BB&T reports record revenues for 2010; Fourth quarter EPS totals $.30, up 11%; Net income increased 12%
By Bbt Corporation, PRNEThursday, January 20, 2011
Credit trends improve across the board
WINSTON-SALEM, North Carolina, January 21, 2011 - BB&T Corporation (NYSE: BBT) today reported earnings for the fourth
quarter of 2010. Net income available to common shareholders totaled $208
million, or $.30 per diluted common share, compared with $185 million, or
$.27 per diluted common share, earned during the fourth quarter of 2009.
These results reflect increases of 12.4% and 11.1%, respectively.
"We are pleased to report record revenues for 2010, significant progress
in our efforts to diversify the balance sheet, and across-the-board
improvement in credit trends in the fourth quarter," said Chairman and Chief
Executive Officer Kelly S. King. "Revenues totaled $9.4 billion for 2010, an
increase of 5.8% compared to last year."
"Our company demonstrated significant progress diversifying from a
concentration in real estate lending this quarter," said King. "Average C&I
loans grew 6.9% on an annualized basis compared to the third quarter, while
construction and other real estate loan balances declined significantly,
consistent with our strategy. We also effectively grew automobile, mortgage
and credit card loans during the quarter. In fact, our automobile lending
enjoyed a record production year, and December was the most productive month
for commercial lending in the history of BB&T."
"We made strides in our long-term strategy to improve deposit mix and
reduce cost by pursuing lower cost transaction accounts," continued King.
"Our average noninterest-bearing demand deposits increased 18% and average
total transaction accounts increased 19% on an annualized linked quarter
basis. We improved our mix of noninterest-bearing deposits to 21% of client
deposits at year-end 2010 compared to 18% at year-end 2009."
"Our credit outlook is notably improved compared to last quarter. Peaking
in the second quarter of 2010, we have seen steady improvement in most
measures through the end of the year and declines in essentially all credit
costs this quarter. Our strategy to accelerate the disposition of problem
assets is being effectively executed, as we sold approximately $600 million
in problem assets this quarter. Given declines in NPAs, TDRs, NPA inflows,
delinquent loans and our watch list this quarter, we feel notably more
confident about the direction of credit as we begin 2011."
"Finally, I am very proud of our employees' support of BB&T's mission to
serve our clients and communities by supporting the economic recovery in our
markets," remarked King. "We extended $20.9 billion in credit during the
fourth quarter, an increase of 54% on an annualized basis compared to the
third quarter; we were named the SBA most active small business lender in our
core markets of North Carolina and Virginia in 2010; and we have plans to
hire several hundred people in 2011. We are optimistic that economic
development and growth will strengthen during 2011, and BB&T will continue to
work with our clients to support that growth."
Performance Highlights Include:
- Record annual revenues
-- BB&T delivered record revenues on an FTE basis totaling $9.4 billion
for 2010, up 5.8%
-- Pretax pre-provision earnings totaled $3.6 billion
-- Pretax pre-provision earnings are up 18.1% on a compound annual
basis over 15 years
- Average C&I loans increased 6.9% annualized linked quarter
-- Average total loans and leases held for investment, excluding the
impact of construction and covered loan runoff, increased $1.3
billion, or 5.5% on an annualized basis for the fourth quarter
compared to the third quarter of 2010
-- Annualized linked quarter loan growth includes a 28.7% increase in
average mortgage loans, a 6.3% increase in average sales finance
loans and a 7.4% increase in average revolving credit loans
- Average deposits increased $2.1 billion, or 8.0% annualized linked
quarter
-- Noninterest-bearing deposits increased 18.3% and transaction
Accounts increased 19.0% on an annualized linked quarter basis
-- Net new transaction accounts increased by more than 110,000 in 2010,
a 95% increase compared to 2009
-- Noninterest-bearing deposits increased to 21% of client deposits at
year-end 2010 compared to 18% at year-end 2009
-- Deposit costs were reduced to .90% in the fourth quarter compared to
1.23% in the fourth quarter last year
- Linked quarter credit metrics improved across the board
-- NPAs decreased 4.2%, the third consecutive quarter with lower NPAs
-- Performing TDRs decreased 9.9%
-- NPA inflows decreased $130 million, or 10.2% on a linked quarter
basis
-- Delinquent loans decreased 11.5%, excluding covered and government
guaranteed loans
-- Net charge-offs, excluding covered loans, totaled 2.15% for the
quarter
-- BB&T sold approximately $600 million of problem assets during the
quarter
-- Management expects continued declines in credit costs in coming
quarters
- BB&T's capital levels remained strong and are improving
-- Tangible common equity improved to 7.1%
-- Tier 1 common improved to 9.1%
-- Tier 1 risk-based capital improved to 11.8%
-- Leverage capital remained strong at 9.1%
- Net interest income and margin remained healthy
-- Net interest income on an FTE basis increased 9.9% for the year
compared to 2009
-- Net interest income (FTE) for the fourth quarter increased 1.0%
compared to the fourth quarter of 2009
-- The net interest margin was 4.04% for the fourth quarter, a 24 basis
point increase compared to the fourth quarter of 2009 and a decrease
of 5 basis points compared to last quarter
- BB&T continued to support the economy
-- We extended $20.9 billion in loan production in the fourth quarter,
an increase of 54% on an annualized basis compared to the third
quarter
-- We have plans to hire hundreds of revenue producers in 2011
EARNINGS HIGHLIGHTS Change Change
(dollars in millions, except Q4 10 Q4 10
per share data) Q4 Q3 Q4 vs. vs.
