BB&T reports strong core results; Earnings reduced by mortgage and tax-related charges

WINSTON-SALEM, North Carolina, July 21, 2014 /PRNewswire/ -- BB&T Corporation (NYSE: BBT) today reported second quarter 2014 net income available to common shareholders of $425 million, compared to $547 million earned in the second quarter of 2013. Earnings per diluted common share totaled $0.58 compared to $0.77 in the second quarter last year. The current quarter's results were reduced by mortgage and tax-related reserve adjustments with an after-tax impact that totaled $88 million, or $0.12 per diluted share.

"While BB&T's results for the second quarter were negatively affected by mortgage and tax-related charges, our core results were strong, including 7% annualized growth in average loans and 12% annualized growth in average deposits during the quarter. In addition, revenue grew 3% annualized compared to last quarter and credit quality continued to improve," said Chairman and Chief Executive Officer Kelly S. King.

"Average loan growth was robust in nearly all loan portfolios," said King. "Commercial lending was up across the board during the second quarter, with C&I up 10%, CRE – construction and development up 18%, and CRE – income producing properties up more than 3%. The sales finance portfolio increased 26% during the quarter and the other lending subsidiaries portfolio was up 12%, reflecting seasonally stronger demand.

"Average deposits increased 12% on an annualized basis during the second quarter, and noninterest-bearing deposits were up 14%. Deposit mix has continued to improve, and the cost of interest-bearing deposits dropped one basis point.

"Credit quality continued to improve in the second quarter," said King. "Nonperforming assets, excluding covered assets, declined 7%. Net loan charge-offs fell to 0.40% of average loans and leases, excluding covered loans, which is 35 basis points lower than the same period of 2013 and is at its lowest level in seven years.

"We are also pleased to announce that BB&T completed the acquisition of 21 retail branches in Texas during the second quarter. This acquisition makes BB&T a top 20 bank in the state of Texas and will allow us to accelerate the growth of our franchise in this large and fast growing market. BB&T acquired $1.2 billion in deposits and $112 million in loans in connection with this acquisition.

"Late in the second quarter, BB&T was notified that its FHA-insured loan origination process would be the subject of an audit survey by the Department of Housing and Urban Development. While there are no findings from HUD at this time, in light of announcements made by other financial institutions related to the outcomes of similar audits and related matters and after further review of our exposure, we believe it is prudent to establish reserves in accordance with GAAP," said King. "This has been an industry issue for many FHA originators, and we believe this is the appropriate course of action for BB&T."