BB&T reports 21% increase in net income
By Bbt Corporation, PRNEWednesday, April 20, 2011
WINSTON-SALEM, North Carolina, April 21, 2011 -
EPS totals $.32, up 19%
Credit trends improve across the board for second consecutive quarter
C&I loans up 8.7%
BB&T Corporation (NYSE: BBT) today reported earnings for the first
quarter of 2011. Net income totaled $234 million, an increase of 20.6%
compared to $194 million reported in the first quarter last year. Net income
available to common shareholders was $225 million, or $.32 per diluted common
share, compared with $188 million, or $.27 per diluted common share, earned
during the first quarter of 2010. These results reflect increases of 19.7%
and 18.5%, respectively.
"BB&T posted solid first quarter results as our credit costs continued to
decline and economic conditions improved," said Chairman and Chief Executive
Officer Kelly S. King. "For the second consecutive quarter, we saw
improvements in all measures of credit quality. In particular, we experienced
significant declines in past due loans, to our lowest level in three years.
"We continue to make progress in the diversification of our balance
sheet. We experienced healthy growth in average C&I loans of 8.7% on an
annualized basis compared with last quarter and we further reduced our
exposure to higher-risk real estate," said King. "We also saw growth in total
loans this quarter, including the mortgage and auto loan portfolios.
"Our net interest margin declined only slightly to 4.01% for the quarter
compared with 4.04% for the prior quarter," said King. "Our outlook for the
margin has improved compared to last quarter and we believe we will remain
slightly above 4% throughout 2011. Our margin is benefiting from a more
favorable funding mix, a lower cost of funds and wider credit spreads.
"We enjoyed strong growth in client deposits this quarter," said King.
"Average client deposits increased $2.1 billion, or 8.7% on an annualized
linked quarter basis. Excluding certificates of deposit, client deposits
increased $3.2 billion in the quarter, or 16.8% annualized, despite a
reduction in deposit costs from .90% in the fourth quarter last year to .82%
this quarter.
"Our outlook is positive for continued reductions in problem assets and
related credit costs as we are on track with our asset disposition strategy,"
continued King. "We sold approximately $500 million of problem assets during
the quarter and expect that we will exceed that amount in the second quarter.
As we near the conclusion of our disposition strategy, our execution has
successfully preserved shareholder value.
"Finally, we were pleased to be the first large bank to announce an
increase in our dividend," remarked King. "Among the 19 financial
institutions included in the Fed's comprehensive capital analysis and review,
BB&T currently has the highest dividend yield and the highest dividend payout
ratio."
Performance Highlights Include:
- Average C&I loans increased 8.7% annualized linked quarter
- Average total loans and leases held for investment, excluding the
impact of ADC and covered and other acquired loan runoff, increased
$1.2 billion, or 5.2% on an annualized basis
- Annualized linked quarter loan growth includes a 22.7% increase in
average mortgage loans and a 3.8% increase in average sales finance
loans
- Average total loans increased 1.0%
- Average ADC loans declined 41.0%
- Average client deposits increased $2.1 billion, or 8.7% on an
annualized linked quarter basis
- Client deposits, excluding CDs, increased $3.2 billion, or 16.8%
- Deposit costs were reduced to .82% in the first quarter compared to
.90% in the fourth quarter last year
- Linked quarter credit metrics improved across the board
- Net charge-offs decreased 24.9% and totaled 1.65% of average loans,
excluding covered loans, for the quarter compared with 2.15% last
quarter
- Lowest level of net charge-offs in two years
- NPAs, excluding covered assets, decreased 2.7%, the fourth
consecutive quarter with lower NPAs
- Performing TDRs decreased 11.3%
- NPA inflows decreased 8.3% on a linked quarter basis
- Delinquent loans decreased 20.0%, excluding covered and government
guaranteed loans - lowest balances of delinquencies in three years
- BB&T sold approximately $500 million of problem assets during the
quarter
- Capital levels further improved during the quarter
- Tangible common equity improved to 7.2%
- Tier 1 common equity improved to 9.3%
- Tier 1 risk-based capital improved to 12.1%
- Leverage capital improved to 9.3%
- Total capital improved to 15.8%
- Net interest margin remained healthy
- The net interest margin was 4.01% for the first quarter, a 13 basis
point increase compared to the first quarter of 2010 and a decrease
of 3 basis points compared to last quarter
EARNINGS HIGHLIGHTS
(dollars in millions, Change Change
except per share data) Q1 Q4 Q1 Q1 11 Q1 11
vs. vs.
