolio of 8.90%. This reflects a decrease of 182 basis points in the annualized yield on the total loan portfolio during the first six months of 2002 in comparison to 2001. The decrease in yield resulted from a lower average prime rate during 2001 and 2002, as well as an overall lower interest rate environment. During 2001, the Federal Reserve reduced the intended Federal Funds Rate from 6.50% at the beginning of the year to 1.75% at year-end where it has remained throughout the first six months of 2002. As a result of the Federal Reserve Board’s actions, the average prime rate, which is the basis for pricing many commercial and consumer loans, averaged 7.34% in the second quarter of 2001 compared to 4.75% in the second quarter of 2002. For the first six months of 2002, the prime rate averaged 4.75%, compared to 7.98% during the first six months of 2001. The growth in the overall loan portfolio, combined with the decrease in the yield of the portfolio, from 8.62% in the second quarter and 8.90% in the first six months of 2001 to 7.03% in the second quarter and 7.08% in the first six months of 2002, resulted in a decrease of 10.3% in interest income from loans and leases in the current quarter and a decrease of 13.8% in interest income from loans and leases during the first six months of 2002 compared to the 2001 periods.

BB&T Corporation Page 20 Second Quarter 2002 10-Q

Securities

Securities available for sale totaled $18.1 billion at June 30, 2002, an increase of $1.5 billion, or 8.8%, compared with December 31, 2001. Securities available for sale had net unrealized gains, net of deferred income taxes, of $291.1 million at June 30, 2002, compared to net unrealized gains, net of deferred income taxes, of $288.1 million at December 31, 2001. Securities held to maturity totaled $47.4 million, an increase of $6.9 million, or 17.0%, from year-end 2001. Trading securities totaled $132.3 million, an increase of $34.6 million, or 35.5%, compared to the balance at December 31, 2001.

Average total securities for the first six months amounted to $17.0 billion, up 8.9% from the average during the first six months of 2001. For the second quarter of 2002, average securities totaled $17.6 billion, or 13.2% higher than the average balance for the second quarter of 2001.

The annualized FTE yield on the average total securities portfolio for the first six months of 2002 was 6.45%, a decrease of 76 basis points from the yield earned in the first six months of 2001. This decrease in yield resulted principally from the lower interest rate environment, which resulted in cash flows from the maturity of higher yielding securities, callable bonds and prepayments of mortgage backed securities during 2001 being reinvested at lower interest rates during 2002.

Other Interest Earning Assets

Federal funds sold and securities purchased under resale agreements or similar arrangements totaled $248.2 million at June 30, 2002, an increase of $2.2 million, or .9%, compared to December 31, 2001. Interest-bearing deposits with banks decreased $32.4 million, or 28.3%, compared to December 31, 2001. These categories of earning assets are subject to large daily fluctuations based on the availability of these types of funds. The average yield on other interest-earning assets for the first six months of 2002 was 2.02%, a decrease from the 4.95% earned during the first six months of 2001. The decrease in the yield on other interest-earning assets is principally the result of the decline in the average Federal funds rate from 4.96% for the first six months of 2001 to 1.74% for the first six months of 2002.

Other Assets

BB&T’s other noninterest-earning assets, excluding premises and equipment and noninterest-bearing cash and due from banks, increased $1.1 billion from December 31, 2001, to June 30, 2002. The increase resulted primarily from goodwill, which increased $577.4 million due to acquisitions of AREA, MidAmerica and CRC; increased core deposit and other intangibles, which grew $65.1 million because of the aforementioned acquisitions; and higher capitalized mortgage servicing rights, which increased $36.6 million.

BB&T Corporation Page 21 Second Quarter 2002 10-Q

Deposits

Deposits at June 30, 2002, totaled $50.9 billion, an increase of $6.2 billion, or 13.8%, from December 31, 2001. The purchase acquisitions of AREA and MidAmerica generated $3.2 billion of the increase. Average deposits for the first six months of 2002 increased $3.8 billion, or 8.6%, compared to the first six months of 2001. The categories of deposits with the highest average rates of growth in 2002 compared to 2001 were: money rate savings accounts, including investor deposit accounts, which increased $2.1 billion, or 17.5%, and noninterest-bearing deposits, which increased $857.5 million, or 14.4%. The growth realized in these deposit categories was partially offset by a decline of $61.6 million, or 1.8%, in average savings and interest checking.

For the second quarter, average deposits increased $4.8 billion, or 10.8%. Average total transaction accounts, which include noninterest-bearing deposits, savings, interest checking and money rate savings, totaled $25.3 billion for the second quarter, an increase of $3.4 billion, or 15.8%, compared to the second quarter of 2001. Average time deposits for the second quarter totaled $24.0 billion, an increase of $1.4 billion, or 6.1%, compared to the second quarter of 2001.

The growth in average deposits for 2002 includes the effect of deposits acquired in purchase accounting transactions completed during the last six months of 2001 and the first six months of 2002. The purchase of AREA and MidAmerica in the first quarter of 2002 resulted in the addition of $2.1 billion and $1.1 billion in deposits, respectively. During the last six months of 2001, the purchase of CFBC added $428.4 million in deposits. Growth rates for noninterest-bearing deposits are also affected by an official check outsourcing program, which has improved fee income, but reduced the balance of noninterest-bearing deposits. Excluding the effects of purchase accounting transactions and official check outsourcing, average deposits for the six months ended June 30, 2002, would have increased 2.4% compared to the same time period of 2001. Excluding the effects of purchase accounting, transaction account deposits increased 8.0% compared to the six months ended June 30, 2001, and certificate accounts and other time deposits would have decreased 2.9%. For the second quarter of 2002, total average deposits, excluding the effects of purchase accounting transactions and official check outsourcing, increased 1.8% compared to the second quarter of 2001.

The annualized average rate paid on total interest-bearing deposits during the first six months of 2002 was 2.57%, a decrease of 207 basis points compared to 2001. The decrease in the average rate paid resulted from the lower interest rate environment that has existed during 2002 compared to 2001, which included the previously discussed 322 basis point decrease in the average Federal funds rate.

Other Borrowings

At June 30, 2002, short-term borrowed funds totaled $4.9 billion, a decrease of $1.7 billion, or 25.8%, compared to December 31, 2001. For the second quarter of 2002, average short-term borrowed funds totaled $5.8 billion, an increase of $219.0 million, or 3.9%, from the comparable period of 2001. For the six months ended June 30, 2002, average short-term borrowed funds totaled $5.9 billion, a decrease of $224.7 million, or 3.7%, compared to the first six months of 2001. The average annualized rate paid on short-term borrowed funds was 1.82% for the first six months of 2002, a decrease of 305 basis points from the average rate of 4.87% paid in the comparable period of 2001. This decrease in the cost of short-term borrowed funds resulted from the lower interest rate environment that has existed during 2002 compared to 2001, which included a 322 basis point decrease in the average Federal funds rate.

BB&T Corporation Page 22 Second Quarter 2002 10-Q

Long-term debt consists primarily of Federal Home Loan Bank advances, medium term bank notes and corporate subordinated debt. These borrowings provide BB&T with the flexibility to structure borrowings in a manner that aids in the management of interest rate risk and liquidity. Long-term debt totaled $11.0 billion at June 30, 2002, a decrease of $741.6 million, or 6.3%, from the balance at December 31, 2001. For the second quarter of 2002, average long-term debt totaled $11.3 billion, an increase of $308.3 million, or 2.8%, compared to the second quarter of 2001. For the six months ended June 30, 2002, total average long-term borrowed funds were $11.4 billion, an increase of $705.5 million, or 6.6%, compared to the first six months of 2001. Long-term debt has been utilized for a variety of funding needs, including the repurchase of common stock. The average annualized rate paid on long-term borrowed funds was 5.21% for the first six months of 2002, a decrease of 49 basis points from the average rate of 5.70% paid for the first six months of 2001.

Asset Quality

Nonperforming assets, composed of foreclosed real estate, repossessions, nonaccrual loans and restructured loans, totaled $400.1 million at June 30, 2002, compared to $373.6 million at December 31, 2001. Nonperforming assets, as a percentage of loan-related assets, were .79% at both June 30, 2002, and December 31, 2001. Loans 90 days or more past due and still accruing interest totaled $98.1 million at June 30, 2002, compared to $101.8 million at year-end 2001.

