WINSTON-SALEM, N.C.,
April 19, 2018 /PRNewswire/ --
BB&T Corporation (NYSE: BBT) today reported record earnings for
the first quarter of 2018. Net income available to common
shareholders was $745 million.
Earnings per diluted common share were $0.94 for the first quarter of 2018, up from
$0.77 last quarter. Results for the
first quarter produced an annualized return on average assets of
1.45 percent and an annualized return on common shareholders'
equity of 11.43 percent.
Excluding pre-tax merger-related and restructuring charges of
$28 million ($22 million after-tax), net income available to
common shareholders was $767 million,
or $0.97 per diluted share.
Net income available to common shareholders was $614 million ($0.77
per diluted share) for the fourth quarter of 2017 and $378 million ($0.46
per diluted share) for the first quarter of 2017.
"We had a record quarter with strong expense control and lower
tax expense," said Chairman and Chief Executive Officer
Kelly S. King. "Our returns on
average assets and average common shareholders' equity were the
highest they have been since before the credit crisis.
"Total noninterest expenses for the quarter were $1.69 billion, down $169
million from the prior quarter. Excluding merger-related and
restructuring charges and one-time expenses in the prior quarter
related to the passage of tax reform, noninterest expense was down
$39 million reflecting strong expense
control and continued progress from our optimization efforts," King
said.
"During the first quarter we were pleased to announce a 13.6
percent increase in our common stock dividend to share tax reform
benefits with our shareholders. This follows actions taken in
December of last year when we made additional investments in our
associates and communities. We also increased our minimum hourly
pay rate from $12 to $15 per hour.
"Earlier this month, we announced plans to acquire Regions
Insurance. The acquisition will be a great strategic fit and
increase our retail insurance network in core BB&T markets
across the Southeast and newer markets in Texas, Louisiana and Indiana," said King.
First Quarter 2018 Performance
Highlights
- Earnings per diluted common share were $0.94, up $0.17
compared to fourth quarter of 2017
-
- Earnings per diluted common share were $0.97, excluding merger-related and restructuring
charges
- Return on average assets was 1.45 percent
- Return on average common shareholders' equity was 11.43
percent
- Return on average tangible common shareholders' equity was
19.36 percent
- Taxable-equivalent revenues were $2.84
billion, down $71 million from
the fourth quarter of 2017
-
- Net interest margin was 3.44 percent, up one basis point from
the prior quarter
- Taxable-equivalent adjustment declined $15 million, primarily due to lower tax
rates
- Noninterest income was down $45
million primarily due to decreases in services charges on
deposits and other income
- Fee income ratio was 41.9 percent, compared to 42.7 percent for
the prior quarter
- Noninterest expense was $1.69
billion, down $169 million
compared to the fourth quarter of 2017
-
- GAAP efficiency ratio was 60.0 percent, compared to 64.7
percent for the prior quarter
- Adjusted efficiency ratio was 57.3 percent, compared to 57.2
percent for the prior quarter
- Average loans and leases held for investment were
$142.9 billion, up $194 million, or 0.6 percent annualized compared
to the fourth quarter of 2017
-
- Average commercial and industrial loans increased $149 million, or 1.0 percent annualized
- Average CRE loans increased $400
million, or 7.7 percent annualized
- Average residential mortgage loans increased $265 million, or 3.8 percent annualized
- Average indirect loans decreased $512
million, or 11.9 percent annualized
- Average deposits were $157.1
billion compared to $158.0
billion for the fourth quarter of 2017
-
- Average noninterest-bearing deposits decreased $892 million, or 6.7 percent annualized
- Average noninterest-bearing deposits represent 34.0 percent of
total deposits, compared to 34.4 percent in the prior quarter
- Average interest-bearing deposits increased $71 million and costs were 0.46 percent, up six
basis points compared to the prior quarter
- Asset quality remains strong
-
- Nonperforming loans were 0.42 percent of loans held for
investment, up two basis points
- Loans 90 days or more past due and still accruing were 0.34
percent of loans held for investment, compared to 0.38 percent in
the prior quarter
- The allowance for loan loss coverage ratio was 2.49 times
nonperforming loans held for investment, versus 2.62 times in the
prior quarter
- The allowance for loan and lease losses was 1.05 percent of
loans held for investment, up one basis point compared to the prior
quarter
- Capital levels remained strong across the board
-
- Common equity tier 1 to risk-weighted assets was 10.2
percent
- Tier 1 risk-based capital was 12.0 percent
- Total capital was 14.0 percent
- Leverage capital was 9.9 percent
EARNINGS
HIGHLIGHTS
|
|
|
|
|
|
|
|
|
|
|
(dollars in millions,
except per share data)
|
|
|
|
|
|
|
|
Change 1Q18
vs.