2011 2010 2010 Q4 10 Q1 10
---- ---- ---- ----- -----
Net income available to
common shareholders $225 $208 $188 $17 $37
Diluted earnings per common
share .32 .30 .27 .02 .05
Net interest income-
taxable equivalent $1,321 $1,369 $1,347 $(48) $(26)
Noninterest income 714 964 844 (250) (130)
--- --- --- ---- ----
Total revenue $2,035 $2,333 $2,191 $(298) $(156)
====== ====== ====== ===== =====
Return on average assets (%) .60 .54 .48 .06 .12
Return on average common
shareholders' equity (%) 5.48 4.88 4.59 .60 .89
Net interest margin -
taxable equivalent (%) 4.01 4.04 3.88 (.03) .13
Efficiency ratio (1) (%) 57.10 55.30 52.40 1.80 4.70
(1) Excludes securities gains (losses), foreclosed property expense,
amortization of intangible assets, merger-related and restructuring
charges, the impact of FDIC loss share accounting, and other
selected items. See Non-GAAP reconciliations on page 22 of the
Quarterly Performance Summary.
First Quarter 2011 compared to First Quarter 2010
Consolidated net income available to common shareholders for the first
quarter of 2011 of $225 million was up 19.7% compared to $188 million earned
during the same period in 2010. On a diluted per common share basis, earnings
for the first quarter of 2011 were $.32, up 18.5% compared to $.27 for the
same period in 2010. BB&T's results of operations for the first quarter of
2011 produced an annualized return on average assets of .60% and an
annualized return on average common shareholders' equity of 5.48% compared to
prior year ratios of .48% and 4.59%, respectively.
Total revenues were $2.0 billion for the first quarter of 2011, down $156
million compared to the first quarter of 2010. The decrease in total revenues
included declines of $130 million in noninterest income and $26 million in
fully taxable equivalent net interest income. The decline in noninterest
income included $74 million in losses related to commercial loans held for
sale in connection with management's asset disposition strategy. In addition,
the first quarter of 2011 included a $63 million reduction from the FDIC loss
share asset, which is offset by additional interest income on the loans and
securities and lower provisions for credit losses compared to the first
quarter of 2010. Excluding these items, noninterest income was relatively
flat compared to the first quarter of 2010. The decline in net interest
income was primarily the result of a decline in average earning assets of
$6.8 billion as a result of the balance sheet deleverage strategy that was
executed in the second quarter of 2010, which was partially offset by a
higher net interest margin. The net interest margin improved 13 basis points
compared to the first quarter of 2010, as a result of higher yields on loans
acquired in the Colonial acquisition and lower deposit costs.
The provision for credit losses for the first quarter of 2011 declined
$235 million, or 40.9%, compared to the first quarter of 2010, as improving
credit resulted in lower provision expense. Net charge-offs for the first
quarter of 2011 were $71 million lower than the first quarter of 2010 and the
level of nonperforming assets, loan delinquencies and the outlook for future
credit losses continued to improve.
A $53 million provision for income taxes was recorded for the first
quarter of 2011 compared to $48 million for the first quarter of 2010. This
resulted in an effective tax rate for the first quarter of 2011 of 18.5%
compared to 19.8% for the prior year's first quarter.
First Quarter 2011 compared to Fourth Quarter 2010
Consolidated net income available to common shareholders for the first
quarter of 2011 of $225 million was up $17 million, or an annualized 33.1%
compared to $208 million earned during the fourth quarter of 2010. On a
diluted per common share basis, earnings for the first quarter of 2011 were
$.32, up $.02, or an annualized 27.0%, compared to the amount earned in the
fourth quarter of 2010. BB&T's results of operations for the first quarter of
2011 produced an annualized return on average assets of .60% and an
annualized return on average common shareholders' equity of 5.48% compared to
prior quarter ratios of .54% and 4.88%, respectively.
Total revenues were $2.0 billion for the first quarter of 2011, down $298
million compared to the fourth quarter of 2010. The decline in total revenues
was primarily the result of lower noninterest income in the first quarter of
2011 compared to the prior quarter. Noninterest income was down $250 million
compared to the fourth quarter of 2010. The decline in noninterest income
included a decrease of $99 million in net securities gains, a decrease of $58
million from the FDIC loss share asset, a $43 million decrease in mortgage
banking revenues and $12 million of additional losses and writedowns on
commercial loans held for sale compared to the fourth quarter of 2010. Fully
taxable equivalent net interest income declined $48 million compared to the
fourth quarter of 2010, primarily due to a decline of $1.6 billion in average
earning assets and a 3 basis point drop in the net interest margin.
The provision for credit losses, excluding covered loans, for the first
quarter of 2011 declined $203 million compared to the fourth quarter of 2010
due to improving credit. The provision for covered loans decreased $100
million, which was offset by a corresponding $80 million decrease in FDIC
loss share income. Net charge-offs for the first quarter of 2011 were $134
million lower than the fourth quarter of 2010.
The provision for income taxes was $53 million for the first quarter of
2011 compared to $15 million for the fourth quarter of 2010. This produced an
effective tax rate for the first quarter of 2011 of 18.5% compared to 6.5%
for the prior quarter. The increase in the effective tax rate compared to the
fourth quarter of 2010 was primarily due to adjustments made in the fourth
quarter of 2010 to align the actual effective tax rate for the year.
