WINSTON-SALEM, N.C.,
Oct. 19, 2017 /PRNewswire/
-- BB&T Corporation (NYSE: BBT) today reported earnings
for the third quarter of 2017. Net income available to common
shareholders was $597 million.
Earnings per diluted common share were $0.74 for the third quarter of 2017, up 1.4
percent from $0.73 last year.
Excluding pre-tax merger-related and restructuring charges of
$47 million ($29 million after-tax), net income available to
common shareholders was $626 million,
or $0.78 per diluted share, up 2.6
percent from $0.76 last year.
Net income available to common shareholders was $631 million ($0.77
per diluted share) for the second quarter of 2017 and $599 million ($0.73
per diluted share) for the third quarter of 2016.
"We had a solid quarter with growth in revenues and good expense
control," said Chairman and Chief Executive Officer Kelly S. King. "Taxable-equivalent revenues were
$2.9 billion, up 1.4 percent compared
to the third quarter of 2016 and net interest income was up
$38 million driven by higher interest
rates.
"Total expenses for the quarter were $1.7
billion and our GAAP efficiency was 62.0 percent, primarily
due to restructuring charges as we continue to optimize our
structure," said King. "Our year-to-date adjusted efficiency ratio
of 58.3 percent is the lowest level in four years.
"While average total loans declined 1.1 percent annualized
compared with last quarter, core loans increased 3.2 percent, which
excludes prime auto, residential mortgage and PCI loans that are
decreasing as planned," said King. "Our credit quality is very
strong, as nonperforming assets and loans 90 days or more past due
were relatively stable and net charge-offs improved from already
low levels."
"We are also pleased to have completed $920 million in share repurchases in the third
quarter," King said. "This is nearly half of the amount included in
our capital plan approved late last quarter and demonstrates our
continued capital strength and commitment to serving our clients
and communities as we generate long-term benefits for our
shareholders."
Third Quarter 2017 Performance
Highlights
- Taxable-equivalent revenues were $2.9
billion for the third quarter, down $41 million from the second quarter of 2017
-
- Net interest income on a taxable-equivalent basis was up
$13 million
- Net interest margin was 3.48 percent, up one basis point;
driven by rate increases
- Noninterest income was down $54
million driven by lower insurance income
- Fee income ratio was 41.4 percent, compared to 42.7 percent for
the prior quarter
- Noninterest expense was $1.7
billion, essentially flat compared to the second quarter of
2017
-
- Personnel expense decreased $18
million
- Merger-related and restructuring charges increased $37 million
- GAAP efficiency ratio was 62.0 percent, compared to 61.0
percent for the prior quarter
- Adjusted efficiency ratio was 58.3 percent, compared to 58.6
percent for the prior quarter
- Average loans and leases held for investment were $142.7 billion compared to $143.1 billion for the second quarter of
2017
-
- Average other lending subsidiaries loans increased $522 million, or 13.2 percent annualized
- Average CRE-construction and development increased $276 million, or 28.0 percent annualized
- Average sales finance loans decreased $670 million, or 25.4 percent annualized
- Average residential mortgage loans decreased $468 million, or 6.3 percent annualized
- Average deposits were $157.4
billion compared to $160.3
billion for the second quarter of 2017
-
- Average noninterest-bearing deposits increased $916 million, or 6.9 percent annualized
- Deposit mix strengthened, with average noninterest-bearing
deposits representing 34.0 percent of total deposits, compared to
32.8 percent in the prior quarter
- Average interest-bearing deposits decreased $3.8 billion and costs were 0.35 percent, up five
basis points compared to the prior quarter
- Asset quality continues to improve
-
- Nonperforming loans were 0.42 percent of loans held for
investment, down one basis point compared to the prior quarter
- Loans 90 days or more past due and still accruing were 0.35
percent of loans held for investment, compared to 0.34 percent in
the prior quarter
- Loans 30-89 days past due and still accruing were 0.69 percent
of loans held for investment, compared to 0.61 percent in the prior
quarter
- The allowance for loan loss coverage ratio was 2.44 times
nonperforming loans held for investment, versus 2.43 times in the
prior quarter
- The allowance for loan and lease losses was 1.04 percent of
loans held for investment, up slightly from the prior quarter
- Capital levels remained strong across the board
-
- Common equity tier 1 to risk-weighted assets was 10.1
percent
- Tier 1 risk-based capital was 11.8 percent
- Total capital was 13.9 percent
- Leverage capital was 9.9 percent
EARNINGS
HIGHLIGHTS
|
|
|
|
|
|
|
|
|
|
|
(dollars in millions,
except per share data)
|
|
|
|
|
|
|
|
Change 3Q17
vs.
|
|
|
3Q17
|
|
2Q17
|
|
3Q16
|
|
2Q17
|
|
3Q16
|
Net income available
to common shareholders
|
|
$
|
597
|
|
|
$
|
631
|
|
|
$
|
599
|
|
|
$
|
(34)
|
|
|
$
|
(2)
|
|
Diluted earnings per
common share
|
|
0.74
|
|
|
0.77
|
|
|
0.73
|
|
|
(0.03)
|
|
|
0.01
|
|
|
|
|
|
|
|
|
|
|
|
|
Net interest income -
taxable equivalent
|
|
$
|
1,688
|
|
|
$
|
1,675
|
|
|
$
|
1,650
|
|
|
$
|
13
|
|
|
$
|
38
|
|
Noninterest
income
|
|
1,166
|
|
|
1,220
|
|
|
1,164
|
|
|
(54)
|
|
|
2
|
|
Total
taxable-equivalent revenue
|
|
$
|
2,854
|
|
|
$
|
2,895
|
|
|
$
|
2,814
|
|
|
$
|
(41)
|
|
|
$
|
40
|
|
Less
taxable-equivalent adjustment
|
|
41
|
|
|
40
|
|
|
40
|
|
|
|
|
|
Total
revenue
|
|
$
|
2,813
|
|
|
$
|
2,855
|
|
|
$
|
2,774
|
|
|
|
|
|
Return on average
assets
|
|
|
1.16
|
%
|
|
|
1.22
|
%
|
|
|
1.15
|
%
|
|
|
(0.06)%
|
|
|
|
0.01
|
%
|
Return on average
risk-weighted assets
|
|
|
1.45
|
|
|
|
1.53
|
|
|
|
1.45
|
|
|
|
(0.08)
|
|
|
|
—
|
|
Return on average
common shareholders' equity
|
|
|
8.82
|
|
|
|
9.30
|
|
|
|
8.87
|
|
|
|
(0.48)
|
|
|
|
(0.05)
|
|
Return on average
tangible common shareholders' equity (1)
|
|
|
14.89
|
|
|
|
15.60
|
|
|
|
15.20
|
|
|
|
(0.71)
|
|
|
|
(0.31)
|
|
Net interest margin -
taxable equivalent
|
|
|
3.48
|
|
|
|
3.47
|
|
|
|
3.39
|
|
|
|
0.01
|
|
|
|
0.09
|
|
|
(1)
Excludes certain items as detailed in the non-GAAP reconciliations
in the Quarterly Performance Summary.