BB&T’s net charge-offs totaled $58.1 million for the second quarter and amounted to ..46% of average loans and leases, on an annualized basis, compared to $49.9 million, or .43% of average loans and leases, on an annualized basis, in the corresponding period in 2001. For the six months ended June 30, 2002, net charge-offs totaled $114.3 million, or .47% of average loans and leases, compared to $78.8 million, or .35% of average loans and leases, in 2001.

While the slowdown in the economy has resulted in increases in nonperforming assets and net charge-offs during the second quarter, BB&T’s lending strategy, which focuses on relationship-based lending within our markets and smaller individual loan balances, continues to produce superior credit quality in good and bad economic times. BB&T’s asset quality, as measured by relative levels of nonperforming assets and net charge-offs, has remained approximately half that of published industry averages and demonstrated improvement compared to the first quarter of 2002.

BB&T Corporation Page 23 Second Quarter 2002 10-Q

The allowance for loan and lease losses was $706.4 million, or 1.40% of loans and leases, at June 30, 2002, compared to $644.4 million, or 1.36% of loans and leases, at December 31, 2001. The increase in the allowance as a percentage of loans and leases reflects higher provisions for loan and lease losses in view of the economic slowdown and resulting higher nonperforming assets and net charge-offs.

The provision for loan and lease losses for the second quarter of 2002 was $58.5 million, compared to $48.8 million in the comparable quarter of 2001. For the six months, the provision for loan and lease losses totaled $115.0 million compared to $90.8 million in 2001. The increased provision during 2002 was necessary to cover higher net charge-offs and to maintain the allowance at a level considered adequate to absorb losses inherent in the loan portfolio at the balance sheet date.

BB&T Corporation Page 24 Second Quarter 2002 10-Q

Asset quality statistics for the last five calendar quarters are presented in the accompanying table.

ASSET QUALITY ANALYSIS
(Dollars in thousands)

	For the Three Months Ended

	6/30/02			3/31/02			12/31/01			9/30/01			6/30/01

Allowance For Loan & Lease Losses
Beginning balance	$	705,905		$	644,418		$	634,552			610,171		$	601,788
Allowance for acquired loans, net		136			61,177			9,047			--			9,470
Provision for loan and lease losses		58,500			56,500			65,000			68,500			48,798
Net charge-offs		(58,095	)		(56,190	)		(64,181	)		(44,119	)		(49,885	)

Ending balance	$	706,446			705,905		$	644,418			634,552		$	610,171

Risk Assets
Nonaccrual loans and leases	$	335,287			354,916		$	316,607			266,384		$	244,711
Foreclosed real estate		49,009			46,687			39,106			34,601			27,725
Other foreclosed property		15,803			20,734			17,858			17,733			20,494
Restructured loans		--			--			--			183			521

Total nonperforming assets	$	400,099			422,337		$	373,571			318,901		$	293,451

Loans 90 days or more past due
and still accruing	$	98,143	$		100,962		$	101,778			93,968		$	84,399



Asset Quality Ratios
Nonaccrual loans and leases as a
percentage of total loans and leases*	.66	%	.71	%	.67	%	.57	%	.52	%
Total nonperforming assets as a percentage of:
Total assets	.52		.56		.53		.45		.43
Loans and leases plus foreclosed property*	.79		.84		.79		.68		.62
Annualized net charge-offs as a percentage of
average loans and leases*	.46		.48		.54		.37		.43
Allowance for loan and lease losses as a
percentage of loans and leases*	1.40		1.41		1.36		1.35		1.30
Ratio of allowance for loan and lease losses to:
Annualized net charge-offs	3.03	x	3.10	x	2.53	x	3.63	x	3.05	x
Nonaccrual and restructured loans and leases	2.11		1.99		2.04		2.38		2.49

*All items referring to loans and leases include loans held for sale and are net of unearned income.

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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. The primary objective of interest rate risk management is to minimize the effect that changes in interest rates have on net interest income. This is accomplished through active management of asset and liability portfolios with a focus on the strategic pricing of asset and liability accounts and management of maturity mixes for 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 consistent net interest income during periods of changing interest rates. BB&T’s Asset / Liability Management Committee (“ALCO”) monitors loan, investment and liability portfolios to ensure comprehensive management of interest rate risk. These portfolios are analyzed for proper fixed-rate and variable-rate mixes under various interest rate scenarios.

BB&T Corporation Page 25 Second Quarter 2002 10-Q

The asset/liability management process is designed to achieve relatively stable net interest margins and assure liquidity by coordinating the volumes, maturities or repricing opportunities of earning assets, deposits and borrowed funds. It is the responsibility of the ALCO to determine and achieve the most appropriate volume and mix of earning assets and interest-bearing liabilities, as well as ensure an adequate level of liquidity and capital, within the context of corporate performance goals. The ALCO also sets policy guidelines and establishes long-term strategies with respect to interest rate risk exposure and liquidity. The ALCO 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 impact on earnings and liquidity as a result of fluctuations in interest rates is within acceptable standards.

The majority of assets and liabilities of financial institutions are monetary in nature and differ greatly from most commercial and industrial companies that have significant investments in fixed assets and inventories. Fluctuations in interest rates and actions of the Board of Governors of the Federal Reserve System (“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, BB&T is positioned to respond to changing interest rates and inflationary trends.

Management uses Interest Sensitivity Simulation Analysis (“Simulation”) to measure the sensitivity of projected earnings to changes in interest rates. Simulation takes into account the current contractual agreements that BB&T has with its customers on deposits, borrowings, loans, investments and any commitments to enter into those transactions. Management monitors BB&T’s interest sensitivity by means of a computer model that incorporates the current volumes, average rates and scheduled maturities and payments of asset and liability portfolios, together with multiple scenarios of 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, however, it provides a better illustration of the sensitivity of earnings to changes in interest rates than other analyses such as static or dynamic gap.

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 information necessary to analyze interest sensitivity and to aid in the development of strategies to reach performance goals.

BB&T Corporation Page 26 Second Quarter 2002 10-Q

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 under the “most likely” interest rate scenario incorporated into the Interest Sensitivity Simulation computer model. Key assumptions in the preparation of the table include prepayment speeds of mortgage-related assets; cash flows and maturities of derivative financial instruments, changes in market condition, loan volumes and pricing, deposit sensitivity; customer preferences and capital plans. The resulting change in net interest income reflects the level of sensitivity that net interest income has in relation to changing interest rates.

Interest Sensitivity Simulation Analysis
June 30, 2002

Interest
Rate				Annualized
Scenario				Hypothetical
				Percentage
Linear				Change in
Change in		Prime		Net Interest
Prime Rate		Rate		Income

+3.00	%	7.75	%		2.92	%
+1.50		6.25			1.39
-1.50		3.25			-2.98
-3.00		1.75			-3.99

Management has established parameters for asset/liability management which prescribe a maximum impact on net interest income, using the most likely interest rate scenario, of 3% for a 150 basis point parallel change in interest rates over six months and 6% for a 300 basis point change over 12 months. It is management’s ongoing objective to effectively manage the impact of changes in interest rates and minimize the resulting effect on earnings as evidenced by the preceding table. At June 30, 2002, the sensitivity of BB&T’s net interest income to changes in interest rates was within the guidelines established by management, as illustrated in the accompanying table.

Derivative Financial Instruments

BB&T utilizes a variety of financial instruments to manage various financial risks. These instruments, commonly referred to as derivatives, primarily consist of interest rate swaps, caps, floors, collars, financial forward and futures contracts and options written and purchased. A derivative is a financial instrument that derives its cash flows, and therefore its value, by reference to an underlying instrument, index or referenced interest rate. BB&T uses derivatives primarily to hedge business loans, forecasted sales of mortgage loans, federal funds purchased, long-term debt and certificates of deposit.

BB&T Corporation Page 27 Second Quarter 2002 10-Q

Credit risk related to derivatives arises when amounts receivable from a counterparty exceed those payable. The risk of loss with any counterparty is limited to a small fraction of the notional amount. BB&T deals only with national market makers with “investment grade” credit ratings in its derivatives activities. BB&T further controls the risk of loss by subjecting counterparties to credit reviews and approvals similar to those used in making loans and other extensions of credit. All of the derivative contracts to which BB&T is a party settle monthly, quarterly or semiannually. Further, BB&T has netting agreements with the dealers with which it does business. Because of these factors, BB&T’s credit risk exposure at June 30, 2002 was not material.

