BB&T reports increase in 1st
quarter earnings
Net income totals $428 million, up 1.7% compared to 2007
WINSTON-SALEM, N.C., April 17 /PRNewswire-FirstCall/ -- BB&T
Corporation (
NYSE:BBT
) reported today net income for the first quarter of 2008 totaling $428
million, or $.78 per diluted share, compared with $421 million, or $.77
per diluted share, earned during the first quarter of 2007. These results
reflect increases of 1.7% and 1.3%, respectively, compared to the first
quarter last year.
BB&T's first quarter net income produced annualized
returns on average assets and average shareholders' equity of 1.29% and
13.30%, respectively, compared to prior year returns of 1.41% and 14.81%,
respectively.
Operating earnings for the first quarter of 2008 totaled
$401 million, or $.73 per diluted share, excluding $30 million in net
after-tax income associated with the initial public offering by Visa and
$3 million in net after-tax merger-related and restructuring charges.
Operating earnings for the first quarter of 2007 totaled $425 million, or
$.78 per diluted share, excluding $4 million in net after-tax
merger-related and restructuring charges. These results reflect decreases
of 5.6% and 6.4%, respectively, compared to the same period last year.
GAAP and operating results include $43 million in
securities gains, a $12 million charge resulting from a valuation
adjustment for bank owned life insurance, a $6 million reduction in
earnings from trading activities and $223 million in provision for credit
losses, all on a pre-tax basis. The securities gains resulted from a sale
of available-for-sale securities, which allowed reinvestment at higher
rates of return with no additional credit risk. The provision for credit
losses exceeded net charge-offs by $98 million, which resulted in an
increase in the allowance for loan and lease losses as a percentage of
loans and leases held for investment to 1.19%.
Cash basis operating results exclude the unamortized
balances of intangibles from assets and shareholders' equity, and exclude
the amortization of intangibles, the net amortization of purchase
accounting mark-to-market adjustments, merger-related and restructuring
charges or credits and nonrecurring items from earnings. Cash basis
operating earnings totaled $418 million for the first quarter of 2008, a
decrease of 5.2% compared to the first quarter of 2007. Cash basis
operating diluted earnings per share totaled $.76 for the first quarter of
2008, a decrease of 6.2% compared to $.81 earned during the same period in
2007. Cash basis operating earnings for the first quarter of 2008 produced
annualized returns on average tangible assets and average tangible
shareholders' equity of 1.32% and 22.81%, respectively, compared to prior
year returns of 1.54% and 28.20%, respectively.
"I am pleased to report solid first quarter results,
particularly given the ongoing challenges in residential real estate
markets and the broader financial markets," said Chairman and Chief
Executive Officer John A. Allison. "Our core businesses are
performing reasonably well, producing healthy loan growth and improved
revenue growth during the quarter. We are also benefiting from a liability
sensitive balance sheet, which generated a very positive improvement in
our net interest margin during the quarter. While market conditions are
challenging, they have provided opportunities for BB&T to develop new
client relationships and I believe we will emerge from this credit cycle a
stronger institution."
Net Interest Margin Improves to 3.54%
BB&T's fully taxable equivalent net interest income
totaled $1.0 billion for the first quarter, an increase of 7.4% compared
to the same quarter of 2007. The net interest margin was 3.54% for the
current quarter, up 8 basis points from 3.46% in the fourth quarter of
2007. The increase reflects benefits realized from BB&T's liability
sensitive balance sheet, as short-term interest rates have decreased this
quarter, and effective control of liability costs. The increase marks the
second consecutive quarter that BB&T's margin has improved.
Nonperforming Assets and Credit Losses Affected by Economic Conditions
"We experienced significant credit deterioration
during the first quarter," said Allison. "While we expect
further increases in nonperforming assets and charge-offs going forward,
we continue to believe that these issues will be manageable. We have added
resources in our special assets group, and are working with our clients to
assist them during this challenging economic environment."
BB&T's nonperforming asset levels and credit losses
increased further in the first quarter of 2008 compared to the fourth
quarter of 2007. Nonperforming assets, as a percentage of total assets,
increased to .73% at Mar. 31, compared to .52% at Dec. 31, 2007, and .30%
at Mar. 31, 2007. Annualized net charge-offs were .54% of average loans
and leases for the first quarter of 2008, up from .48% in the fourth
quarter of 2007, and .29% in the first quarter of 2007. Excluding losses
incurred by BB&T's specialized lending subsidiaries, annualized net
charge-offs for the current quarter were .32% of average loans and leases
compared to .28% in the fourth quarter last year, and .13% in the first
quarter of 2007.