REVENUE, NET OF PROVISION IMPACT Change Change
FROM ACQUIRED ASSETS (1) Q1 Q4 Q1 Q1 11 Q1 11
vs. vs.
(dollars in millions) 2011 2010 2010 Q4 10 Q1 10
---- ---- ---- ----- -----
Interest income - loans $266 $276 $165 $(10) $101
Interest income - securities 37 50 34 (13) 3
--- --- --- --- ---
Total interest income 303 326 199 (23) 104
Provision for covered loans - (100) (19) 100 19
FDIC loss share income, net (58) - 5 (58) (63)
--- --- --- --- ---
Net revenue after provision for
covered loans $245 $226 $185 $19 $60
==== ==== ==== === ===
(1) Presents amounts related to covered and acquired loans, covered
securities and the FDIC loss sharing asset recognized in the
Colonial acquisition. Excludes all amounts related to other
assets acquired and liabilities assumed in the acquisition.
First Quarter 2011 compared to First Quarter 2010
Interest income for the first quarter of 2011 on loans and securities
acquired in the Colonial acquisition increased $104 million compared to the
first quarter of 2010, which is partially offset by a decrease in FDIC loss
share income. The vast majority of the increase is related to loans and
reflects higher expected cash flows based on the quarterly cash flow
reassessment process required by acquisition accounting. The net interest
margin on covered and other acquired loans for the first quarter of 2011 was
18.09% compared to 8.66% in 2010. At March 31, 2011, the accretable yield
balance on these loans was $2.3 billion. Accretable yield represents the
excess of future cash flows above the current net carrying amount of loans
and will be recognized into income over the remaining life of the covered and
acquired loans.
There was no provision for covered loans in the current quarter, a
decrease of $19 million compared to the first quarter of 2010. The first
quarter of 2011 reassessment showed decreases in expected cash flows in
certain loan pools that resulted in additional provisions that were fully
offset by recoveries in other previously impaired loan pools.
FDIC loss share income, net decreased $63 million compared to the first
quarter of 2010 primarily as a result of the impact of cash flow
reassessments that resulted in additional interest income and a reduction in
the offset related to the provision for covered loans.
First Quarter 2011 compared to Fourth Quarter 2010
Interest income on loans and securities acquired in the Colonial
acquisition decreased $23 million in the first quarter of 2011 compared to
the fourth quarter. The net interest margin on covered and other acquired
loans for the first quarter of 2011 was 18.09%, up slightly compared to
16.71% in the earlier quarter as a result of the first quarter reassessment.
The higher yield was more than offset by lower loan balances that resulted in
the net decrease. The decrease of $13 million in interest income on covered
securities is primarily due to the impact of changes in the expected duration
of the underlying investments that were made in the fourth quarter of 2010.
The majority of the interest income decrease is offset in the FDIC loss share
income.
There was no provision for covered loans in the first quarter of 2011,
resulting in a decrease of $100 million compared to the fourth quarter of
2010. This decrease was offset by a corresponding $80 million decrease in
FDIC loss share income.
FDIC loss share income, net decreased $58 million primarily as the result
of the impact of cash flow reassessment and fourth quarter changes in
securities' durations that resulted in lower first quarter interest income
and provision for covered loans.
NONINTEREST INCOME
(dollars in % Change % Change
millions) Q1 Q4 Q1 Q1 11 Q1 11
vs. vs.
2011 2010 2010 Q4 10 Q1 10
---- ---- ---- ----- -----
(annualized)
Insurance income $250 $249 $253 1.6 (1.2)
Service charges on
deposits 135 143 164 (22.7) (17.7)
Mortgage banking
income 95 138 89 (126.4) 6.7
Investment banking and
brokerage fees and
commissions 87 97 79 (41.8) 10.1
Checkcard fees 72 73 61 (5.6) 18.0
Other nondeposit fees
and commissions 67 68 65 (6.0) 3.1
Bankcard fees and
merchant discounts 46 47 40 (8.6) 15.0
Trust and investment
advisory revenues 43 42 38 9.7 13.2
Income from bank-
owned life insurance 30 31 31 (13.1) (3.2)
FDIC loss share
income, net (58) - 5 NM NM
Securities gains
(losses), net - 99 (3) NM (100.0)
Other income, net (53) (23) 22 NM NM
--- --- ---
Total noninterest
income $714 $964 $844 (105.2) (15.4)
==== ==== ====
NM - not meaningful.
