WINSTON-SALEM, N.C.,
July 19, 2018 /PRNewswire/
-- BB&T Corporation (NYSE: BBT) today reported record
earnings for the second quarter of 2018. Net income available to
common shareholders was $775 million.
Earnings per diluted common share were $0.99 for the second quarter of 2018, up from
$0.94 last quarter. Results for the
second quarter produced an annualized return on average assets of
1.49 percent and an annualized return on average common
shareholders' equity of 11.74 percent.
Excluding pre-tax merger-related and restructuring charges of
$24 million ($17 million after-tax), net income available to
common shareholders was $792 million,
or $1.01 per diluted share.
Net income available to common shareholders was $745 million ($0.94
per diluted share) for the first quarter of 2018 and $631 million ($0.77
per diluted share) for the second quarter of 2017.
"Strong revenues, improved loan growth and solid expense control
resulted in record earnings for the quarter," said Chairman and
Chief Executive Officer Kelly S.
King. "We produced a strong 3.5 percent annualized growth in
average loans held for investment compared to the prior quarter.
Our earnings before income taxes exceeded $1.0 billion, which is also a record and was up
4.7 percent over the second quarter of last year.
"Revenue was $2.9 billion as both
net interest income and noninterest income were near all-time
highs. Total noninterest expenses for the quarter were $1.7 billion, down $22
million from the second quarter of 2017. Excluding
merger-related and restructuring charges, noninterest expense was
down $36 million, reflecting
continued progress on our optimization efforts," King said.
"Asset quality remains excellent and improved further during the
second quarter. Nonperforming assets, net charge-offs and loans 90
days or more past due all declined from already very low levels,"
King said.
"We were pleased the Federal Reserve did not object to our
capital plan, which includes a $0.03
per share increase in our dividend, which will be considered at our
July Board of Directors meeting, and up to $1.7 billion in share repurchases. A portion of
the capital allocated for share repurchases was used to acquire
Regions Insurance in early July. 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, Arkansas and Indiana," King said.
Second Quarter 2018 Performance
Highlights
- Earnings per diluted common share were $0.99, up $0.05
compared to first quarter of 2018
-
- Earnings per diluted common share were $1.01, excluding merger-related and restructuring
charges
- Return on average assets was 1.49 percent
- Return on average common shareholders' equity was 11.74
percent
- Return on average tangible common shareholders' equity was
19.78 percent
- Taxable-equivalent revenues were $2.9
billion, up $65 million from
the first quarter of 2018
-
- Net interest margin was 3.45 percent, up one basis point from
the prior quarter
- Noninterest income was up $42
million primarily due to higher insurance income
- Fee income ratio was 42.5 percent, compared to 41.9 percent for
the prior quarter
- Noninterest expense was $1.7
billion, up $34 million
compared to the first quarter of 2018 driven by performance-based
incentive expense
-
- Noninterest expense was down $22
million compared to the second quarter of 2017
- GAAP efficiency ratio was 59.7 percent, compared to 60.0
percent for the first quarter of 2018
- Adjusted efficiency ratio was 57.4 percent, compared to 57.3
percent for the first quarter of 2018
- Average loans and leases held for investment were $144.1 billion, up $1.2
billion, or 3.5 percent annualized compared to the first
quarter of 2018
-
- Average commercial and industrial loans increased $921 million, or 6.3 percent annualized
- Average CRE loans increased $148
million, or 2.8 percent annualized
- Average residential mortgage loans increased $448 million, or 6.2 percent annualized
- Average direct retail loans decreased $111 million, or 3.8 percent annualized
- Average indirect loans decreased $110
million, or 2.6 percent annualized
- Average deposits were $157.7
billion compared to $157.1
billion for the first quarter of 2018
-
- Average noninterest-bearing deposits increased $567 million, or 4.3 percent annualized
- Average noninterest-bearing deposits represent 34.2 percent of
total deposits, compared to 34.0 percent in the prior quarter
- Average interest-bearing deposits costs were 0.57 percent, up
11 basis points
- Asset quality remains excellent
-
- Nonperforming loans were 0.38 percent of loans held for
investment, down four basis points from the first quarter of
2018
- Loans 90 days or more past due and still accruing were 0.30
percent of loans held for investment, compared to 0.34 percent in
the prior quarter
- Net charge-offs were 0.30 percent of average loans and leases,
down 11 basis points
- The allowance for loan loss coverage ratio was 2.74 times
nonperforming loans held for investment, versus 2.49 times in the
prior quarter
- The allowance for loan and lease losses was 1.05 percent of
loans held for investment, unchanged 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 11.9 percent
- Total capital was 13.9 percent
- Leverage capital was 10.0 percent
|
EARNINGS
HIGHLIGHTS
|
|
|
|
|
|
|
Change 2Q18
vs.
