EARNINGS
HIGHLIGHTS
|
|
|
|
|
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(dollars in millions,
except per share data)
|
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Change 4Q16
vs.
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|
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4Q16
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|
3Q16
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4Q15
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3Q16
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|
4Q15
|
Net income available
to common shareholders
|
|
$
|
592
|
|
$
|
599
|
|
$
|
502
|
|
$
|
(7)
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|
$
|
90
|
Diluted earnings per
common share
|
|
0.72
|
|
0.73
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|
0.64
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|
(0.01)
|
|
0.08
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|
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|
|
|
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|
|
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Net interest income -
taxable equivalent
|
|
$
|
1,606
|
|
$
|
1,650
|
|
$
|
1,542
|
|
$
|
(44)
|
|
$
|
64
|
Noninterest
income
|
|
1,162
|
|
1,164
|
|
1,015
|
|
(2)
|
|
147
|
Total
taxable-equivalent revenue
|
|
$
|
2,768
|
|
$
|
2,814
|
|
$
|
2,557
|
|
$
|
(46)
|
|
$
|
211
|
Less
taxable-equivalent adjustment
|
|
41
|
|
40
|
|
38
|
|
|
|
|
Total
revenue
|
|
$
|
2,727
|
|
$
|
2,774
|
|
$
|
2,519
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
|
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|
|
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Return on average
assets
|
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1.16%
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|
|
1.15%
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|
|
1.03%
|
|
0.01%
|
|
0.13%
|
Return on average
risk-weighted assets
|
|
|
1.45
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|
|
1.45
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|
|
1.29
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|
-
|
|
0.16
|
Return on average
common shareholders' equity
|
|
|
8.75
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|
|
8.87
|
|
|
8.06
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|
(0.12)
|
|
0.69
|
Return on average
tangible common shareholders' equity (1)
|
|
|
14.91
|
|
|
15.20
|
|
|
13.37
|
|
(0.29)
|
|
1.54
|
Net interest margin -
taxable equivalent
|
|
|
3.32
|
|
|
3.39
|
|
|
3.35
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|
(0.07)
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|
(0.03)
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(1) Excludes
certain items as detailed in the non-GAAP reconciliations in the
Quarterly Performance Summary.
|
Fourth Quarter 2016 compared to Third Quarter 2016
Earnings for the fourth quarter included $34 million of pre-tax charges for securities
duration adjustments and hedge ineffectiveness, which were
primarily due to higher interest rates. Also impacting the fourth
quarter earnings was a $31 million
release of mortgage repurchase reserves, which was primarily driven
by lower anticipated loan repurchase requests.
Total taxable-equivalent revenues were $2.8 billion for the fourth quarter of 2016, a
decrease of $46 million compared to
the prior quarter, which reflects a decrease of $44 million in taxable-equivalent net interest
income, while noninterest income was essentially flat.
The net interest margin was 3.32% for the fourth quarter, down
seven basis points compared to the prior quarter. Average earning
assets decreased $1.3 billion, which
primarily reflects a $2.3 billion
decrease in average securities partially offset by an $880 million increase in average total loans.
Average interest-bearing liabilities decreased $1.9 billion, resulting from a $1.9 billion decrease in long-term debt due to
maturities. Additionally, interest-bearing deposits declined
$247 million and average short-term
borrowings increased $245
million.
The annualized yield on the total loan portfolio for the fourth
quarter was 4.24%, down six basis points compared to the prior
quarter due to lower rates on new production and reduced purchase
accounting amortization. The annualized taxable-equivalent yield on
the average securities portfolio for the fourth quarter was 2.13%,
down 19 basis points compared to the prior quarter, primarily due
to duration adjustments on non-agency mortgage-backed
securities.
The average annualized cost of interest-bearing deposits was
0.22%, down one basis point compared to the prior quarter. The
average annualized rate paid on long-term debt was 2.16%, up 11
basis points compared to the prior quarter, due to lower benefits
from hedging.
Excluding acquired from FDIC and purchased credit impaired
("PCI") loans, the provision for credit losses was $133 million and net charge-offs were
$136 million for the fourth quarter,
compared to $150 million and
$130 million, respectively, for the
prior quarter. The fourth quarter included $14 million of net charge-offs for the sale of
certain energy-related loans.
Noninterest income of $1.2 billion
was essentially flat compared to the prior quarter as lower
mortgage banking income was offset by improved FDIC loss share
income following the termination of the related agreements in the
third quarter, higher other income primarily from partnerships and
other investments and higher insurance income.
Noninterest expense was $1.7
billion for the fourth quarter, down $43 million compared to the prior quarter, which
reflects lower merger-related and restructuring charges and lower
loan-related expense, partially offset by higher other expense.
The provision for income taxes was $287
million for the fourth quarter, compared to $273 million for the prior quarter. The effective
tax rate for the fourth quarter was 30.9%, compared to 29.8% for
the prior quarter.
Fourth Quarter 2016 compared to Fourth Quarter 2015
Total taxable-equivalent revenues were $2.8 billion for the fourth quarter of 2016, an
increase of $211 million compared to
the earlier quarter. This reflects an increase of $64 million in taxable-equivalent net interest
income and an increase of $147
million in noninterest income. These increases primarily
reflect the acquisitions during the past year.
Net interest margin was 3.32%, down three basis points compared
to the earlier quarter. Average earning assets increased
$9.4 billion, while average
interest-bearing liabilities increased $3.0
billion; both increases were primarily driven by acquisition
activity. The annualized yield on the total loan portfolio for the
fourth quarter was 4.24%, down seven basis points compared to the
earlier quarter. The annualized taxable-equivalent yield on the
average securities portfolio for the fourth quarter was 2.13%, down
17 basis points compared to the earlier period. This decrease was
primarily due to securities duration adjustments during 2016.