The provision for credit losses totaled $223 million in
the first quarter of 2008, an increase of $152 million compared to the
same quarter last year, and exceeded net charge-offs by $98 million in the
current quarter. The higher provision included an $84 million increase
that resulted from the allowance for loan and lease losses increasing to
1.19% of loans and leases held for investment at Mar. 31, compared to
1.10% at Dec. 31, 2007. The increases in net charge-offs, nonperforming
assets and the provision for credit losses were largely driven by
continued challenges in residential real estate markets with the largest
concentration of credit issues occurring in Georgia, Florida and metro
Washington, D.C.
Loan Growth Remains Healthy - Up 9.2%
Average loans and leases totaled $92.7 billion for the
first quarter of 2008, reflecting an increase of $7.8 billion, or 9.2%,
compared to the first quarter of 2007. This increase was composed of
growth in average commercial loans and leases, which increased $4.4
billion, or 10.8%; average mortgage loans, which increased $2.1 billion,
or 12.7%; average consumer loans, which increased $879 million, or 3.9%;
and growth in average loans originated by BB&T's specialized lending
subsidiaries, which increased $425 million, or 8.7%, compared to the first
quarter last year.
BB&T's Fee Income Producing Businesses Enjoy Healthy Growth
On an operating basis, noninterest income increased $85
million, or 13.0%, during the first quarter of 2008 compared to 2007.
These increases include the impact of securities gains, higher revenues
from BB&T's insurance operations, service charges on deposit accounts,
and other nondeposit fees and commissions, as well as solid performances
from both BB&T's investment banking and brokerage operations and
mortgage banking operations.
Commissions from BB&T's insurance operations increased
7.6% to $212 million in the current quarter compared with $197 million
earned in the first quarter of 2007. This increase was primarily the
result of new product initiatives that were introduced during the second
half of 2007.
Service charges on deposit accounts totaled $154 million
for the first quarter of 2008, an increase of 11.6% compared to $138
million earned in the same quarter last year. This increase was
attributable to growth in revenues from overdraft items.
Other nondeposit fees and commissions totaled $128 million
for the first quarter of 2008, an increase of 12.3% compared to the first
quarter of 2007. This increase was generated primarily by growth in
bankcard income and debit card related services.
BB&T's investment banking and brokerage operations
produced increased revenues as fees increased 4.9% to $86 million compared
to $82 million earned in the same quarter last year. This increase was
primarily driven by increased sales at BB&T Investment Services.
Revenues from mortgage banking operations totaled $59
million for the first quarter of 2008, an increase of $29 million, or
96.7% compared to the first quarter of 2007. This increase was affected by
the adoption of new fair value accounting standards and the net change in
the mortgage servicing rights valuation. Fair value accounting increased
mortgage banking income by $31 million, and also resulted in a $16 million
increase in personnel expense during the quarter. The net change in the
valuation of mortgage servicing rights resulted in a $6 million decline
compared to the first quarter of 2007. Excluding the impact of these
items, mortgage banking income increased $4 million, or 15.4%, compared to
the same period last year.
Other noninterest income, on an operating basis, totaled
$15 million for the first quarter of 2008 compared to $62 million earned
in the same quarter last year, a decrease of 75.8%. This decrease resulted
from a decline of $15 million in bank owned life insurance, a prior-period
sale of an insurance operation which produced a gain of $19 million in the
first quarter last year, a $6 million reduction in income from trading
activities and a $6 million charge related to the adoption of fair value
accounting.
Capital Levels Remain Very Strong
BB&T's tangible and regulatory capital levels exceeded
all internal targets and remained very strong at Mar. 31. BB&T's
tangible capital ratio was 5.6% at Mar. 31, and the Tier 1 leverage ratio
was 7.3%. In addition, BB&T's Tier 1 risk-based capital and total
risk-based capital ratios were 9.0% and 14.1%, respectively, all very
healthy capital levels. Given these strong capital levels, management
anticipates that BB&T will provide some increase in the cash dividend
during 2008, which will mark the 37th consecutive year that BB&T has
increased its dividend. This excellent history has gained BB&T
recognition as a Mergent Dividend Achiever and a Standard and Poors
Dividend Aristocrat.