|
(dollars in millions,
except per share data)
|
2Q18
|
|
1Q18
|
|
2Q17
|
|
1Q18
|
|
2Q17
|
Net income available
to common shareholders
|
$
|
775
|
|
|
$
|
745
|
|
|
$
|
631
|
|
|
$
|
30
|
|
|
$
|
144
|
|
Diluted earnings per
common share
|
0.99
|
|
|
0.94
|
|
|
0.77
|
|
|
0.05
|
|
|
0.22
|
|
|
|
|
|
|
|
|
|
|
|
Net interest income -
taxable equivalent
|
$
|
1,679
|
|
|
$
|
1,656
|
|
|
$
|
1,675
|
|
|
$
|
23
|
|
|
$
|
4
|
|
Noninterest
income
|
1,222
|
|
|
1,180
|
|
|
1,220
|
|
|
42
|
|
|
2
|
|
Total
taxable-equivalent revenue
|
$
|
2,901
|
|
|
$
|
2,836
|
|
|
$
|
2,895
|
|
|
$
|
65
|
|
|
$
|
6
|
|
Less
taxable-equivalent adjustment
|
22
|
|
|
23
|
|
|
40
|
|
|
|
|
|
Total
revenue
|
$
|
2,879
|
|
|
$
|
2,813
|
|
|
$
|
2,855
|
|
|
|
|
|
|
|
|
|
|
Return on average
assets
|
|
1.49
|
%
|
|
|
1.45
|
%
|
|
|
1.22
|
%
|
|
|
0.04
|
%
|
|
|
0.27
|
%
|
Return on average
risk-weighted assets
|
|
1.85
|
|
|
|
1.81
|
|
|
|
1.53
|
|
|
|
0.04
|
|
|
|
0.32
|
|
Return on average
common shareholders' equity
|
|
11.74
|
|
|
|
11.43
|
|
|
|
9.30
|
|
|
|
0.31
|
|
|
|
2.44
|
|
Return on average
tangible common shareholders' equity (1)
|
|
19.78
|
|
|
|
19.36
|
|
|
|
15.60
|
|
|
|
0.42
|
|
|
|
4.18
|
|
Net interest margin -
taxable equivalent
|
|
3.45
|
|
|
|
3.44
|
|
|
|
3.47
|
|
|
|
0.01
|
|
|
|
(0.02)
|
|
(1)
|
Excludes certain
items as detailed in the non-GAAP reconciliations in the Quarterly
Performance Summary.
|
Second Quarter 2018 compared to First Quarter
2018
Total taxable-equivalent revenues were $2.9 billion for the second quarter of 2018, an
increase of $65 million compared to
the prior quarter, which reflects an increase of $23 million in taxable-equivalent net interest
income and an increase of $42 million
in noninterest income.
The net interest margin was 3.45 percent for the second quarter,
up one basis point compared to the prior quarter. Average earning
assets increased $564 million, which
reflects a $1.8 billion increase in
average total loans and a $1.2
billion decrease in average total securities. Average
interest-bearing liabilities decreased $221
million, driven by a decrease of $154
million in average short-term borrowings. The need for
short-term borrowings was reduced as a result of the $567 million increase in noninterest-bearing
deposits.
The annualized yield on the total loan portfolio for the second
quarter was 4.70 percent, up 13 basis points, reflecting the impact
of rate increases. The annualized taxable-equivalent yield on the
average securities portfolio for the second quarter was 2.53
percent, up nine basis points compared to the prior quarter.
The average annualized cost of interest-bearing deposits was
0.57 percent, up 11 basis points compared to the prior quarter. The
average annualized rate on long-term debt was 2.81 percent, up 27
basis points compared to the prior quarter. The average annualized
rate on short-term borrowings was 1.77 percent, up 34 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 $135
million, and net charge-offs were $109 million for the second quarter, compared to
$150 million and $145 million, respectively, for the prior
quarter.
Noninterest income was $1.2
billion, an increase of $42
million compared to the prior quarter primarily due to a
seasonal increase in insurance income.
