BB&T Corp. (BBT) Misses Q2 EPS by 7c

BB&T Corp. (NYSE: BBT) reported Q2 EPS of $0.62, $0.07 worse than the analyst estimate of $0.69. Revenue for the quarter came in at $2.37 billion versus the consensus estimate of $2.41 billion.

Second Quarter 2015 Performance Highlights

• Taxable equivalent revenues were $2.4 billion for the second quarter, up $23 million from the first quarter of 2015
  • Net interest margin was 3.27%, down six basis points due to lower rates on new loans and runoff of loans acquired from the FDIC
  • Mortgage banking income was up $20 million, an annualized increase of 72.9% that reflects higher mortgage servicing income and higher commercial mortgage fee income due to increased volume
  • Fee income ratio was 46.3%, compared to 45.8% in the prior quarter, reflecting continued revenue diversification
• Noninterest expense was $1.7 billion, up compared to the prior quarter primarily due to a $172 million loss on early extinguishment of debt
  • Personnel expense was up $34 million due to increased production-related incentives due to volume, seasonal increases in fringe benefits and approximately 500 additional full-time equivalent employees, which was primarily due to acquisitions
  • Merger-related and restructuring charges were $12 million higher as a result of increased activity related to The Bank of Kentucky, Susquehanna and AmRisc/American Coastal transactions
  • The adjusted efficiency ratio was 59.2%
• Average loans and leases held for investment increased 3.9% on an annualized basis compared to the first quarter of 2015; up 7.8% excluding residential mortgage
  • Average C&I loans increased 10.6%
  • Average direct retail loans increased 12.6%
  • Average other lending subsidiaries loans increased 13.6%
  • Average residential mortgage loans decreased 7.4%, reflecting the strategic decision to continue to sell conforming mortgage loan production
• Average deposits increased $2.3 billion, or 7.2% annualized, compared to the prior quarter
  • The Texas branch acquisition, completed in late March, contributed approximately $1.7 billion of the average deposit growth
  • The Bank of Kentucky acquisition added approximately $190 million in average deposits as a result of closing on June 19
  • Excluding the impact of these acquisitions, average noninterest-bearing deposits increased $1.4 billion
  • Average interest-bearing deposit costs were 0.24%, down one basis point compared to the prior quarter
  • Deposit mix improved, with average noninterest-bearing deposits representing 31.5% of total deposits, compared to 30.6% in the prior quarter
• Asset quality remained strong
  • Nonperforming assets decreased $36 million, or 4.7%, from March 31, 2015
  • Delinquent loans increased $43 million, primarily due to seasonality
  • The allowance for loan loss coverage ratio was 2.55 times nonperforming loans held for investment at June 30, 2015, versus 2.45 times at March 31, 2015
• Capital levels remained strong across the board
  • Common equity tier 1 to risk-weighted assets was 10.4%, or 10.2% on a fully phased-in basis
  • Tier 1 risk-based capital was 12.1%
  • Total capital was 14.3%
  • Leverage capital was 10.2%
  • Tangible common equity to tangible assets was 8.1%

For earnings history and earnings-related data on BB&T Corp. (BBT) click here.

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