|
Third Quarter 2017 compared to Second Quarter 2017
Total taxable-equivalent revenues were $2.9 billion for the third quarter of 2017, a
decrease of $41 million compared to
the prior quarter, which reflects an increase of $13 million in taxable-equivalent net interest
income, while noninterest income was down $54 million.
The net interest margin was 3.48 percent for the third quarter,
up one basis point compared to the prior quarter. Average earning
assets decreased $313 million, which
reflects a $558 million increase in
average securities, a $146 million
decrease in average total loans and a $725
million decrease in average other earning assets. Average
interest-bearing liabilities decreased $838
million, resulting from a $3.8
billion decrease in interest-bearing deposits and a
$308 million decrease in long-term
debt, which was partially offset by a $3.2
billion increase in short-term borrowings.
The annualized yield on the total loan portfolio for the third
quarter was 4.47 percent, up 11 basis points, reflecting the impact
of rate increases. The annualized taxable-equivalent yield on the
average securities portfolio for the third quarter was 2.47
percent, down two basis points compared to the prior quarter.
The average annualized cost of interest-bearing deposits was
0.35 percent, up five basis points compared to the prior quarter.
The average annualized rate on long-term debt was 2.29 percent, up
38 basis points compared to the prior quarter. The average
annualized rate on short-term borrowings was 1.03 percent, up 33
basis points compared to the prior quarter. The higher rates on
interest-bearing liabilities reflect the impact of rate
increases.
The provision for credit losses was $126
million, and net charge-offs were $127 million for the third quarter, compared to
$135 million and $132 million, respectively, for the prior
quarter.
Noninterest income of $1.2 billion
was down $54 million compared to the
prior quarter primarily due to decreased insurance income, which
was partially offset by an increase in mortgage banking and other
income.
Noninterest expense was $1.7
billion for the third quarter, essentially flat compared to
the prior quarter. This was largely a result of increased
merger-related and restructuring charges, partially offset by
decreases in most other categories of expenses led by decreased
personnel expense.
The provision for income taxes was $294
million for the third quarter, compared to $304 million for the prior quarter. The effective
tax rate for the third quarter was 31.2 percent, compared to 31.1
percent for the prior quarter.
Third Quarter 2017 compared to Third Quarter 2016
Total taxable-equivalent revenues were $2.9 billion for the third quarter of 2017, an
increase of $40 million compared to
the earlier quarter. This reflects an increase of $38 million in taxable-equivalent net interest
income.
Net interest margin was 3.48 percent, up nine basis points
compared to the earlier quarter. Average earning assets decreased
$836 million. The decrease in average
earnings assets reflects a $1.2
billion decrease in average securities, partially offset by
a $492 million increase in average
total loans and leases. Average interest-bearing liabilities
decreased $3.1 billion, which
includes a $2.0 billion decrease in
average long-term debt and a $5.0
billion decrease in average interest-bearing deposits. These
decreases were partially offset by an increase of $3.9 billion in average short-term borrowings.
The annualized yield on the total loan portfolio for the third
quarter of 2017 was 4.47 percent, up 17 basis points compared to
the earlier quarter. The annualized taxable-equivalent yield on the
average securities portfolio was 2.47 percent, up 15 basis points
compared to the earlier period.
The average annualized cost of interest-bearing deposits was
0.35 percent, up 12 basis points compared to the earlier quarter.
The average annualized rate on long-term debt was 2.29 percent, up
24 basis points compared to the earlier quarter. The average
annualized rate on short-term borrowings was 1.03 percent, up 69
basis points compared to the earlier quarter. The higher rates on
interest-bearing liabilities reflect the impact of rate
increases.
The provision for credit losses was $126
million compared to $148
million in the earlier quarter. Net charge-offs for the
third quarter of 2017 totaled $127
million compared to $130
million for the earlier quarter.
Noninterest income was $1.2
billion, essentially flat from the earlier quarter.
Noninterest expense for the third quarter of 2017 was
$1.7 billion, up $34 million compared to the earlier quarter. This
increase was driven by higher personnel expense and other expense,
partially offset by lower outside IT services.
The provision for income taxes was $294
million for the third quarter of 2017, compared to
$273 million for the earlier quarter.
This produced an effective tax rate for the third quarter of 2017
of 31.2 percent, compared to 29.8 percent for the earlier
quarter.