Noninterest expense was $1.7
billion for the second quarter, up $34 million compared to the prior quarter. This
increase was primarily due to higher personnel expense, which was
driven by higher performance-based incentives.
The provision for income taxes was $202
million for the second quarter, compared to $186 million for the prior quarter. The effective
tax rate for the second quarter was 19.7 percent, compared to 19.0
percent for the prior quarter.
Second Quarter 2018 compared to Second Quarter
2017
Total taxable-equivalent revenues were $2.9 billion for the second quarter of 2018, an
increase of $6 million compared to
the earlier quarter as taxable-equivalent net interest income and
noninterest income were essentially flat.
Net interest margin was 3.45 percent, down two basis points
compared to the earlier quarter. Average earning assets increased
$1.7 billion. The increase in average
earnings assets reflects a $1.7
billion increase in average securities, a $1.4 billion increase in average total loans and
a $1.5 billion decrease in average
other earning assets. Average interest-bearing liabilities
increased $470 million compared to
the earlier quarter, as the growth in earning assets was primarily
funded by noninterest-bearing deposits, which increased
$1.4 billion compared to the earlier
quarter. Average interest-bearing deposits decreased $4.0 billion, which was offset by increases of
$1.9 billion in average long-term
debt and $2.6 billion in average
short-term borrowings. The annualized yield on the total loan
portfolio for the second quarter of 2018 was 4.70 percent, up 34
basis points compared to the earlier quarter, reflecting the impact
of rate increases. The annualized taxable-equivalent yield on the
average securities portfolio was 2.53 percent, up four basis points
compared to the earlier period.
The average annualized cost of interest-bearing deposits was
0.57 percent, up 27 basis points compared to the earlier quarter.
The average annualized rate on long-term debt was 2.81 percent, up
90 basis points compared to the earlier quarter. The average
annualized rate on short-term borrowings was 1.77 percent, up 107
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 $135
million, flat compared to the earlier quarter. Net
charge-offs for the second quarter of 2018 totaled $109 million compared to $132 million for the earlier quarter.
Noninterest income was $1.2
billion, flat from the earlier quarter. Noninterest expense
for the second quarter of 2018 was $1.7
billion, down $22 million
compared to the earlier quarter. Excluding merger-related and
restructuring charges, noninterest expense was down $36 million due to a continued focus on expense
control.
The provision for income taxes was $202
million for the second quarter of 2018, compared to
$304 million for the earlier quarter.
This produced an effective tax rate for the second quarter of 2018
of 19.7 percent, compared to 31.1 percent for the earlier quarter.
The provision for income taxes for the current quarter reflects the
new lower federal tax rate.
NONINTEREST
INCOME
|
|
|
|
|
|
|
% Change 2Q18
vs.
|
(dollars in
millions)
|
2Q18
|
|
1Q18
|
|
2Q17
|
|
1Q18
|
|
2Q17
|
|
|
|
|
|
|
|
(annualized)
|
|
|
Insurance
income
|
$
|
481
|
|
|
$
|
436
|
|
|
$
|
481
|
|
|
41.4
|
%
|
|
—
|
%
|
Service charges on
deposits
|
179
|
|
|
165
|
|
|
176
|
|
|
34.0
|
|
|
1.7
|
|
Mortgage banking
income
|
94
|
|
|
99
|
|
|
94
|
|
|
(20.3)
|
|
|
—
|
|
Investment banking
and brokerage fees and commissions
|
109
|
|
|
113
|
|
|
105
|
|
|
(14.2)
|
|
|
3.8
|
|
Trust and investment
advisory revenues
|
72
|
|
|
72
|
|
|
70
|
|
|
—
|
|
|
2.9
|
|
Bankcard fees and
merchant discounts
|
72
|
|
|
69
|
|
|
75
|
|
|
17.4
|
|
|
(4.0)
|
|
Checkcard
fees
|
57
|
|
|
52
|
|
|
54
|
|
|
38.6
|
|
|
5.6
|
|
Operating lease
income
|
36
|
|
|
37
|
|
|
37
|
|
|
(10.8)
|
|
|
(2.7)
|
|
Income from
bank-owned life insurance
|
30
|
|
|
31
|
|
|
32
|
|
|
(12.9)
|
|
|
(6.3)
|
|
Securities gains
(losses), net
|
1
|
|
|
—
|
|
|
—
|
|
|
NM
|
|
|
NM
|
|
Other
income
|
91
|
|
|
106
|
|
|
96
|
|
|
(56.8)
|
|
|
(5.2)
|
|
Total noninterest
income
|
$
|
1,222
|
|
|
$
|
1,180
|
|
|
$
|
1,220
|
|
|
14.3
|
|
|
0.2
|
|
Second Quarter 2018 compared to First Quarter
2018
Noninterest income was $1.2
billion for the second quarter, up $42 million compared to the prior quarter
primarily due to an increase in insurance income.