First Quarter 2011 compared to First Quarter 2010
Noninterest income was $714 million for first quarter of 2011 compared to
$844 million for the first quarter of 2010. Service charges on deposits
declined $29 million, or 17.7%, primarily due to changes to BB&T's overdraft
policies that were implemented during the third quarter of 2010 that were
partially in response to regulatory changes. Mortgage banking income was up
$6 million, or 6.7%, compared to the same period of 2010. The increase in
mortgage banking income was driven by a $13 million, or 162.5%, increase from
commercial mortgage banking activities due to improving market conditions,
partially offset by lower revenues from residential mortgage banking
activities. Investment banking and brokerage fees and commissions for the
first quarter of 2011 were $87 million, up $8 million, or 10.1%, compared to
the same period of 2010. The increase in investment banking and brokerage
fees and commissions was largely driven by increased commission income from
investment services. Checkcard fees were up $11 million, or 18.0%, and
bankcard fees and merchant discounts were up $6 million, or 15.0%, largely
due to higher volumes. Trust and investment advisory revenues benefited from
improved market conditions and were up $5 million, or 13.2%, compared to the
first quarter of 2010. FDIC loss share income was down $63 million primarily
due to improvements in forecasted cash flows related to covered loans that
resulted in additional interest income but negatively impacted FDIC loss
share income as these gains reduce what the FDIC pays BB&T. Other income
declined $75 million compared to the first quarter of 2010, primarily as a
result of $74 million of losses and writedowns recorded on commercial loans
held for sale during the current quarter in connection with management's
nonperforming asset disposition strategy. In addition, other income included
a $10 million increase due to market-related increases on trading assets for
post-employment benefits that is offset by a similar increase in personnel
expense and a $12 million decrease in other trading and hedging activities.
First Quarter 2011 compared to Fourth Quarter 2010
Noninterest income for the first quarter of 2011 was down $250 million
compared to the fourth quarter of 2010. Service charges on deposits declined
$8 million, or an annualized 22.7%, primarily due to lower revenues from
overdrafts as a result of seasonality. Mortgage banking income was down $43
million, compared to the prior quarter, due to a decline in income from
residential mortgage banking activities of $40 million, which reflects an
unfavorable net change of $13 million in the valuation of mortgage servicing
rights and related hedging activities and a decline of $31 million due to
lower production-related income from loans originated for sale. Investment
banking and brokerage fees and commissions decreased $10 million, or an
annualized 41.8%, compared to the prior quarter. The decrease in investment
banking and brokerage fees and commissions was the result of lower equity and
fixed-income offerings following record performance in the fourth quarter of
2010. FDIC loss share income was down $58 million compared to the fourth
quarter of 2010 primarily due to the amount of provision for credit losses
recoverable from the FDIC, which was down $80 million compared to the prior
quarter. Net securities gains decreased $99 million compared to the prior
quarter, $96 million from fewer sales during the current quarter and $3
million in higher other-than-temporary impairments. Other income decreased
$30 million compared to the fourth quarter of 2010. The decrease in other
income includes decreases of $12 million from higher losses and writedowns on
commercial loans held for sale, $10 million due to lower sales volume and
higher credit losses related to client derivative activities and $9 million
due to other trading and hedging activities.
NONINTEREST
EXPENSE
(dollars in % Change % Change
millions) Q1 Q4 Q1 Q1 11 Q1 11
vs. vs.
2011 2010 2010 Q4 10 Q1 10
---- ---- ---- ----- -----
(annualized)
Personnel
expense $694 $679 $646 9.0 7.4
Foreclosed
property
expense 143 162 178 (47.6) (19.7)
Occupancy and
equipment
expense 154 155 138 (2.6) 11.6
Professional
services 71 92 72 (92.6) (1.4)
Regulatory
charges 61 59 45 13.7 35.6
Loan processing
expenses 53 45 35 72.1 51.4
Amortization of
intangibles 26 28 32 (29.0) (18.8)
Software expense 26 30 29 (54.1) (10.3)
Merger-related
and
restructuring
charges, net (2) 4 17 NM (111.8)
Other expenses 146 167 149 (51.0) (2.0)
--- --- ---
Total
noninterest
expense $1,372 $1,421 $1,341 (14.0) 2.3
====== ====== ======
NM - not meaningful.
First Quarter 2011 compared to First Quarter 2010
Noninterest expense was $1.4 billion for first quarter of 2011, an
increase of $31 million, or 2.3%, compared to the same quarter of 2010.
Personnel expense increased $48 million, or 7.4%, compared to the same
quarter of last year. This includes an increase of $20 million resulting from
incentive expense largely from production-related businesses and an increase
of $8 million related to equity-based compensation expense, primarily due to
changes in forfeiture assumptions. In addition, personnel expense increased
$11 million related to post-employment benefits that is offset through higher
noninterest income. Foreclosed property expense decreased $35 million, or
19.7%, compared to the same quarter of 2010, largely as a result of decreased
losses and write-downs on foreclosed properties. Occupancy and equipment
expense was up $16 million compared to the first quarter of 2010, primarily
as a result of an adjustment of $16 million in the first quarter of last year
related to changes in the estimated occupancy expenses associated with
properties acquired from the FDIC in the Colonial acquisition. Regulatory
charges increased $16 million, or 35.6%, due to higher deposit and
supervisory-related costs. Loan processing expenses were higher by $18
million, or 51.4%, primarily due to costs associated with problem loan
workouts. Amortization of intangibles was down $6 million, or 18.8%, compared
to the first quarter of 2010 as intangibles are amortized on an accelerated
schedule. Merger-related and restructuring charges for the first quarter of
2011 were also down $19 million compared to the same period of 2010, as prior
year's first quarter included charges related to the acquisition of Colonial.