NONINTEREST
INCOME
|
|
|
|
|
|
|
|
|
|
|
(dollars in
millions)
|
|
|
|
|
|
|
|
% Change 3Q17
vs.
|
|
|
3Q17
|
|
2Q17
|
|
3Q16
|
|
2Q17
|
|
3Q16
|
|
|
|
|
|
|
|
|
(annualized)
|
|
|
Insurance
income
|
|
$
|
397
|
|
|
$
|
481
|
|
|
$
|
410
|
|
|
(69.3)
|
|
|
(3.2)
|
|
Service charges on
deposits
|
|
179
|
|
|
176
|
|
|
172
|
|
|
6.8
|
|
|
4.1
|
|
Mortgage banking
income
|
|
114
|
|
|
94
|
|
|
154
|
|
|
84.4
|
|
|
(26.0)
|
|
Investment banking
and brokerage fees and commissions
|
|
103
|
|
|
105
|
|
|
101
|
|
|
(7.6)
|
|
|
2.0
|
|
Trust and investment
advisory revenues
|
|
68
|
|
|
70
|
|
|
68
|
|
|
(11.3)
|
|
|
—
|
|
Bankcard fees and
merchant discounts
|
|
70
|
|
|
75
|
|
|
61
|
|
|
(26.4)
|
|
|
14.8
|
|
Checkcard
fees
|
|
54
|
|
|
54
|
|
|
50
|
|
|
—
|
|
|
8.0
|
|
Operating lease
income
|
|
36
|
|
|
37
|
|
|
34
|
|
|
(10.7)
|
|
|
5.9
|
|
Income from
bank-owned life insurance
|
|
28
|
|
|
32
|
|
|
35
|
|
|
(49.6)
|
|
|
(20.0)
|
|
FDIC loss share
income, net
|
|
—
|
|
|
—
|
|
|
(18)
|
|
|
—
|
|
|
(100.0)
|
|
Other
income
|
|
117
|
|
|
96
|
|
|
97
|
|
|
86.8
|
|
|
20.6
|
|
Total noninterest
income
|
|
$
|
1,166
|
|
|
$
|
1,220
|
|
|
$
|
1,164
|
|
|
(17.6)
|
|
|
0.2
|
|
Third Quarter 2017 compared to Second Quarter 2017
Noninterest income was $1.2
billion for the third quarter, down $54 million compared to the prior quarter
primarily due to decreased insurance income, which was partially
offset by an increase in mortgage banking and other income.
Insurance income decreased $84
million primarily due to seasonality and performance-based
commissions. Mortgage banking income increased $20 million primarily due to gains from the sale
of residential mortgages. Other income increased $21 million primarily due to income from SBIC
private equity investments.
Third Quarter 2017 compared to Third Quarter 2016
Noninterest income for the third quarter of 2017 was essentially
flat compared to the earlier quarter.
FDIC loss share income improved $18
million due to the termination of the loss sharing
agreements during the third quarter of 2016.
Insurance income decreased $13
million, primarily due to lower performance-based
commissions.
Mortgage banking income decreased $40
million primarily resulting from lower gains on the net MSR
valuation during the current quarter. In addition, commercial
mortgage production revenues were lower in the current period.
Other income increased $20 million
primarily due to income from SBIC private equity investments.
NONINTEREST
EXPENSE
|
|
|
|
|
|
|
|
|
|
|
(dollars in
millions)
|
|
|
|
|
|
|
|
% Change 3Q17
vs.
|
|
|
3Q17
|
|
2Q17
|
|
3Q16
|
|
2Q17
|
|
3Q16
|
|
|
|
|
|
|
|
|
(annualized)
|
|
|
Personnel
expense
|
|
$
|
1,024
|
|
|
$
|
1,042
|
|
|
$
|
1,006
|
|
|
(6.9)
|
|
|
1.8
|
|
Occupancy and
equipment expense
|
|
198
|
|
|
198
|
|
|
203
|
|
|
—
|
|
|
(2.5)
|
|
Software
expense
|
|
62
|
|
|
57
|
|
|
63
|
|
|
34.8
|
|
|
(1.6)
|
|
Outside IT
services
|
|
34
|
|
|
39
|
|
|
51
|
|
|
(50.9)
|
|
|
(33.3)
|
|
Amortization of
intangibles
|
|
34
|
|
|
36
|
|
|
38
|
|
|
(22.0)
|
|
|
(10.5)
|
|
Regulatory
charges
|
|
40
|
|
|
36
|
|
|
41
|
|
|
44.1
|
|
|
(2.4)
|
|
Professional
services
|
|
27
|
|
|
38
|
|
|
27
|
|
|
(114.8)
|
|
|
—
|
|
Loan-related
expense
|
|
32
|
|
|
36
|
|
|
33
|
|
|
(44.1)
|
|
|
(3.0)
|
|
Merger-related and
restructuring charges, net
|
|
47
|
|
|
10
|
|
|
43
|
|
|
NM
|
|
|
9.3
|
|
Other
expense
|
|
247
|
|
|
250
|
|
|
206
|
|
|
(4.8)
|
|
|
19.9
|
|
Total noninterest
expense
|
|
$
|
1,745
|
|
|
$
|
1,742
|
|
|
$
|
1,711
|
|
|
0.7
|
|
|
2.0
|
|
|
NM - not
meaningful.
|
Third Quarter 2017 compared to Second Quarter 2017
Noninterest expense was $1.7
billion for the third quarter, essentially flat compared to
the prior quarter. This was largely a result of increased
merger-related and restructuring charges, partially offset by
decreases in most other categories of expenses led by personnel
expense.
Personnel expense decreased $18
million, primarily due to lower employee benefits expense
and lower production based incentives, partially offset by lower
capitalized costs.
Merger-related and restructuring charges increased $37 million compared to the prior quarter. The
increase was primarily related to facilities charges in connection
with various branch closures and severance.
All other expense categories decreased a combined $16 million led by professional services, which
was primarily the result of lower professional services related to
BSA/AML.
Third Quarter 2017 compared to Third Quarter 2016
Noninterest expense for the third quarter of 2017 was up
$34 million compared to the earlier
quarter. This increase was driven by higher personnel expense and
other expense, partially offset by lower outside IT services.
Personnel expense increased $18
million compared to the earlier quarter primarily due to
higher incentive compensation and lower capitalized costs.
Outside IT services decreased $17
million compared to the earlier quarter due to lower
project-related expenses.
Other expense increased $41
million compared to the earlier quarter. The earlier quarter
included a $73 million net benefit
related to the settlement of certain legacy mortgage matters and a
$50 million charitable contribution.