|
|
|
1Q18
|
|
4Q17
|
|
1Q17
|
|
4Q17
|
|
1Q17
|
Net income available
to common shareholders
|
|
$
|
745
|
|
$
|
614
|
|
$
|
378
|
|
$
|
131
|
|
$
|
367
|
Diluted earnings per
common share
|
|
|
0.94
|
|
|
0.77
|
|
|
0.46
|
|
|
0.17
|
|
|
0.48
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net interest income -
taxable equivalent
|
|
$
|
1,656
|
|
$
|
1,682
|
|
$
|
1,649
|
|
$
|
(26)
|
|
$
|
7
|
Noninterest
income
|
|
|
1,180
|
|
|
1,225
|
|
|
1,171
|
|
|
(45)
|
|
|
9
|
Total
taxable-equivalent revenue
|
|
$
|
2,836
|
|
$
|
2,907
|
|
$
|
2,820
|
|
$
|
(71)
|
|
$
|
16
|
Less
taxable-equivalent adjustment
|
|
|
23
|
|
|
38
|
|
|
40
|
|
Total
revenue
|
|
$
|
2,813
|
|
$
|
2,869
|
|
$
|
2,780
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Return on average
assets
|
|
|
1.45%
|
|
|
1.19%
|
|
|
0.79%
|
|
|
0.26%
|
|
|
0.66%
|
Return on average
risk-weighted assets
|
|
|
1.81
|
|
|
1.50
|
|
|
0.98
|
|
|
0.31
|
|
|
0.83
|
Return on average
common shareholders' equity
|
|
|
11.43
|
|
|
9.10
|
|
|
5.72
|
|
|
2.33
|
|
|
5.71
|
Return on average
tangible common shareholders' equity (1)
|
|
|
19.36
|
|
|
15.35
|
|
|
9.98
|
|
|
4.01
|
|
|
9.38
|
Net interest margin -
taxable equivalent
|
|
|
3.44
|
|
|
3.43
|
|
|
3.46
|
|
|
0.01
|
|
|
(0.02)
|
|
(1)
Excludes certain items as detailed in the non-GAAP reconciliations
in the Quarterly Performance Summary.
|
First Quarter 2018 compared to Fourth Quarter 2017
Total taxable-equivalent revenues were $2.84 billion for the first quarter of 2018, a
decrease of $71 million compared to
the prior quarter, which reflects a decrease of $26 million in taxable-equivalent net interest
income ($15 million of the decrease
was due to the taxable-equivalent adjustment as a result of a lower
tax rate), and a decrease of $45
million in noninterest income. First quarter results were
negatively impacted by fee waivers and other costs associated with
our system outage in February, which resulted in lost revenue of
approximately $15 million and
incremental noninterest expenses of approximately $5 million.
The net interest margin was 3.44 percent for the first quarter,
up one basis point compared to the prior quarter (up three basis
points adjusted for impact of tax reform). Average earning assets
decreased $775 million, which
reflects a decrease in average trading securities primarily due to
lower balances related to client supporting activities. Average
interest-bearing liabilities increased $244
million, primarily due to an increase of $1.0 billion in average long-term debt, which was
partially offset by a decrease of $865
million in average short-term borrowings.
The annualized yield on the total loan portfolio for the first
quarter was 4.57 percent, up seven basis points, reflecting the
impact of rate increases. The annualized taxable-equivalent yield
on the average securities portfolio for the first quarter was 2.44
percent, up two basis points compared to the prior quarter.
The average annualized cost of interest-bearing deposits was
0.46 percent, up six basis points compared to the prior quarter.
The average annualized rate on long-term debt was 2.54 percent, up
18 basis points compared to the prior quarter. The average
annualized rate on short-term borrowings was 1.43 percent, up 30
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 $150
million, and net charge-offs were $145 million for the first quarter, compared to
$138 million and $130 million, respectively, for the prior
quarter.
Noninterest income was $1.18
billion, a decrease of $45
million compared to the prior quarter primarily due to
decreases in service charges on deposits and other income,
partially offset by an increase in insurance income.
Noninterest expense was $1.69
billion for the first quarter, down $169 million compared to the prior quarter. This
decrease was primarily due to actions taken in the prior quarter in
connection with the passage of the tax reform legislation, which
included a contribution of $100
million to BB&T's philanthropic fund and $36 million for a one-time bonus paid to
associates who do not generally receive incentives or commissions.
Excluding these items and merger-related and restructuring charges,
noninterest expenses were down $39
million as a result of tight expense control.
The provision for income taxes was $186
million for the first quarter, compared to $209 million for the prior quarter. The effective
tax rate for the first quarter was 19.0 percent, compared to 23.9
percent for the prior quarter. The provision for income taxes for
the current quarter reflects the new lower federal tax rate and
$18 million in excess tax benefits
from equity-based compensation plans, whereas the fourth quarter
effective tax rate reflected a net tax benefit of $43 million related to the impact of tax
reform.
First Quarter 2018 compared to First Quarter 2017
Total taxable-equivalent revenues were $2.84 billion for the first quarter of 2018, an
increase of $16 million compared to
the earlier quarter, which reflects an increase of $7 million in taxable-equivalent net interest
income and an increase of $9 million
in noninterest income.
Net interest margin was 3.44 percent, down two basis points
compared to the earlier quarter. Average earning assets increased
$2.0 billion. The increase in average
earnings assets reflects a $3.8
billion increase in average securities, partially offset by
a $2.0 billion decrease in other
earning assets. Average interest-bearing liabilities decreased
$254 million compared to the earlier
quarter, as the growth in earning assets was funded by
noninterest-bearing deposits, which increased $2.3 billion compared to the earlier quarter.