First Quarter 2011 compared to Fourth Quarter 2010
Noninterest expense for the first quarter of 2011 was down $49 million,
or an annualized 14.0%, compared to the fourth quarter of 2010. Personnel
expense increased $15 million, or an annualized 9.0%. This includes an
increase of $20 million related to social security and other payroll taxes,
primarily due to the annual reset of FICA tax. In addition, pension plan
expense increased $6 million compared to the fourth quarter of 2010. These
increases in personnel expense were partially offset by a decrease of $11
million for production related incentive compensation compared with the
fourth quarter of 2010. Foreclosed property expense decreased $19 million, or
an annualized 47.6%, compared to the fourth quarter of 2010, largely as a
result of lower losses and write-downs on foreclosed properties. Professional
services expense for the first quarter of 2011 was down $21 million, or an
annualized 92.6%, compared to the fourth quarter of 2010, primarily due to
lower costs related to problem loan workouts and lower costs for outsourced
services. Other noninterest expense was down $21 million, or an annualized
51.0%, compared to the fourth quarter of 2010. The decline in other
noninterest expense includes a reduction of $9 million for advertising and
other marketing expenses and lower operational losses of $11 million.
LOANS AND LEASES - average balances
(dollars in
millions) % Change % Change
Q1 Q4 Q1 Q1 11 Q1 11
vs. vs.
2011 2010 2010 Q4 10 Q1 10
---- ---- ---- ----- -----
(annualized)
Commercial and
industrial $33,433 $32,733 $31,498 8.7 6.1
Commercial real
estate-other 11,368 11,661 12,296 (10.2) (7.5)
Commercial real
estate-residential
ADC 3,281 3,650 5,586 (41.0) (41.3)
Direct retail
lending 13,672 13,770 14,165 (2.9) (3.5)
Sales finance
loans 7,080 7,015 6,406 3.8 10.5
Revolving
credit loans 2,082 2,086 1,991 (0.8) 4.6
Residential
mortgage loans 17,926 16,974 15,459 22.7 16.0
Specialized
lending 7,797 7,937 7,479 (7.2) 4.3
Other acquired
loans 57 63 108 (38.6) (47.2)
--- --- ---
Total loans and
leases held
for investment
(excluding
covered loans) 96,696 95,889 94,988 3.4 1.8
Covered loans 5,927 6,488 7,642 (35.1) (22.4)
----- ----- -----
Total loans and
leases held
for investment $102,623 $102,377 $102,630 1.0 -
======== ======== ========
First Quarter 2011 compared to First Quarter 2010
Average loans held for investment for the first quarter of 2011 was
$102.6 billion, essentially flat compared to the corresponding period of
2010. Average commercial and industrial loans increased $1.9 billion, or
6.1%, compared to the first quarter of 2010. The growth in average commercial
and industrial loans reflects management's focused efforts at growing this
component of the loan portfolio. Average commercial real estate - residential
ADC and commercial real estate - other declined 41.3% and 7.5%, respectively,
compared to first quarter of 2010 as management has intentionally lowered
exposures to higher-risk real estate lending during the economic downturn.
Average direct retail lending loans for the first quarter of 2011 declined
$493 million, or 3.5%, due to continued runoff of residential lot/land loans
and lower demand for housing-related credits during most of 2010. Average
mortgage loans increased $2.5 billion, or 16.0%, compared to the first
quarter of 2010, due to the decision to retain a portion of the 10 to 15 year
fixed-rate and adjustable rate mortgage production beginning in the third
quarter of 2010. Average sales finance and revolving credit loans continued
to show steady growth; up $674 million, or 10.5%, and $91 million, or 4.6%,
respectively compared to the first quarter of 2010. The increase in average
sales finance loans reflects improvement in prime automobile lending. In
addition, average specialized lending loans increased $318 million, or 4.3%,
as the majority of these niche businesses experienced growth. Total average
loans held for investment includes a decline of $1.8 billion, or 22.8%, in
average covered and other acquired loans compared to the first quarter of
2010.
First Quarter 2011 compared to Fourth Quarter 2010
Average loans held for investment for the first quarter of 2011 was up
$246 million, or an annualized 1.0%, compared to the fourth quarter of 2010.