Derivative contracts are written in amounts referred to as notional amounts. Notional amounts only provide the basis for calculating payments between counterparties and do not represent amounts to be exchanged between parties or a measure of financial risk. On June 30, 2002, BB&T had derivative financial instruments outstanding with notional amounts totaling $5.8 billion. The estimated fair value of open contracts reflected net unrealized gains of $40.8 million at June 30, 2002.

The following table sets forth certain information concerning BB&T’s derivative financial instruments at June 30, 2002:

Derivative Financial Instruments
June 30, 2002
(Dollars in thousands)

			Average			Average
	Notional		Receive			Pay			Estimated
Type	Amount		Rate			Rate			Fair Value

Receive fixed swaps	$	2,093,872		4.31	%		0.80	%	$	40,750
Pay fixed swaps		267,839		1.77			4.93			(4,862	)
Caps, floors & collars		1,317,550		--			--			20,852
Foreign exchange contracts		148,806		--			--			294
Forward contracts and futures		1,450,651		--			--			(15,350	)
Interest rate lock commitments		364,234		--			--			--
Options on contracts purchased		145,000		--			--			(836	)

Total	$	5,787,952							$	40,848

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CAPITAL ADEQUACY AND RESOURCES

The maintenance of appropriate levels of capital is a management priority and is monitored on an ongoing basis. BB&T’s principal goals related to capital management are to provide an adequate return to shareholders while retaining a sufficient base to support future growth and comply with all regulatory standards.

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Total shareholders’ equity was $7.1 billion at June 30, 2002, and $6.2 billion at December 31, 2001. BB&T’s book value per common share at June 30, 2002 was $14.99 compared to $13.50 at December 31, 2001.

Financial holding companies and their subsidiaries are subject to regulatory requirements with respect to risk-based capital adequacy. Risk-based capital ratios measure capital as a percentage of balance sheet risk. The risk-weighted values of balance sheet items are determined in accordance with risk factors specified by Federal regulatory pronouncements.

Tier 1 capital (total shareholders’ equity excluding unrealized gains or losses on debt securities available for sale and unrealized gains or losses on cash flow hedges, net of tax effects, plus certain mandatorily redeemable capital securities, less nonqualifying intangible assets) is required to be at least 4% of risk-weighted assets, and total capital (Tier 1 capital, a qualifying portion of the allowance for loan and lease losses and qualifying subordinated debt) must be at least 8% of risk-weighted assets, with one half of the minimum consisting of Tier 1 capital.

In addition to the risk-based capital measures described above, regulators have also established minimum leverage capital requirements for banking organizations. This is the primary measure of capital adequacy used by BB&T’s management, and is calculated by dividing period-end Tier 1 capital by average tangible assets for the most recent quarter. The minimum required Tier 1 leverage ratio ranges from 3% to 5% depending upon Federal bank regulatory agency evaluation of an organization’s overall safety and soundness.

BB&T’s capital ratios at the end of the last five quarters are presented in the accompanying table:

CAPITAL RATIOS

	2002				2001

	Second		First		Fourth		Third		Second
	Quarter		Quarter		Quarter		Quarter		Quarter

Risk-based capital ratios:
Tier 1 capital	9.7	%	9.9	%	9.8	%	9.6	%	9.7	%
Total capital	12.8		13.3		13.3		13.2		12.0
Tier 1 leverage ratio	7.3		7.7		7.2		7.1		7.2

BB&T Corporation Page 29 Second Quarter 2002 10-Q

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ANALYSIS OF RESULTS OF OPERATIONS

Net income for the second quarter of 2002 totaled $328.0 million, an increase of 38.2% compared to the $237.2 million earned during the comparable quarter of 2001. On a diluted per share basis, earnings for the three months ended June 30, 2002, were $.68, compared to $.52 for the same period in 2001, an increase of 30.8%. BB&T’s operating results for the second quarter of 2002 produced an annualized return on average assets of 1.74% and an annualized return on average shareholders’ equity of 18.38% compared to prior year ratios of 1.40% and 16.81%, respectively.

Net income for the six months ended June 30, 2002, totaled $637.6 million, an increase of $163.9 million, or 34.6%, compared to the $473.7 million earned during the comparable period of 2001. On a diluted per share basis, earnings for the six months ended June 30, 2002, were $1.34 compared to $1.03 for the same period in 2001, an increase of 30.1%. BB&T’s operating results for the first six months of 2002 produced an annualized return on average assets of 1.75% and an annualized return on average shareholders’ equity of 18.87% compared to prior year ratios of 1.41% and 17.14%, respectively.

The following table sets forth selected financial ratios for the last five calendar quarters:

PROFITABILITY MEASURES

	2002						2001

	Second			First			Fourth			Third			Second
	Quarter			Quarter			Quarter			Quarter			Quarter

Return on average assets		1.74	%		1.76	%		1.56	%		1.27	%		1.40	%
Return on average equity		18.38			19.41			17.93			14.92			16.81
Net interest margin		4.27			4.26			4.20			4.18			4.16

BB&T recorded certain merger-related and restructuring costs during both 2002 and 2001. For the second quarter of 2002, BB&T recorded $1.1 million in net after-tax charges primarily associated with the mergers of AREA and MidAmerica, as well as systems conversion costs related to other mergers. During the second quarter of 2001, BB&T incurred $30.2 million in net after-tax charges primarily associated with the acquisitions of Century South Banks, Inc. (“CSBI”) and F&M National Corporation (“F&M”), and systems conversion costs related to other mergers. Merger-related and restructuring charges typically include, but are not limited to, personnel-related expenses such as staff relocation, severance benefits, early retirement packages and contract settlements; occupancy, furniture and equipment expenses including branch consolidation; and other costs, such as asset write-offs, professional fees, etc.

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For the six months ended June 30, 2002, BB&T incurred $10.4 million in net after-tax charges primarily associated with the mergers of AREA, MidAmerica and CFBC, as well as systems conversion costs related to other mergers. For the six months ended June 30, 2001, BB&T incurred $55.1 million in net after-tax charges primarily associated with the mergers of FCNB Corp. (“FCNB”), CSBI and F&M, and systems conversion costs related to other mergers. Additionally, during the first quarter of 2002, BB&T recorded a $9.8 million gain resulting from the implementation of SFAS No. 141, which required any existing negative goodwill to be recognized as income effective January 1, 2002. This gain is classified separately as a cumulative effect of a change in accounting principle.

Merger-Related and Restructuring Charges

During the second quarter of 2002, BB&T recorded pre-tax merger-related and restructuring charges of $1.6 million, which are reflected in BB&T’s Consolidated Statements of Income as noninterest expenses. These expenses were recorded in connection with the second quarter conversion of CFBC, as well as first quarter acquisitions of AREA and MidAmerica. For the six months ended 2002, BB&T recorded pre-tax merger-related and restructuring charges of $16.2 million, which are reflected in BB&T’s Consolidated Statements of Income as noninterest expenses.

During the second quarter of 2001, in connection with the acquisitions of CSBI and F&M, the Company recorded pre-tax merger-related and restructuring charges of $54.2 million, which are reflected in BB&T’s Consolidated Statements of Income as noninterest expenses. For the six months ended 2001, BB&T recorded $108.0 million, which are reflected in BB&T’s Consolidated Statements of Income as noninterest expenses. In addition, a provision for loan and lease losses totaling $4.5 million for the second quarter of 2001, and $13.4 million for the first six months of 2001, was recorded to conform the acquired entities’ credit policies to those of BB&T, including underwriting and risk rating standards, charge-offs, past due and nonaccrual loans, as well as to reflect impending changes in the management of the acquired institutions’ problem loans.

The following table presents the components of merger-related and restructuring charges included in noninterest expenses. This table includes increases to previously recorded merger-related accruals and period expenses for merger-related items that must be expensed as incurred. Items that are required to be expensed as incurred include certain systems conversion costs, data processing, training, travel and other costs.

Summary of Merger-Related and Restructuring Charges
(Dollars in thousands)

		For the Six Months Ended June 30,

		2002		2001

Severance and personnel-related costs	$	860	$	26,923
Occupancy and equipment charges		5,379		23,214
Marketing and public relations		5,716		3,501
Systems conversions, asset write-offs,
conforming policies and other		4,218		54,409


Total	$	16,173	$	108,047

BB&T Corporation Page 31 Second Quarter 2002 10-Q

Severance and personnel-related costs include severance, employee retention, payments related to change-in-control provisions of employment contracts, outplacement services and other benefits associated with the termination of employees primarily in corporate support and data processing functions.