BB&T Expands Insurance Business
BB&T expanded its Florida insurance operations with
the acquisition of Burkey Risk Services of metro Orlando. Burkey Risk
Services provides risk management and employee benefits services. BB&T
also acquired Savannah Reinsurance Underwriting Management LLC, a
reinsurance broker based in Stamford, Ct. Also, in early January 2008,
BB&T Insurance Services expanded its metro Atlanta operation with the
acquisitions of Ott & Company of Alpharetta, Ga., and Ramsay Title
Group of Norcross, Ga.
At Mar. 31, BB&T had $136.4 billion in assets and
operated 1,494 banking offices in the Carolinas, Virginia, West Virginia,
Kentucky, Georgia, Maryland, Tennessee, Florida, Alabama, Indiana and
Washington, D.C. BB&T's common stock is traded on the New York Stock
Exchange under the trading symbol BBT. The closing price of BB&T's
common stock on Apr. 16 was $32.60 per share.
For additional information about BB&T's financial
performance, company news, products and services, please visit our Web
site at
http://www.bbt.com/
.
Risk-based capital ratios are preliminary.
T his press release contains financial information
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. Non-GAAP measures typically
adjust GAAP performance measures to exclude the effects of charges,
expenses and gains related to the consummation of mergers and
acquisitions, and costs related to the integration of merged entities, as
well as the amortization of intangibles and purchase accounting
mark-to-market adjustments in the case of "cash basis"
performance measures. These non-GAAP measures may also exclude other
significant gains, losses or expenses that are unusual in nature and not
expected to recur. Since these items and their impact on BB&T's
performance are difficult to predict, management believes presentations of
financial measures excluding the impact of these items provide useful
supplemental information that is important for a proper understanding of
the operating results of BB&T's core businesses. These disclosures
should not be viewed as a substitute for operating results determined in
accordance with GAAP, nor are they necessarily comparable to non-GAAP
performance measures that may be presented by other companies.
This press 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 press release.
QUARTERLY PERFORMANCE SUMMARY
BB&T Corporation (
NYSE:BBT
)
(Dollars in millions, except per share data)
For the Three Months Percent
Ended Increase
3/31/08 3/31/07 (Decrease)
OPERATING EARNINGS STATEMENTS (1)
Interest income - taxable equivalent $1,918 $1,909 .5%
Interest expense 884 946 (6.6)
Net interest income - taxable
equivalent 1,034 963 7.4
Less: Taxable equivalent adjustment 17 18 (5.6)
Net interest income 1,017 945 7.6
Provision for credit losses 223 71 214.1
Net interest income after provision
for credit losses 794 874 (9.2)
Noninterest income 737 652 13.0
Noninterest expense 945 877 7.8
Operating earnings before income
taxes 586 649 (9.7)
Provision for income taxes 185 224 (17.4)
Operating earnings (1) $401 $425 (5.6)%
PER SHARE DATA BASED ON OPERATING
EARNINGS (1)
Basic Earnings $.73 $.78 (6.4)%
Diluted Earnings .73 .78 (6.4)
Weighted average shares (in
thousands) -
Basic 546,214 541,851
Diluted 548,946 547,230
Dividends paid per share $.46 $.42 9.5%
PERFORMANCE RATIOS BASED ON OPERATING
EARNINGS (1)
Return on average assets 1.21% 1.42%
Return on average equity 12.47 14.94
Net yield on earning assets (taxable
equivalent) 3.54 3.61
Noninterest income as a percentage of
total income (taxable equivalent) (2) 40.2 40.6
Efficiency ratio (taxable
equivalent) (2) 54.0 53.7
CASH BASIS PERFORMANCE
BASED ON OPERATING EARNINGS (1)(3)
Cash basis operating earnings $418 $441 (5.2)%
Diluted earnings per share .76 .81 (6.2)
Return on average tangible assets 1.32% 1.54%
Return on average tangible equity 22.81 28.20
Efficiency ratio (taxable
equivalent) (2) 52.4 52.1
QUARTERLY PERFORMANCE SUMMARY
BB&T Corporation (
NYSE:BBT
)
(Dollars in millions, except per share data)
For the Three Months Percent
Ended Increase
3/31/08 3/31/07 (Decrease)
INCOME STATEMENTS
Interest Income $1,895 $1,891 .2%
Interest Expense 878 946 (7.2)
Net interest income 1,017 945 7.6
Provision for credit losses 223 71 214.1
Net interest income after provision
for credit losses 794 874 (9.2)
Noninterest income 771 652 18.3
Noninterest expense 936 883 6.0
Income before income taxes 629 643 (2.2)
Provision for income taxes 201 222 (9.5)
Net income $428 $421 1.7%
PER SHARE DATA
Basic earnings $.78 $.78 -%
Diluted earnings .78 .77 1.3
Weighted average shares (in
thousands) -
Basic 546,214 541,851
Diluted 548,946 547,230
PERFORMANCE RATIOS BASED
ON NET INCOME
Return on average assets 1.29% 1.41%
Return on average equity 13.30 14.81
Efficiency ratio (taxable
equivalent) (2) 52.4 54.1
NOTES: Applicable ratios are annualized.
