BB&T Corporation 's ( BBT ) first-quarter
2013 earnings came in at 69 cents per share, marginally surpassing
the Zacks Consensus Estimate of 67 cents. Moreover, this compares
favorably with the year-ago earnings of 61 cents.BB&T CORP (BBT): Free Stock Analysis ReportBANK OF NY MELL (BK): Free Stock Analysis
ReportCOMERICA INC (CMA): Free Stock Analysis ReportM&T BANK CORP (MTB): Free Stock Analysis
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The year-over-year improvement was primarily attributable to
growth in revenues and lower provision for credit losses, partially
offset by a rise in operating expenses. Further, the overall credit
quality and capital ratios exhibited improvement, while
profitability ratios declined.
After adjusting an unresolved disputed tax liability of $281
million, BB&T's net income available to common shareholders
came in at $210 million. This compares unfavorably with the
prior-year net income of $431 million.
Performance in Details
BB&T reported first-quarter total revenue of $2.46 billion, up
4.9% year over year. Revenues came in line with the Zacks Consensus
Tax-equivalent net interest income waned 1.0% year over year to
$1.46 billion. The decrease was attributable to a decline in
interest income partially offset by lower funding costs.
However, net interest margin fell 17 basis points (bps) year over
year to 3.76%.
Non-interest income surged 14.9% year over year to $1.0 billion.
The surge was largely buoyed by increase in net securities gains,
insurance income and other income, partially offset by decrease in
mortgage banking income.
Non-interest expense rose 2.1% year over year to $1.41 billion.
The rise was mainly attributable to an increase in personnel
expenses and occupancy and equipment expenses as a result of the
Crump Insurance and BankAtlantic acquisitions, partially offset by
a decline in foreclosed property expenses.
BB&T's efficiency ratio in the reported quarter stood at
56.4%, rising from 52.0% in the prior-year quarter. The increase
indicates deterioration in profitability.
Average deposits for the reported quarter enhanced 4.7% year over
year to $130.4 billion. Similarly, average loans held for
investment stood at $113.2 billion, up 5.3% year over year.
BB&T's credit quality continued to show improvement. As of Mar
31, 2013, total non-performing assets (NPAs) declined 8.0%
sequentially and 37.4% year over year to $1.41 billion due to
decreases in non-performing loans and foreclosed real estate and
other foreclosed property. As a percentage of total assets, NPAs
came in at 0.80%, down 5 bps sequentially and 53 bps year over
Similarly, net charge-offs were 1.65% of average loans and leases,
down 5 bps from the prior quarter and 32 bps from the year-ago
quarter. Further, the allowance for loan and lease losses was 1.65%
of total loans and leases held for investment, excluding covered
loans, down from 1.70% as of Dec 31, 2012, and 1.97% as of Mar 31,
2012. The decrease was primarily driven by improvement in the
quality of overall loan portfolio.
Moreover, provision for credit losses was $272 million, down 5.6%
compared with $288 million in the prior-year quarter.
Profitability and Capital Ratios
Profitability metrics exhibited deterioration in 2013. As of Mar
31, 2013, return on average assets stood at 0.57% compared with
1.03% at the end of the prior-year period. Moreover, return on
average common equity deteriorated to 4.44% from 9.75% as of Mar
In 2013, BB&T's capital levels remained almost stable. As of
Mar 31, 2013, the Tier 1 risk-based capital ratio and tangible
common equity ratio were 10.8% and 7.1%, respectively, compared
with 12.0% and 7.1%, as of Mar 31, 2012.
BB&T's Tier 1 common capital ratio, under the currently
proposed Basel III capital standards, was 7.8% as of Mar 31, 2013
based on the proposed rules.
Performances of Other Major Regional Banks
The Bank of New York Mellon Corp . ( BK ) marginally lagged
the Zacks Consensus Estimate. The quarterly results were adversely
affected by a rise in operating expenses and lower net interest
income, partially offset by an almost stable fee income.
However, asset quality continued to show improvements and capital
ratios remained healthy. Further, BNY Mellon's asset position
continued to improve.
Comerica Incorporated 's ( CMA ) and
M&T Bank Corporation 's ( MTB ) first quarter
earnings beat the Zacks Consensus Estimate. Comerica's results
reflected reduced expenses, partially offset by a decline in
revenues. M&T Bank's earnings were primarily aided by reduced
provision for credit losses, partially offset by an increase in
expenses and declining net interest and non-interest income.
BB&T continues to progress well with its efforts to diversify.
However, the company's wide exposure to problem assets, a
protracted economic recovery and various regulatory issues are
expected to mar its top line improvement.
BB&T currently carries a Zacks Rank #3 (Hold).