Occupancy and equipment charges represent merger-related costs associated with lease terminations, obsolete equipment write-offs, and the sale of duplicate facilities and equipment. Systems conversions and related charges included expenses necessary to convert and combine the acquired branches and operations of merged companies. Marketing and public relations represented direct media advertising relative to the acquisitions and local charitable contributions that were required by the merger agreements. The other merger-related charges are composed of asset and inventory write-offs, which are primarily composed of unreconcilable differences in an acquired institution’s accounts or unreconcilable differences identified during systems conversions, litigation accruals, costs to conform an acquired institution’s accounting policies, and other similar charges.

In conjunction with the consummation of an acquisition and the completion of other requirements, BB&T typically accrues certain merger-related expenses related to estimated severance costs, costs to terminate lease contracts, costs related to the disposal of duplicate facilities and equipment, costs to terminate data processing contracts and other costs associated with the acquisition. The following tables present a summary of activity with respect to BB&T’s merger and restructuring accruals related to the mergers listed above, with the more significant mergers (One Valley Bancorp, Inc. and F&M National Corporation) presented separately. These tables include costs reflected as expenses, as presented in the table above, and accruals recorded through purchase accounting adjustments.

Summary of Merger-Related and Restructuring Accrual Activity
(Dollars in thousands)

		One Valley Bancorp, Inc.

		Balance				Balance				Balance
		December 31,		Utilized in		December 31,		Utilized in		June 30,
		2000		2001		2001		2002		2002

Severance and personnel-related charges	$	3,719	$	3,719	$	--	$	--	$	--
Occupancy and equipment charges		4,737		97		4,640		3,821		819
Systems conversions and related charges		128		117		11		11		--
Other merger-related charges		10,009		10,009		--		--		--

Total	$	18,593	$	13,942	$	4,651	$	3,832	$	819

The remaining accrual at June 30, 2002 for One Valley Bancorp, Inc. related primarily to costs to exit certain leases and to dispose of excess facilities and equipment. This liability will be utilized in the future upon termination of the various leases and sale of duplicate property.

BB&T Corporation Page 32 Second Quarter 2002 10-Q

	F&M National Corporation

					Balance						Balance
	Additions in		Utilized in		December 31,		Additions in		Utilized in		June 30,
	2001		2001		2001		2002		2002		2002

Severance and personnel-related charges	$	15,830	$	4,775	$	11,055	$	--	$	8,939	$	2,116
Occupancy and equipment charges		20,455		9,463		10,992		--		57		10,935
Systems conversions and related charges		5,165		790		4,375		2,800		7,175		--
Other merger-related charges		11,099		7,989		3,110		--		1,227		1,883

Total	$	52,549	$	23,017	$	29,532	$	2,800	$	17,398	$	14,934

The liabilities associated with F&M National Corporation are expected to be substantially utilized during 2002 in connection with the systems conversion.

Activity with respect to the merger and restructuring accruals for all other mergers, which are discussed above, is presented in the accompanying table:

	All Other Merger Activity

	Balance						Balance						Balance
	December 31,		Additions in		Utilized in		December 31,		Additions in		Utilized in		June 30,
	2000		2001		2001		2001		2002		2002		2002

Severance and personnel-related charges	$	9,317	$	33,956	$	22,957	$	20,316	$	16,662	$	9,142	$	27,836
Occupancy and equipment charges		16,602		18,513		13,685		21,431		29,266		16,630		34,067
Systems conversions and related charges		3,601		11,936		8,583		6,953		8,378		5,548		9,783
Other merger-related charges		7,711		16,238		11,948		12,000		10,381		9,395		12,986

Total	$	37,231	$	80,643	$	57,173	$	60,700	$	64,687	$	40,715	$	84,672

The liabilities for severance and personnel-related costs relate to severance liabilities that will be paid out based on such factors as expected termination dates, the provisions of employment contracts and the terms of BB&T’s severance plans. The remaining occupancy and equipment accruals relate to costs to exit certain leases and to dispose of excess facilities and equipment. This liability will be utilized upon termination of the various leases and sale of duplicate property. The liabilities associated with systems conversions relate to termination penalties on contracts with information technology service providers. These liabilities will be utilized as the contracts are paid out and expire. The other merger-related liabilities relate to asset and inventory write-offs, litigation accruals, accruals to conform the accounting policies of an acquired institution with those of BB&T and other similar charges.

Because BB&T often has multiple merger integrations in process, and, due to limited resources, must schedule in advance significant events in the merger conversion and integration process, BB&T’s merger process and utilization of merger accruals may cover an extended period of time. In general, a major portion of accrued costs are utilized in conjunction with or immediately following the systems conversion, when most of the duplicate positions are terminated and the terminated employees begin to receive severance. Other costs are utilized over time based on the sale, closing or disposal of duplicate facilities or equipment or the expiration of lease contracts. Merger accruals are re-evaluated regularly and adjusted up or down as necessary. BB&T has not recorded any material adjustments to merger-related accruals for any of the periods presented.

BB&T Corporation Page 33 Second Quarter 2002 10-Q

Net Interest Income and Net Interest Margin

Net interest income on a fully taxable equivalent (“FTE”) basis was $727.3 million for the second quarter of 2002 compared to $647.9 million for the same period in 2001, an increase of $79.4 million, or 12.3%. For the three months ended June 30, 2002, average earning assets increased $5.8 billion, or 9.3%, compared to the same period of 2001, while average interest-bearing liabilities increased by $4.3 billion, or 7.9%, and the net interest margin increased from 4.16% in the second quarter of 2001 to 4.27% in the current quarter. The eleven basis point increase in the net interest margin resulted because the average cost of funds decreasing faster than yields earned on interest-earning assets. The average cost of funds in the second quarter of 2002 decreased 170 basis points compared to the first quarter of 2001, while the average yield earned on interest-earning assets decreased 142 basis points, increasing the interest rate spread by 28 basis points.

For the six months ended June 30, 2002, net interest income on an FTE basis was $1.4 billion compared to $1.3 billion for the same period in 2001, an increase of $130.3 million, or 10.2%. Average interest earning assets for the six months ended June 30, 2002, increased $4.5 billion, or 7.3%, while interest-bearing liabilities increased $3.4 billion, or 6.2%, compared to the first six months of 2001. The net interest margin for the six months ended June 30, 2002, was 4.26%, up from 4.15% in the first six months of 2001. The increase resulted principally from the same factors that affected the quarterly comparison described above.

The following tables set forth the major components of net interest income and the related annualized yields and rates for the second quarter and first six months of 2002 compared to the same periods in 2001, and the variances between the periods caused by changes in interest rates versus changes in volumes.

BB&T Corporation Page 34 Second Quarter 2002 10-Q

Net Interest Income and Rate / Volume Analysis
For the Three Months Ended June 30, 2002 and 2001

	Average Balances				Annualized Yield / Rate						Income / Expense				Increase			Change due to

Fully Taxable Equivalent - (Dollars in thousands)	2002		2001		2002			2001			2002		2001		(Decrease)			Rate (6)			Volume (6)

Assets
Securities (1):
U.S. Treasury, government and other (5)	$	16,622,342	$	14,472,035		6.23			7.15		$	258,759	$	258,775	$	(16	)	$	(35,708	)	$	35,692
States and political subdivisions		971,263		1,070,103		7.45			7.32			18,078		19,581		(1,503	)		327			(1,830	)

Total securities (5)		17,593,605		15,542,138		6.29			7.16			276,837		278,356		(1,519	)		(35,381	)		33,862
Other earning assets (2)		354,745		453,386		1.76			4.41			1,554		4,988		(3,434	)		(2,522	)		(912	)
Loans and leases, net
of unearned income (1)(3)(4)(5)		50,265,129		46,415,430		7.03			8.62			881,084		998,077		(116,993	)		(195,034	)		78,041

Total earning assets		68,213,479		62,410,954		6.81			8.23			1,159,475		1,281,421		(121,946	)		(232,937	)		110,991

Non-earning assets		7,324,507		5,676,265

Total assets	$	75,537,986	$	68,087,219

Liabilities and Shareholders' Equity
Interest-bearing deposits:
Savings and interest-checking	$	3,568,247	$	3,398,441		0.76			1.56			6,746		13,213		(6,467	)		(7,097	)		630
Money rate savings		14,617,809		12,371,408		1.13			2.78			41,191		85,668		(44,477	)		(57,870	)		13,393
Certificates of deposit and other time deposits		24,007,049		22,628,040		3.51			5.73			210,250		322,980		(112,730	)		(131,377	)		18,647