Average commercial and industrial loans and leases increased $700 million, or
an annualized 8.7%, compared to the fourth quarter of 2010, due to focused
efforts to grow this component of the loan portfolio. Average commercial real
estate - residential ADC and commercial real estate - other declined an
annualized 41.0% and 10.2%, respectively, compared to fourth quarter of 2010
due to management's objective of diversifying the mix of the commercial
lending portfolio and lowering exposure to higher-risk real estate lending.
Average direct retail lending loans were down an annualized 2.9%, or $98
million, compared to the fourth quarter of 2010. Average mortgage loans were
up $952 million, or an annualized 22.7%, compared to the fourth quarter of
2010, as management continues to retain certain mortgage loans in the held
for investment portfolio. Average specialized lending loans were down $140
million, or an annualized 7.2%, compared to the fourth quarter of 2010,
largely as a result of a decline in insurance premium financing. Total
average loans held for investment includes a decline of $567 million, or an
annualized 35.1%, in average covered and other acquired loans compared to the
fourth quarter of 2010.
LOANS HELD FOR SALE - end of period
(Dollars in % Change % Change
millions) Q1 Q4 Q1 Q1 11 Q1 11
vs. vs.
2011 2010 2010 Q4 10 Q1 10
---- ---- ---- ----- -----
(annualized)
Residential
mortgage $1,943 $3,068 $2,013 $(148.7) $(3.5)
Commercial mortgage 166 108 44 NM NM
Commercial 203 521 - NM NM
--- --- ---
Total loans held
for sale $2,312 $3,697 $2,057 (151.9) 12.4
====== ====== ======
NM - not meaningful.
First Quarter 2011 compared to First Quarter 2010
As of March 31, 2011, loans held for sale totaled $2.3 billion, an
increase of $255 million compared to $2.1 billion at March 31, 2010. The
increase in loans held for sale compared to the prior year includes $203
million of commercial loans that were held for sale due primarily to
management's nonperforming asset disposition strategy and an increase of $122
million related to commercial mortgage banking activities.
A total of $1.9 billion in unpaid principal balances in commercial loans
were transferred into held for sale under the nonperforming asset disposition
strategy during 2010. Of this amount, only $377 million remains to be sold at
March 31, 2011 with a carrying value of $189 million. The life-to-date loss
percentage on commercial loans that were part of this strategy was 51%. In
addition, commercial loans held for sale includes a single performing loan of
$14 million that was sold in early April.
First Quarter 2011 compared to Fourth Quarter 2010
As of March 31, 2011, loans held for sale totaled $2.3 billion, a
decrease of $1.4 billion compared to $3.7 billion at December 31, 2010. The
decrease in loans held for sale compared to the prior quarter includes a
reduction of $332 million of commercial loans that were held for sale in
connection with management's nonperforming asset disposition strategy,
representing approximately two-thirds of the balance of commercial loans held
for sale at December 31, 2010. This decrease was partially offset by the $14
million increase related to a single performing loan that was transferred to
held for sale in the first quarter of 2011 and sold in early April.
Residential mortgages held for sale decreased $1.1 billion compared to the
balance at December 31, 2010 due to lower inventory of mortgage loans as
rates have increased.
DEPOSITS - average balances
(dollars in
millions) % Change % Change
Q1 11 Q1 11
Q1 Q4 Q1 vs. vs.
2011 2010 2010 Q4 10 Q1 10
---- ---- ---- ----- -----
(annualized)
Noninterest-
bearing
deposits $20,990 $21,027 $18,464 $(0.7) $13.7
Interest
checking 3,594 3,682 3,745 (9.7) (4.0)
Other
client
deposits 55,909 52,578 51,712 25.7 8.1
Client
certificates
of deposit 21,081 22,144 30,833 (19.5) (31.6)
------ ------ ------
Total
client
deposits 101,574 99,431 104,754 8.7 (3.0)
Other
interest-
bearing
deposits 4,040 6,161 6,277 (139.6) (35.6)
----- ----- -----
Total
deposits $105,614 $105,592 $111,031 0.1 (4.9)
======== ======== ========
First Quarter 2011 compared to First Quarter 2010
Average deposits for the first quarter of 2011 decreased $5.4 billion, or
4.9%, compared to the same period in 2010. The decline in average deposits
reflects the balance sheet deleverage executed in the second quarter of 2010,
which was partially offset by strong organic deposit growth. The mix of the
portfolio has continued to improve with growth in noninterest-bearing and
lower-cost client deposits and declines in client certificates of deposits.
The categories of deposits with the highest growth for the first quarter of
2011 compared to the same quarter of 2010 were noninterest-bearing deposits,
which increased $2.5 billion, or 13.7%, and other client deposits, which
include money market deposit accounts, savings accounts, individual
retirement accounts and other time deposits, which increased $4.2 billion, or
8.1%. Other interest-bearing deposits, which are primarily Eurodollar
deposits and negotiable certificates of deposits decreased $2.2 billion and
client certificates of deposit decreased $9.8 billion compared to the first
quarter of 2010.