The average annualized cost of interest-bearing deposits was
0.22%, down two basis points compared to the earlier quarter. The
average annualized rate paid on long-term debt was 2.16%, up five
basis points compared to the earlier quarter primarily due to lower
benefits from hedging.
Excluding acquired from FDIC and PCI loans, the provision for
credit losses was $133 million,
compared to $128 million in the
earlier quarter. Net charge-offs for the fourth quarter of 2016,
excluding loans acquired from the FDIC and PCI, totaled
$136 million, compared to
$130 million for the earlier
quarter.
Noninterest income was $1.2
billion, an increase of $147
million from the earlier quarter, driven by higher insurance
income, improved FDIC loss share income (following the termination
of the related agreements in the third quarter) and higher
investment banking and brokerage fees and commissions.
Noninterest expense for the fourth quarter of 2016 was
$1.7 billion, up $71 million compared to the earlier quarter. This
increase reflects higher personnel expense and various other
categories of expense following the current year acquisitions,
partially offset by lower merger-related and restructuring charges
as the earlier quarter included activity related to the Susquehanna
acquisition. Loan-related expense declined primarily due to
repurchase reserve adjustments.
The provision for income taxes was $287
million for the fourth quarter of 2016, compared to
$251 million for the earlier quarter.
This produced an effective tax rate for the fourth quarter of 2016
of 30.9%, compared to 31.7% for the earlier quarter.
NONINTEREST
INCOME
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|
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(dollars in
millions)
|
|
|
|
|
|
|
|
% Change 4Q16
vs.
|
|
|
4Q16
|
|
3Q16
|
|
4Q15
|
|
3Q16
|
|
4Q15
|
|
|
|
|
|
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|
(annualized)
|
|
|
Insurance
income
|
|
$
|
419
|
|
$
|
410
|
|
$
|
380
|
|
8.7
|
|
10.3
|
Service charges on
deposits
|
|
172
|
|
172
|
|
165
|
|
—
|
|
4.2
|
Mortgage banking
income
|
|
107
|
|
154
|
|
104
|
|
(121.4)
|
|
2.9
|
Investment banking
and brokerage fees and
commissions
|
|
108
|
|
101
|
|
91
|
|
27.6
|
|
18.7
|
Trust and investment
advisory revenues
|
|
69
|
|
68
|
|
64
|
|
5.9
|
|
7.8
|
Bankcard fees and
merchant discounts
|
|
60
|
|
61
|
|
56
|
|
(6.5)
|
|
7.1
|
Checkcard
fees
|
|
50
|
|
50
|
|
47
|
|
—
|
|
6.4
|
Operating lease
income
|
|
34
|
|
34
|
|
33
|
|
—
|
|
3.0
|
Income from
bank-owned life insurance
|
|
26
|
|
35
|
|
27
|
|
(102.3)
|
|
(3.7)
|
FDIC loss share
income, net
|
|
—
|
|
(18)
|
|
(52)
|
|
NM
|
|
(100.0)
|
Securities gains
(losses), net
|
|
1
|
|
—
|
|
—
|
|
NM
|
|
NM
|
Other
income
|
|
116
|
|
97
|
|
100
|
|
77.9
|
|
16.0
|
Total noninterest
income
|
|
$
|
1,162
|
|
$
|
1,164
|
|
$
|
1,015
|
|
(0.7)
|
|
14.5
|
|
|
|
|
|
|
|
NM - not
meaningful.
|
Fourth Quarter 2016 compared to Third Quarter 2016
Noninterest income was $1.2
billion for the fourth quarter, down $2 million compared to the prior quarter as lower
mortgage banking income was offset by improved FDIC loss share
income (following the termination of the related agreements in the
third quarter), higher other income primarily from partnerships and
other investments and higher insurance income due to
seasonality.
Mortgage banking income decreased $47
million due to net mortgage servicing rights valuation
adjustments and lower production volumes.
Other income increased $19
million, primarily due to higher income from partnerships
and other investments, which is predominantly due to SBIC private
equity investments.
Fourth Quarter 2016 compared to Fourth Quarter 2015
Noninterest income for the fourth quarter of 2016 was up
$147 million compared to the earlier
quarter. This increase was driven by higher insurance income, FDIC
loss share income, investment banking and brokerage fees and
commissions and other income.
Insurance income increased $39
million, primarily the result of the Swett & Crawford
acquisition.
FDIC loss share income improved $52
million due to the termination of the loss sharing
agreements during the third quarter.
Investment banking and brokerage fees and commissions increased
$17 million due to strong activity in
the current quarter.
Other income increased $16
million, primarily as a result of higher income from
partnerships and other investments, which is predominantly due to
SBIC private equity investments.