The remaining increase is due to sundry items.
Merger-related and restructuring charges were up slightly due to
current quarter restructuring costs. These costs were partially
offset by lower merger-related charges as a result of mergers in
2016.
LOANS AND
LEASES
|
|
|
|
|
|
|
|
|
(dollars in
millions)
|
|
|
|
|
|
|
|
|
Average
balances
|
|
3Q17
|
|
2Q17
|
|
Change
|
|
% Change
|
|
|
|
|
|
|
|
|
(annualized)
|
Commercial and
industrial
|
|
$
|
51,605
|
|
|
$
|
51,900
|
|
|
$
|
(295)
|
|
|
(2.3)
|
|
CRE-income producing
properties
|
|
15,099
|
|
|
14,864
|
|
|
235
|
|
|
6.3
|
|
CRE-construction and
development
|
|
4,181
|
|
|
3,905
|
|
|
276
|
|
|
28.0
|
|
Dealer floor
plan
|
|
1,574
|
|
|
1,490
|
|
|
84
|
|
|
22.4
|
|
Direct retail
lending
|
|
11,960
|
|
|
12,000
|
|
|
(40)
|
|
|
(1.3)
|
|
Sales
finance
|
|
9,780
|
|
|
10,450
|
|
|
(670)
|
|
|
(25.4)
|
|
Revolving
credit
|
|
2,668
|
|
|
2,612
|
|
|
56
|
|
|
8.5
|
|
Residential
mortgage
|
|
28,924
|
|
|
29,392
|
|
|
(468)
|
|
|
(6.3)
|
|
Other lending
subsidiaries
|
|
16,158
|
|
|
15,636
|
|
|
522
|
|
|
13.2
|
|
PCI
|
|
742
|
|
|
825
|
|
|
(83)
|
|
|
(39.9)
|
|
Total loans and leases
held for investment
|
|
$
|
142,691
|
|
|
$
|
143,074
|
|
|
$
|
(383)
|
|
|
(1.1)
|
|
Average loans held for investment for the third quarter of 2017
were $142.7 billion, down
$383 million, or 1.1 percent
annualized compared to the second quarter of 2017. Excluding
planned runoff from sales finance loans, residential mortgage loans
and PCI loans, average loans held for investment increased
$838 million, or 3.2 percent
annualized compared to the prior quarter.
Average commercial and industrial loans decreased $295 million, while average CRE-income producing
properties increased $235 million.
The changes were impacted by the reclassification of approximately
$500 million in loans from commercial
and industrial to CRE-income producing properties that was made at
the time of our new commercial loan system implementation at the
beginning of the third quarter. Average CRE-construction and
development increased $276 million
primarily due to utilization as projects progressed. Average other
lending subsidiaries loans increased $522
million, which includes an increase due to strong growth in
small ticket consumer finance, premium finance and equipment
finance.
Average sales finance loans decreased $670 million, primarily due to strategic
optimization and directing investments towards higher-yielding
assets. In addition, average residential mortgage loans decreased
$468 million as all conforming loans
continue to be sold in the secondary market.
DEPOSITS
|
|
|
|
|
|
|
|
|
(dollars in
millions)
|
|
|
|
|
|
|
|
|
Average
balances
|
|
3Q17
|
|
2Q17
|
|
Change
|
|
% Change
|
|
|
|
|
|
|
|
|
(annualized)
|
Noninterest-bearing
deposits
|
|
$
|
53,489
|
|
|
$
|
52,573
|
|
|
$
|
916
|
|
|
6.9
|
|
Interest
checking
|
|
27,000
|
|
|
28,849
|
|
|
(1,849)
|
|
|
(25.4)
|
|
Money market and
savings
|
|
61,450
|
|
|
64,294
|
|
|
(2,844)
|
|
|
(17.5)
|
|
Time
deposits
|
|
13,794
|
|
|
14,088
|
|
|
(294)
|
|
|
(8.3)
|
|
Foreign office
deposits - interest-bearing
|
|
1,681
|
|
|
459
|
|
|
1,222
|
|
|
NM
|
|
Total
deposits
|
|
$
|
157,414
|
|
|
$
|
160,263
|
|
|
$
|
(2,849)
|
|
|
(7.1)
|
|
|
NM - not
meaningful.
|
Average deposits for the third quarter were $157.4 billion, down $2.8
billion compared to the prior quarter. Average
noninterest-bearing deposits increased $916
million, primarily due to increases in commercial
balances.
Interest checking decreased $1.8
billion, primarily due to decreases in commercial balances,
public funds and personal balances. Money market and savings
decreased $2.8 billion primarily due
to commercial balances. Average time deposits decreased
$294 million due to decreases in
personal balances. Average foreign office deposits increased
$1.2 billion due to changes in the
overall funding mix.
Noninterest-bearing deposits represented 34.0 percent of total
average deposits for the third quarter, compared to 32.8 percent
for the prior quarter and 31.7 percent a year ago. The cost of
interest-bearing deposits was 0.35 percent for the third quarter,
up five basis points compared to the prior quarter.
SEGMENT
RESULTS
|
|
|
|
|
|
|
|
|
|
|
(dollars in
millions)
|
|
|
|
|
|
|
|
Change 3Q17
vs.
|
Segment Net
Income
|
|
3Q17
|
|
2Q17
|
|
3Q16
|
|
2Q17
|
|
3Q16
|
Community
Banking
|
|
$
|
396
|
|
|
$
|
345
|
|
|
$
|
344
|
|
|
$
|
51
|
|
|
$
|
52
|
|
Residential Mortgage
Banking
|
|
67
|
|
|
46
|
|
|
132
|
|
|
21
|
|
|
(65)
|
|
Dealer Financial
Services
|
|
38
|
|
|
38
|
|
|
40
|
|
|
—
|
|
|
(2)
|
|
Specialized
Lending
|
|
54
|
|
|
54
|
|
|
60
|
|
|
—
|
|
|
(6)
|
|
Insurance
Holdings
|
|
13
|
|
|
55
|
|
|
21
|
|
|
(42)
|
|
|
(8)
|
|
Financial
Services
|
|
106
|
|
|
115
|
|
|
81
|
|
|
(9)
|
|
|
25
|
|
Other, Treasury &
Corporate
|
|
(26)
|
|
|
21
|
|
|
(36)
|
|
|
(47)
|
|
|
10
|
|
Total net
income
|
|
$
|
648
|
|
|
$
|
674
|
|
|
$
|
642
|
|
|
$
|
(26)
|
|
|
$
|
6
|
|
Third Quarter 2017 compared to Second Quarter 2017
Community Banking
Community Banking serves individual and business clients by
offering a variety of loan and deposit products and other financial
services. The segment is primarily responsible for acquiring and
servicing client relationships.