Average interest-bearing deposits decreased $6.5 billion, which was partially offset by
increases of $2.9 billion in average
long-term debt and $3.4 billion in
average short-term borrowings. The annualized yield on the total
loan portfolio for the first quarter of 2018 was 4.57 percent, up
27 basis points compared to the earlier quarter. The annualized
taxable-equivalent yield on the average securities portfolio was
2.44 percent, up two basis points compared to the earlier
period.
The average annualized cost of interest-bearing deposits was
0.46 percent, up 20 basis points compared to the earlier quarter.
The average annualized rate on long-term debt was 2.54 percent, up
71 basis points compared to the earlier quarter. The average
annualized rate on short-term borrowings was 1.43 percent, up 100
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 $150
million compared to $148
million in the earlier quarter. Net charge-offs for the
first quarter of 2018 totaled $145
million compared to $148
million for the earlier quarter.
Noninterest income was $1.18
billion, an increase of $9
million from the earlier quarter. Noninterest expense for
the first quarter of 2018 was $1.69
billion, down $416 million
compared to the earlier quarter. This decrease was primarily driven
by a loss of $392 million on the
early extinguishment of debt in the earlier period. Excluding this
item and merger-related and restructuring charges, noninterest
expense was down $16 million due to
tight expense control.
The provision for income taxes was $186
million for the first quarter of 2018, compared to
$104 million for the earlier quarter.
This produced an effective tax rate for the first quarter of 2018
of 19.0 percent, compared to 19.6 percent for the earlier quarter.
The provision for income taxes for the current quarter reflects the
new lower federal tax rate, whereas the earlier period includes the
tax benefits associated with using the marginal income tax rate for
the loss on the early extinguishment of debt. The current quarter
also reflects $18 million in excess
tax benefits from equity-based compensation plans compared to
$35 million in the earlier
quarter.
NONINTEREST
INCOME
|
|
|
|
|
|
|
|
|
|
|
(dollars in
millions)
|
|
|
|
|
|
|
|
% Change 1Q18
vs.
|
|
|
1Q18
|
|
4Q17
|
|
1Q17
|
|
4Q17
|
|
1Q17
|
|
|
|
|
|
|
|
|
(annualized)
|
|
|
Insurance
income
|
|
$
|
436
|
|
|
$
|
418
|
|
|
$
|
458
|
|
|
17.5%
|
|
(4.8)%
|
Service charges on
deposits
|
|
165
|
|
|
183
|
|
|
168
|
|
|
(39.9)
|
|
(1.8)
|
Mortgage banking
income
|
|
99
|
|
|
104
|
|
|
103
|
|
|
(19.5)
|
|
(3.9)
|
Investment banking
and brokerage fees and commissions
|
|
113
|
|
|
111
|
|
|
91
|
|
|
7.3
|
|
24.2
|
Trust and investment
advisory revenues
|
|
72
|
|
|
72
|
|
|
68
|
|
|
—
|
|
5.9
|
Bankcard fees and
merchant discounts
|
|
69
|
|
|
67
|
|
|
59
|
|
|
12.1
|
|
16.9
|
Checkcard
fees
|
|
52
|
|
|
55
|
|
|
51
|
|
|
(22.1)
|
|
2.0
|
Operating lease
income
|
|
37
|
|
|
37
|
|
|
36
|
|
|
—
|
|
2.8
|
Income from
bank-owned life insurance
|
|
31
|
|
|
33
|
|
|
29
|
|
|
(24.6)
|
|
6.9
|
Securities gains
(losses), net
|
|
—
|
|
|
(1)
|
|
|
—
|
|
|
NM
|
|
—
|
Other
income
|
|
106
|
|
|
146
|
|
|
108
|
|
|
(111.1)
|
|
(1.9)
|
Total noninterest
income
|
|
$
|
1,180
|
|
|
$
|
1,225
|
|
|
$
|
1,171
|
|
|
(14.9)
|
|
0.8
|
First Quarter 2018 compared to Fourth Quarter 2017
Noninterest income was $1.18
billion for the first quarter, down $45 million compared to the prior quarter
primarily due to decreases in service charges on deposit driven by
the system outage and other income, partially offset by an increase
in insurance income.
Insurance income increased $18
million primarily due to seasonality. Service charges on
deposits decreased $18 million
primarily due to fee waivers associated with the system outage.
Other income decreased $40 million
primarily due to a decrease of $27
million in income from SBIC private equity investments and
$25 million due to income related to
assets for certain post-employment benefits, which is primarily
offset in other income/expense categories. Partially offsetting
these decreases in other income were smaller increases in various
sundry items.
First Quarter 2018 compared to First Quarter 2017
Noninterest income for the first quarter of 2018 was up
$9 million compared to the earlier
quarter.
