BB&T reports record second quarter earnings

OREANDA-NEWS. BB&T Corporation (NYSE: BBT) today reported earnings for the second quarter of 2017. Net income available to common shareholders was a record $631 million, up 16.6 percent from the second quarter of 2016. Earnings per diluted common share were $0.77 for the second quarter of 2017. Excluding pre-tax merger-related and restructuring charges of $10 million ($6 million after tax), net income available to common shareholders was $637 million, or $0.78 per diluted share.

Net income available to common shareholders was $378 million ($0.46 per diluted share) for the first quarter of 2017 and $541 million ($0.66 per diluted share) for the second quarter of 2016.

"We are pleased to report record earnings and revenues for the second quarter," said Chairman and Chief Executive Officer Kelly S. King. "Taxable-equivalent revenues were a record $2.9 billion, up 3.9 percent compared to the second quarter of 2016," King said. "Net interest income was up $18 million and noninterest income was up $90 million from last year. In addition, revenues were up an annualized 10.7 percent, from the first quarter of 2017.

"Our credit quality improved further in the second quarter, as we had declines in non-performing assets, net charge-offs, performing TDRs and loans 90 days or more past due."

"We are also pleased to receive the Federal Reserve's non-objection to our capital plan that includes a quarterly dividend of $0.33 per share, an increase of ten percent, and up to $1.88 billion in share repurchases," King said. "This will allow us to continue to provide one of the strongest dividend payouts among all large banks."

Second Quarter 2017 Performance Highlights

• Taxable-equivalent revenues were $2.9 billion for the second quarter, up $75 million from the first quarter of 2017
• Net interest income on a taxable-equivalent basis was up $26 million
• Net interest margin was 3.47 percent, up one basis point; driven by rate increases
• Noninterest income was up $49 million due to higher insurance revenues, investment banking and brokerage fees and commissions and bankcard fees and merchant discounts
• Fee income ratio was 42.7 percent, compared to 42.1 percent for the prior quarter
• Noninterest expense was $1.7 billion, down $360 million compared to the first quarter of 2017
• Decrease includes $392 million loss on debt extinguishment recorded in the prior quarter
• Personnel expense increased $31 million
• Merger-related and restructuring charges decreased $26 million
• GAAP efficiency ratio was 61.0 percent, compared to 75.6 percent for the prior quarter
• Adjusted efficiency ratio was 58.6 percent, compared to 58.0 percent for the prior quarter
• Average loans and leases held for investment were $143.1 billion compared to $142.0 billion for the first quarter of 2017
• Average commercial and industrial loans increased $781 million, or 6.1 percent annualized
• Average other lending subsidiaries loans increased $717 million, or 19.3 percent annualized
• Average total CRE increased $323 million, or 7.0 percent annualized
• Average sales finance loans decreased $446 million, or 16.4 percent annualized
• Average residential mortgage loans decreased $309 million, or 4.2 percent annualized
• Average deposits were $160.3 billion compared to $161.4 billion for the first quarter of 2017
• Average noninterest-bearing deposits increased $1.5 billion, or 11.6 percent annualized
• Deposit mix remained strong, with average noninterest-bearing deposits representing 32.8 percent of total deposits, compared to 31.7 percent in the prior quarter
• Average interest-bearing deposits decreased $2.6 billion and costs were 0.30 percent, up four basis points compared to the prior quarter
• Asset quality continues to improve
• Nonperforming loans were 0.43 percent of loans held for investment, down $111 million
• Loans 90 days or more past due and still accruing were 0.34 percent of loans held for investment, compared to 0.38 percent in the prior quarter
• Loans 30-89 days past due and still accruing were 0.61 percent of loans held for investment, compared to 0.56 percent in the prior quarter
• The allowance for loan loss coverage ratio was 2.43 times nonperforming loans held for investment, versus 2.05 times in the prior quarter
• The allowance for loan and lease losses was 1.03 percent of loans held for investment, slightly down from the prior quarter
• Capital levels remained strong across the board
• Common equity tier 1 to risk-weighted assets was 10.3 percent, or 10.2 percent on a fully phased-in basis
• Tier 1 risk-based capital was 12.1 percent
• Total capital was 14.1 percent
• Leverage capital was 10.1 percent

Second Quarter 2017 compared to First Quarter 2017

Total taxable-equivalent revenues were $2.9 billion for the second quarter of 2017, an increase of $75 million compared to the prior quarter, which reflects an increase of $26 million in taxable-equivalent net interest income, while noninterest income was up $49 million.

The net interest margin was 3.47 percent for the second quarter, up one basis point compared to the prior quarter driven by rate increases. Average earning assets increased $822 million, which primarily reflects an $803 million increase in average securities and a $629 million increase in average total loans. These increases were offset by a decrease of $610 million in other earning assets. Average interest-bearing liabilities decreased $945 million, resulting from a $2.6 billion decrease in interest-bearing deposits, which was partially offset by a $1.0 billion increase in long-term debt and a $643 million increase in short-term borrowings.

The annualized yield on the total loan portfolio for the second quarter was 4.36 percent, up six basis points, reflecting the impact of rate increases. The annualized taxable-equivalent yield on the average securities portfolio for the second quarter was 2.49 percent, up seven basis points compared to the prior quarter.