NONINTEREST
EXPENSE
|
|
|
|
|
|
|
|
(dollars in
millions)
|
|
|
|
|
|
|
|
% Change 4Q16
vs.
|
|
|
4Q16
|
|
3Q16
|
|
4Q15
|
|
3Q16
|
|
4Q15
|
|
|
|
|
|
|
|
|
(annualized)
|
|
|
Personnel
expense
|
|
$
|
1,004
|
|
$
|
1,006
|
|
$
|
893
|
|
(0.8)
|
|
12.4
|
Occupancy and
equipment expense
|
|
198
|
|
203
|
|
192
|
|
(9.8)
|
|
3.1
|
Software
expense
|
|
57
|
|
63
|
|
52
|
|
(37.9)
|
|
9.6
|
Loan-related
expense
|
|
(6)
|
|
33
|
|
37
|
|
NM
|
|
(116.2)
|
Outside IT
services
|
|
50
|
|
51
|
|
41
|
|
(7.8)
|
|
22.0
|
Professional
services
|
|
27
|
|
27
|
|
29
|
|
—
|
|
(6.9)
|
Amortization of
intangibles
|
|
38
|
|
38
|
|
32
|
|
—
|
|
18.8
|
Regulatory
charges
|
|
42
|
|
41
|
|
28
|
|
9.7
|
|
50.0
|
Foreclosed property
expense
|
|
9
|
|
9
|
|
11
|
|
—
|
|
(18.2)
|
Merger-related and
restructuring charges, net
|
|
13
|
|
43
|
|
50
|
|
NM
|
|
(74.0)
|
Other
expense
|
|
236
|
|
197
|
|
232
|
|
78.8
|
|
1.7
|
Total noninterest
expense
|
|
$
|
1,668
|
|
$
|
1,711
|
|
$
|
1,597
|
|
(10.0)
|
|
4.4
|
|
|
|
NM - not
meaningful.
|
Fourth Quarter 2016 compared to Third Quarter 2016
Noninterest expense was $1.7
billion for the fourth quarter, down $43 million compared to the prior quarter. This
change was driven by lower merger-related and restructuring charges
and lower loan-related expense, partially offset by higher other
expense.
Personnel expense was essentially flat, which includes a
$12 million decline in equity-based
compensation primarily due to a decrease for retirement eligible
employees, partially offset by an $11
million increase in incentives expense primarily within the
financial services segment based on performance relative to
targets.
Merger-related and restructuring charges decreased $30 million compared to the prior quarter. The
prior quarter included higher charges due to the systems conversion
and integration of National Penn.
Loan-related expense decreased $39
million compared to the prior quarter largely due to a
$31 million release of mortgage
repurchase reserves, which was primarily driven by lower
anticipated loan repurchase requests.
Other expense increased $39
million primarily due to a net benefit of $73 million in the prior quarter related to the
settlement of certain legacy mortgage matters involving the
origination of mortgage loans insured by the FHA. Partially
offsetting this benefit was a $50
million charitable contribution that was also made in the
third quarter.
Fourth Quarter 2016 compared to Fourth Quarter 2015
Noninterest expense for the fourth quarter of 2016 was up
$71 million compared to the earlier
quarter. This increase was driven by higher personnel expense,
which was partially offset by declines in merger-related and
restructuring charges and loan-related expense.
Personnel expense increased $111
million, driven by a $50
million increase in salaries, which reflects a 1,421
increase in full-time equivalent employees primarily resulting from
acquisitions. Personnel expense also reflects a $35 million increase in incentives due to
improved performance relative to target measures. Additionally,
other personnel expenses were higher $26
million, primarily due to higher payroll taxes, insurance
expense and pension expense.
Loan-related expense decreased $43
million compared to the prior quarter primarily due to the
previously described release of $31
million related to mortgage repurchase reserves and
$12 million due to a decrease in
pre-foreclosure expenses.
Regulatory charges increased $14
million, primarily due to the FDIC's special assessment for
larger institutions that became effective during the third quarter
of 2016, as well as growth through acquisitions.
Merger-related and restructuring charges decreased $37 million, primarily the result of costs
incurred for the Susquehanna acquisition in the earlier
quarter.
LOANS AND
LEASES - average balances
|
|
|
|
|
|
|
|
|
(dollars in
millions)
|
|
|
|
|
|
|
|
|
|
|
4Q16
|
|
3Q16
|
|
Change
|
|
% Change
|
|
|
|
|
|
|
|
|
(annualized)
|
Commercial and
industrial
|
|
$
|
51,306
|
|
$
|
51,508
|
|
$
|
(202)
|
|
(1.6)
|
CRE-income producing
properties
|
|
14,566
|
|
14,667
|
|
(101)
|
|
(2.7)
|
CRE-construction and
development
|
|
3,874
|
|
3,802
|
|
72
|
|
7.5
|
Dealer floor
plan
|
|
1,367
|
|
1,268
|
|
99
|
|
31.1
|
Direct retail
lending
|
|
12,046
|
|
11,994
|
|
52
|
|
1.7
|
Sales
finance
|
|
10,599
|
|
9,339
|
|
1,260
|
|
53.7
|
Revolving
credit
|
|
2,608
|
|
2,537
|
|
71
|
|
11.1
|
Residential
mortgage
|
|
30,044
|
|
30,357
|
|
(313)
|
|
(4.1)
|
Other lending
subsidiaries
|
|
14,955
|
|
14,742
|
|
213
|
|
5.7
|
Acquired from FDIC
and PCI
|
|
974
|
|
1,052
|
|
(78)
|
|
(29.5)
|
Total loans and leases
held for investment
|
|
$
|
142,339
|
|
$
|
141,266
|
|
$
|
1,073
|
|
3.0
|
Average loans held for investment for the fourth quarter of 2016
were $142.3 billion, up $1.1 billion compared to the third quarter of
2016. The increase was driven by sales finance loans. There was
also modest growth in other lending subsidiaries loans, which was
offset by a continued decline in residential mortgage loans.
Average sales finance loans increased $1.3 billion, primarily due to a $1.0 billion portfolio acquisition late in the
third quarter of 2016 and a $1.9
billion portfolio acquisition in the fourth quarter. These
increases were partially offset by the continued effects of dealer
pricing structure changes implemented during 2015 and also reflect
the continued runoff of the auto lease portfolio obtained in
connection with the Susquehanna acquisition.