Total interest-bearing deposits		42,193,105		38,397,889		2.45			4.41			258,187		421,861		(163,674	)		(196,344	)		32,670
Short-term borrowed funds		5,791,792		5,572,755		1.84			4.19			26,540		58,251		(31,711	)		(33,916	)		2,205
Long-term debt		11,283,857		10,975,583		5.24			5.60			147,442		153,438		(5,996	)		(9,940	)		3,944

Total interest-bearing liabilities		59,268,754		54,946,227		2.92			4.62			432,169		633,550		(201,381	)		(240,200	)		38,819

Noninterest-bearing deposits		7,151,674		6,119,524
Other liabilities		1,960,958		1,361,903
Shareholders' equity		7,156,600		5,659,565

Total liabilities and
shareholders' equity	$	75,537,986	$	68,087,219

Average interest rate spread						3.89			3.61
Net yield on earning assets						4.27	%		4.16	%	$	727,306	$	647,871	$	79,435		$	7,263		$	72,172

Taxable equivalent adjustment											$	37,210	$	53,404


(1)	Yields related to securities, loans and leases exempt from income taxes are stated on a taxable equivalent basis assuming tax rates in effect for the periods presented.
(2)	Includes Federal funds sold and securities purchased under resale agreements or similar arrangements.
(3)	Loan fees, which are not material for any of the periods shown, have been included for rate calculation purposes.
(4)	Nonaccrual loans have been included in the average balances. Only the interest collected on such loans has been included as income.
(5)	Includes assets which were held for sale or available for sale at amortized cost and trading securities at estimated fair value.
(6)	Changes in interest income and expense attributable to both changes in interest rates and changes in volumes are allocated proportionately.

BB&T Corporation Page 35 Second Quarter 2002 10-Q

Net Interest Income and Rate / Volume Analysis
For the Six Months Ended June 30, 2002 and 2001

	Average Balances				Annualized Yield / Rate						Income / Expense				Increase			Change due to

Fully Taxable Equivalent - (Dollars in thousands)	2002		2001		2002			2001			2002		2001		(Decrease)			Rate (6)			Volume (6)

Assets
Securities (1):
U.S. Treasury, government and other (5)	$	16,061,776	$	14,556,605		6.38			7.20		$	512,583	$	524,022	$	(11,439	)	$	(62,177	)	$	50,738
States and political subdivisions		978,860		1,085,239		7.47			7.30			36,580		39,590		(3,010	)		914			(3,924	)

Total securities (5)		17,040,636		15,641,844		6.45			7.21			549,163		563,612		(14,449	)		(61,263	)		46,814
Other earning assets (2)		404,904		466,111		2.02			4.95			4,047		11,443		(7,396	)		(6,055	)		(1,341	)
Loans and leases, net
of unearned income (1)(3)(4)(5)		49,055,889		45,860,658		7.08			8.90			1,725,888		2,026,866		(300,978	)		(434,867	)		133,889

Total earning assets		66,501,429		61,968,613		6.89			8.44			2,279,098		2,601,921		(322,823	)		(502,186	)		179,363

Non-earning assets		7,019,610		5,555,818

Total assets	$	73,521,039	$	67,524,431

Liabilities and Shareholders' Equity
Interest-bearing deposits:
Savings and interest-checking	$	3,385,771	$	3,447,388		0.78			1.70			13,129		29,129		(16,000	)		(15,488	)		(512	)
Money rate savings		14,171,994		12,065,884		1.13			3.14			79,660		187,850		(108,190	)		(136,484	)		28,294
Certificates of deposit and other time deposits		23,146,738		22,293,957		3.70			5.90			425,000		652,349		(227,349	)		(251,437	)		24,088

Total interest-bearing deposits		40,704,503		37,807,229		2.57			4.64			517,789		869,328		(351,539	)		(403,409	)		51,870
Short-term borrowed funds		5,860,857		6,085,596		1.82			4.87			52,989		146,951		(93,962	)		(88,724	)		(5,238	)
Long-term debt		11,427,259		10,721,715		5.21			5.70			295,752		303,366		(7,614	)		(26,836	)		19,222

Total interest-bearing liabilities		57,992,619		54,614,540		3.01			4.87			866,530		1,319,645		(453,115	)		(518,969	)		65,854

Noninterest-bearing deposits		6,826,917		5,969,416
Other liabilities		1,886,762		1,366,639
Shareholders' equity		6,814,741		5,573,836

Total liabilities and
shareholders' equity	$	73,521,039	$	67,524,431

Average interest rate spread						3.88			3.57
Net yield on earning assets						4.26	%		4.15	%	$	1,412,568	$	1,282,276	$	130,292		$	16,784		$	113,508

Taxable equivalent adjustment											$	75,200	$	102,355


(1)	Yields related to securities, loans and leases exempt from income taxes are stated on a taxable equivalent basis assuming tax rates in effect for the periods presented.
(2)	Includes Federal funds sold and securities purchased under resale agreements or similar arrangements.
(3)	Loan fees, which are not material for any of the periods shown, have been included for rate calculation purposes.
(4)	Nonaccrual loans have been included in the average balances. Only the interest collected on such loans has been included as income.
(5)	Includes assets which were held for sale or available for sale at amortized cost and trading securities at estimated fair value.
(6)	Changes in interest income and expense attributable to both changes in interest rates and changes in volumes are allocated proportionately.

BB&T Corporation Page 36 Second Quarter 2002 10-Q

Noninterest Income

Noninterest income for the three months ended June 30, 2002, was $404.1 million compared to $346.7 million for the same period in 2001, an increase of $57.4 million, or 16.6%. Noninterest income increased primarily due to substantial growth in insurance commissions from BB&T’s agency network, growth in service charges on deposits, and higher investment banking and brokerage fees and commissions. For the six months ended June 30, 2002, noninterest income was $778.8 million, an increase of $100.1 million, or 14.8%, compared to the same period in 2001. The increase in noninterest income for the period ended June 30, 2002, resulted primarily from higher mortgage banking income, growth in service charges on deposits, growth in insurance commissions from BB&T’s agency network, and higher investment banking and brokerage fees and commissions.

Service charges on deposits totaled $101.5 million for the second quarter of 2002, an increase of $13.5 million, or 15.3%, compared to the second quarter of 2001. For the first six months of 2002, service charges on deposits totaled $191.6 million, an increase of $24.2 million, or 14.4%, compared to the first six months of 2001. The largest components of the growth within service charges on deposits in the 2002 period were NSF and overdraft charges on personal accounts and account analysis fees on commercial accounts, which contributed $4.3 million and $4.4 million, respectively, to the increase in the second quarter of 2002 compared to 2001. MidAmerica was acquired and accounted for as a purchase on March 8, 2002, which contributed $2.6 million to the increase in service charges on deposits in the second quarter of 2002 compared to the prior year quarter. Additionally, AREA was acquired and accounted for as a purchase on March 20, 2002, which contributed $3.6 million. The 14.4% increase in service charges on deposits for the six months of 2002 was driven primarily by the same factors that affected quarterly growth.

Trust income totaled $24.2 million for the current quarter, an increase of $.3 million, or 1.1%, compared to the same period a year ago. For the six months, trust income totaled $47.3 million, a decrease of $1.7 million, or 3.4%, compared to the same period in 2001. The decrease in trust income for the first half of 2002 is due primarily to a decline in the value of trust assets under management, which was the result of the significant decline in the overall market value of equity securities held in trust. Assets under management totaled $20.4 billion at June 30, 2002, up from $15.5 billion at June 30, 2001. The increase in trust assets under management reflects trust assets at companies acquired through purchase accounting, which offset the declines in market value previously discussed. Through the acquisitions of AREA and MidAmerica, BB&T acquired trust assets totaling $1.8 million.

Investment banking and brokerage fees and commissions totaled $56.0 million during the second quarter of 2002, an increase of $13.1 million, or 30.6%, compared to the second quarter of 2001. For the six months, investment banking and brokerage fees and commissions totaled $108.9 million, an increase of $22.3 million, or 25.8%, compared to the same period in 2001. The increase in this category of revenue for the second quarter and the six month period of 2002 resulted primarily from growth in revenues at Edgar M. Norris & Co. and Scott & Stringfellow, which collectively contributed $9.2 million of the increase. Also, growth in revenues from fixed income underwriting fees and higher trading and retail brokerage fees contributed to the increase.