Insurance income increased $45
million primarily due to seasonality. Service charges on
deposits increased $14 million
primarily due to fewer fee waivers as the prior quarter was
impacted by the February system outage. Other income decreased
$15 million primarily due to smaller
decreases in various sundry items.
Second Quarter 2018 compared to Second Quarter
2017
Noninterest income for the second quarter of 2018 was
essentially flat compared to the earlier quarter.
NONINTEREST
EXPENSE
|
|
|
|
|
|
|
|
% Change 2Q18
vs.
|
(dollars in
millions)
|
|
2Q18
|
|
1Q18
|
|
2Q17
|
|
1Q18
|
|
2Q17
|
|
|
|
|
|
|
|
|
(annualized)
|
|
|
Personnel
expense
|
|
$
|
1,074
|
|
|
$
|
1,039
|
|
|
$
|
1,068
|
|
|
13.5
|
%
|
|
0.6
|
%
|
Occupancy and
equipment expense
|
|
187
|
|
|
194
|
|
|
198
|
|
|
(14.5)
|
|
|
(5.6)
|
|
Software
expense
|
|
67
|
|
|
65
|
|
|
57
|
|
|
12.3
|
|
|
17.5
|
|
Outside IT
services
|
|
32
|
|
|
32
|
|
|
39
|
|
|
—
|
|
|
(17.9)
|
|
Regulatory
charges
|
|
39
|
|
|
40
|
|
|
36
|
|
|
(10.0)
|
|
|
8.3
|
|
Amortization of
intangibles
|
|
31
|
|
|
33
|
|
|
36
|
|
|
(24.3)
|
|
|
(13.9)
|
|
Loan-related
expense
|
|
26
|
|
|
29
|
|
|
36
|
|
|
(41.5)
|
|
|
(27.8)
|
|
Professional
services
|
|
32
|
|
|
30
|
|
|
38
|
|
|
26.7
|
|
|
(15.8)
|
|
Merger-related and
restructuring charges, net
|
|
24
|
|
|
28
|
|
|
10
|
|
|
(57.3)
|
|
|
140.0
|
|
Other
expense
|
|
208
|
|
|
196
|
|
|
224
|
|
|
24.6
|
|
|
(7.1)
|
|
Total noninterest
expense
|
|
$
|
1,720
|
|
|
$
|
1,686
|
|
|
$
|
1,742
|
|
|
8.1
|
|
|
(1.3)
|
|
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.
Second Quarter 2018 compared to First Quarter
2018
Noninterest expense was $1.7
billion for the second quarter, up $34 million compared to the prior quarter. This
increase is primarily due to higher personnel expense.
Personnel expense increased $35
million compared to the prior quarter. The increase was
driven by higher performance-based incentive expense due to
improved performance relative to targets, partially offset by lower
payroll taxes. Full-time equivalent employees decreased 126
compared to the prior quarter.
Merger-related and restructuring charges were $24 million for the second quarter and primarily
reflect charges associated with facilities optimization
activities.
Other expense increased $12
million partially due to an increase in Visa indemnification
reserves.
Second Quarter 2018 compared to Second Quarter
2017
Noninterest expense for the second quarter of 2018 was down
$22 million compared to the earlier
quarter. Excluding merger-related and restructuring charges,
noninterest expense was down $36
million due to a continued focus on expense control. This
includes the benefits of prior optimization efforts including lower
occupancy and equipment expense and fewer FTEs, as well as lower
project-related costs.
Personnel expense was essentially flat compared to the earlier
quarter as lower salaries expense driven by approximately 1,600
fewer FTEs was largely offset by higher performance-based incentive
expense and annual merit increases.