DEPOSITS -
average balances
|
|
|
|
|
|
(dollars in
millions)
|
|
|
|
|
|
|
|
|
|
|
4Q16
|
|
3Q16
|
|
Change
|
|
% Change
|
|
|
|
|
|
|
|
|
(annualized)
|
Noninterest-bearing
deposits
|
|
$
|
51,421
|
|
$
|
50,559
|
|
$
|
862
|
|
6.8
|
Interest
checking
|
|
28,634
|
|
27,754
|
|
880
|
|
12.6
|
Money market and
savings
|
|
63,884
|
|
64,335
|
|
(451)
|
|
(2.8)
|
Time
deposits
|
|
15,693
|
|
15,818
|
|
(125)
|
|
(3.1)
|
Foreign office
deposits - interest-bearing
|
|
486
|
|
1,037
|
|
(551)
|
|
NM
|
Total
deposits
|
|
$
|
160,118
|
|
$
|
159,503
|
|
$
|
615
|
|
1.5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NM - not
meaningful.
|
|
|
|
|
|
|
|
|
|
|
|
Average deposits for the fourth quarter were $160.1 billion, up $615
million compared to the prior quarter.
Average noninterest-bearing deposits increased $862 million, primarily due to increases in
commercial balances with smaller increases in public funds and
personal balances.
Interest checking increased $880
million, primarily due to increases in personal and
commercial balances.
Money market and savings decreased $451
million primarily due to commercial balances partially
offset by increased personal balances.
Average time deposits decreased $125
million as decreases in IRAs and personal balances were
partially offset by higher commercial balances.
Average foreign office deposits decreased $551 million due to lower overall funding
needs.
Noninterest-bearing deposits represented 32.1% of total average
deposits for the fourth quarter, compared to 31.7% for the prior
quarter and 30.9% a year ago. The cost of interest-bearing deposits
was 0.22% for the fourth quarter, down one basis point compared to
the prior quarter.
SEGMENT
RESULTS
|
|
|
|
|
|
|
|
(dollars in
millions)
|
|
|
|
|
|
|
|
Change 4Q16
vs.
|
Segment Net
Income
|
|
4Q16
|
|
3Q16
|
|
4Q15
|
|
3Q16
|
|
4Q15
|
Community
Banking
|
|
$
|
334
|
|
$
|
338
|
|
$
|
262
|
|
$
|
(4)
|
|
$
|
72
|
Residential Mortgage
Banking
|
|
64
|
|
117
|
|
49
|
|
(53)
|
|
15
|
Dealer Financial
Services
|
|
41
|
|
40
|
|
41
|
|
1
|
|
—
|
Specialized
Lending
|
|
55
|
|
64
|
|
63
|
|
(9)
|
|
(8)
|
Insurance
Holdings
|
|
34
|
|
23
|
|
36
|
|
11
|
|
(2)
|
Financial
Services
|
|
122
|
|
83
|
|
104
|
|
39
|
|
18
|
Other, Treasury and
Corporate
|
|
(7)
|
|
(23)
|
|
(13)
|
|
16
|
|
6
|
Total net
income
|
|
$
|
643
|
|
$
|
642
|
|
$
|
542
|
|
$
|
1
|
|
$
|
101
|
Fourth Quarter 2016 compared to Third Quarter 2016
The financial information related to National Penn's operations
was included in the Other, Treasury & Corporate segment until
the systems conversion, which occurred during July 2016. The majority of National Penn's
operations are now included in Community Banking.
Community Banking
Community Banking serves individual and business clients by
offering a variety of loan and deposit products and other financial
services. The segment is primarily responsible for acquiring and
servicing client relationships.
Community Banking net income was $334
million for the fourth quarter of 2016, a decrease of
$4 million compared to the prior
quarter. Segment net interest income was up $12 million, primarily due to loan and deposit
growth and the inclusion of National Penn for the full quarter,
partially offset by lower credit spreads on loans. The allocated
provision for credit losses was $26
million for the fourth quarter of 2016, compared to a
benefit of $3 million in the prior
quarter. This change was primarily the result of loan growth and a
decline in the rate of improvement in credit trends in the
commercial loan portfolio compared to the third quarter.
Residential Mortgage Banking
Residential Mortgage Banking originates and purchases mortgage
loans to either hold for investment or sell to third-parties.
BB&T generally retains the servicing rights to loans sold.
Mortgage products include fixed and adjustable-rate government
guaranteed and conventional loans used for the purpose of
constructing, purchasing or refinancing residential properties.
Substantially all of the properties are owner-occupied.
Residential Mortgage Banking net income was $64 million for the fourth quarter of 2016, a
decrease of $53 million compared to
the prior quarter. Noninterest income decreased $41 million, driven by lower net mortgage
servicing rights valuation adjustments and lower saleable loan
volume and margins. Noninterest expense increased $28 million, driven by the previously discussed
settlement of certain FHA-insured loan matters in the prior
quarter, partially offset by a reduction in mortgage repurchase
reserves in the current quarter.
Dealer Financial Services
Dealer Financial Services originates loans to consumers for the
purchase of automobiles. These loans are originated on an indirect
basis through approved franchised and independent automobile
dealers throughout BB&T's market area through BB&T Dealer
Finance, and on a national basis through Regional Acceptance
Corporation. Dealer Financial Services also originates loans for
the purchase of recreational and marine vehicles. In conjunction
with Community Banking, Dealer Financial Services provides
financing and servicing to dealers for their inventories in
Community Banking's footprint.