2010 2010 2009 Q3 10 Q4 09
---- ---- ---- ----- -----
Net income available to
common shareholders $208 $210 $185 $(2) $23
Diluted earnings per common
share .30 .30 .27 -- .03
Net interest income-taxable
equivalent $1,369 $1,347 $1,355 $22 $14
Noninterest income 964 1,110 970 (146) (6)
--- ----- --- ---- ---
Total revenue $2,333 $2,457 $2,325 $(124) $8
====== ====== ====== ===== ===
Return on average assets (%) .54 .56 .47 (.02) .07
Return on average common
shareholders' equity (%) 4.88 4.91 4.52 (.03) .36
Net interest margin -taxable
equivalent (%) 4.04 4.09 3.80 (.05) .24
Efficiency ratio (1) (%) 55.3 54.1 51.4 1.2 3.9
(1) Excludes securities gains (losses), foreclosed property expense,
amortization of intangible assets, merger-related and restructuring
charges, the impacts of FDIC loss share accounting, and other
selected items. See Non-GAAP reconciliations on page 23 of the
Quarterly Performance Summary.
Fourth Quarter 2010 compared to Fourth Quarter 2009
Consolidated net income available to common shareholders for the fourth
quarter of 2010 of $208 million was up 12.4% compared to $185 million earned
during the same period in 2009. On a diluted per common share basis, earnings
for the fourth quarter of 2010 were $.30, up 11.1% compared to $.27 for the
same period in 2009. BB&T's results of operations for the fourth quarter of
2010 produced an annualized return on average assets of .54% and an
annualized return on average common shareholders' equity of 4.88% compared to
prior year ratios of .47% and 4.52%, respectively.
Total revenues were $2.3 billion for the fourth quarter of 2010, up
slightly compared to the fourth quarter of 2009. The increase in total
revenues was driven by higher net interest income, as the net interest margin
for the fourth quarter of 2010 improved 24 basis points compared to the
fourth quarter of 2009. The improvement in the net interest margin reflects
higher yields on loans acquired in the Colonial acquisition and lower deposit
costs. Interest income on covered and other acquired assets increased $128
million, the majority of which is offset in the FDIC loss-share income. Net
interest income increased at a slower pace due to a decline in average
earning assets of $6.9 billion as a result of the balance sheet deleverage
strategy that was executed in the second quarter of 2010. Noninterest income
was down slightly compared to the fourth quarter of 2009, as higher net
securities gains of $100 million were offset by a decrease of $43 million in
service charges on deposit accounts and $62 million of losses and writedowns
on commercial loans held for sale.
Management completed its strategy to de-risk the investment securities
portfolio during the fourth quarter of 2010. In anticipation of rising rates,
management sold approximately $6.1 billion of agency mortgage-backed
securities and replaced them with shorter duration and floating rate
securities. In addition, management sold approximately $400 million of
nonagency mortgage-backed securities to reduce the potential for future
credit losses.
The provision for credit losses, excluding covered loans, for the fourth
quarter of 2010 declined $182 million, or 25.1%, compared to the fourth
quarter of 2009, as improving credit resulted in lower provision expense. The
provision for covered loans increased $100 million, which was offset by a
corresponding $80 million increase in FDIC loss share income. Net-charge-offs
for the fourth quarter of 2010 were $50 million higher than the fourth
quarter of 2009, partially due to $26 million in charge-offs recognized as a
result of the continuing NPA disposition strategy. Overall, the level of
nonperforming assets and loan delinquencies were improving and the outlook
for future credit losses is better.