(1) Operating earnings exclude the effect of merger-related and
restructuring charges or credits and nonrecurring items. These
amounts totaled $(27 million) and $4 million, net of tax, in
the first quarters of 2008 and 2007, respectively. See
Reconciliation Tables included herein.
(2) Excludes securities gains (losses), foreclosed property
expense, increases or decreases in the valuation of mortgage
servicing rights, and gains or losses on mortgage servicing
rights-related derivatives. Cash basis and operating ratios
also exclude merger-related and restructuring charges or
credits and nonrecurring items, where applicable. See
Reconciliation Tables included herein.
(3) Cash basis performance information excludes the effect on
earnings of amortization expense applicable to intangible
assets, the unamortized balances of intangibles from assets and
equity, net of deferred taxes, and the net amortization of
purchase accounting mark-to-market adjustments. See
Reconciliation Tables included herein.
QUARTERLY PERFORMANCE SUMMARY
BB&T Corporation (
NYSE:BBT
)
(Dollars in millions)
As of / For the Percent
Three Months Ended Increase
3/31/08 3/31/07 (Decrease)
CONSOLIDATED BALANCE SHEETS
End of period balances
Cash and due from banks $1,848 $1,749 5.7%
Interest-bearing deposits with banks 716 484 47.9
Federal funds sold and other earning
assets 382 298 28.2
Securities available for sale 23,487 20,898 12.4
Trading securities 609 906 (32.8)
Total securities 24,096 21,804 10.5
Commercial loans and leases 46,277 41,238 12.2
Direct retail loans 15,570 15,283 1.9
Sales finance loans 6,052 5,774 4.8
Revolving credit loans 1,598 1,386 15.3
Mortgage loans 17,446 16,011 9.0
Specialized lending 5,186 4,956 4.6
Total loans and leases held for
investment 92,129 84,648 8.8
Loans held for sale 1,822 672 171.1
Total loans and leases 93,951 85,320 10.1
Allowance for loan and lease losses 1,097 896 22.4
Total earning assets 119,174 108,193 10.1
Premises and equipment, net 1,544 1,431 7.9
Goodwill 5,226 4,860 7.5
Core deposit and other intangibles 474 479 (1.0)
Other assets 9,277 6,165 50.5
Total assets 136,417 121,694 12.1
Noninterest-bearing deposits 13,377 13,533 (1.2)
Interest checking 1,150 1,288 (10.7)
Other client deposits 35,196 34,657 1.6
Client certificates of deposit 26,819 25,322 5.9
Total client deposits 76,542 74,800 2.3
Other interest-bearing deposits 10,939 5,039 117.1
Total deposits 87,481 79,839 9.6
Fed funds purchased, repos and other
borrowings 8,610 6,770 27.2
Long-term debt 22,544 19,936 13.1
Total interest-bearing liabilities 105,258 93,012 13.2
Other liabilities 4,940 3,499 41.2
Total liabilities 123,575 110,044 12.3
Total shareholders' equity $12,842 $11,650 10.2%
Average balances
Securities, at amortized cost $23,414 $21,872 7.1%
Commercial loans and leases 45,549 41,122 10.8
Direct retail loans 15,639 15,272 2.4
Sales finance loans 6,031 5,734 5.2
Revolving credit loans 1,602 1,387 15.5
Mortgage loans 18,574 16,481 12.7
Specialized lending 5,323 4,898 8.7
Total loans and leases 92,718 84,894 9.2
Allowance for loan and lease losses 1,018 894 13.9
Other earning assets 1,282 840 52.6
Total earning assets 117,414 107,606 9.1
Total assets 133,425 121,054 10.2
Noninterest-bearing deposits 12,676 12,946 (2.1)
Interest checking 2,301 2,206 4.3
Other client deposits 34,851 33,393 4.4
Client certificates of deposit 27,061 25,076 7.9
Total client deposits 76,889 73,621 4.4
Other interest-bearing deposits 9,694 8,902 8.9
Total deposits 86,583 82,523 4.9
Fed funds purchased, repos and other
borrowings 10,760 7,627 41.1
Long-term debt 19,201 16,086 19.4
Total interest-bearing liabilities 103,868 93,290 11.3
Total shareholders' equity $12,929 $11,522 12.2%
NOTES: All items referring to average loans and leases include loans held
for sale.