Investment banking and brokerage fees and commissions increased
$22 million due to higher managed
account fees and higher investment banking income. Insurance income
decreased $22 million compared to the
earlier quarter primarily due to lower performance-based
commissions. Service charges on deposits was essentially flat, but
was negatively impacted due to fee waivers associated with the
system outage as previously mentioned. Other income was essentially
flat, as increases from various sundry items were more than offset
by a $22 million decrease in income
related to assets for certain post-employment benefits, which is
primarily offset in other income/expense categories.
NONINTEREST
EXPENSE
|
|
|
|
|
|
|
|
|
|
|
(dollars in
millions)
|
|
|
|
|
|
|
|
% Change 1Q18
vs.
|
|
|
1Q18
|
|
4Q17
|
|
1Q17
|
|
4Q17
|
|
1Q17
|
|
|
|
|
|
|
|
|
(annualized)
|
|
|
Personnel
expense
|
|
$
|
1,039
|
|
|
$
|
1,072
|
|
|
$
|
1,035
|
|
|
(12.5)%
|
|
0.4%
|
Occupancy and
equipment expense
|
|
194
|
|
|
195
|
|
|
193
|
|
|
(2.1)
|
|
0.5
|
Software
expense
|
|
65
|
|
|
65
|
|
|
58
|
|
|
—
|
|
12.1
|
Outside IT
services
|
|
32
|
|
|
38
|
|
|
49
|
|
|
(64.0)
|
|
(34.7)
|
Regulatory
charges
|
|
40
|
|
|
38
|
|
|
39
|
|
|
21.3
|
|
2.6
|
Amortization of
intangibles
|
|
33
|
|
|
34
|
|
|
38
|
|
|
(11.9)
|
|
(13.2)
|
Loan-related
expense
|
|
29
|
|
|
32
|
|
|
30
|
|
|
(38.0)
|
|
(3.3)
|
Professional
services
|
|
30
|
|
|
36
|
|
|
22
|
|
|
(67.6)
|
|
36.4
|
Merger-related and
restructuring charges, net
|
|
28
|
|
|
22
|
|
|
36
|
|
|
110.6
|
|
(22.2)
|
Loss (gain) on early
extinguishment of debt
|
|
—
|
|
|
—
|
|
|
392
|
|
|
—
|
|
(100.0)
|
Other
expense
|
|
196
|
|
|
323
|
|
|
210
|
|
|
(159.5)
|
|
(6.7)
|
Total noninterest
expense
|
|
$
|
1,686
|
|
|
$
|
1,855
|
|
|
$
|
2,102
|
|
|
(36.9)
|
|
(19.8)
|
|
New pension
accounting guidance was adopted in 1Q18 such that only service cost
is included in personnel expense with the
other pension expense elements included in other expense. Prior
periods have been retrospectively adjusted to conform to the
new presentation and total noninterest expense was not
affected.
|
First Quarter 2018 compared to Fourth Quarter 2017
Noninterest expense was $1.69
billion for the first quarter, down $169 million compared to the prior quarter. This
decrease was primarily due to actions taken in the prior quarter in
connection with the passage of the tax reform legislation. That
included a contribution of $100
million to BB&T's philanthropic fund and $36 million for a one-time bonus paid to
associates who do not generally receive incentives or commissions.
Excluding these items and merger-related and restructuring charges,
noninterest expenses were down $39
million as a result of tight expense control.
Personnel expense decreased $33
million compared to the prior quarter and FTEs decreased
576. This includes decreases of $36
million for the one-time bonus mentioned above and
$40 million in incentives resulting
from lower current quarter performance relative to targets. These
decreases were partially offset by increases of $25 million for payroll taxes primarily due to
the annual reset of social security taxes as well as higher pension
expense and increased equity-based compensation related to
retirement eligible associates.
Merger-related and restructuring charges were $28 million for the first quarter and primarily
reflect charges associated with facilities optimization
activities.
Other expense decreased $127
million primarily due to the $100
million charitable contribution mentioned above. In
addition, the expected return on pension assets increased
$15 million due to higher plan
assets.
First Quarter 2018 compared to First Quarter 2017
Noninterest expense for the first quarter of 2018 was down
$416 million compared to the earlier
quarter primarily driven by a loss of $392
million on the early extinguishment of debt in the earlier
period. Excluding this item and merger-related and restructuring
charges, noninterest expense was down $16
million due to tight expense control.
Personnel expense was essentially flat compared to the earlier
quarter as lower salaries expense driven by approximately 1,500
fewer FTEs was largely offset by higher pension service cost.
Outside IT services decreased $17
million compared to the earlier quarter due to lower
project-related expenses. Other expense decreased $14 million compared to the earlier quarter,
primarily due to an increase in the expected return on pension plan
assets due to higher plan assets.