A $15 million provision for income taxes was recorded for the fourth
quarter of 2010 compared to $13 million for the fourth quarter of 2009. This
resulted in an effective tax rate for the fourth quarter of 2010 of 6.5%
compared to 6.3% for the prior year's fourth quarter.
Fourth Quarter 2010 compared to Third Quarter 2010
Consolidated net income available to common shareholders for the fourth
quarter of 2010 of $208 million was flat compared to $210 million earned
during the third quarter of 2010. On a diluted per common share basis,
earnings for the fourth quarter of 2010 were $.30, equal to the amount earned
in the third quarter of 2010. BB&T's results of operations for the fourth
quarter of 2010 produced an annualized return on average assets of .54% and
an annualized return on average common shareholders' equity of 4.88% compared
to prior quarter ratios of .56% and 4.91%, respectively.
Total revenues were $2.3 billion for the fourth quarter of 2010, down
$124 million compared to the third quarter of 2010. The decline in total
revenues was the result of lower net securities gains in the fourth quarter
of 2010 compared to the prior quarter. Excluding net securities gains, total
revenues increased $16 million. The net interest margin was down 5 basis
points from 4.09% to 4.04%. Noninterest income was down $146 million
primarily as a result of lower net securities gains compared to the third
quarter of 2010 and a $34 million increase in losses and writedowns on
commercial loans held for sale.
The provision for credit losses, excluding covered loans, for the fourth
quarter of 2010 declined $200 million compared to the third quarter of 2010
due to improving credit. The provision for covered loans increased $73
million, which was offset by a corresponding $58 million increase in FDIC
loss share income. Net-charge-offs for the fourth quarter of 2010 were
substantially lower than the third quarter of 2010. Net charge-offs for the
third quarter of 2010 included $431 million related to the commercial NPA
disposition strategy compared to $26 million in the fourth quarter of 2010.
The recorded provision for income taxes was $15 million for the fourth
quarter of 2010 compared to $27 million for the third quarter of 2010. This
produced an effective tax rate for the fourth quarter of 2010 of 6.5%
compared to 11.0% for the prior quarter. The decline in the effective tax
rate compared to the third quarter of 2010 was primarily due to a change in
the expected annual tax rate compared to the rate anticipated at September
30, 2010.
REVENUE, NET OF PROVISION
IMPACT FROM ACQUIRED ASSETS
(1) Change Change
Q4 10 Q4 10
(dollars in millions) Q4 Q3 Q4 vs. vs.
2010 2010 2009 Q3 10 Q4 09
---- ---- ---- ----- -----
Interest income - loans $276 $261 $165 $15 $111
Interest income - securities 50 23 33 27 17
Total interest income 326 284 198 42 128
Provision for credit losses (100) (27) - (73) (100)
FDIC loss share income, net - (43) 11 43 (11)
Net revenue after provision for
credit losses $226 $214 $209 $12 $17
==== ==== ==== === ===
(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.
Fourth Quarter 2010 compared to Fourth Quarter 2009
Interest income for the fourth quarter of 2010 on loans and securities
acquired in the Colonial acquisition increased $128 million compared to the
fourth quarter of 2009, the majority of which is offset in the FDIC loss
share income. The increase 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 fourth
quarter of 2010 was 16.71% compared to 7.96% in 2009. At December 31, 2010,
the remaining accretable yield balance on these loans was $2.4 billion.
Accretable yield represents the excess of future cash flows above the current
net carrying amount of loans.
The provision for credit losses for the current quarter increased $100
million compared to the fourth quarter of 2009, which was offset by a
corresponding $80 million increase in FDIC loss share income. The provision
for credit losses recorded during the fourth quarter of 2010, reflects lower
expected cash flows from certain loan pools.
FDIC loss share income, net decreased $11 million compared to the fourth
quarter of 2009 primarily as the result of the impact of cash flow
reassessments that resulted in additional interest income and provision for
credit losses.
Fourth Quarter 2010 compared to Third Quarter 2010
Interest income on loans and securities acquired in the Colonial
acquisition increased $42 million in the fourth quarter of 2010 compared to
the third quarter. The net interest margin on covered and other acquired
loans for the fourth quarter of 2010 was 16.71% compared to 14.77% in the
earlier quarter as a result of the fourth quarter reassessment. The increase
of $27 million in interest income on covered securities is primarily due to
changes in the expected duration of the underlying investments. The majority
of the interest income increase is offset in the FDIC loss share income.