QUARTERLY PERFORMANCE SUMMARY
BB&T Corporation (
NYSE:BBT
)
(Dollars in millions, except per share data)
For the Three Months Ended
3/31/08 3/31/07
RECONCILIATION TABLE
Net income $428 $421
Merger-related and restructuring
items, net of tax 3 4
Other, net of tax (3) (30) -
Operating earnings 401 425
Amortization of intangibles, net
of tax 17 16
Amortization of mark-to-market
adjustments, net of tax - -
Cash basis operating earnings 418 441
Return on average assets 1.29% 1.41%
Effect of merger-related and
restructuring items, net of tax .01 .01
Effect of other, net of tax (3) (.09) -
Operating return on average assets 1.21 1.42
Effect of amortization of
intangibles, net of tax (1) .11 .12
Effect of amortization of mark-
to-market adjustments, net of tax - -
Cash basis operating return on
average tangible assets 1.32 1.54
Return on average equity 13.30% 14.81%
Effect of merger-related and
restructuring items, net of tax .09 .13
Effect of other, net of tax (3) (.92) -
Operating return on average equity 12.47 14.94
Effect of amortization of
intangibles, net of tax (1) 10.34 13.26
Effect of amortization of mark-
to-market adjustments, net of tax - -
Cash basis operating return on
average tangible equity 22.81 28.20
Efficiency ratio (taxable
equivalent) (2) 52.4% 54.1%
Effect of merger-related and
restructuring items (.2) (.4)
Effect of other (3) 1.8 -
Operating efficiency ratio (2) 54.0 53.7
Effect of amortization of
intangibles (1.6) (1.6)
Effect of amortization of mark-
to-market adjustments - -
Cash basis operating efficiency
ratio (2) 52.4 52.1
Fee income ratio (2) 41.4% 40.6%
Effect of other (3) (1.2) -
Operating fee income ratio (2) 40.2 40.6
Basic earnings per share $.78 $.78
Effect of merger-related and
restructuring items, net of tax - -
Effect of other, net of tax (3) (.05) -
Operating basic earnings per share .73 .78
Diluted earnings per share $.78 $.77
Effect of merger-related and
restructuring items, net of tax - .01
Effect of other, net of tax (3) (.05) -
Operating diluted earnings per
share .73 .78
Effect of amortization of
intangibles, net of tax .03 .03
Effect of amortization of mark-
to-market adjustments, net of tax - -
Cash basis operating diluted
earnings per share .76 .81
NOTES: Applicable ratios are annualized.
(1) Reflects the effect of excluding average intangible assets from
average assets and average equity, net of deferred taxes, to
calculate cash basis ratios.
(2) Excludes securities gains (losses), foreclosed property
expense, increases or decreases in the valuation of mortgage
servicing rights, and gains or losses on mortgage servicing
rights-related derivatives. Operating and cash basis ratios
also exclude merger-related and restructuring charges or
credits and nonrecurring items, where applicable.
(3) Reflects a gain from the IPO and the reversal of a reserve
charge relating to the Visa USA, Inc settlement totaling $30
million, net of tax, in the first quarter of 2008.
Source: BB&T Corporation
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