BB&T reports first quarter EPS totaling $0.29; EPS reduced by $0.40 related to tax adjustment

WINSTON-SALEM, North Carolina, April 18, 2013 /PRNewswire/ -- BB&T Corporation (NYSE: BBT) today reported first quarter 2013 net income available to common shareholders of $210 million, or $0.29 per diluted share. Net income available to common shareholders and earnings per share include the impact of a previously announced $281 million adjustment recorded in connection with an unresolved disputed tax liability. Excluding this adjustment, BB&T's first quarter net income available to common shareholders was $491 million, or $0.69 per diluted share.

Excluding the tax adjustment, net income available to common shareholders increased 13.9% compared to the first quarter of 2012. Diluted EPS for the first quarter, excluding the tax adjustment, increased 13.1% compared to the same period last year.

These earnings produced an annualized return on average assets of 0.57% and a return on average common shareholders' equity of 4.44%. Excluding the tax adjustment, the return on average assets was 1.20% and the return on average common equity was 10.34%.

"We are pleased to report strong earnings for the first quarter despite a challenging environment for lending," said Chairman and Chief Executive Officer Kelly S. King. "Earnings reflect a strong performance from our insurance group and a record production quarter from our mortgage group.

"In addition, we achieved excellent expense control during the quarter with noninterest expenses down 20% on an annualized basis compared to the fourth quarter last year. This decline was led by lower credit-related costs in foreclosed property, professional services and loan-related expenses.

"While average loans decreased slightly during the quarter, this was largely the result of runoff in covered loans and residential ADC. Without this decline, average loans would have increased slightly. In addition, loan growth improved late in the quarter and we expect positive loan growth in the second quarter as seasonal headwinds subside.

"Net operating revenues totaled $2.5 billion for the first quarter, an increase of 5% compared to the first quarter last year," said King. "This substantial growth was generated by stronger insurance revenues resulting from our Crump acquisition and 5% organic growth with improved pricing in commercial property and casualty premiums.

"We continue to make excellent progress in the reduction of credit-related costs and nonperforming assets," said King. "Nonperforming assets declined 8.0% compared to last quarter, including an 18% reduction in foreclosed real estate. Notably, net charge-offs fell to 0.98% of average loans and leases, below 1.00% for the first time since June 2008, and we expect further improvement in coming quarters. In addition, costs related to foreclosed properties decreased to $18 million in the first quarter, a 63% decline compared with last quarter, reflecting significant progress."

First Quarter 2013 Performance Highlights

• Average total loans and leases held for investment decreased 1.4% on an annualized basis compared to the fourth quarter of 2012
  • Average sales finance loans increased 6.0%
  • Average residential mortgage loans decreased 3.4%
  • Average loans in the other lending subsidiaries group decreased 2.5% due to seasonality
  • Average residential ADC loans declined 46.4%
    
    
• Revenues were $2.5 billion for the first quarter, down $73 million from 4Q12
  • Net interest income was $54 million lower primarily due to covered loan run-off
  • Insurance income was up slightly as seasonal declines were offset by firming market conditions
  • Mortgage banking income was down $51 million as margins moved toward more normal levels which offset record originations
  • Investment banking and brokerage continued strong performance
    
    
• Noninterest expenses were down $74 million or 20.2% annualized from 4Q12
  • Personnel expense was down $6 million despite seasonal pressures. FTEs and headcount were down slightly
  • Foreclosed property expense totaled $18 million, down $30 million
  • Loan-related expense was down $15 million
  • Professional services was down $10 million
    
    
• Average noninterest-bearing deposits increased $669 million, or 8.5% on an annualized linked quarter basis
  • Average interest-bearing deposit costs fell to 0.36% this quarter compared to 0.49% in the first quarter of 2012
    
    
• Asset quality measures continued to improve
  • Nonperforming assets decreased $123 million, or 8.0%, excluding covered assets
  • Delinquent loans improved $141 million, or 11.4%, excluding covered loans
  • Foreclosed real estate, excluding covered assets, declined $19 million, or 17.8% to the lowest levels since 3Q07
  • Net charge-offs, excluding covered, totaled 0.98% of average loans for the quarter, down from 1.28% in the first quarter of 2012
    
    
• Capital levels remain strong
  • Tangible common equity was 7.1%
  • Tier 1 common equity was 9.2%
  • Tier 1 risk-based capital was 10.8%
  • Leverage capital remained strong at 8.3%
  • Total capital was 13.6%

Earnings presentation and Quarterly Performance Summary

To listen to BB&T's live first quarter 2013 earnings conference call at 8 a.m. (ET) today, please call 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 BBT.com. Replays of the conference call will be available by dialing 888-203-1112 (access code 4313363) until May 18.

To access the presentation, including an appendix reconciling non-GAAP disclosures, go to www.BBT.com, click on "About" and proceed to "Investor Relations." The presentation can be found under "View Recent Presentations."

BB&T's first quarter 2013 Quarterly Performance Summary, which contains detailed financial schedules, is available on BB&T's website at www.BBT.com/financials.html.

About BB&T

As of March 31, 2013, BB&T is one of the largest financial services holding companies in the U.S. with $181 billion in assets and market capitalization of $22.0 billion. Based in Winston-Salem, N.C., the company operates 1,842 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 J.D. Power and Associates, 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 BBT.com.

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:

• 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.
• Asset quality ratios have been adjusted to remove the impact of acquired loans and foreclosed property covered by FDIC loss sharing agreements from the numerator and denominator of these ratios.  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 believe 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.
• Net income available to common shareholders and diluted EPS have been adjusted to exclude the impact of the $281 million tax adjustment that was recorded in the first quarter of 2013. BB&T management believes these adjustments increase comparability of period-to-period results and uses these measures to assess performance and believes investors may find them useful in their analysis of the Corporation.

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 First Quarter 2013 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.