The provision for credit losses increased $73 million as a result of the
fourth quarter reassessment, which was offset by a corresponding $58 million
increase in FDIC loss share income.
FDIC loss share income, net increased $43 million primarily as the result
of the impact of cash flow reassessment and changes in securities' durations
that resulted in additional interest income and provision for credit losses.
NONINTEREST INCOME % Change % Change
Q4 10
(dollars in millions) Q4 Q3 Q4 Q4 10 vs. vs.
2010 2010 2009 Q3 10 Q4 09
---- ---- ---- ----- -----
(annualized)
Insurance income $249 $252 $260 (4.7) (4.2)
Service charges on deposits 143 147 186 (10.8) (23.1)
Mortgage banking income 138 184 142 (99.2) (2.8)
Investment banking and brokerage
fees and commissions 97 85 83 56.0 16.9
Other nondeposit fees and
commissions 68 74 64 (32.2) 6.3
Checkcard fees 73 70 62 17.0 17.7
Bankcard fees and merchant
discounts 47 45 41 17.6 14.6
Trust and investment advisory
revenues 42 40 38 19.8 10.5
Income from bank-owned life
insurance 31 30 25 13.2 24.0
FDIC loss share income, net - (43) 11 NM (100.0)
Securities gains (losses), net 99 239 (1) NM NM
Other income, net (23) (13) 59 NM (139.0)
--- --- ---
Total noninterest income $964 $1,110 $970 (52.2) (0.6)
==== ====== ====
NM-not meaningful.
Fourth Quarter 2010 compared to Fourth Quarter 2009
Noninterest income was $964 million for fourth quarter of 2010, a slight
decrease compared to $970 million for the fourth quarter of 2009. Noninterest
income benefited from higher net securities gains of $100 million compared to
the prior comparable period. Net securities gains of $117 million were
recognized in the current quarter in connection with BB&T's strategic
de-risking of the investment portfolio. Other-than-temporary impairment of
securities totaled $18 million in the current quarter compared to $1 million
in the fourth quarter of 2009. Investment banking and brokerage fees and
commissions for the fourth quarter of 2010 were a record $97 million, up $14
million, or 16.9%, compared to the same period of 2009. The increase in
investment banking and brokerage fees and commissions was largely driven by
increased equity offerings due to improved market conditions. Checkcard fees
and bankcard fees and merchant discounts were up, compared to the fourth
quarter of 2009, $11 million, or 17.7%, and $6 million, or 14.6%,
respectively, largely due to higher volumes. Trust and investment advisory
revenues also benefited from improved market conditions and were up $4
million, or 10.5%, compared to the fourth quarter of 2009. Service charges on
deposits declined $43 million, or 23.1%, primarily due to changes to BB&T's
overdraft policies that were implemented during 2010 that were partially in
response to regulatory changes. Mortgage banking income was down $4 million,
or 2.8%, compared to the same period of 2009, due to a decline in income from
residential mortgage banking activities of $19 million, which largely
reflects an unfavorable net change of $13 million in the valuation of
mortgage servicing rights and related hedging activities. The decline in
residential mortgage banking activities was partially offset by an increase
of $15 million, or 166.7%, from commercial mortgage banking due to improving
market conditions. Insurance income was down $11 million, or 4.2%, reflecting
continued softness in the industry's pricing for premiums. Other income,
including other nondeposit fees and commissions, income from bank-owned life
insurance and FDIC loss share income, declined $83 million compared to the
fourth quarter of 2009, as a result of $62 million of losses and writedowns
recorded on commercial loans held for sale and a $27 million gain that was
recognized in the fourth quarter of 2009 from the sale of BB&T's payroll
processing business.
Fourth Quarter 2010 compared to Third Quarter 2010
Noninterest income for the fourth quarter of 2010 was down $146 million
compared to the third quarter of 2010. The decline largely reflects lower net
securities gains of $140 million compared to the prior quarter, $124 million
from fewer sales related to BB&T's strategic de-risking of the investment
portfolio and $16 million in higher other-than-temporary impairment.