LOANS AND
LEASES
|
|
|
|
|
|
|
|
|
(dollars in
millions)
|
|
|
|
|
|
|
|
|
Average
balances
|
|
1Q18
|
|
4Q17
|
|
Change
|
|
% Change
|
|
|
|
|
|
|
|
|
(annualized)
|
Commercial:
|
|
|
|
|
|
|
|
|
Commercial and
industrial
|
|
$
|
58,627
|
|
|
$
|
58,478
|
|
|
$
|
149
|
|
|
1.0%
|
CRE
|
|
21,398
|
|
|
20,998
|
|
|
400
|
|
|
7.7
|
Lease
financing
|
|
1,872
|
|
|
1,851
|
|
|
21
|
|
|
4.6
|
Retail:
|
|
|
|
|
|
|
|
|
Residential
mortgage
|
|
28,824
|
|
|
28,559
|
|
|
265
|
|
|
3.8
|
Direct
|
|
11,791
|
|
|
11,901
|
|
|
(110)
|
|
|
(3.7)
|
Indirect
|
|
16,914
|
|
|
17,426
|
|
|
(512)
|
|
|
(11.9)
|
Revolving
credit
|
|
2,798
|
|
|
2,759
|
|
|
39
|
|
|
5.7
|
PCI
|
|
631
|
|
|
689
|
|
|
(58)
|
|
|
(34.1)
|
Total loans and leases
held for investment
|
|
$
|
142,855
|
|
|
$
|
142,661
|
|
|
$
|
194
|
|
|
0.6
|
Average loans held for investment for the first quarter of 2018
were $142.9 billion, up $194 million, or 0.6 percent annualized compared
to the fourth quarter of 2017.
Average commercial and industrial loans increased $149 million, as production late in the prior
quarter led to higher average balances. This was partially offset
by a seasonal decline in average mortgage warehouse loans. Average
CRE increased $400 million due to
growth in loans for income producing properties. In addition,
average residential mortgage loans increased $265 million due to a change to retain a portion
of the conforming mortgage production rather than selling
substantially all such production.
Average indirect retail loans decreased $512 million, primarily due to seasonality,
strategic optimization and directing investments toward
higher-yielding assets.
DEPOSITS
|
|
|
|
|
|
|
|
|
(dollars in
millions)
|
|
|
|
|
|
|
|
|
Average
balances
|
|
1Q18
|
|
4Q17
|
|
Change
|
|
% Change
|
|
|
|
|
|
|
|
|
(annualized)
|
Noninterest-bearing
deposits
|
|
$
|
53,396
|
|
|
$
|
54,288
|
|
|
$
|
(892)
|
|
|
(6.7)%
|
Interest
checking
|
|
27,270
|
|
|
26,746
|
|
|
524
|
|
|
7.9
|
Money market and
savings
|
|
61,690
|
|
|
61,693
|
|
|
(3)
|
|
|
—
|
Time
deposits
|
|
13,847
|
|
|
13,744
|
|
|
103
|
|
|
3.0
|
Foreign office
deposits - interest-bearing
|
|
935
|
|
|
1,488
|
|
|
(553)
|
|
|
(150.7)
|
Total
deposits
|
|
$
|
157,138
|
|
|
$
|
157,959
|
|
|
$
|
(821)
|
|
|
(2.1)
|
Average deposits for the first quarter were $157.1 billion, down $821
million compared to the prior quarter. Average
noninterest-bearing deposits decreased $892
million, reflecting seasonality and driven by decreases in
commercial balances, partially offset by increases in personal and
public funds balances.
Average interest checking increased $524
million primarily due to increases in commercial and public
funds balances. Average time deposits increased $103 million primarily due to increases in
commercial balances. Average foreign office deposits decreased
$553 million due to changes in the
overall funding mix.
Noninterest-bearing deposits represented 34.0 percent of total
average deposits for the first quarter, compared to 34.4 percent
for the prior quarter and 31.7 percent a year ago. The cost of
interest-bearing deposits was 0.46 percent for the first quarter,
up six basis points compared to the prior quarter.
SEGMENT
RESULTS
|
|
|
|
|
|
|
|
|
|
|
(dollars in
millions)
|
|
|
|
|
|
|
|
Change 1Q18
vs.
|
Segment Net
Income
|
|
1Q18
|
|
4Q17
|
|
1Q17
|
|
4Q17
|
|
1Q17
|
Community Banking
Retail and Consumer Finance
|
|
$
|
324
|
|
|
$
|
263
|
|
|
$
|
254
|
|
|
$
|
61
|
|
|
$
|
70
|
|
Community Banking
Commercial
|
|
270
|
|
|
234
|
|
|
195
|
|
|
36
|
|
|
75
|
|
Financial Services
and Commercial Finance
|
|
144
|
|
|
136
|
|
|
109
|
|
|
8
|
|
|
35
|
|
Insurance Holdings
and Premium Finance
|
|
62
|
|
|
33
|
|
|
50
|
|
|
29
|
|
|
12
|
|
Other, Treasury &
Corporate
|
|
(9)
|
|
|
1
|
|
|
(182)
|
|
|
(10)
|
|
|
173
|
|
Total net
income
|
|
$
|
791
|
|
|
$
|
667
|
|
|
$
|
426
|
|
|
$
|
124
|
|
|
$
|
365
|
|
First Quarter 2018 compared to Fourth Quarter 2017
Community Banking Retail and Consumer Finance ("CB-Retail")
CB-Retail serves retail clients by offering a variety of loan
and deposit products, payment services, bankcard products and other
financial services by connecting clients to a wide range of
financial products and services. CB-Retail includes Dealer Retail
Services, which originates loans on an indirect basis to consumers
for the purchase of automobiles, boats and recreational vehicles.