Other expense decreased $16
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
|
2Q18
|
|
1Q18
|
|
Change
|
|
%
Change
|
|
|
|
|
|
|
|
(annualized)
|
Commercial:
|
|
|
|
|
|
|
|
Commercial and
industrial
|
$
|
59,548
|
|
|
$
|
58,627
|
|
|
$
|
921
|
|
|
6.3
|
%
|
CRE
|
21,546
|
|
|
21,398
|
|
|
148
|
|
|
2.8
|
|
Lease
financing
|
1,862
|
|
|
1,872
|
|
|
(10)
|
|
|
(2.1)
|
|
Retail:
|
|
|
|
|
|
|
|
Residential
mortgage
|
29,272
|
|
|
28,824
|
|
|
448
|
|
|
6.2
|
|
Direct
|
11,680
|
|
|
11,791
|
|
|
(111)
|
|
|
(3.8)
|
|
Indirect
|
16,804
|
|
|
16,914
|
|
|
(110)
|
|
|
(2.6)
|
|
Revolving
credit
|
2,831
|
|
|
2,798
|
|
|
33
|
|
|
4.7
|
|
PCI
|
559
|
|
|
631
|
|
|
(72)
|
|
|
(45.8)
|
|
Total loans and leases
held for investment
|
$
|
144,102
|
|
|
$
|
142,855
|
|
|
$
|
1,247
|
|
|
3.5
|
|
Average loans held for investment for the second quarter of 2018
were $144.1 billion, up $1.2 billion, or 3.5 percent annualized compared
to the first quarter of 2018.
Average commercial and industrial loans increased $921 million driven by strong growth in mortgage
warehouse lending of $389 million
following a seasonal decline in the first quarter. Community
Banking Commercial segment average loans increased $260 million across most of the footprint. Also
contributing to the growth in commercial and industrial loans was
higher dealer floor plan and premium finance of $64 million and $60
million, respectively. Average CRE loans increased
$148 million primarily due to an
increase in construction lending and Grandbridge. Average
residential mortgage loans increased $448
million primarily due to the retention of a portion of the
conforming mortgage production.
Average direct retail loans decreased $111 million, however, direct retail loans as of
June 30, 2018, were relatively flat
compared to the balance at the end of the first quarter as loan
demand in this category improved late in the second quarter.
Average indirect retail loans decreased $110 million. While overall this category
decreased, there was strong seasonal growth in power sports and
recreational lending, which was more than offset by declines in
automobile loans. Indirect loans as of June
30, 2018, were $17.1 billion,
up 11.1 percent annualized compared to the end of the first
quarter, reflecting strong growth late in the second quarter.
DEPOSITS
|
|
|
|
|
|
|
|
(dollars in
millions)
|
|
|
|
|
|
|
|
Average
balances
|
2Q18
|
|
1Q18
|
|
Change
|
|
%
Change
|
|
|
|
|
|
|
|
(annualized)
|
Noninterest-bearing
deposits
|
$
|
53,963
|
|
|
$
|
53,396
|
|
|
$
|
567
|
|
|
4.3
|
%
|
Interest
checking
|
26,969
|
|
|
27,270
|
|
|
(301)
|
|
|
(4.4)
|
|
Money market and
savings
|
62,105
|
|
|
61,690
|
|
|
415
|
|
|
2.7
|
|
Time
deposits
|
13,966
|
|
|
13,847
|
|
|
119
|
|
|
3.4
|
|
Foreign office
deposits - interest-bearing
|
673
|
|
|
935
|
|
|
(262)
|
|
|
(112.4)
|
|
Total
deposits
|
$
|
157,676
|
|
|
$
|
157,138
|
|
|
$
|
538
|
|
|
1.4
|
|
Average deposits for the second quarter were $157.7 billion, up $538
million compared to the prior quarter. Average
noninterest-bearing deposits increased $567
million, driven by increases in personal and commercial
balances, partially offset by a decrease in public funds
balances.
Average interest checking decreased $301
million primarily due to a decrease in public funds
balances, partially offset by an increase in commercial balances.
Average money market and savings deposits increased $415 million primarily due to an increase in
commercial balances partially offset by a decline in public funds
balances. Average foreign office deposits decreased $262 million due to changes in the overall
funding mix.
Noninterest-bearing deposits represented 34.2 percent of total
average deposits for the second quarter, compared to 34.0 percent
for the prior quarter and 32.8 percent a year ago. The cost of
interest-bearing deposits was 0.57 percent for the second quarter,
up 11 basis points compared to the prior quarter.