Community Banking net income was $396
million for the third quarter of 2017, an increase of
$51 million compared to the prior
quarter. Segment net interest income increased $24 million primarily due to improved funding
spreads on deposits and one additional day in the current quarter.
Noninterest income decreased primarily due to lower bankcard fees
and merchant discounts driven by a reduction in the accrual for
rewards in the prior quarter.
The allocated provision for credit losses decreased $40 million primarily due to a decrease in loss
estimates, lower net charge-offs and a decline in loans.
Noninterest expense decreased $24
million driven by a decline in personnel expense primarily
due to a change in the approach with respect to capitalized loan
origination costs.
Residential Mortgage Banking
Residential Mortgage Banking originates and purchases mortgage
loans to either hold for investment or sell to third-parties.
BB&T generally retains the servicing rights to loans sold.
Mortgage products include fixed and adjustable-rate government
guaranteed and conventional loans used for the purpose of
constructing, purchasing or refinancing residential properties.
Substantially all of the properties are owner-occupied. Residential
Mortgage Banking also includes Mortgage Warehouse Lending which
provides short-term lending solutions to finance first-lien
residential mortgages held-for-sale by independent mortgage
companies.
Residential Mortgage Banking net income was $67 million for the third quarter of 2017, an
increase of $21 million compared to
the prior quarter. Noninterest income rose $14 million primarily due to
increased gains on the sale of residential mortgage loans.
Noninterest expense decreased largely due to a decline in loan
processing expense and personnel expense.
Dealer Financial Services
Dealer Financial Services originates loans to consumers for the
purchase of automobiles. These loans are originated on an indirect
basis through approved franchised and independent automobile
dealers throughout BB&T's market area through BB&T Dealer
Finance, and on a national basis through Regional Acceptance
Corporation. Dealer Financial Services also originates loans for
the purchase of recreational and marine vehicles. In conjunction
with Community Banking, Dealer Financial Services provides
financing and servicing to dealers for their inventories in
Community Banking's footprint.
Dealer Financial Services net income was $38 million for the third quarter of 2017, flat
compared to the prior quarter.
Dealer Financial Services average loans held for investment
decreased $556 million, or 13.9
percent annualized, primarily due to the strategy to optimize the
auto portfolio.
Specialized Lending
Specialized Lending consists of businesses that provide
specialty finance solutions to commercial and consumer clients
including: commercial finance, tax-exempt financing for local
governments and special-purpose districts, equipment finance,
full-service commercial mortgage banking, commercial and retail
insurance premium finance and small ticket dealer-based financing
of equipment for consumers and small businesses.
Specialized Lending net income was $54
million for the third quarter of 2017, flat compared to the
prior quarter.
Specialized Lending average loans held for investment increased
$536 million, or 12.9 percent
annualized, primarily due to growth in small ticket consumer
finance, premium finance and equipment finance loans.
Insurance Holdings
BB&T's insurance agency / brokerage network is the fifth
largest in the United States and
in the world. Insurance Holdings provides property and casualty,
life and health insurance to businesses and individual clients. It
also provides small business and corporate products, such as
workers compensation and professional liability, as well as surety
coverage and title insurance.
Insurance Holdings net income was $13
million in the third quarter of 2017, a decrease of
$42 million compared to the prior
quarter. Noninterest income decreased $84
million, primarily due to seasonality and performance-based
commissions. Noninterest expense fell $18
million due to lower personnel expense, primarily driven by
decreased incentive expense on seasonally lower commissions.
Financial Services
Financial Services provides personal trust administration,
estate planning, investment counseling, wealth management, asset
management, employee benefits services, corporate banking and
corporate trust services to individuals, corporations,
institutions, foundations and government entities. In addition,
Financial Services offers clients a variety of investment services,
including discount brokerage services, equities, annuities, mutual
funds and government bonds through BB&T Investment Services,
Inc. The segment includes BB&T Securities, a full-service
brokerage and investment banking firm, and the Corporate Banking
Division, which originates and services large corporate
relationships, syndicated lending relationships and client
derivatives. The segment also includes the company's SBIC private
equity investments.
Financial Services net income was $106
million in the third quarter of 2017, a decrease of
$9 million compared to the prior
quarter. Noninterest income increased $12
million primarily due to higher income from SBIC private
equity investments. The allocated provision for credit losses
increased $24 million due to a
moderation in the improvement of loss estimates for commercial and
industrial loans.
Corporate Banking's average loans held for investment increased
$313 million, or an annualized 8.4
percent, compared to the prior quarter, while BB&T Wealth's
average loans held for investment increased $76 million, or an annualized 18.2 percent.
Corporate Banking's average transaction account deposits decreased
$752 million, or 128.2 percent on an
annualized basis compared to the prior quarter. The decline in
average transaction account deposits was primarily the result of an
initiative to decrease reliance on higher cost institutional
deposits. BB&T Wealth's average transaction account deposits
decreased $84 million, or 7.2 percent
on an annualized basis.
Other, Treasury & Corporate
Net income in Other, Treasury & Corporate can vary due to
the changing needs of the Corporation, including the size of the
investment portfolio, the need for wholesale funding and income
received from derivatives used to hedge the balance sheet.