First Quarter 2011 compared to Fourth Quarter 2010
Average deposits for the first quarter of 2011 increased slightly
compared to the fourth quarter of 2010. Average client deposits increased
$2.1 billion, or an annualized 8.7%, compared to the fourth quarter of 2010.
This included growth of $3.3 billion, or an annualized 25.7%, in other client
deposits, which were partially offset by a decrease of $1.1 billion, or an
annualized 19.5%, in client certificates of deposit. The change in the mix of
the portfolio reflects the growth in lower cost client deposits. Other
interest-bearing deposits decreased $2.1 billion compared to the fourth
quarter of 2010. These sources of funding are subject to greater volatility
as they are used interchangeably with short-term borrowed funds.
CAPITAL RATIOS (1) 2011 2010
---- ----
Q1 Q4 Q3 Q2 Q1
--- --- --- --- ---
Risk-based
Tier 1 (%) 12.1 11.8 11.7 11.7 11.6
Total (%) 15.8 15.5 15.7 15.8 15.9
Leverage (%) 9.3 9.1 9.3 8.9 8.7
Tangible common equity (%) (2) 7.2 7.1 7.0 7.0 6.4
Tier 1 common equity to risk-
weighted assets (%) (2) 9.3 9.1 9.0 8.9 8.6
(1) Current quarter regulatory capital ratios are preliminary.
(2) Tangible common equity and Tier 1 common equity ratios are
Non-GAAP measures. BB&T uses the Tier 1 common equity definition
used in the SCAP assessment to calculate these ratios. See the
calculations and management's reasons for using these measures on
page 19 of the Quarterly Performance Summary.
BB&T's capital levels at March 31, 2011 remained strong. All of BB&T's
capital measurements improved compared to December 31, 2010. The Tier 1
risk-based capital ratio and Tier 1 common equity to risk-weighted assets
ratio were 12.1% and 9.3%, respectively, compared to 11.8% and 9.1%,
respectively, at December 31, 2010. BB&T declared total dividends of $0.17
during the first quarter of 2011, which reflects a $0.16 quarterly dividend
and $0.01 special dividend. The $0.16 quarterly dividend amount is a 7%
increase over the prior quarter's amount. BB&T also announced intentions to
retire all of its $3.2 billion in trust preferred securities in 2013. In
advance of retiring these instruments, management plans to issue
approximately $1.75 billion of Tier 1 qualifying instruments in order to
maximize the amount of these types of instruments allowable under the Basel
III capital standards.
ASSET QUALITY (1)
(dollars in Change Change
millions) Q1 Q4 Q1 Q1 11 Q1 11
vs. vs.
2011 2010 2010 Q4 10 Q1 10
---- ---- ---- ----- -----
Total nonperforming
assets $3,863 $3,971 $4,394 $(108) $(531)
Total loans 90 days
past due and still
accruing 263 295 295 (32) (32)
Total loans 30-89
days past due 1,099 1,408 1,577 (309) (478)
Allowance for loan
and lease losses 2,497 2,564 2,695 (67) (198)
Total performing
TDRs 1,309 1,476 1,715 (167) (406)
Nonperforming loans
and leases as a
percentage of total
loans and leases (%) 2.64 2.64 2.91 (.00) (.27)
Nonperforming assets
as a percentage of
total assets (%) 2.56 2.64 2.82 (.08) (.26)
Allowance for loan
and lease losses as
a percentage of
loans and leases
held for investment
(%) 2.58 2.63 2.84 (.05) (.26)
Net charge-offs as
a percentage of
average loans and
leases (%)
annualized 1.65 2.15 1.99 (.50) (.34)
Ratio of allowance
for loan and lease
losses to net
charge-offs (times)
annualized 1.52 1.20 1.40 .32 .12
Ratio of allowance
for loan and lease
losses to
nonperforming loans
and leases held for
investment (times) 1.03 1.19 .96 (.16) .07
(1) Excludes amounts related to covered assets and government
guaranteed loans. See footnotes on page 13 and page 15 of the
Quarterly Performance Summary for additional information.
Total nonperforming assets were $3.9 billion at March 31, 2011, a
decrease of $108 million, or 2.7%, compared to December 31, 2010. This is the
fourth consecutive quarterly decline in nonperforming assets. The decline in
nonperforming assets reflects the continuation of the nonperforming asset
disposition strategy that was initiated during the second quarter of 2010.
Total performing troubled debt restructurings ("TDRs") were $1.3 billion
at March 31, 2011, a decrease of $167 million, or 11.3%, compared to December
31, 2010. Commercial performing TDRs declined $179 million which was offset
by slight increases across several of the other lending portfolios.