SEGMENT
RESULTS
|
|
|
|
|
|
|
Change 2Q18
vs.
|
(dollars in
millions)
|
|
|
|
|
|
|
Segment Net
Income
|
2Q18
|
|
1Q18
|
|
2Q17
|
|
1Q18
|
|
2Q17
|
Community Banking
Retail and Consumer Finance
|
$
|
377
|
|
|
$
|
324
|
|
|
$
|
279
|
|
|
$
|
53
|
|
|
$
|
98
|
|
Community Banking
Commercial
|
277
|
|
|
270
|
|
|
177
|
|
|
7
|
|
|
100
|
|
Financial Services
and Commercial Finance
|
145
|
|
|
144
|
|
|
134
|
|
|
1
|
|
|
11
|
|
Insurance Holdings
and Premium Finance
|
73
|
|
|
62
|
|
|
60
|
|
|
11
|
|
|
13
|
|
Other, Treasury &
Corporate
|
(50)
|
|
|
(9)
|
|
|
24
|
|
|
(41)
|
|
|
(74)
|
|
Total net
income
|
$
|
822
|
|
|
$
|
791
|
|
|
$
|
674
|
|
|
$
|
31
|
|
|
$
|
148
|
|
Second Quarter 2018 compared to First Quarter
2018
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 $377
million for the second quarter of 2018, an increase of
$53 million compared to the prior
quarter. Segment net interest income increased $37 million due to higher funding spreads on
deposits, average loan and deposit growth and an additional day in
the current quarter, partially offset by lower credit spreads on
loans. Noninterest income increased primarily due to higher service
charges on deposits, checkcard fees, and bankcard fees and merchant
discounts, partially offset by a decline in mortgage banking
income. The allocated provision for credit losses decreased due to
seasonally lower net charge-offs and a decline in incurred loss
estimates, partially offset by loan growth.
CB-Retail average loans and leases held for investment increased
$721 million, or 4.6 percent on an
annualized basis, compared to the prior quarter primarily due to
increases in residential mortgage and mortgage warehouse loans,
partially offset by decreases in indirect and direct loans.
CB-Retail average total deposits increased $983 million, or 5.0 percent on an annualized
basis, compared to the prior quarter. Average noninterest-bearing
deposits increased $765 million, or
18.9 percent annualized, and average time deposits increased
$168 million, or 6.2 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 $277
million for the second quarter of 2018, an increase of
$7 million compared to the prior
quarter. Segment net interest income increased primarily due to
improved funding spreads and an additional day in the current
quarter, partially offset by lower credit spreads on loans.
CB-Commercial average loans and leases held for investment
increased $268 million, or 2.1
percent on an annualized basis, due to an increase in average
commercial and industrial loans.
CB-Commercial average total deposits decreased $203 million, or 1.4 percent on an annualized
basis. Compared to the prior quarter, average interest checking
fell $510 million, or 22.6 percent
annualized, partially offset by an increase in money market and
savings of $347 million, or 9.4
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 $145
million for the second quarter of 2018, up slightly compared
to the prior quarter. Segment net interest income increased
primarily due to average loan growth, higher spreads on loans and
deposits, and an additional day in the current quarter. Noninterest
expense increased primarily due to higher performance-based
incentive expense and operating charge-offs.
FS&CF average total loans held for investment increased
$292 million, or 4.4 percent on an
annualized basis, compared to the prior quarter. The increase was
primarily driven by higher loans held for investment for Corporate
Banking, Grandbridge and BB&T Wealth of $134 million, $117
million and $41 million,
respectively. FS&CF average total deposits were essentially
flat compared to the prior quarter.
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. In addition, IH&PF includes
commercial and retail insurance premium finance.
IH&PF net income was $73
million for the second quarter of 2018, an increase of
$11 million compared to the prior
quarter. Noninterest income increased $45
million primarily due to seasonality. Noninterest expense
increased $33 million primarily due
to higher performance-based incentive expense and merger-related
and restructuring charges.
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 $50
million for the second quarter of 2018, compared to a net
loss of $9 million for the prior
quarter. Segment net interest income decreased $37 million partially due to an increase in the
rate for long-term debt. Noninterest income decreased $23 million due to a decline in other income for
smaller sundry items. The allocated provision for credit losses
decreased slightly partially due to a decline in the provision for
PCI loans.
