BB&T reports record quarterly earnings; EPS totals $0.72, up 64%
WINSTON-SALEM, N.C. -- BB&T Corporation (NYSE: BBT) today reported record second quarter net income available to common shareholders of $510 million. This reflects an increase of 66% compared to $307 million reported in the second quarter of 2011. Earnings per diluted common share totaled $0.72, an increase of 64% compared to $0.44 earned in the second quarter last year. These earnings produced an annualized return on average assets of 1.22% and a return on average common shareholders' equity of 11.21%.
For the first six months of 2012, BB&T reported net income available to common shareholders of $941 million, an increase of 77% compared to the first six months of last year. Earnings per diluted common share totaled $1.33 for the first six months of 2012, an increase of 75% compared to 2011.
"We are excited to report the strongest net income for any quarter in our history," said Chairman and Chief Executive Officer Kelly S. King. "This record performance reflects a 7% increase in net interest income, a 44% increase in noninterest income, lower credit costs and effective expense control. The net interest margin increased this quarter following the call of our outstanding trust preferred securities.
"Loan growth improved during the quarter as average loans increased 7% on an annualized basis compared to the first quarter. This growth was led by a 33% increase in loans originated by our other lending subsidiaries, a 20% increase in residential mortgage loans, a 10% increase in direct retail loans and a 9% increase in sales finance loans.
"Net revenues totaled $2.5 billion for the second quarter, an annualized increase of 21% compared to last quarter," said King. "This growth was substantially due to our acquisition of the insurance divisions of Crump.
"BB&T had another excellent quarter reducing credit costs," said King. "Nonperforming assets declined 16% compared to last quarter, including a 42% reduction in foreclosed real estate. Costs related to foreclosed properties decreased to $72 million in the second quarter, a 22% decline compared with last quarter, reflecting significant progress in our strategy. Net charge-offs fell to 1.22% of average loans and leases in the quarter compared to 1.28% last quarter, and losses are expected to continue to trend lower this year.
"We are also pleased to have completed the acquisition of Crump's insurance divisions, which is very positive for our shareholders, both strategically and financially."
Second Quarter 2012 Performance Highlights
- Average total loans and leases held for investment increased 6.6% on an annualized basis compared to the first quarter of 2012
- Average C&I loans increased 3.0%
- Average direct retail loans increased 10.1%
- Average residential mortgage loans increased 20.2%
- Average sales finance loans increased 9.3%
- Average loans originated in the other lending subsidiaries group increased 32.6%
- Revenues were $2.5 billion for the second quarter, up an annualized 20.9% compared to the first quarter of 2012
- Noninterest revenues increased due to the Crump insurance acquisition
- Taxable-equivalent net interest income totaled $1.5 billion for the second quarter, an annualized increase of 7.4% compared to the first quarter of 2012, driven by an increase in the net interest margin, from 3.93% to 3.95% and a 5.1% annualized increase in average earning assets
- Average deposits increased $742 million, or 2.4% on an annualized linked quarter basis
- Average noninterest-bearing deposits increased $1.5 billion, or 22.6%
- Average interest-bearing deposit costs fell to 0.44% this quarter compared to 0.49% in the first quarter of 2012
- Asset quality measures continued to improve
- Nonperforming assets decreased $359 million, or 15.9% excluding covered assets, the 9th consecutive quarter BB&T has reduced its NPAs
- As a percentage of total assets, excluding covered assets, nonperformers decreased from 1.33% last quarter to 1.09% at June 30
- Foreclosed real estate, excluding covered assets, declined $157 million, or 41.5%, compared to the first quarter 2012, to the lowest levels since 1Q08
- Net charge-offs, excluding covered, totaled 1.22% of average loans for the quarter, down from 1.28% in the first quarter of 2012
- Foreclosed property expense totaled $72 million, down 21.7% from the first quarter of 2012
- Capital levels remain strong following the acquisition of the insurance divisions of Crump and the announced redemption of trust preferred securities
- Tangible common equity was 6.9%
- Tier 1 common equity was 9.7%
- Tier 1 risk-based capital was 10.2%
- Leverage capital remained strong at 7.3%
- Total capital was 13.5%
Current quarter capital ratios are preliminary. Credit quality data excludes covered and government guaranteed loans where applicable.
This news release contains financial information and performance measures determined by methods other than in accordance with accounting principles generally accepted in the United States of America ("GAAP"). BB&T's management uses these "non-GAAP" measures in their analysis of the Corporation's performance and the efficiency of its operations. Management believes 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. Below is a listing of the types of non-GAAP measures used in this news release:
A reconciliation of these non-GAAP measures to the most directly comparable GAAP measure is included on the Investor Relations section of BB&T's website and in BB&T's second quarter 2012 Quarterly Performance Summary, which is available on BB&T's website at www.BBT.com/financials.html.
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.
- 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. The Basel III Tier I common equity ratio is also a non-GAAP measure and reflects management's best estimate of the proposed regulatory requirements, which are subject to change. 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 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.
- Fee income and efficiency ratios are non-GAAP in that they exclude 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.
- Return on average tangible common shareholders' equity is a non-GAAP measure that calculates the return on average common shareholders' equity without the impact of intangible assets and their related amortization.
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