Investment banking and brokerage fees and commissions increased $12 million,
or an annualized 56.0%, compared to the prior quarter. The increase in
investment banking and brokerage fees and commissions was largely driven by
increased equity and fixed-income offerings due to improved market
conditions. Trust and investment advisory revenues also benefited from
improved market conditions and were up $2 million, or an annualized 19.8%,
compared to the third quarter of 2010. Checkcard fees and bankcard fees and
merchant discounts were up $3 million, or an annualized 17.0%, and $2
million, or an annualized 17.6%, respectively, largely due to higher volumes
due to seasonality. Service charges on deposits declined $4 million, or an
annualized 10.8%, 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 down $46 million,
compared to the prior quarter, due to a decline in income from residential
mortgage banking activities of $52 million, which reflects an unfavorable net
change of $16 million in the valuation of mortgage servicing rights and
related hedging activities. Residential mortgage banking activities also
reflects a decline of $40 million due to lower gains on warehouse loans. The
decline in residential mortgage banking activities was partially offset by an
increase of $6 million, or an annualized 132.2%, from commercial mortgage
banking due to improving market conditions. Insurance income was down $3
million, or an annualized 4.7%, reflecting continued softness in the
industry's pricing for premiums. Other income, including other nondeposit
fees and commissions, income from bank-owned life insurance and FDIC loss
share income, increased $28 million compared to the third quarter of 2010.
The increase in other income includes an increase of $43 million related to
the FDIC loss share asset, which is largely related to increased provisions
for covered loans. In addition, other income also includes an increase of $17
million due to increased sales volume and lower losses related to client
derivative activities and $14 million due to market-related increases in
trading assets for post-employment benefits that is offset by a similar
increase in personnel expense. The increases in other income were partially
offset by an increase of $34 million in losses and writedowns recorded on
commercial loans held for sale.
%
NONINTEREST EXPENSE % Change Change
Q4 10
(dollars in millions) Q4 Q3 Q4 Q4 10 vs. vs.
2010 2010 2009 Q3 10 Q4 09
---- ---- ---- ----- -----
(annualized)
Personnel expense $679 $642 $650 22.9 4.5
Foreclosed property expense 162 167 142 (11.9) 14.1
Occupancy and equipment
expense 155 157 173 (5.1) (10.4)
Professional services 92 84 77 37.8 19.5
Regulatory charges 59 61 47 (13.0) 25.5
Loan processing expenses 45 53 34 (59.9) 32.4
Amortization of intangibles 28 30 36 (26.4) (22.2)
Merger-related and
restructuring charges, net 4 10 9 NM (55.6)
Other expenses 197 204 193 (13.6) 2.1
--- --- ---
Total noninterest expense $1,421 $1,408 $1,361 3.7 4.4
====== ====== ======
NM-not meaningful.
Fourth Quarter 2010 compared to Fourth Quarter 2009
Noninterest expense was $1.4 billion for fourth quarter of 2010, an
increase of $60 million, or 4.4%, compared to the same quarter of 2009.
Personnel expense increased $29 million, or 4.5%, primarily as a result of
higher production-related incentive expense. Foreclosed property expense
increased $20 million, or 14.1%, compared to the same quarter of 2009,
largely as a result of higher losses and write-downs on foreclosed
properties. Noninterest expense benefited from a decline of $18 million, or
10.4%, in occupancy and equipment expense primarily due to the consolidation
of branches after the Colonial Bank systems conversion. Other noninterest
expense, including professional services, regulatory charges, loan processing
expenses, amortization of intangibles and merger-related and restructuring
charges, increased $29 million, or 7.3%, compared to the same period of 2009.
The increase in other noninterest expense was partially due to a $12 million,
or 25.5%, increase in regulatory charges due to higher deposit and
supervisory-related costs. In addition, professional services and loan
processing expenses were up $15 million, or 19.5%, and $11 million, or 32.4%,
respectively. Amortization of intangibles was down $8 million, or 22.2%, due
to lower amortization from prior acquisitions.
Fourth Quarter 2010 compared to Third Quarter 2010
Noninterest expense for the fourth quarter of 2010 was up $13 million, or
an annualized 3.7%, compared to the third quarter of 2010. Personnel expense
increased $37 million, or an annualized 22.9%. This includes an increase of
$14 million related to post-employment benefits that is offset through higher
noninterest income and $6 million related to health and welfare benefits. In
addition, personnel expense increased $20 million primarily for higher
production-related incentive expense. Foreclosed property expense decreased
$5 million, or an annualized 11.9%, compared to the third quarter of 2010,
largely as a result of lower losses and write-downs on foreclosed properties.
Other noninterest expense, including occupancy and equipment expense,
professional services, regulatory charges, loan processing expenses,
amortization of intangibles and merger-related and restructuring charges,
decreased $19 million, or 12.6%, compared to the prior quarter. The decrease
in other noninterest expense was up partially due to a $13 million decrease
in insurance reserves due to lower claims experience and a $6 million
reduction of merger-related and restructuring charges compared to third
quarter of 2010.