Dealer Financial Services net income was $41 million for the fourth quarter of 2016,
essentially flat compared to the prior quarter. Results were driven
by a $13 million increase in segment
net interest income, partially attributable to the purchase of
prime auto loans in the Dealer Finance portfolio during the current
quarter. This increase was largely offset by an increase in the
allocated provision for credit losses primarily due to seasonally
higher net charge-offs in the Regional Acceptance loan
portfolio.
Specialized Lending
Specialized Lending consists of businesses that provide
specialty finance solutions to commercial and consumer clients
including: commercial finance, mortgage warehouse lending,
tax-exempt financing for local governments and special-purpose
districts, equipment leasing, full-service commercial mortgage
banking, commercial and retail insurance premium finance and small
ticket dealer-based financing of equipment for consumers and small
businesses.
Specialized Lending net income was $55
million for the fourth quarter of 2016, a decrease of
$9 million compared to the prior
quarter. The allocated provision for credit losses decreased
$11 million, primarily due to the
sale of a loan portfolio in the current quarter and lower net
charge-offs in the commercial finance portfolio. Noninterest
expense increased $17 million,
primarily attributable to asset write-downs in the operating lease
portfolio as well as restructuring charges. Specialized Lending
average loans increased $247 million,
or 5.4% annualized, primarily due to higher equipment finance,
governmental finance and commercial mortgage loans.
Insurance Holdings
BB&T's insurance agency / brokerage network is the fifth
largest in the United States and
sixth largest in the world. Insurance Holdings provides property
and casualty, life and health insurance to businesses and
individual clients. It also provides small business and corporate
products, such as workers compensation and professional liability,
as well as surety coverage and title insurance.
Insurance Holdings net income was $34
million in the fourth quarter of 2016, an increase of
$11 million compared to the prior
quarter. Noninterest income increased $16
million, which primarily reflects seasonality in the
commercial property and casualty insurance business and higher life
insurance commissions.
Financial Services
Financial Services provides personal trust administration,
estate planning, investment counseling, wealth management, asset
management, employee benefits services, corporate banking and
corporate trust services to individuals, corporations,
institutions, foundations and government entities. In addition,
Financial Services offers clients a variety of investment services,
including discount brokerage services, equities, annuities, mutual
funds and government bonds through BB&T Investment Services,
Inc. The segment includes BB&T Securities, a full-service
brokerage and investment banking firm, and the Corporate Banking
Division, which originates and services large corporate
relationships, syndicated lending relationships and client
derivatives. The segment also includes the company's SBIC private
equity investments.
Financial Services net income was $122
million in the fourth quarter of 2016, an increase of
$39 million compared to the prior
quarter. Noninterest income increased $29
million, primarily due to higher investment banking and
client derivative income and higher income from SBIC private equity
investments. The allocated provision for credit losses decreased
$34 million, primarily attributable
to the sale of certain energy loans during the current quarter.
Corporate Banking's average loan balances decreased $152 million, or an annualized 4.2%, compared to
the prior quarter, while BB&T Wealth's average loan balances
increased $35 million, or 8.0%
annualized. The reduction in Corporate Banking's average loan
balances was impacted by the sale of energy loans previously
discussed and increased pay downs. Corporate Banking's average
transaction account deposits decreased $101
million, or 17.2% on an annualized basis compared to the
prior quarter. BB&T Wealth's average transaction account
deposits grew $355 million, or 31.3%
on an annualized basis.
Other, Treasury & Corporate
Net income in Other, Treasury & Corporate can vary due to
the changing needs of the Corporation, including the size of the
investment portfolio, the need for wholesale funding and income
received from derivatives used to hedge the balance sheet. As
previously discussed, Branch Bank entered into an agreement with
the FDIC to terminate the loss share agreements during the prior
quarter.
Other, Treasury & Corporate generated a net loss of
$7 million for the fourth quarter of
2016, compared to a net loss of $23
million in the prior quarter. Segment net interest income
decreased $58 million, partially
attributable to a reduction in the securities portfolio. The
allocated provision for credit losses decreased $19 million, primarily due to an increase in the
reserve for unfunded lending commitments in the prior quarter
driven by changes related to the mix of lines of credit, letters of
credit and bankers' acceptances. Noninterest expense decreased
$81 million as a result of lower
charitable contributions expense, occupancy and equipment expense,
software expense and merger-related and restructuring charges.
Fourth Quarter 2016 compared to Fourth Quarter 2015
Community Banking
Community Banking net income was $334
million for the fourth quarter of 2016, an increase of
$72 million compared to the earlier
quarter. Segment net interest income increased $131 million driven by acquisition activity,
deposit growth and higher funding spreads on deposits, while
noninterest income increased $16
million, primarily attributable to earlier acquisition
activity. Intersegment net referral fees were up $12 million, primarily attributable to higher
client referrals. The allocated provision for credit losses
decreased $13 million, driven by
lower commercial net charge-offs. Noninterest expense increased
$36 million, driven by higher
personnel and occupancy and equipment expense primarily
attributable to the acquisitions. Allocated corporate expense
increased $28 million compared to the
earlier quarter driven by the acquisitions.
Residential Mortgage Banking
Residential Mortgage Banking net income was $64 million for the fourth quarter of 2016, an
increase of $15 million compared to
the earlier quarter. Segment net interest income and noninterest
income decreased slightly during the current quarter. The allocated
provision for credit losses increased, primarily due to an increase
in performing TDRs driven by the strategy of repurchasing loans
from GNMA pools that commenced during the second quarter.
Noninterest expense decreased $40
million driven by the previously discussed reduction in
mortgage repurchase reserves in the current quarter.