BB&T Corporation Page 37 Second Quarter 2002 10-Q

Agency insurance commissions totaled $74.1 million for the second quarter of 2002, an increase of $29.0 million, or 64.4%, compared to the same three-month period of 2001. For the six months, agency insurance commissions totaled $137.9 million, an increase of $50.9 million, or 58.6%, compared to the same period in 2001. The purchase of Cooney, Rikard & Curtin, Inc. (“CRC”), a wholesale insurance broker, in January 2002 contributed $19.8 million in revenue growth for the second quarter and $32.9 million for the first six months of 2002. In addition, other agencies were acquired in the last half of 2001 and first half of 2002 which added $3.9 million in revenues in the second quarter of 2002 and $7.8 million for the first six months of 2002. Finally, property and casualty insurance commissions increased $7.1 million and group health insurance commissions increased $1.8 million. The 58.6% increase in agency insurance commissions for the six months of 2002 was driven by the same factors that affected quarterly growth.

Income from mortgage banking activities totaled $44.0 million for the second quarter of 2002, a decrease of $7.5 million, or 14.6%, compared to the same period of 2001. For the current quarter, servicing fee income increased $8.4 million; origination fees on loans sold increased $6.5 million; and gains from loan sales decreased $1.2 million compared to the second quarter of 2001. These increases were offset by a $15.8 million valuation allowance recorded to reduce the value of BB&T’s capitalized mortgage servicing rights as a result of the declining interest rate environment. In comparison, in the second quarter of 2001, a reversal of $5.9 million in previously recorded mortgage servicing rights valucation allowances were recorded due to increased mortgage rates. For the first six months of 2002, income from mortgage banking activities totaled $94.5 million, an increase of $36.9 million, or 63.9%, compared to the same period in 2001. The increase in year-to-date mortgage banking income resulted from higher mortgage loan originations in 2002, which have resulted from the lower interest rate environment. For the six months ended 2002, a $25.5 million valuation allowance was provided, reducing mortgage income, compared to a valuation allowance of $29.1 million recorded during the first half of 2001. During the first six months of 2002, BB&T has originated $5.1 billion of mortgage loans, compared to $4.5 billion in the same period of 2001.

Other nondeposit fees and commissions totaled $52.5 million for the second quarter of 2002, an increase of $4.7 million, or 9.9%, compared to the three months ended June 30, 2001. For the six months, other nondeposit fees and commissions totaled $96.6 million, an increase of $4.4 million, or 4.8%, compared to the same period in 2001. The principal drivers of the increase were check card interchange fees, which increased $1.6 million; an increase in bankcard income of $1.1 million; business check card interchange fee income, which contributed $.6 million. Additionally, the purchase of AREA and MidAmerica contributed $2.0 million and $2.2 million, respectively, to the growth in other nondeposit fees and commissions. The higher nondeposit fees and commissions were offset by a decrease in income from the outsourcing of official checks, which declined $2.4 million for the quarter. The 4.8% increase in other nondeposit fees and commissions for the six months of 2002 was primarily driven by the same factors that affected quarterly growth.

BB&T Corporation Page 38 Second Quarter 2002 10-Q

Securities gains totaled $19.7 million for the second quarter of 2002, an increase of $3.0 million, or 18.2%, compared with the same period one year ago. For the six months ended June 30, 2002 and 2001, securities gains totaled $33.1 million and $89.3 million, respectively. In the first six months of 2001, BB&T realized a pretax gain of $82.4 million on an investment in an electronic transaction processing company. Excluding the gain, securities gains for the six months ended 2001 would have been $6.9 million.

Other income totaled $28.2 million for the second quarter of 2002, an increase of $.8 million, or 3.0%, compared with the same period one year ago. The more significant components of this increase were income from bank owned life insurance, which increased $5.2 million, and a decrease in income from the amortization of negative goodwill, which decreased $1.6 million. For the six months ended 2002 and 2001, other income totaled $61.3 million and $43.0 million, respectively. During the six months, income from bank owned life insurance increased $10.9 million, and a $5.8 million gain for stock received from the demutualization of Principal Financial Group was recognized.

Noninterest Expense

Noninterest expenses totaled $576.9 million for the second quarter of 2002 compared to $563.8 million for the same period a year ago, an increase of $13.0 million, or 2.3%. Noninterest expense for the second quarter of 2002 includes $1.6 million of pretax merger-related and restructuring expenses principally associated with the mergers of CFBC, AREA and MidAmerica. For the six months ended June 30, 2002, noninterest expenses totaled $1.1 billion, an increase of $22.8 million, or 2.1%, over the same period one year ago. Noninterest expense for the six months of 2002 includes $16.2 million of pretax merger-related and restructuring expenses.

Personnel expense, the largest component of noninterest expense, was $319.6 million for the second quarter of 2002 compared to $282.5 million for the same period in 2001, an increase of $37.1 million, or 13.1%. This increase was primarily the result of the effect of purchase acquisitions, which added costs of $11.0 million, $7.5 million and $10.2 million for the acquisitions of CRC, MidAmerica and AREA, respectively. Additionally, employee investment incentive compensation increased $6.3 million and flex fringe benefit expense increased $4.6 million. These increases in personnel expense were partially offset by a decrease of $2.7 million in annual performance expense. For the six months, personnel expense totaled $624.5 million, an increase of $67.7 million, or 12.2%, compared to 2001. The increase resulted from the same factors that produced the second quarter increase.

Occupancy and equipment expense for the three months ended June 30, 2002, totaled $84.7 million, an increase of $9.6 million, or 12.8%, compared to 2001. The increase was the result of an increase in communications equipment expense and information technology equipment expense of $2.5 million and rent on buildings and premises in the amount of $3.4 million. Additionally, the purchase acquisitions of MidAmerica and AREA resulted in added costs of $1.8 million and $2.5 million, respectively. For the six months, occupancy and equipment expense totaled $168.1 million, an increase of $17.9 million, or 11.9%, compared to 2001. This increase was created by similar growth in the same categories that produced the quarterly increase.

BB&T Corporation Page 39 Second Quarter 2002 10-Q

The amortization of goodwill and other intangible assets totaled $6.3 million for the three months ended June 30, 2002, a decrease of $12.1 million, or 66.0%, from the amount incurred in the second quarter of 2001. For the first six months of 2002, amortization of goodwill and other intangible assets totaled $10.6 million, a decrease of $25.7 million, or 70.8%, compared to 2001. This decrease is due to the adoption of SFAS No. 142, which ended the amortization of goodwill effective July 1, 2001.

Other noninterest expenses for the second quarter of 2002 totaled $164.7 million, an increase of $31.1 million, or 23.2%, compared to 2001. This increase is due to the acquisitions of CRC, MidAmerica, and AREA, consummated using purchase accounting, added $1.8 million, $3.1 million, and $6.3 million, respectively. Additionally, the amortization of mortgage servicing rights increased $8.8 million; data processing software expense increased $3.5 million; and loan and lease expense increased $3.9 million. For the first six months of 2002, other noninterest expenses totaled $305.7 million, an increase of $54.8 million, or 21.8%, compared with 2001.

Provision for Income Taxes

The provision for income taxes totaled $130.9 million for the second quarter of 2001, an increase of $39.6 million, or 43.4%, compared to the second quarter of 2001. For the first six months of 2002, the provision for income taxes totaled $248.2 million, an increase of $56.5 million, or 29.5%, compared to 2001. BB&T’s effective income tax rates were 28.5% and 27.8% for the three months ended June 30, 2002 and 2001, respectively, and 28.3% and 28.8% for the six months of 2002 and 2001, respectively.

During the last three years, BB&T entered into option contracts which legally transferred part of the responsibility for the future residual management of certain leveraged lease investments including the future remarketing or re-leasing of these assets to a wholly-owned subsidiary in a foreign jurisdiction having a lower income tax rate, thereby lowering the effective income tax rate applicable to these lease investments. These option contracts provide that the foreign subsidiary may purchase the lease investments at expiration of the existing leveraged leases for a fixed price. As a result, a portion of the residual value included in the consolidated leveraged lease analysis should be taxed at a lower tax rate than originally anticipated, resulting in a change in the total net income from the lease. In accordance with SFAS No. 13, “Accounting for Leases”, the net income from the affected leases was recalculated from inception based on the new effective income tax rate. The recalculation had the effect of reducing net interest income and the income tax provision for the first six months of 2002 by $4.9 million and $9.7 million, respectively. BB&T intends to permanently reinvest the earnings of this subsidiary and, therefore, in accordance with the provisions of SFAS No. 109, “Accounting for Income Taxes”, deferred income taxes associated with the foreign subsidiary arising from these transactions have not been provided.

