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.
Earnings Webcast
To hear a live webcast of BB&T's first quarter 2008 earnings conference
p.m. (EDT) today, please visit our Web site at http://www.BBT.com. Replays
of the conference call will be available through our Web site until 5 p.m.
(EDT) on Friday, May 2.
Risk-based capital ratios are preliminary.
This 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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CONTACT:
Media, Bob Denham, Senior Vice President,
Corporate Communications, +1-336-733-1475, or Investors, Tamera
Gjesdal, Senior Vice President, Investor Relations,
+1-336-733-3058, or Chris Henson, Sr. Exec. Vice President, Chief
Financial Officer, +1-336-733-3008, all of BB&T Corporation
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