Additionally, CB-Retail includes specialty finance lending, small
equipment leasing and other products for consumers. CB-Retail also
includes Residential Mortgage Banking, which 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.
CB-Retail net income was $324
million for the first quarter of 2018, an increase of
$61 million compared to the prior
quarter. Segment net interest income decreased primarily due to
fewer days in the current quarter, partially offset by higher
funding spreads on deposits. Noninterest income decreased
$19 million primarily due to a
decline in service charges on deposits largely resulting from fee
waivers associated with the February system outage. The allocated
provision for credit losses decreased due to a decline in loss
estimates and a seasonal decline in bankcard loans. Noninterest
expense decreased $22 million
primarily due to a one-time bonus in the prior quarter to
associates who do not generally receive incentives or commissions,
partially offset by an increase in allocated corporate expenses.
The provision for income taxes declined $51
million due to a lower tax rate in the current quarter.
CB-Retail average loans and leases held for investment decreased
$777 million, or 5.0 percent on an
annualized basis, compared to the prior quarter primarily due to
seasonality, strategic optimization and directing investments to
higher yielding assets. The decline was driven by decreases in
indirect, mortgage warehouse and direct loans, partially offset by
an increase in average residential mortgage loans.
CB-Retail average total deposits increased $420 million, or 2.2 percent on an annualized
basis, compared to the prior quarter. Average noninterest-bearing
deposits increased $290 million, or
7.4 percent annualized, and average money market and savings
accounts increased $158 million, or
1.8 percent annualized.
Community Banking Commercial ("CB-Commercial")
CB-Commercial serves large, medium and small business clients by
offering a variety of loan and deposit products and by connecting
clients to the combined organization's broad array of financial
services. CB-Commercial includes CRE lending, commercial and
industrial lending, corporate banking, asset-based lending, dealer
inventory financing, tax exempt financing, cash management and
treasury services, and commercial deposit products.
CB-Commercial net income was $270
million for the first quarter of 2018, an increase of
$36 million compared to the prior
quarter. Segment net interest income decreased primarily due to
lower credit spreads on loans and fewer days in the current
quarter, partially offset by higher funding spreads on deposits.
The allocated provision for credit losses increased due to higher
net charge-offs and an increase in loss estimates. Noninterest
expense decreased $19 million
primarily due to lower allocated corporate expenses. The provision
for income taxes declined $47 million
primarily due to a lower tax rate in the current period.
CB-Commercial average loans and leases held for investment
increased $642 million, or 5.0
percent on an annualized basis. Compared to the prior quarter,
average commercial and industrial loans increased $474 million, or 6.0 percent annualized, and
average commercial real estate loans increased $198 million, or 4.1 percent annualized.
CB-Commercial average total deposits decreased $737 million, or 5.0 percent on an annualized
basis, driven by a seasonal decline in average noninterest-bearing
deposits of $920 million, or 10.5
percent annualized.
Financial Services and Commercial Finance ("FS&CF")
FS&CF provides personal trust administration, estate
planning, investment counseling, wealth management, asset
management, corporate retirement services, capital markets and
corporate banking services, specialty finance and corporate trust
services to individuals, corporations, institutions, foundations
and government entities. In addition, the segment includes BB&T
Securities, a full-service brokerage and investment banking firm,
which offers clients a variety of investment services, including
discount brokerage services, equities, annuities, mutual funds and
government bonds. The Corporate Banking Division originates and
services large corporate relationships, syndicated lending
relationships and client derivatives while the specialty finance
products offered by FS&CF include equipment finance, tax-exempt
financing for local governments and special-purpose entities, and
full-service commercial mortgage banking lending.
FS&CF net income was $144
million for the first quarter of 2018, an increase of
$8 million compared to the prior
quarter. Noninterest income decreased primarily due to lower gains
on trading securities and a seasonal decline in commercial mortgage
banking income. The provision for income taxes declined
$26 million due to a lower tax rate
and a decline in pre-tax earnings.
Corporate Banking's average loans held for investment increased
$20 million, or an annualized 0.5
percent, compared to the prior quarter, while BB&T Wealth's
average loans held for investment increased $60 million, or an annualized 13.7 percent.
Average loans held for investment at Governmental Finance increased
$183 million, or an annualized 14.8
percent, compared to the prior quarter and increased 49.6 percent
and 7.6 percent, respectively, for Grandbridge and Equipment
Finance.
FS&CF average total deposits decreased $91 million, or 1.3 percent annualized, driven by
a decline in average total deposits for Grandbridge and Corporate
Banking, partially offset by an increase in average total deposits
for BB&T Wealth.
Insurance Holdings and Premium Finance ("IH&PF")
BB&T's insurance agency / brokerage network is the fifth
largest in the world. IH&PF provides property and casualty,
employee benefits and life insurance to businesses and individuals.
It also provides small business and corporate services, such as
workers compensation and professional liability, as well as surety
coverage and title insurance.
Additionally, IH&PF includes commercial and retail insurance
premium finance.
IH&PF net income was $62
million for the first quarter of 2018, an increase of
$29 million compared to the prior
quarter. Noninterest income increased primarily due to seasonality.