Other, Treasury & Corporate generated a net loss of
$26 million for the third quarter of
2017, a decrease of $47 million
compared to the prior quarter. Noninterest income increased
primarily due to a decline in allocated referral fees paid to other
operating segments. Segment net interest income decreased due to
higher rates for long-term debt as well as an increase in average
balances for short-term borrowings.
Noninterest expense increased $57
million due to higher personnel expense driven by a change
in the approach with respect to capitalized loan origination costs
and an increase in merger-related and restructuring charges,
partially offset by a decline in professional services. The
allocated provision for credit losses increased $15 million primarily due to the provision
benefit for PCI loans recognized in the prior quarter.
Third Quarter 2017 compared to Third Quarter 2016
Community Banking
Community Banking net income was $396
million for the third quarter of 2017, an increase of
$52 million compared to the earlier
quarter. Segment net interest income increased $75 million driven by higher funding spreads on
deposits as well as average loan and deposit growth, partially
offset by a reduction in credit spreads on loans. Noninterest
income increased $13 million due to
higher bankcard fees and merchant discounts and service charges on
deposits.
The allocated provision for credit losses increased $26 million primarily due to a decrease in loss
estimates in the earlier quarter for commercial and industrial
loans and an increase in net charge-offs. Noninterest expense
decreased $14 million driven by a
decline in personnel expense primarily due to the previously
mentioned change in approach for capitalized loan origination
costs, partially offset by an increase in operating
charge-offs.
Residential Mortgage Banking
Residential Mortgage Banking net income was $67 million for the third quarter of 2017, a
decrease of $65 million compared to
the earlier quarter. Noninterest income decreased $31 million primarily due to lower gains on the
net MSR valuation during the current quarter. Segment net interest
income decreased $21 million
primarily due to a decline in average loans. Noninterest expense
increased $60 million due to a
$73 million net benefit, in the
earlier quarter, for the settlement of certain legacy mortgage
matters involving the origination of mortgage loans insured by the
FHA, partially offset by declines in personnel expense and loan
processing expense.
Dealer Financial Services
Dealer Financial Services net income was $38 million for the third quarter of 2017,
essentially flat compared to the earlier quarter. Segment net
interest income increased slightly and was offset by an increase in
noninterest expense due to higher allocated corporate expenses and
increased loan processing expense.
Specialized Lending
Specialized Lending net income was $54
million for the third quarter of 2017, a decrease of
$6 million compared to the earlier
quarter. Noninterest income fell due to a decline in commercial
mortgage banking income.
Specialized Lending average loans increased $1.4 billion, or 8.6 percent, primarily due to
higher equipment finance, insurance premium finance and commercial
mortgage loans.
Insurance Holdings
Insurance Holdings net income was $13
million for the third quarter of 2017, a decrease of
$8 million compared to the earlier
quarter. Noninterest income decreased $13
million primarily due to performance-based commissions.
Financial Services
Financial Services net income was $106
million for the third quarter of 2017, an increase of
$25 million compared to the earlier
quarter. Noninterest income increased $16
million due to higher income from SBIC private equity
investments. The allocated provision for credit losses decreased
$25 million due to a decline in loss
estimates related to commercial and industrial loans and lower net
charge-offs.
Other, Treasury & Corporate
Other, Treasury & Corporate generated a net loss of
$26 million in the third quarter of
2017 compared to a net loss of $36
million for the earlier quarter. Noninterest income
increased $27 million primarily due
to an improvement in FDIC loss share income as a result of
terminating the loss share agreements in the third quarter of 2016.
Segment net interest income decreased $28
million due to higher rates for long-term debt as well as an
increase in average balances for short-term borrowings.
Noninterest expense decreased $31
million due to a $50 million
charitable contribution made in the earlier quarter, a decline in
outside IT services and an increase in corporate expenses allocated
to other operating segments, partially offset by increased
personnel expense largely due to the previously mentioned change in
approach for capitalized loan origination costs. The allocated
provision for credit losses decreased $15
million primarily due to a decline in the provision for
unfunded lending commitments.
CAPITAL RATIOS
(1)
|
|
|
|
|
|
|
|
|
|
|
|
|
3Q17
|
|
2Q17
|
|
1Q17
|
|
4Q16
|
|
3Q16
|
Risk-based:
|
|
|
|
|
|
|
|
|
|
|
Common equity Tier
1
|
|
10.1
|
%
|
|
10.3
|
%
|
|
10.3
|
%
|
|
10.2
|
%
|
|
10.1
|
%
|
Tier 1
|
|
11.8
|
|
|
12.1
|
|
|
12.0
|
|
|
12.0
|
|
|
11.8
|
|
Total
|
|
13.9
|
|
|
14.1
|
|
|
14.1
|
|
|
14.1
|
|
|
14.0
|
|
Leverage
|
|
9.9
|
|
|
10.1
|
|
|
10.0
|
|
|
10.0
|
|
|
9.8
|
|
|
(1)
Current quarter regulatory capital ratios are
preliminary.
|
Capital levels remained strong at September 30, 2017.
BB&T declared common dividends of $0.33 per share during the third quarter of 2017,
which resulted in a dividend payout ratio of 43.8 percent. BB&T
completed $920 million of share
repurchases during the third quarter. The total payout ratio for
the third quarter of 2017 was 198.0 percent.
BB&T's liquidity coverage ratio was approximately 128
percent at September 30, 2017, compared to the regulatory
minimum of 100 percent. In addition, the liquid asset buffer, which
is defined as high quality unencumbered liquid assets as a
percentage of total assets, was 14.3 percent at September 30,
2017.