BB&T Corporation Page 40 Second Quarter 2002 10-Q

BB&T transferred certain securities and real estate secured loans to a wholly owned subsidiary in exchange for additional common equity in the subsidiary. The transaction produced a difference between BB&T’s tax basis in the equity investment in the subsidiary and the assets transferred to the subsidiary, resulting in a net reduction in the income tax provision of $17.4 million for the first six months of 2002.

The Internal Revenue Service (“IRS”) is conducting an examination of BB&T’s Federal income tax returns for the years ended December 31, 1996, 1997 and 1998. In connection with this examination the IRS has issued Notices of Proposed Adjustment with respect to BB&T’s income tax treatment of certain leveraged lease investments that were entered into during the years under examination. Management believes that BB&T’s treatment of these leveraged leases was appropriate and in compliance with existing tax laws and regulations, and intends to vigorously defend this position. In addition, inasmuch as the proposed adjustments relate primarily to the timing of revenue recognition and amortization expense, deferred taxes have been provided. Management does not expect that BB&T’s consolidated financial position or consolidated results of operations will be materially adversely affected as a result of the IRS examination.

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PART II. OTHER INFORMATION

Item 1. Legal Proceedings

The nature of the business of BB&T’s banking subsidiaries ordinarily results in a certain amount of litigation. The subsidiaries of BB&T are involved in various legal proceedings, all of which are considered incidental to the normal conduct of business. Management believes that the liabilities arising from these proceedings will not have a materially adverse effect on the consolidated financial position or consolidated results of operations of BB&T.

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Item 4. Submission of Matters to a Vote of Security Holders

BB&T held its annual meeting of the shareholders on April 23, 2002, to consider and vote upon the following matters:

(1)

To elect six Directors for three-year terms expiring in 2005. Of shares represented by proxy, votes in favor were 342,319,180; and votes withheld were 5,334,274.

(2)

To ratify the appointment of PricewaterhouseCoopers LLP as the Corporation’s Independent Auditors for 2002. Of shares represented by proxy, votes in favor were 337,705,853; votes opposed were 7,933,165; and abstentions were 1,976,575.

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BB&T Corporation Page 41 Second Quarter 2002 10-Q

Item 6. Exhibits and Reports on Form 8-K

EXHIBIT INDEX

Exhibit No.	Description	Location

2(a)	Agreement and Plan of Reorganization dated as of July 29, 1994 and amended and restated as of October 22, 1994 between the Registrant and BB&T Financial Corporation.	Incorporated herein by reference to Registration No. 33-56437.

2(b)	Plan of Merger as of July 29, 1994 as amended and restated on October 22, 1994 between the Registrant and BB&T Financial Corporation.	Incorporated herein by reference to Registration No. 33-56437.

2(c)	Agreement and Plan of Reorganization dated as of November 1, 1996 between the Registrant and United Carolina Bancshares Corporation, as amended.	Incorporated herein by reference to Exhibit 3(a) filed in the Annual Report on Form 10-K, filed March 17, 1997.


2(d)	Agreement of Plan of Reorganization dated as of October 29, 1997 between the Registrant and Life Bancorp, Inc.	Incorporated herein by reference to Registration No. 33-44183.

2(e)	Agreement and Plan of Reorganization dated as of February 6, 2000 between the Registrant and One Valley Bancorp, Inc.	Incorporated herein by reference to Exhibit 99.1 filed in the Current Report on Form 8-K, dated February 9, 2000


3(a)(i)	Amended and Restated Articles of Incorporation of the Registrant, as amended.	Incorporated herein by reference to Exhibit 3(a) filed in the Annual Report on Form 10-K, filed March 17, 1997.

BB&T Corporation Page 42 Second Quarter 2002 10-Q


3(a)(ii)	Articles of Amendment of Articles of Incorporation.	Incorporated herein by reference to Exhibit 3(a)(ii) filed in the Annual Report on Form 10-K, filed March 18, 1998


3(b)(i)	Bylaws of the Registrant, as amended.	Incorporated herein by reference to Exhibit 3(b) filed in the Annual Report on Form 10-K, filed March 18, 1998


3(b)(ii)	Incorporated herein by reference to Exhibit 3(b)(ii) filed in the Quarterly Report on Form 10-Q, filed May 13, 2002.	Incorporated herein by reference to Exhibit 3(b)(ii) filed in the Quarterly Report on Form 10-Q, filed May 13, 2002.

4(a)	Articles of Amendment to Amended and Restated Articles of Incorporation of the Registrant related to Junior Participating Preferred Stock.	Incorporated herein by reference to Exhibit 3(a) filed in the Annual Report on Form 10-K, filed March 17, 1997.

4(b)	Rights Agreement dated as of December 17, 1996 between the Registrant and Branch Banking and Trust Company, Rights Agent.	Incorporated herein by reference to Exhibit 1 filed under Form 8-A, filed January 10, 1997.

4(c)	Subordinated Indenture (including Form of Subordinated Debt Security) between the Registrant and State Street Bank and Trust Company, Trustee, dated as of May 24, 1996.	Incorporated herein by reference to Exhibit 4(d) of Registration No. 333-02899.

4(d)	Senior Indenture (including Form of Senior Debt Security) between the Registrant and State Street Bank and Trust company, Trustee, dated as of May 24, 1996.	Incorporated herein by reference to Exhibit 4(c) of Registration No. 333-02899.

10 (a)*	Death Benefit Only Plan, Dated April 23, 1990, by and between Branch Banking and Trust Company (as successor to Southern National Bank of North Carolina) and L. Glenn Orr, Jr.	Incorporated herein by reference to Registration No. 33-33984.

BB&T Corporation Page 43 Second Quarter 2002 10-Q


10 (b)*	BB&T Corporation Non-Employee Directors' Deferred Compensation and Stock Option Plan.	Incorporated herein by reference to Exhibit 10(b) of the Annual Report on Form 10-K, filed March 17, 1997.

10 (c)*	BB&T Corporation 1994 Omnibus Stock Incentive Plan.	Incorporated herein by reference to Registration No. 33-57865.

10 (d)*	Settlement and Non-Compete Agreement, dated February 28, 1995, by and between the Registrant and L. Glenn Orr, Jr.	Incorporated herein by reference to Registration No. 33-56437.

10 (e)*	Settlement Agreement, Waiver and General Release dated September 19, 1994, by and between the Registrant, Branch Banking and Trust Company (as successor to Southern National Bank of North Carolina) and Gary E. Carlton.	Incorporated herein by reference to Registration No. 33-56437.

10 (f)	BB&T Corporation 401(k) Savings Plan (restated effective January 1, 2000, and subsequently amended).	Incorporated herein by reference to Exhibit 10(f) filed in the Annual Report on Form 10-K, filed March 16, 2001.

10 (g)*	BB&T Corporation 1995 Omnibus Stock Incentive Plan.	Incorporated herein by reference to Exhibit 10(g) filed in the Annual Report on Form 10-K, filed March 17, 1997.

10 (h)*	Branch Banking and Trust Company Long-Term Incentive Plan.	Incorporated by reference to the identified exhibit under the Quarterly Report on Form 10-Q, filed May 14, 1991.

BB&T Corporation Page 44 Second Quarter 2002 10-Q


10 (i)*	Branch Banking and Trust Company Executive Incentive Compensation Plan.	Incorporated by reference to the identified exhibit under the Annual Report on Form 10-K, filed February 22, 1985.

10 (j)*	Southern National Deferred Compensation Plan for Key Executives.	Incorporated herein by reference to Exhibit 10(j) filed in the Annual Report on Form 10-K, filed March 17, 1997.

10 (k)*	BB&T Corporation Target Pension Plan.	Incorporated herein by reference to Exhibit 10(k) filed in the Annual Report on Form 10-K, filed March 17, 1997.

10 (l)*	BB&T Corporation Supplemental Executive Retirement Plan.	Incorporated herein by reference to Exhibit 10(l) filed in the Annual Report on Form 10-K, filed March 17, 1997.

10 (m)*	Settlement and Noncompetition Agreement, dated July 1, 1997, by and between the Registrant and E. Rhone Sasser.	Incorporated herein by reference to Exhibit 10(m) filed in the Annual Report on Form 10-K, filed March 18, 1998.