Dealer Financial Services
Dealer Financial Services net income was $41 million for the fourth quarter of 2016, flat
compared to the earlier quarter. Results were driven by an
$11 million increase in segment net
interest income, partially attributable to a purchase of prime auto
loans in the Dealer Finance portfolio during the current quarter,
which was largely offset by an increase in the allocated provision
for credit losses primarily due to higher net charge-offs in the
Regional Acceptance loan portfolio due to increased loss
severity.
Specialized Lending
Specialized Lending net income was $55
million for the fourth quarter of 2016, a decrease of
$8 million compared to the earlier
quarter. Segment net interest income was up due to growth in small
ticket dealer-based finance, mortgage warehouse lending and
commercial mortgage, partially offset by lower interest rates on
new loans. Noninterest income increased slightly as a result of
higher commercial mortgage banking income. Noninterest expense was
up $19 million, primarily due to
asset write-downs in the operating lease portfolio as well as
restructuring charges.
Insurance Holdings
Insurance Holdings net income was $34
million for the fourth quarter of 2016, a decrease of
$2 million compared to the earlier
quarter. Noninterest income increased $40
million, which primarily reflects the addition of Swett and
Crawford and higher employee benefit commissions. Noninterest
expense increased $36 million,
primarily due to the Swett & Crawford acquisition, which led to
higher personnel expense and higher occupancy and equipment
expense.
Financial Services
Financial Services net income was $122
million for the fourth quarter of 2016, an increase of
$18 million compared to the earlier
quarter. Segment net interest income increased $16 million, primarily driven by deposit growth
and higher funding spreads on deposits for BB&T Wealth.
Noninterest income increased $45
million, primarily due to higher investment banking and
client derivative income and higher income from SBIC private equity
investments. Noninterest expense increased $23 million, primarily due to higher personnel
and professional services expense.
Other, Treasury & Corporate
Other, Treasury & Corporate generated a net loss of
$7 million in the fourth quarter of
2016, compared to a net loss of $13
million in the earlier quarter. Segment net interest income
decreased $102 million, primarily due
to higher funding credits on deposits allocated to other segments
and the inclusion of Susquehanna results for a portion of the
earlier quarter. Noninterest income increased $44 million, driven by a $52 million improvement in FDIC loss share income
as a result of terminating the loss share agreements in the third
quarter of 2016. The segment allocated $48
million more of expense to other operating segments compared
to the earlier quarter.
CAPITAL RATIOS
(1)
|
|
|
|
|
|
|
|
|
|
|
|
|
4Q16
|
|
3Q16
|
|
2Q16
|
|
1Q16
|
|
4Q15
|
Risk-based:
|
|
|
|
|
|
|
|
|
|
|
Common equity Tier
1
|
|
10.2%
|
|
10.1%
|
|
10.0%
|
|
10.4%
|
|
10.3%
|
Tier 1
|
|
12.0
|
|
11.8
|
|
11.7
|
|
12.2
|
|
11.8
|
Total
|
|
14.1
|
|
14.0
|
|
13.9
|
|
14.6
|
|
14.3
|
Leverage
|
|
10.0
|
|
9.8
|
|
9.6
|
|
10.1
|
|
9.8
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Current
quarter regulatory capital ratios are preliminary.
|
Capital levels remained strong at December 31, 2016.
BB&T declared common dividends of $0.30 per share during the fourth quarter of
2016, which resulted in a dividend payout ratio of 41.0%. Capital
ratios increased during the fourth quarter primarily due to
earnings in excess of dividends. In addition, capital increased
$197 million due to net proceeds for
equity award transactions. BB&T completed $160 million (4.1 million shares) of open market
share repurchases during the fourth quarter. The previously
announced $200 million accelerated
share repurchase ("ASR") program began in December and resulted in
the retirement of 3.4 million shares. The program concluded in
January 2017 with approximately
910,000 additional shares being retired. The conclusion of the ASR
program in January does not impact capital as the full cost was
charged to equity in the fourth quarter. The total payout ratio for
the fourth quarter of 2016 was 101.9%.
BB&T's estimated common equity Tier 1 ratio under Basel III,
on a fully-phased in basis, was approximately 10.0% at
December 31, 2016 and 9.9% at September 30, 2016.
BB&T's liquidity coverage ratio was approximately 121% at
December 31, 2016, compared to the regulatory minimum of 90%.
In addition, the liquid asset buffer, which is defined as high
quality unencumbered liquid assets as a percentage of total assets,
was 12.6% at December 31, 2016.
ASSET QUALITY
(1)
|
|
|
|
|
|
|
|
(dollars in
millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
4Q16
|
|
3Q16
|
|
2Q16
|
|
1Q16
|
|
4Q15
|
Total nonperforming
assets
|
|
$
|
813
|
|
$
|
843
|
|
$
|
886
|
|
$
|
903
|
|
$
|
712
|
Total performing
TDRs
|
|
1,170
|
|
1,072
|
|
1,003
|
|
981
|
|
982
|
Total loans 90 days
past due and still accruing
|
|
636
|
|
592
|
|
610
|
|
609
|
|
677
|
Total loans 30-89
days past due
|
|
1,077
|
|
980
|
|
914
|
|
825
|
|
1,031
|
|
|
|
|
|
|
|
|
|
|
|
Nonperforming loans
and leases as a percentage of loans
and leases held for
investment
|
|
0.51%
|
|
0.53%
|
|
0.56%
|
|
0.58%
|
|
0.42%
|
Nonperforming assets
as a percentage of total assets
|
|
0.37
|
|
0.38
|
|
0.40
|
|
0.42
|
|
0.34
|
Allowance for loan
and lease losses as a percentage of loans
and leases held for
investment
|
|
1.04
|
|
1.06
|
|
1.06
|
|
1.10
|
|
1.07
|
Net charge-offs as a
percentage of average loans and leases,
annualized
|
|
0.42
|
|
0.37
|
|
0.28
|
|
0.46
|
|
0.38
|
Ratio of allowance
for loan and lease losses to net charge-
offs, annualized
|
|
2.47x
|
|
2.91x
|
|
3.88x
|
|
2.40x
|
|
2.83x
|
Ratio of allowance
for loan and lease losses to
nonperforming loans and leases held
for investment
|
|
2.03x
|
|
2.00x
|
|
1.90x
|
|
1.89x
|
|
2.53x
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Includes
amounts related to government guaranteed GNMA mortgage loans that
BB&T has the right but not the obligation to repurchase. See
footnotes on the Credit Quality pages of the Quarterly Performance
Summary for additional information.