LOANS AND LEASES -
average balances % Change % Change
(dollars in Q4 10
millions) Q4 Q3 Q4 Q4 10 vs. vs.
2010 2010 2009 Q3 10 Q4 09
---- ---- ---- ----- -----
(annualized)
Commercial loans
and leases $48,044 $48,620 $49,419 (4.7) (2.8)
Direct retail loans 13,770 13,867 14,379 (2.8) (4.2)
Sales finance loans 7,015 6,906 6,393 6.3 9.7
Revolving credit
loans 2,086 2,048 1,961 7.4 6.4
Mortgage loans 16,974 15,828 15,452 28.7 9.8
Specialized lending 7,937 8,046 7,533 (5.4) 5.4
Other acquired
loans 63 73 133 (54.3) (52.6)
--- --- ---
Total loans and
leases held for
investment
(excluding covered
loans) 95,889 95,388 95,270 2.1 0.6
Covered loans 6,488 6,957 8,095 (26.7) (19.9)
----- ----- -----
Total loans and
leases held for
investment $102,377 $102,345 $103,365 0.1 (1.0)
======== ======== ========
Fourth Quarter 2010 compared to Fourth Quarter 2009
Average loans held for investment for the fourth quarter of 2010 was
$102.4 billion, down 1.0% compared to the corresponding period of 2009.
Average commercial loans and leases declined $1.4 billion, or 2.8%, compared
to the fourth quarter of 2009 due to lower commercial real estate balances as
management has intentionally lowered exposures to higher-risk real estate
lending during the economic downturn. End of period residential acquisition
and development loans (ADC) and other commercial real estate loans held for
investment have declined $2.4 billion and $1.0 billion, respectively since
December 31, 2009. These declines have been partially offset by growth in
commercial and industrial loans. Average direct retail loans for the fourth
quarter of 2010 declined $609 million, or 4.2%, due to runoff of residential
lot/land loans and lower demand for housing-related credits during most of
2010. Average mortgage loans increased $1.5 billion, or 9.8%, compared to the
fourth quarter of 2009, 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 $622 million, or 9.7%, and $125 million,
or 6.4%, respectively compared to the fourth quarter of 2009. The increase in
average sales finance loans reflects improvement in prime automobile lending.
In addition, average specialized lending loans increased $404 million, or
5.4%, as the majority of these niche businesses experienced growth. Total
average loans held for investment includes a decline of $1.7 billion, or
20.4%, in average covered and other acquired loans compared to the fourth
quarter of 2009.
Fourth Quarter 2010 compared to Third Quarter 2010
Average loans held for investment for the fourth quarter of 2010 was up
slightly compared to the third quarter of 2010. Average commercial loans and
leases declined $576 million, or an annualized 4.7%, compared to the third
quarter of 2010, due to lower commercial real estate balances and strong
growth in commercial and industrial loans as management continues to
diversify the mix of the portfolio. Average ADC and other commercial real
estate loans held for investment were down $746 million and $389 million,
respectively, compared to the third quarter of 2010. These declines were
partially offset by strong growth in commercial and industrial loans, which
were up $559 million, or an annualized 6.9%. Average direct retail loans were
down an annualized 2.8%, or $97 million, compared to the third quarter of
2010. Average mortgage loans were up $1.1 billion, or an annualized 28.7%,
compared to the third 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 $109 million, or
an annualized 6.3%, and $38 million, or an annualized 7.4%, respectively
compared to the prior quarter. Average specialized lending loans were down
$109 million, or an annualized 5.4%, compared to the third quarter of 2010,
largely as a result of a seasonal decline in insurance premium financing.
Total average loans held for investment includes a decline of $479 million,
or an annualized 27.0%, in average covered and other acquired loans compared
to the third quarter of 2010.
LOANS HELD FOR SALE -end %
of period % Change Change
Q4 10 Q4 10
(dollars in millions) Q4 Q3 Q4 vs. vs.
2010 2010 2009 Q3 10 Q4 09
---- ---- ---- ----- -----
(annualized)
Residential Mortgage $3,068 $2,846 $2,524 30.9 21.6
Commercial Mortgage 108 163 27 (133.9) NM
Commercial 521 824 -- (145.9) NM
--- --- ---
Total loans held for sale $3,697 $3,833 $2,551 (14.1) 44.9
====== ====== ======
NM - not meaningful.
