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

 BB&T reports strong core results; Earnings reduced by mortgage and tax-related  charges  WINSTON-SALEM, N.C., July 21, 2014 /CNW/ -- 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."  Second Quarter 2014 Performance Highlights        --  Average total loans and leases held for investment increased         7.2% on an annualized basis compared to the first quarter of         2014         o Average C&I loans increased 10.0%         o Average sales finance loans increased 25.5%         o Average CRE - construction and development loans increased           18.3%         o Average loans in the other lending subsidiaries group           increased 12.4%         o Average CRE - income producing properties loans increased           3.5%         o Average direct retail loans increased approximately 8%           adjusted for last quarter's QM transfer     --  Taxable equivalent revenues were $2.3 billion for the second         quarter, an annualized increase of 3.0% compared to the first         quarter         o Net interest margin was 3.43%, down nine basis points           compared with the prior quarter due to lower rates on new           loans and securities, and covered loan runoff         o Mortgage banking income was $12 million higher than the prior           quarter driven by an increase in residential mortgage loan           production and sales         o Bankcard fees and merchant discounts increased $8 million to           a record $70 million     --  Average deposits increased $3.9 billion, or 12.4% annualized,         compared to the prior quarter         o Average noninterest-bearing deposits increased $1.2 billion,           or 14.1%         o Average interest-bearing deposit costs fell one basis point           to 0.26%         o Deposit mix continued to improve, with noninterest-bearing           deposits representing 28.3% of total deposits compared to           25.8% in the same period of last year     --  Asset quality continued to improve         o Nonperforming assets, excluding covered assets, decreased $70           million, or 7.1%         o Net charge-offs, excluding covered, were 0.40% of average           loans for the quarter, the lowest level since 2007         o The allowance for loan loss coverage ratio, excluding covered           loans, increased to 1.78 times nonperforming loans held for           investment in the second quarter compared to 1.70 times in           the first quarter     --  Capital levels remained strong across the board         o Tier 1 common equity to risk-weighted assets was 10.2%         o Tier 1 risk-based capital was 12.0%         o Total capital was 14.3%         o Basel III common equity tier 1 was 10.0%         o Leverage capital remained strong at 9.5%         o Tangible common equity to tangible assets was 7.7%  Earnings presentation and Quarterly Performance Summary  To listen to BB&T's live second quarter 2014 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 Replays of the conference call  will be available by dialing 888-203-1112 (access code 4313363) until August  21, 2014.  The presentation, including an appendix reconciling non-GAAP disclosures, is  available at  BB&T's second quarter 2014 Quarterly Performance Summary, which contains  detailed financial schedules, is available on BB&T's website at  About BB&T  As of June 30, 2014, BB&T is one of the largest financial services holding  companies in the U.S. with $188 billion in assets and market capitalization of  $28.4 billion. Based in Winston-Salem, N.C., the company operates 1,844  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  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, Tier 1 common equity and related ratios         are non-GAAP measures. The return on average risk-weighted         assets is a non-GAAP measure. The Basel III common equity Tier         I ratio reflects management's interpretation of the regulatory         requirements, which is 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 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.     --  Diluted EPS has been adjusted to exclude the impact of certain         adjustments. BB&T's 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.     --  Adjusted net charge-offs and the adjusted ratio of net         charge-offs to average loans are non-GAAP measures that adjust         net charge-offs to exclude the impact of a process change that         resulted in accelerated recognition of charge-offs in the         non-prime automobile lending portfolio during the quarter ended         March 31, 2014. BB&T's management believes these adjustments         increase comparability of period-to-period results and believes         that 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 in BB&T's Second Quarter 2014 Quarterly Performance  Summary, which is available on BB&T's website at  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 our business and         financial performance, or our reputation; and     --  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.  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.    SOURCE  BB&T Corporation  ANALYSTS: Alan Greer, Executive Vice President, Investor Relations, (336)  733-3021; or Tamera Gjesdal, Senior Vice President, Investor Relations, (336)  733-3058; or MEDIA: Cynthia Williams, Senior Executive Vice President,  Corporate Communications, (336) 733-1478  CO: BB&T Corporation ST: North Carolina NI: FIN ERN EST ERN CONF  
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