10 (n)*	BB&T Corporation Supplemental Defined Contribution Plan for Highly Compensated Employees (amended and restated effective November 1, 2001).	Incorporated herein by Reference to Exhibit 10 (n) filed in the Annual Report on Form 10-K, filed March 15, 2002.

10 (o)*	Scott & Stringfellow, Inc. Executive and Employee Retention Plan.	Incorporated herein by reference to Registration No. 333-81471.

BB&T Corporation Page 45 Second Quarter 2002 10-Q


10 (p)*	BB&T Corporation Non-Qualified Defined Contribution Plan (amended and restated November 1, 2001).	Incorporated herein by reference to Exhibit 10 (p) filed in the Annual Report on Form 10-K, filed March 15, 2002.

10 (q)*	BB&T Corporation Amended and Restated 1996 Short-term Incentive Plan.	Incorporated herein by reference to Exhibit 10(q) of the Annual Report on Form 10-K, filed on March 16, 2001.

10 (r)*	Amendment to 1995 Omnibus Stock Incentive Plan.	Incorporated herein by reference to Registration No. 333-36540.

10 (s)*	Employment Agreement dated February 6, 2000, by and between the Registrant and J. Holmes Morrison.	Incorporated herein by reference to Exhibit 10(s) of the Annual Report on Form 10-K, filed on March 16, 2001.

10 (t)	BB&T Corporation Pension Plan (restated effective January 1, 2000, and subsequently amended).	Incorporated herein by reference to Exhibit 10(t) of the Annual Report on Form 10-K, filed on March 16, 2001.

10 (u)*	Amendment to BB&T Corporation Nonqualified Defined Contribution Plan.	Incorporated herein by reference to Exhibit 10(u) of the Annual Report on Form 10-K, filed on March 16, 2001.

10 (v)*	BB&T Corporation Non-Employee Directors' Deferred Compensation and Stock Option Plan (amended and restated effective November 1, 2001).	Incorporated herein by reference to Exhibit 10 (v) filed in the Annual Report on Form 10-K, filed March 15, 2002.

BB&T Corporation Page 46 Second Quarter 2002 10-Q


10 (w)*	Amendment to the BB&T Corporation Supplemental Defined Contribution Plan for Highly Compensated Employees.	Incorporated herein by reference to Exhibit 10(w) of the Annual Report on Form 10-K, filed on March 16, 2001.

10 (x)*	BB&T Corporation Non-Qualified Deferred Compensation Trust (amended and restated effective Incorporated herein by reference to Exhibit November 1, 2001).	10 (x) filed in the Annual Report on Form 10-K, filed March 15, 2002.

10 (y)*	2001 Declaration of Amendment to BB&T Corporation Non-Employee Directors' Deferred Compensation and Stock Option Plan	Incorporated herein by reference to Exhibit 10 (y) filed in the Annual Report on Form 10-K, filed March 15, 2002.

10 (z)*	Amended and Restated Employment Agreement by and among the Registrant, Branch Banking and Trust Co. and John A. Allison IV	Incorporated by reference to 10 (z) in the Quarterly Report on Form 10-Q filed May 13, 2002.

10 (aa)*	Amended and Restated Employment Agreement by and among the Registrant, Branch Banking and Trust Co. and W. Kendall Chalk	Incorporated by reference to 10 (aa) in the Quarterly Report on Form 10-Q filed May 13, 2002.

10 (ab)*	Amended and Restated Employment Agreement by and among the Registrant, Branch Banking and Trust Co. and Robert E. Greene	Incorporated by reference to 10 (ab) in the Quarterly Report on Form 10-Q filed May 13, 2002.

10 (ac)*	Amended and Restated Employment Agreement by and among the Registrant, Branch Banking and Trust Co. and Sherry A. Kellett	Incorporated by reference to 10 (ac) in the Quarterly Report on Form 10-Q filed May 13, 2002.

BB&T Corporation Page 47 Second Quarter 2002 10-Q


10 (ad)*	Amended and Restated Employment Agreement by and among the Registrant, Branch Banking and Trust Co. and Kelly S. King	Incorporated by reference to 10 (ad) in the Quarterly Report on Form 10-Q filed May 13, 2002.

10 (ae)*	Amended and Restated Employment Agreement by and among the Registrant, Branch Banking and Trust Co. and Scott E. Reed	Incorporated by reference to the identified exhibit under the Quarterly Report on Form 10-Q filed May 13, 2002.

10 (af)*	Amended and Restated Employment Agreement by and among the Registrant, Branch Banking and Trust Co. and Henry G. Williamson, Jr.	Incorporated by reference to 10 (ae) in the Quarterly Report on Form 10-Q filed May 13, 2002.

10 (ag)*	Amended and Restated Employment Agreement by and among the Registrant, Branch Banking and Trust Co. and C. Leon Wilson, III	Incorporated by reference to 10 (ag) in the Quarterly Report on Form 10-Q filed May 13, 2002.

11	Statement re Computation of Earnings Per Share.	Filed herewith as Note E.

22	Proxy Statement for the 2002 Annual Meeting of Shareholders.	Incorporated herein by reference to BB&T's Definitive Proxy Statement filed on Schedule 14A on March 21, 2002.


99.1	Chief Executive Officer Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002	Filed herewith.

99.2	Chief Financial Officer Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002	Filed herewith.

	* Management compensatory plan or arrangement.

BB&T Corporation Page 48 Second Quarter 2002 10-Q

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(b) Current Reports on Form 8-K during and following the quarter ended June 30, 2002.

On April 11, 2002, BB&T filed a Current Report on Form 8-K under Item 5 to report the results of operations for the first quarter of 2002. On May 22, 2002, BB&T filed a Current Report on Form 8-K under Item 9 to announce that BB&T had entered into a definitive agreement to acquire Regional Financial Corporation of Tallahassee, Florida, holding company for First South Bank, and to file certain presentation material related to this transaction. On July 11, 2002, BB&T filed a Current Report on Form 8-K under Item 9 to report the results of operations for the second quarter of 2002.

BB&T Corporation Page 49 Second Quarter 2002 10-Q

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


		BB&T CORPORATION
		(Registrant)

Date: August 14, 2002		By: /s/ Scott E. Reed
		Scott E. Reed, Senior Executive Vice President and Chief
		Financial Officer

Date: August 14, 2002		By: /s/ Sherry A. Kellett
		Sherry A. Kellett, Senior Executive Vice President and
		Controller (Principal Accounting Officer)

BB&T Corporation Page 50 Second Quarter 2002 10-Q

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Exhibit 99.1

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO SECTION 906
OF THE SARBANES-OXLEY ACT OF 2002

I, John A. Allison, IV, state and attest that:

(1)

I am the Chairman and Chief Executive Officer of BB&T Corporation (the "issuer").

(2)

Accompanying this certification is BB&T Corporation’s Quarterly Report on Form 10-Q for the period ended June 30, 2002, a periodic report (the “periodic report”) filed by the issuer with the Securities and Exchange Commission pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (the “Exchange Act”), which contains financial statements.

(3)

I hereby certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that

the periodic report containing the financial statements fully complies with the requirements of Section 13(a) or 15(d) of the Exchange Act, and

the information contained in the periodic report fairly presents, in all material respects, the financial condition and results of operations of the issuer for the periods presented.

/s/ John A. Allison, IV

John A. Allison, IV
Chairman and Chief Executive Officer
August 14, 2002

BB&T Corporation Page 51 Second Quarter 2002 10-Q

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Exhibit 99.2

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO SECTION 906
OF THE SARBANES-OXLEY ACT OF 2002

I, Scott E. Reed, state and attest that:

(1)

I am the Chief Financial Officer of BB&T Corporation (the "issuer").

(2)

(3)

I hereby certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that

the periodic report containing the financial statements fully complies with the requirements of Section 13(a) or 15(d) of the Exchange Act, and

the information contained in the periodic report fairly presents, in all material respects, the financial condition and results of operations of the issuer for the periods presented.

/s/ Scott E. Reed

Scott E. Reed
Senior Executive Vice President and
Chief Financial Officer
August 14, 2002

BB&T Corporation Page 52 Second Quarter 2002 10-Q

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PART II. OTHER INFORMATION

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO SECTION 906
OF THE SARBANES-OXLEY ACT OF 2002

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO SECTION 906
OF THE SARBANES-OXLEY ACT OF 2002