ASSET QUALITY
(1)
|
|
|
|
|
|
|
|
|
|
|
(dollars in
millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
3Q17
|
|
2Q17
|
|
1Q17
|
|
4Q16
|
|
3Q16
|
Total nonperforming
assets
|
|
$
|
680
|
|
|
$
|
690
|
|
|
$
|
801
|
|
|
$
|
813
|
|
|
$
|
843
|
|
Total performing TDRs
(2)
|
|
1,052
|
|
|
1,013
|
|
|
1,185
|
|
|
1,187
|
|
|
1,097
|
|
Total loans 90 days
past due and still accruing
|
|
505
|
|
|
493
|
|
|
542
|
|
|
636
|
|
|
592
|
|
Total loans 30-89
days past due
|
|
987
|
|
|
874
|
|
|
805
|
|
|
1,077
|
|
|
980
|
|
|
|
|
|
|
|
|
|
|
|
|
Nonperforming loans
and leases as a percentage of loans and
leases held for
investment
|
|
0.42
|
%
|
|
0.43
|
%
|
|
0.51
|
%
|
|
0.51
|
%
|
|
0.53
|
%
|
Nonperforming assets
as a percentage of total assets
|
|
0.31
|
|
|
0.31
|
|
|
0.36
|
|
|
0.37
|
|
|
0.38
|
|
Allowance for loan
and lease losses as a percentage of loans
and leases held for
investment
|
|
1.04
|
|
|
1.03
|
|
|
1.04
|
|
|
1.04
|
|
|
1.06
|
|
Net charge-offs as a
percentage of average loans and leases,
annualized
|
|
0.35
|
|
|
0.37
|
|
|
0.42
|
|
|
0.42
|
|
|
0.37
|
|
Ratio of allowance
for loan and lease losses to net charge-offs,
annualized
|
|
2.93x
|
|
|
2.80x
|
|
|
2.49x
|
|
|
2.47x
|
|
|
2.91x
|
|
Ratio of allowance
for loan and lease losses to nonperforming
loans and leases held for
investment
|
|
2.44x
|
|
|
2.43x
|
|
|
2.05x
|
|
|
2.03x
|
|
|
2.00x
|
|
|
(1)
Includes amounts related to government guaranteed GNMA mortgage
loans that BB&T has the right but not the obligation to
repurchase. See footnotes on the Credit
Quality pages of the Quarterly
Performance Summary for additional information.
|
(2)
During the third quarter of 2017, BB&T began including trial
modifications in the troubled debt restructurings disclosures.
Prior periods have been adjusted to conform
to the current
presentation.
|
Nonperforming assets totaled $680
million at September 30, 2017, down $10 million compared to June 30, 2017. The
decrease was driven by improvement in commercial portfolios,
partially offset by increases in residential mortgage and other
lending subsidiaries portfolios. Nonperforming loans and leases
represented 0.42 percent of loans and leases held for investment, a
slight improvement compared to June 30, 2017.
Performing TDRs were up $39
million during the third quarter. This increase was largely
related to other lending subsidiaries retail portfolios and
commercial and industrial loans.
Loans 90 days or more past due and still accruing totaled
$505 million at September 30,
2017, up $12 million compared to the
prior quarter, primarily due to an increase in government
guaranteed residential mortgage loans. The ratio of loans 90 days
or more past due and still accruing as a percentage of loans and
leases was 0.35 percent at September 30, 2017, compared to
0.34 percent for the prior quarter. Excluding government guaranteed
and PCI loans, the ratio of loans 90 days or more past due and
still accruing as a percentage of loans and leases was 0.05 percent
at September 30, 2017, flat compared to the prior quarter.
Loans 30-89 days past due and still accruing totaled
$987 million at September 30,
2017, up $113 million compared to the
prior quarter. This increase was primarily due to an increase in
residential mortgage loans, which was largely due to expected
seasonality and the impact of the hurricanes.
Net charge-offs during the third quarter totaled $127 million, down $5
million compared to the prior quarter. As a percentage of
average loans and leases, annualized net charge-offs were 0.35
percent, down two basis points compared to the prior quarter.
The allowance for loan and lease losses, excluding the allowance
for PCI loans, was $1.5 billion,
essentially flat compared to the prior quarter. As of
September 30, 2017, the total allowance for loan and lease
losses was 1.04 percent of loans and leases held for investment, up
slightly compared to June 30, 2017. The allowance for loan and
lease losses includes $35 million for
the estimated impact of potential hurricane-related losses.
The allowance for loan and lease losses was 2.44 times
nonperforming loans and leases held for investment, compared to
2.43 times at June 30, 2017. At September 30, 2017, the
allowance for loan and lease losses was 2.93 times annualized net
charge-offs, compared to 2.80 times at June 30, 2017.
Earnings Presentation and Quarterly Performance
Summary
To listen to BB&T's live third quarter 2017 earnings
conference call at 8 a.m. ET today,
please call 866-519-2796 and enter the participant code
885781. A presentation will be used during the earnings conference
call and is available on our website at
https://bbt.investorroom.com/webcasts-and-presentations. Replays of
the conference call will be available for 30 days by dialing
888-203-1112 (access code 4313363).
The presentation, including an appendix reconciling non-GAAP
disclosures, is available at
https://bbt.investorroom.com/webcasts-and-presentations. BB&T's
Third Quarter 2017 Quarterly Performance Summary, which contains
detailed financial schedules, is available on BB&T's website at
https://bbt.investorroom.com/quarterly-earnings.
About BB&T
BB&T is one of the largest financial services holding
companies in the U.S. with $220.3
billion in assets and market capitalization of $37.0 billion as of September 30, 2017.
Building on a long tradition of excellence in community banking,
BB&T offers a wide range of financial services including retail
and commercial banking, investments, insurance, wealth management,
asset management, mortgage, corporate banking, capital markets and
specialized lending. Based in Winston-Salem, N.C., BB&T operates over
2,100 financial centers in 15 states and Washington, D.C. A Fortune 500 company,
BB&T is consistently recognized for outstanding client service
by Greenwich Associates for small business and middle market
banking. More information about BB&T and its full line of
products and services is available at BBT.com.
Capital ratios are preliminary.
This news release contains financial information and
performance measures determined by methods other than in accordance
with accounting principles generally accepted in the United States of America ("GAAP").