Fourth Quarter 2010 compared to Fourth Quarter 2009
As of December 31, 2010, loans held for sale totaled $3.7 billion, an
increase of $1.1 billion compared to $2.6 billion at December 31, 2009. The
increase in loans held for sale compared to the prior year includes $521
million of commercial loans that were held for sale in connection with
management's nonperforming asset disposition strategy and an increase of $544
million, 21.6%, related to residential mortgage banking due to increased
refinance activity in the fourth quarter of 2010 versus the fourth quarter of
2009.
At December 31, 2010, commercial loans with $980 million in unpaid
principal balances remained to be sold at a carrying value of $521 million.
The life-to-date loss percentage on commercial loans sold in this initiative
was 47%.
Fourth Quarter 2010 compared to Third Quarter 2010
As of December 31, 2010, loans held for sale totaled $3.7 billion, a
decrease of $136 million compared to $3.8 billion at September 30, 2010. The
decrease in loans held for sale compared to the prior quarter includes a
reduction of $303 million of commercial loans that were held for sale in
connection with management's nonperforming asset disposition strategy. The
decline of $303 million in commercial loans held for sale represents
approximately one-third of the balance of commercial loans held for sale at
September 30, 2010. In addition, residential mortgages held for sale
increased $222 million, or an annualized 30.9%, compared to the balance at
September 30, 2010.
DEPOSITS -average
balances % Change % Change
(dollars in Q4 10
millions) Q4 Q3 Q4 Q4 10 vs. vs.
2010 2010 2009 Q3 10 Q4 09
---- ---- ---- ----- -----
(annualized)
Noninterest-
bearing deposits $21,027 $20,099 $18,822 18.3 11.7
Interest checking 3,682 3,482 3,419 22.8 7.7
Other client
deposits 52,578 50,458 50,623 16.7 3.9
Client certificates
of deposit 22,144 25,875 32,562 (57.2) (32.0)
------ ------ ------
Total client
deposits 99,431 99,914 105,426 (1.9) (5.7)
Other interest-
bearing deposits 6,161 3,591 8,196 NM (24.8)
----- ----- -----
Total deposits $105,592 $103,505 $113,622 8.0 (7.1)
======== ======== ========
NM - not meaningful.
Fourth Quarter 2010 compared to Fourth Quarter 2009
Average deposits for the fourth quarter of 2010 decreased $8.0 billion,
or 7.1%, compared to the same period in 2009. The decline in average deposits
largely reflects the balance sheet deleverage that was executed in the second
quarter of 2010 as well as the first quarter 2010 sale of Nevada deposits
assumed in the Colonial acquisition. 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 fourth quarter of 2010 compared to the same
quarter of 2009 were noninterest-bearing deposits, which increased $2.2
billion, or 11.7%; other client deposits, which include money market deposit
accounts, savings accounts, individual retirement accounts and other time
deposits, which increased $2.0 billion, or 3.9%; and interest checking
accounts, which increased $263 million, or 7.7%. Other interest-bearing
deposits, which are primarily Eurodollar deposits and negotiable certificates
of deposits, and client certificates of deposit decreased $2.0 billion and
$10.4 billion, respectively, compared to the fourth quarter of 2009.
Fourth Quarter 2010 compared to Third Quarter 2010
Average deposits for the fourth quarter of 2010 increased $2.1 billion,
or an annualized 8.0%, compared to the third quarter of 2010. The increase in
average deposits reflects continued improvement in the overall mix with
growth in noninterest-bearing and lower-cost client deposits and declines in
client certificates of deposits. The categories of client deposits with the
highest growth for the fourth quarter of 2010 compared to the third quarter
of 2010 were other client deposits, which increased $2.1 billion, or an
annualized 16.7%; noninterest-bearing deposits, which increased $928 million,
or an annualized 18.3% and interest checking, which increased $200 million,
or an annualized 22.8%. Client certificates of deposit decreased $3.7
billion, or an annualized 57.2%, compared to the third quarter of 2010. Other
interest-bearing deposits increased $2.6 billion compared to the third
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) 2010 2009
Q4 Q3 Q2 Q1 Q4
--- --- --- --- ---
Risk-based
Tier 1 (%) 11.8 11.7 11.7 11.6 11.5
Total (%) 15.5 15.7 15.8 15.9 15.8
Leverage (%) 9.1 9.3 8.9 8.7 8.5
Tangible common equity (%) (2) 7.1 7.0 7.0 6.4 6.2
Tier 1 common equity to risk-weighted assets
(%) (2) 9.1 9.0 8.9 8.6 8.5
(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 20 of the Quarterly Performance Summary.