Second Quarter 2018 compared to Second Quarter
2017
Community Banking Retail and Consumer Finance
CB-Retail net income was $377
million for the second quarter of 2018, an increase of
$98 million compared to the earlier
quarter. Segment net interest income increased $31 million due to higher funding spreads on
deposits, partially offset by lower credit spreads on loans. The
allocated provision for credit losses decreased slightly due to a
decline in net charge-offs primarily driven by the sale of mortgage
TDRs in the earlier period, partially offset by accelerating loan
growth in the current quarter. Noninterest expense decreased
primarily due to declines in personnel expense, loan-related
expense, and occupancy and equipment expense. The provision for
income taxes decreased $43 million
due to the lower federal tax rate compared to the earlier
quarter.
Community Banking Commercial
CB-Commercial net income was $277
million for the second quarter of 2018, an increase of
$100 million compared to the earlier
quarter. Segment net interest income increased $20 million primarily driven by higher funding
spreads and average loan growth, partially offset by lower credit
spreads on loans. Noninterest expense decreased $66 million driven primarily by a decline in
personnel expense due to a change in approach for allocating
capitalized loan origination costs that was implemented in the
third quarter of 2017, as well as lower allocated corporate
expenses. The provision for income taxes decreased compared to the
earlier quarter due to the lower federal tax rate.
Financial Services and Commercial Finance
FS&CF net income was $145
million for the second quarter of 2018, an increase of
$11 million compared to the earlier
quarter. Noninterest income increased slightly primarily due to
higher commercial mortgage banking income. The allocated provision
for credit losses increased due to higher incurred loss estimates
and an increase in net charge-offs. Noninterest expense increased
primarily due to higher personnel expense. The provision for income
taxes decreased $25 million due to
the lower federal tax rate.
Insurance Holdings and Premium Finance
IH&PF net income was $73
million for the second quarter of 2018, an increase of
$13 million compared to the earlier
quarter. Noninterest income and noninterest expense were
essentially flat compared to the earlier quarter. The provision for
income taxes decreased compared to the earlier quarter due to the
lower federal tax rate.
Other, Treasury & Corporate
OT&C generated a net loss of $50
million in the second quarter of 2018, compared to net
income of $24 million in the earlier
quarter. Segment net interest income decreased $36 million primarily due to an increase in the
rate and average balances for long-term debt. Noninterest expense
increased $47 million primarily due
to an increase in personnel expense resulting from a third quarter
of 2017 change in approach for allocating capitalized loan
origination costs.
CAPITAL
RATIOS
|
2Q18
|
|
1Q18
|
|
4Q17
|
|
3Q17
|
|
2Q17
|
Risk-based:
|
(preliminary)
|
|
|
|
|
|
|
|
|
Common equity Tier
1
|
10.2
|
%
|
|
10.2
|
%
|
|
10.2
|
%
|
|
10.2
|
%
|
|
10.3
|
%
|
Tier 1
|
11.9
|
|
|
12.0
|
|
|
11.9
|
|
|
11.9
|
|
|
12.1
|
|
Total
|
13.9
|
|
|
14.0
|
|
|
13.9
|
|
|
14.0
|
|
|
14.1
|
|
Leverage
|
10.0
|
|
|
9.9
|
|
|
9.9
|
|
|
9.9
|
|
|
10.1
|
|
Capital levels remained strong at June 30, 2018. BB&T
declared common dividends of $0.375
per share during the second quarter of 2018, which resulted in a
dividend payout ratio of 37.5 percent. BB&T completed
$310 million of share repurchases
during the quarter. The total payout ratio for the second quarter
of 2018 was 77.5 percent.
BB&T's modified liquidity coverage ratio was approximately
131 percent at June 30, 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 14.3 percent at June 30,
2018.