|
Nonperforming assets totaled $813
million at December 31, 2016, down $30 million compared to September 30, 2016.
The decrease was driven by a $50
million decline in nonperforming commercial and industrial
loans, primarily due to the sale of several energy-related credits
during the fourth quarter. This decrease was offset by smaller
increases in consumer related portfolios, which were largely due to
seasonal factors. At December 31, 2016, nonperforming loans
and leases represented 0.51% of loans and leases held for
investment, compared to 0.53% at September 30, 2016.
Performing TDRs were up $98
million during the fourth quarter, driven by a $72 million increase in residential mortgage
loans. This increase was primarily the result of the permanent
restructuring of certain mortgage loan modifications that
successfully completed their trial periods.
Loans 30-89 days past due and still accruing totaled
$1.1 billion at December 31,
2016, up $97 million compared to the
prior quarter. This increase was primarily driven by seasonality in
retail portfolios.
Loans 90 days or more past due and still accruing totaled
$636 million at December 31,
2016, up $44 million compared to the
prior quarter, primarily due to an increase in residential mortgage
loans. The ratio of loans 90 days or more past due and still
accruing as a percentage of loans and leases was 0.44% at
December 31, 2016, compared to 0.42% for the prior quarter.
Excluding government guaranteed and acquired from FDIC and PCI
loans, the ratio of loans 90 days or more past due and still
accruing as a percentage of loans and leases was 0.07% at
December 31, 2016, an increase of one basis point compared to
the prior quarter.
Net charge-offs during the fourth quarter totaled $151 million, up $21
million compared to the prior quarter, primarily due to
higher charge-offs on acquired from FDIC and PCI loans, loan sales
and seasonal increases in the retail lending portfolio, partially
offset by lower commercial net charge-offs. As a percentage of
average loans and leases, annualized net charge-offs were 0.42%,
compared to 0.37% in the prior quarter.
The allowance for loan and lease losses, excluding the allowance
for loans acquired from the FDIC and PCI loans, was $1.4 billion, essentially flat compared to the
prior quarter. As of December 31, 2016, the total allowance
for loan and lease losses was 1.04% of loans and leases held for
investment, two basis points lower compared to September 30,
2016.
The allowance for loan and lease losses was 2.03 times
nonperforming loans and leases held for investment, compared to
2.00 times at September 30, 2016. At December 31, 2016,
the allowance for loan and lease losses was 2.47 times annualized
net charge-offs, compared to 2.91 times at September 30, 2016.
The decrease in the charge-off coverage ratio was primarily due to
the higher charge-offs in the acquired from FDIC and PCI
portfolio.
Earnings presentation and Quarterly Performance
Summary
To listen to BB&T's live fourth quarter 2016 earnings
conference call at 8 a.m. (ET) today,
please call 1-888-632-5009 and enter the participant code 5184622.
A presentation will be used during the earnings conference call and
is available on our website at
https://bbt.investorroom.com/webcasts-and-presentations. Replays of
the conference call will be available for 30 days by dialing
888-203-1112 (access code 4313363).
The presentation, including an appendix reconciling non-GAAP
disclosures, is available at
https://bbt.investorroom.com/webcasts-and-presentations.
BB&T's fourth quarter 2016 Quarterly Performance Summary,
which contains detailed financial schedules, is available on
BB&T's website at BBT.com.
About BB&T
As of December 31, 2016, BB&T is one of the largest
financial services holding companies in the U.S. with $219.3 billion in assets and market
capitalization of $38.1 billion.
Based in Winston-Salem, N.C., the
company operates 2,196 financial centers in 15 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 the U.S. Small
Business Administration, Greenwich Associates and others. BB&T
also has been named one of the World's Strongest Banks by
Bloomberg Markets Magazine, one of the top three in the U.S.
and in the top 15 globally. More information about BB&T and its
full line of products and services is available at BBT.com.
Capital ratios are preliminary.
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 these non-GAAP measures provide a
greater understanding of ongoing operations and enhance
comparability of results with prior periods as well as demonstrate
the effects of significant gains and charges in the current period.
The company believes a meaningful analysis of its financial
performance requires an understanding of the factors underlying
that performance. BB&T's management believes 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:
- Tangible common equity and related measures are non-GAAP
measures that exclude the impact of intangible assets and their
related amortization. These measures are useful for evaluating the
performance of a business consistently, whether acquired or
developed internally. The return on average risk-weighted assets is
a non-GAAP measure. BB&T's management uses these measures to
assess the quality of capital and returns relative to balance sheet
risk and believes investors may find them useful in their analysis
of the Corporation.
- The ratio of loans greater than 90 days and still accruing
interest as a percentage of loans held for investment has been
adjusted to remove the impact of loans that were covered by FDIC
loss sharing agreements and purchased credit impaired ("PCI") loans
as well as government guaranteed loans. Management believes their
inclusion may result in distortion of these ratios such that they
might not be comparable to other periods presented or to other
portfolios not impacted by purchase accounting or reflective of
asset collectibility.
