BB&T reports first quarter results; Adjusted diluted EPS of $0.68 per share

WINSTON-SALEM, North Carolina, April 23, 2015 /PRNewswire/ -- BB&T Corporation (NYSE: BBT) today reported quarterly earnings for the first quarter of 2015. Net income available to common shareholders was $488 million, compared to $496 million earned in the first quarter of 2014. Earnings per diluted common share totaled $0.67 for the quarter, compared to $0.68 for the first quarter of last year. Net income available to common shareholders was affected by $13 million in pre-tax merger-related charges, or $0.01 per diluted share.

"Given the challenges of the current rate environment, I am pleased with our financial performance and other accomplishments during the quarter," said Chairman and Chief Executive Officer Kelly S. King. "We enjoyed solid loan growth, good expense control in a seasonally challenging quarter and outstanding credit quality.

"Revenues for the first quarter were $2.3 billion, up $34 million from the first quarter of 2014. These results were driven by continued strength in our fee-based businesses, with insurance achieving a record quarter. Excluding residential mortgage loans, average loans grew 5.4% compared to last quarter, and our credit metrics improved across the board.

"We are also pleased that the Federal Reserve did not object to our capital plan, which includes an increase in the quarterly dividend to $0.27, a 12.5% increase, three previously announced acquisitions and share buybacks of up to $820 million beginning in the third quarter of 2015," said King.

"On April 1, we announced an agreement to substantially increase our partnership interest in AmRisc and to sell American Coastal Insurance Company, subject to regulatory approval. AmRisc does not assume any underwriting risk and represents an attractive fee income business for BB&T, while the sale of American Coastal Insurance Company will eliminate our exposure to potential underwriting losses in the future.

"We completed the acquisition of 41 branches in Texas, which added approximately $1.9 billion in deposits," said King. "In addition, the pending acquisitions of The Bank of Kentucky and Susquehanna Bancshares are on track to close later this year.

"Capping off a successful first quarter, we achieved a significant milestone by launching our new general ledger system. We are very pleased with this accomplishment as we continue to automate business processes to make our company more efficient," said King.

First Quarter 2015 Performance Highlights

• Taxable equivalent revenues were $2.3 billion for the first quarter, down $49 million from the fourth quarter of 2014
  • Net interest margin was 3.33%, down three basis points compared to the prior quarter due to lower rates on new loans and runoff of loans acquired from the FDIC
  • Insurance income was up $31 million, an annualized increase of 30.7% that reflects seasonal growth in employee benefit commissions
  • Maintained a consistent fee income ratio of 45.8% compared to 46.2% in the prior quarter, reflecting revenue diversification

• Noninterest expense was $1.4 billion, an annualized increase of 8.1% compared to the prior quarter
  • Personnel expense was up $36 million due to higher pension costs and seasonal increases in payroll taxes and fringe benefits, partially offset by a reduction in incentives and a slight headcount reduction
  • Loan-related expense decreased $33 million primarily due to a fourth quarter charge
  • Professional services decreased $14 million due to reduced legal and consulting costs
  • Other expense was up $42 million largely due to prior period benefits for franchise taxes and insurance-related expenses
  • The adjusted efficiency ratio was 58.5%

• Average loans and leases held for investment increased 1.8% on an annualized basis compared to the fourth quarter of 2014; up 5.4% excluding residential mortgage
  • Average C&I loans increased 10.7%
  • Average sales finance loans increased 9.9%
  • Average residential mortgage loans decreased 8.1%, reflecting the strategic decision to sell conforming mortgage loan production

• Average deposits decreased $784 million, or 2.4% annualized, compared to the prior quarter
  • Average noninterest-bearing deposits increased $571 million, or 5.9%
  • Average interest-bearing deposits decreased $1.4 billion, driven by time deposits, which decreased $3.0 billion
  • Average interest-bearing deposit costs were 0.25%, flat compared to the prior quarter
  • Deposit mix improved, with average noninterest-bearing deposits representing 30.6% of total deposits, compared to 30.0% in the prior quarter

• Asset quality continued to improve
  • Nonperforming assets decreased $17 million, or 2.2%, from December 31, 2014
  • Delinquent loans decreased $280 million, or 19.6%
  • The allowance for loan loss coverage ratio was 2.45 times nonperforming loans held for investment in the first quarter, versus 2.39 times in the fourth quarter

• Capital levels remained strong across the board
  • Common equity tier 1 to risk-weighted assets was 10.5%, or 10.3% on a fully phased-in basis
  • Tier 1 risk-based capital was 12.2%
  • Total capital was 14.5%
  • Leverage capital was 10.1%
  • Tangible common equity to tangible assets was 8.0%
    

Earnings presentation and Quarterly Performance Summary

To listen to BB&T's live first quarter 2015 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 www.bbt.com. 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 www.bbt.com.

BB&T's first quarter 2015 Quarterly Performance Summary, which contains detailed financial schedules, is available on BB&T's website at www.bbt.com.

About BB&T

As of March 31, 2015, BB&T is one of the largest financial services holding companies in the U.S. with $189.2 billion in assets and market capitalization of $28.2 billion. Based in Winston-Salem, N.C., the company operates 1,875 financial centers in 12 states and Washington, D.C., and offers a full range of consumer and commercial banking, securities brokerage, asset management, mortgage and insurance products and services. A Fortune 500 company, BB&T is consistently recognized for outstanding client satisfaction by the U.S. Small Business Administration, Greenwich Associates and others. More information about BB&T and its full line of products and services is available at www.bbt.com.

Capital ratios are preliminary. Credit quality data excludes government guaranteed GNMA 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:

• Tangible common equity and related ratios are non-GAAP measures. 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 believes that 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 are or were covered by FDIC loss sharing agreements. Management believes that their inclusion may result in distortion of these ratios such that they might 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. BB&T's management uses these measures in their analysis of the Corporation's performance. BB&T's management believes these 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.
• 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. This measure is useful for evaluating the performance of a business consistently, whether acquired or developed internally.
• 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. BB&T's management believes that the exclusion of the generally higher yielding assets acquired in the Colonial acquisition from the calculation of net interest margin provides investors with useful information related to the relative performance of the remainder 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 First Quarter 2015 Quarterly Performance Summary, which is available on BB&T's website at www.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 that are based on the beliefs and assumptions of the management of BB&T and the information available to management at the time that these disclosures were prepared. 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. Such factors include, but are not limited to, the following:

• 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 credit and financial markets, either nationally or globally, 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 in Europe;
• changes in the interest rate environment and cash flow reassessments may reduce NIM 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 and develop products that enable them to compete more successfully than BB&T and may be subject to different regulatory standards than BB&T;
• natural or other disasters could have an adverse effect on BB&T in that such events could materially disrupt BB&T's operations or the ability or willingness of BB&T's customers to access the financial services BB&T offers;
• costs or difficulties related to the integration of the businesses of BB&T and its merger partners may be greater than expected;
• expected cost savings or revenue growth associated with completed mergers and acquisitions may not be fully realized or realized within the expected time frames;
• significant litigation could have a material adverse effect on BB&T;
• deposit attrition, customer loss and/or revenue loss following completed mergers and acquisitions may be greater than expected;
• cyber-security risks, including "denial of service," "hacking" and "identity theft," could adversely affect BB&T's business, financial performance, or reputation;
• failure to implement part or all of the Company's new ERP system could result in impairment charges that adversely impact BB&T's financial condition and results of operations and could result in significant additional costs to BB&T; and
• failure to execute on the Company's strategic or operational plans, including the ability to successfully complete and/or integrate mergers and acquisitions, 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.

Related Links

http://www.bbt.com