BB&T's capital levels at December 31, 2010 remained strong. The Tier 1
risk-based capital ratio, tangible common equity ratio and Tier 1 common
equity to risk-weighted assets ratio were 11.8%, 7.1%, and 9.1%,
respectively, compared to 11.7%, 7.0% and 9.0%, respectively, at September
30, 2010. The total risk-based capital ratio was 15.5% at December 31, 2010,
compared to 15.7% at September 30, 2010 and 15.8% at December 31, 2009. The
decline in this ratio reflects the loss of regulatory capital classification
for certain issuances of subordinated debt that are within five years of
maturity. The leverage capital ratio was 9.1% at December 31, 2010, compared
to 9.3% at September 30, 2010 and 8.5% at December 31, 2009. The decline in
this ratio compared to September 30, 2010, reflects an increase in the
average balance of securities during the fourth quarter of 2010 that resulted
from the timing of securities transactions in connection with BB&T's
strategic de-risking of the investment portfolio.
ASSET QUALITY (1) Change Change
Q4 10 Q4 10
(dollars in millions) Q4 Q3 Q4 vs. vs.
2010 2010 2009 Q3 10 Q4 09
---- ---- ---- ----- -----
Total nonperforming assets $3,971 $4,147 $4,172 $(176) $(201)
Total loans 90 days past due and
still accruing 295 286 311 9 (16)
Total loans 30-89 days past due 1,408 1,638 1,663 (230) (255)
Allowance for loan and lease losses 2,564 2,567 2,600 (3) (36)
Total performing TDRs 1,476 1,639 1,070 (163) 406
Nonperforming loans and leases as a
percentage of total loans and
leases (%) 2.64 2.82 2.71 (.18) (.07)
Nonperforming assets as a
percentage of total assets (%) 2.64 2.76 2.65 (.12) (.01)
Allowance for loan and lease losses
as a percentage of loans and
leases held for investment (%) 2.63 2.69 2.72 (.06) (.09)
Net charge-offs as a percentage of
average loans and leases (%)
annualized 2.15 3.54 1.98 (1.39) .17
Ratio of allowance for loan and
lease losses to net charge-offs
(times) annualized 1.20 0.74 1.34 .46 (.14)
Ratio of allowance for loan and
lease losses to nonperforming
loans and leases held for
investment (times) 1.19 1.30 0.98 (.11) .21
(1) Excludes amounts related to covered assets and government
guaranteed mortgage loans. See footnotes on page 14 and page 16 of
the Quarterly Performance Summary for additional information.
Total nonperforming assets were $4.0 billion at December 31, 2010, a
decrease of $176 million, or 4.2%, compared to September 30, 2010. This is
the third 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 $1.5 billion
at December 31, 2010, a decrease of $163 million, or 9.9%, compared to
September 30, 2010. Commercial performing TDRs declined $219 million which
was offset by increases across the other lending portfolios.
In addition, loan delinquencies improved during the fourth quarter of
2010. Loans 30-89 days past due and still accruing, excluding loans
guaranteed by the government, totaled $1.4 billion at December 31, 2010, a
decrease of $230 million, or 14.0%, compared to September 30, 2010 reflecting
the lowest balance since the first quarter of 2008. Loans 90 days past due
and still accruing, excluding loans guaranteed by the government, were $295
million at December 31, 2010, and remained relatively stable throughout 2010.
Net charge-offs during the fourth quarter of 2010 were 2.15% of average
loans and leases, excluding covered loans, compared to 3.54% during the third
quarter of 2010 and 1.98% during the fourth quarter of 2009. Net charge-offs
for the third quarter of 2010 were elevated as a result of charge-offs
totaling $431 million related to the transfer of commercial loans to held for
sale.
As of December 31, 2010, the allowance for loan and lease losses was
2.63% of total loans and leases, excluding covered loans, compared to 2.69%
at September 30, 2010 and 2.72% at December 31, 2009. 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 fourth quarter 2010 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 Friday, February 4, 2011, or by dialing
1-888-203-1112 (access code 4313363) until Wednesday, January 26, 2011.
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 Fourth Quarter 2010 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 December 31, 2010, BB&T is one of the largest financial services
holding companies in the U.S. with $157.1 billion in assets and market
capitalization of $18.3 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 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: Bb&t Corporation, January 21, North carolina, Winston-salem