ASSET QUALITY
(1)
|
|
|
|
|
|
|
|
|
|
(dollars in
millions)
|
2Q18
|
|
1Q18
|
|
4Q17
|
|
3Q17
|
|
2Q17
|
Total nonperforming
assets
|
$
|
624
|
|
|
$
|
669
|
|
|
$
|
627
|
|
|
$
|
680
|
|
|
$
|
690
|
|
Total performing
TDRs
|
1,073
|
|
|
1,042
|
|
|
1,043
|
|
|
1,052
|
|
|
1,013
|
|
Total loans 90 days
past due and still accruing
|
435
|
|
|
490
|
|
|
548
|
|
|
505
|
|
|
493
|
|
Total loans 30-89
days past due
|
905
|
|
|
814
|
|
|
1,052
|
|
|
987
|
|
|
874
|
|
|
|
|
|
|
|
|
|
|
|
Nonperforming loans
and leases as a percentage of loans and
leases held for investment
|
0.38
|
%
|
|
0.42
|
%
|
|
0.40
|
%
|
|
0.42
|
%
|
|
0.43
|
%
|
Nonperforming assets
as a percentage of total assets
|
0.28
|
|
|
0.30
|
|
|
0.28
|
|
|
0.31
|
|
|
0.31
|
|
Allowance for loan
and lease losses as a percentage of loans
and leases held for
investment
|
1.05
|
|
|
1.05
|
|
|
1.04
|
|
|
1.04
|
|
|
1.03
|
|
Net charge-offs as a
percentage of average loans and leases,
annualized
|
0.30
|
|
|
0.41
|
|
|
0.36
|
|
|
0.35
|
|
|
0.37
|
|
Ratio of allowance
for loan and lease losses to net charge-
offs, annualized
|
3.49x
|
|
|
2.55x
|
|
|
2.89x
|
|
|
2.93x
|
|
|
2.80x
|
|
Ratio of allowance
for loan and lease losses to
nonperforming loans and leases held
for investment
|
2.74x
|
|
|
2.49x
|
|
|
2.62x
|
|
|
2.44x
|
|
|
2.43x
|
|
(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 $624
million at June 30, 2018, down $45 million compared to March 31, 2018.
Nonperforming loans and leases represented 0.38 percent of loans
and leases held for investment, a four basis point decrease
compared to March 31, 2018. The decrease in nonperforming
assets was across all major loan categories.
Performing TDRs were up $31
million during the second quarter primarily in residential
mortgage with small increases in indirect lending and commercial
and industrial.
Loans 90 days or more past due and still accruing totaled
$435 million at June 30, 2018,
down $55 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 0.30 percent at
June 30, 2018, 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 0.04 percent at June 30, 2018, unchanged
from the prior quarter.
Loans 30-89 days past due and still accruing totaled
$905 million at June 30, 2018,
up $91 million compared to the prior
quarter. The increase was primarily due to residential mortgage and
expected seasonality in indirect lending.
Net charge-offs during the second quarter totaled $109 million, down $36
million compared to the prior quarter driven by indirect and
CRE loans. As a percentage of average loans and leases, annualized
net charge-offs were 0.30 percent, down 11 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
$39 million compared to the prior
quarter. As of June 30, 2018, the total allowance for loan and
lease losses was 1.05 percent of loans and leases held for
investment, unchanged compared to March 31, 2018.
The allowance for loan and lease losses was 2.74 times
nonperforming loans and leases held for investment, compared to
2.49 times at March 31, 2018. At June 30, 2018, the
allowance for loan and lease losses was 3.49 times annualized net
charge-offs, compared to 2.55 times at March 31, 2018. The
improvement in these measures were driven by lower nonperforming
loans and net charge-offs in the current quarter.
Earnings Presentation and Quarterly Performance
Summary
To listen to BB&T's live second 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
Second 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 $222.7
billion in assets and market capitalization of approximately
$39.1 billion as of June 30,
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 1,900 financial centers in 15 states and Washington, D.C. and 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 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.
- Core net interest margin is a non-GAAP measure that adjusts
net interest margin to exclude the impact of purchase accounting.
The interest income and average balances for PCI loans are excluded
in their entirety as the accounting for these loans can result in
significant and unusual trends in yields. The purchase accounting
marks and related amortization for a) securities acquired from the
FDIC in the Colonial acquisition and b) non-PCI loans, deposits and
long-term debt acquired from Susquehanna and National Penn are
excluded to approximate their yields at the pre-acquisition rates.
BB&T's management believes the adjustments to the calculation
of net interest margin for certain assets and liabilities acquired
provide investors with useful information related to the
performance of BB&T's earning assets.
- 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 operating leverage 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.
- The adjusted performance ratios are non-GAAP in that they
exclude merger-related and restructuring charges and, in the case
of return on average tangible common shareholders' equity,
amortization of intangible assets. BB&T's management uses these
measures in their analysis of the Corporation's performance.
BB&T's management believes these measures provide 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.
A reconciliation of these non-GAAP measures to the most
directly comparable GAAP measure is included in BB&T's Second
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, slower deposit and/or asset growth, and 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 and deposits as well as the value of other
financial assets and liabilities;
- 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 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.
View original
content:http://www.prnewswire.com/news-releases/bbt-reports-record-quarterly-earnings-of-0-99-per-diluted-share-up-0-22--or-28-6-percent-compared-to-second-quarter-2017--300683315.html
SOURCE BB&T Corporation