In addition, loan delinquencies improved further during the first quarter
of 2011. Loans 30-89 days past due and still accruing, excluding loans
guaranteed by the government, totaled $1.1 billion at March 31, 2011, a
decrease of $309 million, or 21.9%, compared to December 31, 2010 reflecting
the lowest balance since the second quarter of 2007. Loans 90 days past due
and still accruing, excluding loans guaranteed by the government, were $263
million at March 31, 2011, a decrease of $32 million, or 10.8%, compared to
December 31, 2010 reflecting the lowest balance since the first quarter of
2008.
Net charge-offs during the first quarter of 2011 were 1.65% of average
loans and leases, excluding covered loans, compared to 2.15% during the
fourth quarter of 2010 and 1.99% during the first quarter of 2010. Net
charge-offs were $404 million for the first quarter of 2011, down $134
million compared to $538 million for the fourth quarter of 2010. Net
charge-offs were lower in essentially all loan portfolios with the majority
of the decline occurring in the commercial portfolio, which was down $115
million compared to the fourth quarter of 2010. The reduction in net
charge-offs for commercial loans reflects the overall improvement in the
quality of the loan portfolio.
As of March 31, 2011, the allowance for loan and lease losses was 2.58%
of total loans and leases, excluding covered loans, compared to 2.63% at
December 31, 2010 and 2.84% at March 31, 2010. The decline in the allowance
as a percentage of total loans reflects the improvement in the overall
quality of the loan portfolio.
Earnings webcast, presentation and Quarterly Performance Summary
To hear a live webcast of BB&T's first quarter 2011 earnings conference
call at 8 a.m. (ET) today, please visit our Web site at www.BBT.com.
A presentation will be used during the earnings conference call and will be
available on our Web site. Replays of the conference call will be available
on the BB&T Web site until Thursday, May 5, or by dialing 1-888-203-1112
(access code 4313363) until April 26.
To access the webcast and presentation, including an appendix reconciling
non-GAAP disclosures, go to www.BBT.com and click on "About BB&T" and
proceed to "Investor Relations." The webcast link can be found under
"Webcasts" and the presentation can be found under "View Recent
Presentations."
BB&T's First Quarter 2011 Quarterly Performance Summary, which contains
detailed financial schedules, is available on BB&T's Web site at
www.BBT.com/financials.html.
About BB&T
As of March 31, 2011, BB&T is one of the largest financial services
holding companies in the U.S. with $157 billion in assets and market
capitalization of $19.1 billion. Based in Winston-Salem, N.C., the company
operates approximately 1,800 financial centers in 12 states and Washington,
D.C., and offers a full range of consumer and commercial banking, securities
brokerage, asset management, mortgage and insurance products and services. A
Fortune 500 company, BB&T is consistently recognized for outstanding client
satisfaction by J.D. Power and Associates, the U.S. Small Business
Administration, Greenwich Associates and others. More information about BB&T
and its full line of products and services is available at
www.BBT.com.
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. BB&T's management uses these measures to evaluate
the underlying performance and efficiency of its operations. It believes that
these non-GAAP measures provide a greater understanding of ongoing operations
and enhance comparability of results with prior periods as well as
demonstrating the effects of significant gains and charges in the current
period. The company believes that a meaningful analysis of its financial
performance requires an understanding of the factors underlying that
performance. BB&T's management believes that investors may use these non-GAAP
financial measures to analyze financial performance without the impact of
unusual items that may obscure trends in the company's underlying
performance. 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. Tangible common equity and Tier 1 common equity ratios
are non-GAAP measures. BB&T uses the Tier 1 common equity definition used in
the SCAP assessment to calculate these ratios. BB&T's management uses these
measures to assess the quality of capital and believes that investors may
find them useful in their analysis of the corporation. These capital measures
are not necessarily comparable to similar capital measures that may be
presented by other companies. Asset quality ratios have been adjusted to
remove the impact of acquired loans and foreclosed property covered by the
FDIC loss sharing agreements as management believes their inclusion results
in distortion of those ratios and may not be comparable to other periods
presented or to other portfolios that were not impacted by purchase
accounting.
This news release contains certain forward-looking statements as defined
in the Private Securities Litigation Reform Act of 1995. These statements may
address issues that involve significant risks, uncertainties, estimates and
assumptions made by management. Actual results may differ materially from
current projections. Please refer to BB&T's filings with the Securities and
Exchange Commission for a summary of important factors that may affect BB&T's
forward-looking statements. BB&T undertakes no obligation to revise these
statements following the date of this news release.
ANALYSTS: Tamera Gjesdal, Senior Vice President, Investor Relations, +1-336-733-3058; Alan Greer, Executive Vice President, Investor Relations, +1-336-733-3021; MEDIA: Cynthia Williams, Executive Vice President, Corporate Communications, +1-336-733-1478
Tags: April 21, Bb&t Corporation, North carolina, Winston-salem