Noninterest expense decreased primarily due to a one-time bonus in
the prior period to associates who do not generally receive
incentives or commissions.
Other, Treasury & Corporate ("OT&C")
Net income in OT&C 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.
OT&C generated a net loss of $9
million for the first quarter of 2018, compared to net
income of $1 million for the prior
quarter. Segment net interest income increased due to fewer days in
the current quarter impacting the net funding credit to the other
operating segments. Noninterest income decreased $23 million due to a decline in income from SBIC
private equity investments and lower income related to assets for
certain post-employment benefits. Noninterest expense decreased
$104 million primarily due to a
$100 million charitable contribution
to BB&T's philanthropic fund in the prior quarter. The benefit
for income taxes decreased $101
million due to a decline in pre-tax loss and a net tax
benefit of $43 million recorded in
the prior quarter related to the impact of tax reform partially
offset by excess tax benefits from equity-based compensation plans
in the current quarter.
First Quarter 2018 compared to First Quarter 2017
Community Banking Retail and Consumer Finance
CB-Retail net income was $324
million for the first quarter of 2018, an increase of
$70 million compared to the earlier
quarter. Segment net interest income increased due to higher
funding spreads on deposits and a change in mix to higher yielding
loans, partially offset by lower credit spreads on loans.
Noninterest income increased primarily due to higher bankcard fees
and merchant discounts. The provision for income taxes declined
$45 million due to a lower tax rate
compared to the earlier quarter.
Community Banking Commercial
CB-Commercial net income was $270
million for the first quarter of 2018, an increase of
$75 million compared to the earlier
quarter. Segment net interest income increased $27 million driven primarily by higher funding
spreads on deposits, average noninterest-bearing deposit growth and
average loan growth, partially offset by lower credit spreads on
loans. The allocated provision for credit losses increased
$33 million primarily due to a
normalization in loss estimates and higher net charge-offs.
Noninterest expense decreased $53
million driven primarily by a decline in personnel expense
due to a third quarter of 2017 change in approach for allocating
capitalized loan origination costs, as well as lower allocated
corporate expenses. The provision for income taxes declined
$25 million compared to the earlier
quarter due to a lower tax rate.
Financial Services and Commercial Finance
FS&CF net income was $144
million for the first quarter of 2018, an increase of
$35 million compared to the earlier
quarter. Noninterest income increased $21
million due to higher investment banking and brokerage fees
and commissions, primarily driven by higher managed account fees
and higher investment banking income. The allocated provision for
credit losses decreased due to a decline in net charge-offs.
Noninterest expense increased due to higher personnel expense
primarily resulting from increased incentive expense. The provision
for income taxes declined primarily due to a lower tax rate.
Insurance Holdings and Premium Finance
IH&PF net income was $62
million for the first quarter of 2018, an increase of
$12 million compared to the earlier
quarter. Noninterest income decreased $24
million primarily due to lower performance-based
commissions. Noninterest expense decreased $25 million primarily due to declines in business
referral expense, merger-related and restructuring charges and
personnel expense. The provision for income taxes decreased
compared to the earlier quarter due to a lower tax rate.
Other, Treasury & Corporate
OT&C generated a net loss of $9
million in the first quarter of 2018, compared to a net loss
of $182 million in the earlier
quarter. Segment net interest income decreased $21 million primarily due to an increase in the
rate and average balances for long-term debt. The allocated
provision for credit losses decreased due to a decline in the
provision for PCI loans and a decrease in the provision for
unfunded lending commitments. Noninterest expense decreased
$352 million due to a $392 million loss on the early extinguishment of
debt in the earlier period, partially offset by an increase in
personnel expense due to a third quarter of 2017 change in approach
for allocating capitalized loan origination costs. The benefit for
income taxes fell $171 million
primarily due to a decline in pre-tax loss and lower excess tax
benefits from equity-based compensation plans.
CAPITAL RATIOS
(1)
|
|
|
|
|
|
|
|
|
|
|
|
|
1Q18
|
|
4Q17
|
|
3Q17
|
|
2Q17
|
|
1Q17
|
Risk-based:
|
|
|
|
|
|
|
|
|
|
|
Common equity Tier
1
|
|
10.2%
|
|
10.2%
|
|
10.2%
|
|
10.3%
|
|
10.3%
|
Tier 1
|
|
12.0
|
|
11.9
|
|
11.9
|
|
12.1
|
|
12.0
|
Total
|
|
14.0
|
|
13.9
|
|
14.0
|
|
14.1
|
|
14.1
|
Leverage
|
|
9.9
|
|
9.9
|
|
9.9
|
|
10.1
|
|
10.0
|
|
(1)
Current quarter regulatory capital ratios are
preliminary.
|
Capital levels remained strong at March 31, 2018. BB&T
declared common dividends of $0.375
per share (up 13.6 percent from the fourth quarter) during the
first quarter of 2018, which resulted in a dividend payout ratio of
39.2 percent. BB&T completed $320
million of share repurchases during the first quarter in
accordance with the capital plan. The total payout ratio for the
first quarter of 2018 was 82.1 percent.
