) fourth-quarter 2012 earnings of 71 cents per share came a penny
ahead of the Zacks Consensus Estimate. Moreover, this outpaced
the prior-year quarter's earnings of 55 cents.
BB&T CORP (BBT): Free Stock Analysis
BANK OF NY MELL (BK): Free Stock Analysis
M&T BANK CORP (MTB): Free Stock Analysis
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In 2012, BB&T reported earnings of $2.70 per share, lagging
the Zacks Consensus Estimate by a penny. However, this surged 48%
from the last year's earnings of $1.83.
Growth in revenue and a fall in operating expenses, partially
offset by slightly higher provision for credit losses, were
mainly responsible for the improvement in the quarterly results.
Further, overall credit quality showed improvement, while capital
as well as profitability ratios were stable. Moreover,
accelerating growth in loans and low-cost deposits were
Net income available to common shareholders in the fourth quarter
was $506 million, augmenting 29.4% from $391 million in the
prior-year quarter. For 2012, net income stood at $1.9 billion,
increasing 48.6% year over year.
Performance in Details
BB&T reported fourth-quarter total revenues of $2.53 billion,
up 5.1% year over year. Moreover, it surpassed the Zacks
Consensus Estimate of $2.46 billion.
In 2012, total revenue of $9.83 billion grew 12.1% from $8.77
billion in 2011. Additionally, it was ahead of the Zacks
Consensus Estimate of $9.53 billion.
Tax-equivalent net interest income escalated 1.6% year over year
to $1.51 billion. The increase was attributable to lower funding
However, net interest margin fell 18 basis points (bps) year over
year to 3.84%. The decline reflects lower yields on new loans and
securities as well as covered loan run-off, partly offset by the
lower funding costs.
Non-interest income surged 10.6% year over year to $1.02 billion.
The surge was largely buoyed by higher mortgage banking income
and insurance income.
Non-interest expense decreased 8.0% year over year to $1.49
billion. The fall was mainly attributable to a decrease in
foreclosed property expense, partially offset by a rise in
personnel expense as a result of the Crump Insurance and
BB&T's efficiency ratio in the reported quarter stood at
55.3%, rising marginally from 53.5% in the prior-year quarter.
The increase indicates deterioration in profitability.
Average deposits for the reported quarter accelerated 8.1% year
over year to $131.8 billion. Similarly, average loans held for
investment stood at $113.6 billion, up 7.3% year over year.
BB&T's credit quality continued to show improvements. As of
Dec 31, 2012, total non-performing assets (NPAs) declined 10.6%
sequentially and 37.3% year over year to $1.54 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 0.85%, down 12 bps sequentially and 60 bps year over
Similarly, net charge-offs were 1.04% of average loans and
leases, down 4 bps from the prior quarter and 42 bps from the
year-ago quarter. Further, the allowance for loan and lease
losses was 1.70% of total loans and leases held for investment,
excluding covered loans, down from 1.73% as of Sep 30, 2012, and
2.05% as of Dec 31, 2011. The decrease was primarily driven by
improvement in the overall quality of the loan portfolio.
However, provision for credit losses was $256 million, up 14.8%
compared with $223 million in the prior-year quarter. The rise
reflects a smaller reserve release in the reported quarter.
Profitability and Capital Ratios
Profitability metrics exhibited an improvement in 2012. As of Dec
31, 2012, return on average assets stood at 1.14% compared with
0.82% in the prior year. Also, return on average common equity
improved to 10.35% from 7.49% in 2011.
In 2012, BB&T's capital levels remained stable. As of Dec 31,
2012, the Tier 1 risk-based capital ratio and tangible common
equity ratio were 11.4% and 6.9%, respectively, compared with
12.5% and 6.9%, as of Dec 31, 2011.
BB&T's Tier 1 common capital ratio, under the currently
proposed Basel III capital standards, was 8.0% as of Dec 31, 2012
based on the proposed U.S. rules.
The Bank of New York Mellon Corp.
) fourth-quarter 2012 earnings came in line with the Zacks
Consensus Estimate. However, this compares unfavorably with
prior-quarter earnings of 61 cents. The quarterly results were
adversely impacted by lower top line and higher operating
expenses on a sequential basis. However, asset quality continued
to show improvements and capital ratios remained healthy.
Further, BNY Mellon's asset position improved.
M&T Bank Corporation
) fourth-quarter 2012 operating earnings of $2.23 per share beat
the Zacks Consensus Estimate of $2.17. Better-than-expected
results were aided by an increased top line. Moreover, capital
ratios showed improvements. However, an increase in expenses and
deterioration in credit quality metrics were the headwinds for
The growth story at BB&T is impressive, following its organic
expansion as well as acquisitions. The efforts to diversify from
a concentration in real estate lending continues to progress
well, with BB&T reporting an increase in average commercial
and industrial loans, while reducing its other real estate loan
However, BB&T has a wide exposure to problem assets. The
current protracted economic recovery, continuous increase in
operating expenses and various regulatory issues will make it
difficult for the company to significantly improve its top line.
BB&T currently retains a Zacks Rank #3 (Hold). Also,
considering the fundamentals, we maintain a long-term Neutral
recommendation on the shares.