- The adjusted efficiency ratio is non-GAAP in that it
excludes securities gains (losses), amortization of intangible
assets, merger-related and restructuring charges and other selected
items. BB&T's management uses this measure in their analysis of
the Corporation's performance. BB&T's management believes this
measure provides a greater understanding of ongoing operations and
enhances comparability of results with prior periods, as well as
demonstrates the effects of significant gains and charges.
- Core net interest margin is a non-GAAP measure that adjusts
net interest margin to exclude the impact of interest income and
funding costs associated with loans and securities acquired in the
Colonial acquisition and PCI loans acquired from Susquehanna and
National Penn. Core net interest margin is also adjusted to remove
the purchase accounting marks and related amortization for non-PCI
loans, deposits and long-term debt acquired from Susquehanna and
National Penn. BB&T's management believes the adjustments to
the calculation of net interest margin for certain assets and
deposits acquired provide investors with useful information related
to the performance of BB&T's earning assets.
A reconciliation of these non-GAAP measures to the most
directly comparable GAAP measure is included in BB&T's Fourth
Quarter 2016 Quarterly Performance Summary, which is available at
BBT.com.
This news release contains "forward-looking statements"
within the meaning of the Private Securities Litigation Reform Act
of 1995, regarding the financial condition, results of operations,
business plans and the future performance of BB&T.
Forward-looking statements are not based on historical facts but
instead represent management's expectations and assumptions
regarding BB&T's business, the economy and other future
conditions. Because forward-looking statements relate to the
future, they are subject to inherent uncertainties, risks and
changes in circumstances difficult to predict. BB&T's actual
results may differ materially from those contemplated by the
forward-looking statements. Words such as "anticipates,"
"believes," "estimates," "expects," "forecasts," "intends,"
"plans," "projects," "may," "will," "should," "could," and other
similar expressions are intended to identify these forward-looking
statements. Such statements are subject to factors that could cause
actual results to differ materially from anticipated results. While
there is no assurance any list of risks and uncertainties or risk
factors is complete, important factors that could cause actual
results to differ materially from those in the forward-looking
statements include the following, without
limitation:
- general economic or business conditions, either nationally
or regionally, may be less favorable than expected, resulting in,
among other things, a deterioration in credit quality and/or a
reduced demand for credit, insurance or other services;
- disruptions to the national or global financial markets,
including the impact of a downgrade of U.S. government obligations
by one of the credit ratings agencies and the adverse effects of
recessionary conditions or market disruptions in Europe, China
or other global markets, including, but not limited to, the
potential exit of the United
Kingdom from the European Union;
- changes in the interest rate environment, including interest
rate changes made by the Federal Reserve or the possibility of a
negative interest rate scenario, as well as cash flow reassessments
may reduce net interest margin and/or the volumes and values of
loans made or held as well as the value of other financial assets
held;
- competitive pressures among depository and other financial
institutions may increase significantly;
- legislative, regulatory or accounting changes, including
changes resulting from the adoption and implementation of the
Dodd-Frank Act may adversely affect the businesses in which
BB&T is engaged;
- local, state or federal taxing authorities may take tax
positions that are adverse to BB&T;
- a reduction may occur in BB&T's credit ratings;
- adverse changes may occur in the securities
markets;
- competitors of BB&T may have greater financial resources
or develop products that enable them to compete more successfully
than BB&T and may be subject to different regulatory standards
than BB&T;
- cybersecurity risks, including "denial of service,"
"hacking" and "identity theft," could adversely affect BB&T's
business and financial performance or reputation, and BB&T
could be liable for financial losses incurred by third parties due
to breaches of data shared between financial institutions;
- natural or other disasters, including acts of terrorism,
could have an adverse effect on BB&T, materially disrupting
BB&T's operations or the ability or willingness of customers to
access BB&T's products and services;
- costs related to the integration of the businesses of
BB&T and its merger partners may be greater than
expected;
- failure to execute on strategic or operational plans,
including the ability to successfully complete and/or integrate
mergers and acquisitions or fully achieve expected cost savings or
revenue growth associated with mergers and acquisitions within the
expected time frames could adversely impact financial condition and
results of operations;
- significant litigation and regulatory proceedings could have
a material adverse effect on BB&T;
- unfavorable resolution of legal proceedings or other claims
and regulatory and other governmental investigations or other
inquiries could result in negative publicity, protests, fines,
penalties, restrictions on BB&T's operations or ability to
expand its business and other negative consequences, all of which
could cause reputational damage and adversely impact BB&T's
financial conditions and results of operations;
- risks resulting from the extensive use of models;
- risk management measures may not be fully
effective;
- deposit attrition, customer loss and/or revenue loss
following completed mergers/acquisitions may exceed
expectations;
- higher-than-expected costs related to information technology
infrastructure or a failure to successfully implement future system
enhancements could adversely impact BB&T's financial condition
and results of operations and could result in significant
additional costs to BB&T; and
- widespread system outages, caused by the failure of critical
internal systems or critical services provided by third parties,
could adversely impact BB&T's financial condition and results
of operations.
Readers are cautioned not to place undue reliance on these
forward-looking statements, which speak only as of the date of this
report. Actual results may differ materially from those expressed
in or implied by any forward-looking statement. Except to the
extent required by applicable law or regulation, BB&T
undertakes no obligation to revise or update publicly any
forward-looking statements for any reason.
To view the original version on PR Newswire,
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SOURCE BB&T Corporation