BB&T's liquidity coverage ratio was approximately 144
percent at March 31, 2018, 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 15.1 percent at March 31, 2018.
ASSET QUALITY
(1)
|
|
|
|
|
|
|
|
|
|
|
(dollars in
millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
1Q18
|
|
4Q17
|
|
3Q17
|
|
2Q17
|
|
1Q17
|
Total nonperforming
assets
|
|
$
|
669
|
|
$
|
627
|
|
$
|
680
|
|
$
|
690
|
|
$
|
801
|
Total performing
TDRs
|
|
1,042
|
|
1,043
|
|
1,052
|
|
1,013
|
|
1,185
|
Total loans 90 days
past due and still accruing
|
|
490
|
|
548
|
|
505
|
|
493
|
|
542
|
Total loans 30-89
days past due
|
|
814
|
|
1,052
|
|
987
|
|
874
|
|
805
|
|
|
|
|
|
|
|
|
|
|
|
Nonperforming loans
and leases as a percentage of loans and
leases held for investment
|
|
0.42%
|
|
0.40%
|
|
0.42%
|
|
0.43%
|
|
0.51%
|
Nonperforming assets
as a percentage of total assets
|
|
0.30
|
|
0.28
|
|
0.31
|
|
0.31
|
|
0.36
|
Allowance for loan
and lease losses as a percentage of loans and
leases held for investment
|
|
1.05
|
|
1.04
|
|
1.04
|
|
1.03
|
|
1.04
|
Net charge-offs as a
percentage of average loans and leases,
annualized
|
|
0.41
|
|
0.36
|
|
0.35
|
|
0.37
|
|
0.42
|
Ratio of allowance
for loan and lease losses to net charge-offs,
annualized
|
|
2.55x
|
|
2.89x
|
|
2.93x
|
|
2.80x
|
|
2.49x
|
Ratio of allowance
for loan and lease losses to nonperforming
loans and leases held for
investment
|
|
2.49x
|
|
2.62x
|
|
2.44x
|
|
2.43x
|
|
2.05x
|
|
|
(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.
|
Nonperforming assets totaled $669
million at March 31, 2018, up $42 million compared to December 31, 2017.
Nonperforming loans and leases represented 0.42 percent of loans
and leases held for investment, a slight increase compared to
December 31, 2017. The increase in nonperforming assets was
primarily related to CRE lending and leasing, as well as an
increase in foreclosed properties.
Performing TDRs were essentially flat during the first quarter,
as the commercial and industrial and CRE portfolios were down while
government guaranteed residential mortgage loans increased.
Loans 90 days or more past due and still accruing totaled
$490 million at March 31, 2018,
down $58 million compared to the
prior quarter, primarily due to a decrease in residential mortgage
loans. The ratio of loans 90 days or more past due and still
accruing as a percentage of loans and leases was 0.34 percent at
March 31, 2018, compared to 0.38 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 0.04 percent at March 31,
2018, an improvement of one basis point from the prior quarter.
Loans 30-89 days past due and still accruing totaled
$814 million at March 31, 2018,
down $238 million compared to the
prior quarter. The decrease was primarily due to expected
seasonality in indirect lending and residential mortgage.
Net charge-offs during the first quarter totaled $145 million, up $15
million compared to the prior quarter. As a percentage of
average loans and leases, annualized net charge-offs were 0.41
percent, up five basis points compared to the prior quarter.
The allowance for loan and lease losses, excluding the allowance
for PCI loans, was $1.5 billion, up
$11 million compared to the prior
quarter. As of March 31, 2018, the total allowance for loan
and lease losses was 1.05 percent of loans and leases held for
investment, up slightly compared to December 31, 2017.
The allowance for loan and lease losses was 2.49 times
nonperforming loans and leases held for investment, compared to
2.62 times at December 31, 2017. At March 31, 2018, the
allowance for loan and lease losses was 2.55 times annualized net
charge-offs, compared to 2.89 times at December 31, 2017.
Earnings Presentation and Quarterly Performance
Summary
To listen to BB&T's live first quarter 2018 earnings
conference call at 8 a.m. ET today,
please call 866-519-2796 and enter the participant code 876127. 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 6326592).
The presentation, including an appendix reconciling non-GAAP
disclosures, is available at
https://bbt.investorroom.com/webcasts-and-presentations. BB&T's
First Quarter 2018 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 $220.7
billion in assets and market capitalization of approximately
$40.6 billion as of March 31,
2018. 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 more
than 2,000 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 Corporation 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 diluted earnings per share is non-GAAP in that
it excludes merger-related and restructuring charges and other
selected items, net of tax. 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.
- 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.
- The adjusted net interest margin is a non-GAAP measure in
that it estimates the impact on taxable equivalent net interest
income if the tax reform legislation had not been enacted.
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
tax reform.
A reconciliation of these non-GAAP measures to the most
directly comparable GAAP measure is included in BB&T's First
Quarter 2018 Quarterly Performance Summary, which is available
at https://bbt.investorroom.com/quarterly-earnings.
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, 2017 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 eventual exit of the United
Kingdom from the European Union;
- 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;
- 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;
- 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;
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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SOURCE BB&T Corporation