BB&T's management uses these "non-GAAP" measures in their
analysis of the Corporation's performance and the efficiency of its
operations. Management believes these non-GAAP measures provide a
greater understanding of ongoing operations, enhance comparability
of results with prior periods and demonstrate the effects of
significant items in the current period. The company believes a
meaningful analysis of its financial performance requires an
understanding of the factors underlying that performance.
BB&T's management believes investors may find these non-GAAP
financial measures useful. These disclosures should not be viewed
as a substitute for financial measures determined in accordance
with GAAP, nor are they necessarily comparable to non-GAAP
performance measures that may be presented by other companies.
Below is a listing of the types of non-GAAP measures used in this
news release:
- The adjusted efficiency ratio is non-GAAP in that it
excludes securities gains (losses), amortization of intangible
assets, merger-related and restructuring charges and other selected
items. BB&T's management uses this measure in their analysis of
the Corporation's performance. BB&T's management believes this
measure provides a greater understanding of ongoing operations and
enhances comparability of results with prior periods, as well as
demonstrates the effects of significant gains and charges.
- Tangible common equity and related measures are non-GAAP
measures that exclude the impact of intangible assets and their
related amortization. These measures are useful for evaluating the
performance of a business consistently, whether acquired or
developed internally. BB&T's management uses these measures to
assess the quality of capital and returns relative to balance sheet
risk and believes investors may find them useful in their analysis
of the Corporation.
A reconciliation of these non-GAAP measures to the most
directly comparable GAAP measure is included in BB&T's Third
Quarter 2017 Quarterly Performance Summary, which is available at
BBT.com.
This news release contains "forward-looking statements"
within the meaning of the Private Securities Litigation Reform Act
of 1995, regarding the financial condition, results of operations,
business plans and the future performance of BB&T.
Forward-looking statements are not based on historical facts but
instead represent management's expectations and assumptions
regarding BB&T's business, the economy and other future
conditions. Because forward-looking statements relate to the
future, they are subject to inherent uncertainties, risks and
changes in circumstances difficult to predict. BB&T's actual
results may differ materially from those contemplated by the
forward-looking statements. Words such as "anticipates,"
"believes," "estimates," "expects," "forecasts," "intends,"
"plans," "projects," "may," "will," "should," "could" and other
similar expressions are intended to identify these forward-looking
statements. Such statements are subject to factors that could cause
actual results to differ materially from anticipated results. While
there is no assurance any list of risks and uncertainties or risk
factors is complete, important factors that could cause actual
results to differ materially from those in the forward-looking
statements include the following, without limitation, as well as
the risks and uncertainties more fully discussed under Item 1A-Risk
Factors in our Annual Report on Form 10-K for the year ended
December 31, 2016 and in any of
BB&T's subsequent filings with the Securities and Exchange
Commission:
- general economic or business conditions, either nationally
or regionally, may be less favorable than expected, resulting in,
among other things, a deterioration in credit quality and/or a
reduced demand for credit, insurance or other services;
- disruptions to the national or global financial markets,
including the impact of a downgrade of U.S. government obligations
by one of the credit ratings agencies, the economic instability and
recessionary conditions in Europe,
the potential exit of the United
Kingdom from the European Union and the economic slowdown in
China;
- changes in the interest rate environment, including interest
rate changes made by the Federal Reserve, as well as cash flow
reassessments may reduce net interest margin and/or the volumes and
values of loans made or held as well as the value of other
financial assets held;
- competitive pressures among depository and other financial
institutions may increase significantly;
- legislative, regulatory or accounting changes, including
changes resulting from the adoption and implementation of the
Dodd-Frank Act may adversely affect the businesses in which
BB&T is engaged;
- local, state or federal taxing authorities may take tax
positions that are adverse to BB&T;
- a reduction may occur in BB&T's credit ratings;
- adverse changes may occur in the securities
markets;
- competitors of BB&T may have greater financial resources
or develop products that enable them to compete more successfully
than BB&T and may be subject to different regulatory standards
than BB&T;
- cybersecurity risks, including "denial of service,"
"hacking" and "identity theft" could adversely affect BB&T's
business and financial performance or reputation, and BB&T
could be liable for financial losses incurred by third parties due
to breaches of data shared between financial institutions;
- natural or other disasters, including acts of terrorism,
could have an adverse effect on BB&T, materially disrupting
BB&T's operations or the ability or willingness of customers to
access BB&T's products and services;
- costs related to the integration of the businesses of
BB&T and its merger partners may be greater than
expected;
- failure to execute on strategic or operational plans,
including the ability to successfully complete and/or integrate
mergers and acquisitions or fully achieve expected cost savings or
revenue growth associated with mergers and acquisitions within the
expected time frames could adversely impact financial condition and
results of operations;
- significant litigation and regulatory proceedings could have
a material adverse effect on BB&T;
- unfavorable resolution of legal proceedings or other claims
and regulatory and other governmental investigations or other
inquiries could result in negative publicity, protests, fines,
penalties, restrictions on BB&T's operations or ability to
expand its business and other negative consequences, all of which
could cause reputational damage and adversely impact BB&T's
financial conditions and results of operations;
- risks resulting from the extensive use of models;
- risk management measures may not be fully
effective;
- deposit attrition, customer loss and/or revenue loss
following completed mergers/acquisitions may exceed
expectations;
- higher-than-expected costs related to information technology
infrastructure or a failure to successfully implement future system
enhancements could adversely impact BB&T's financial condition
and results of operations and could result in significant
additional costs to BB&T; and
- widespread system outages, caused by the failure of critical
internal systems or critical services provided by third parties,
could adversely impact BB&T's financial condition and results
of operations.
Readers are cautioned not to place undue reliance on these
forward-looking statements, which speak only as of the date of this
report. Actual results may differ materially from those expressed
in or implied by any forward-looking statement. Except to the
extent required by applicable law or regulation, BB&T
undertakes no obligation to revise or update publicly any
forward-looking statements for any reason.
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content:http://www.prnewswire.com/news-releases/bbt-reports-solid-third-quarter-earnings-300539473.html
SOURCE BB&T Corporation