The average annualized cost of interest-bearing deposits was 0.30 percent, up four basis points compared to the prior quarter. The average annualized rate on long-term debt was 1.91 percent, up eight basis points compared to the prior quarter. The average annualized rate on short-term borrowings was 0.70 percent, up 27 basis points compared to the prior quarter. The higher rates on interest-bearing liabilities reflect the impact of rate increases.

The provision for credit losses was $135 million, which includes a $16 million benefit for purchased credit impaired ("PCI") loans, and net charge-offs were $132 million for the second quarter, compared to $148 million and $148 million, respectively, for the prior quarter.

Noninterest income of $1.2 billion was up $49 million compared to the prior quarter primarily due to increased insurance income, investment banking and brokerage fees and commissions and bankcard fees and merchant discounts.

Noninterest expense was $1.7 billion for the second quarter, down $360 million compared to the prior quarter. This decrease was largely a result of the $392 million loss on the early extinguishment of $2.9 billion of higher-cost FHLB advances recorded in the prior quarter.

The provision for income taxes was $304 million for the second quarter, compared to $104 million for the prior quarter. The effective tax rate for the second quarter was 31.1 percent, compared to 19.6 percent for the prior quarter. The increase in the provision for income tax reflects higher earnings. In addition, the prior quarter tax provision included $35 million of excess tax benefits from equity-based compensation plans.

Second Quarter 2017 compared to Second Quarter 2016

Total taxable-equivalent revenues were $2.9 billion for the second quarter of 2017, an increase of $108 million compared to the earlier quarter. This reflects an increase of $18 million in taxable-equivalent net interest income and an increase of $90 million in noninterest income.

Net interest margin was 3.47 percent, up six basis points compared to the earlier quarter. Average earning assets decreased $1.4 billion. The decrease in average earnings assets reflects a $3.1 billion decrease in average securities partially offset by a $1.2 billion increase in average total loans and leases. Average interest-bearing liabilities decreased $5.6 billion. The decrease in average interest-bearing liabilities reflects an improvement in deposit mix, as average noninterest-bearing deposits increased $3.8 billion and average interest-bearing deposits decreased $3.8 billion. In addition, average long-term debt decreased $1.5 billion. The annualized yield on the total loan portfolio for the second quarter was 4.36 percent, up five basis points compared to the earlier quarter. The annualized taxable-equivalent yield on the average securities portfolio for the second quarter was 2.49 percent, up two basis points compared to the earlier period.

The average annualized cost of interest-bearing deposits was 0.30 percent, up seven basis points compared to the earlier quarter. The average annualized rate on long-term debt was 1.91 percent, down 19 basis points compared to the earlier quarter primarily due to benefits from the early extinguishment of higher-cost FHLB advances. The average annualized rate on short-term borrowings was 0.70 percent, up 36 basis points compared to the earlier quarter.

The provision for credit losses was $135 million, which includes a $16 million benefit for PCI loans, compared to $111 million in the earlier quarter. Net charge-offs for the second quarter of 2017 totaled $132 million compared to $97 million for the earlier quarter.

Noninterest income was $1.2 billion, an increase of $90 million from the earlier quarter. This increase was driven by higher insurance income, FDIC loss share income and bankcard fees and merchant discounts. These increases were partially offset by a decline in mortgage banking income compared to the earlier quarter.

Noninterest expense for the second quarter of 2017 was $1.7 billion, down $55 million compared to the earlier quarter. This decrease was driven by lower merger-related and restructuring charges in the current year.

The provision for income taxes was $304 million for the second quarter of 2017, compared to $252 million for the earlier quarter. This produced an effective tax rate for the second quarter of 2017 of 31.1 percent, compared to 30.0 percent for the earlier quarter.

Second Quarter 2017 compared to First Quarter 2017

Noninterest income was $1.2 billion for the second quarter, up $49 million compared to the prior quarter primarily due to increased insurance income, investment banking and brokerage fees and commissions and bankcard fees and merchant discounts.

Insurance income increased $23 million primarily due to seasonality. Bankcard fees and merchant discounts increased $16 million primarily due to a reduction in the accrual for rewards and an increase in volumes. Investment banking and brokerage fees and commissions increased $14 million, as several deals closed this quarter.

Second Quarter 2017 compared to Second Quarter 2016

Noninterest income for the second quarter of 2017 was up $90 million compared to the earlier quarter. This increase was driven by higher insurance income, FDIC loss share income and bankcard fees and merchant discounts. These increases were partially offset by a decline in mortgage banking income compared to the earlier quarter.

FDIC loss share income increased $64 million due to the termination of the loss sharing agreements during the third quarter of 2016. Insurance income increased $16 million, primarily due to the timing of wholesale commission payments. Bankcard fees and merchant discounts increased $15 million primarily due to a reduction in the accrual for rewards and an increase in volumes.

Mortgage banking income decreased $17 million primarily resulting from lower gains on the net MSR valuation during the current quarter.

Second Quarter 2017 compared to First Quarter 2017

Noninterest expense was $1.7 billion for the second quarter, down $360 million compared to the prior quarter. This decrease was largely a result of the $392 million loss on the extinguishment of $2.9 billion of higher-cost FHLB advances recorded in the prior quarter. In addition, merger-related and restructuring charges decreased $26 million compared to the prior quarter.

Personnel expense increased $31 million, primarily due to an increase of $34 million from higher incentives due to improved performance. Professional services expense increased $16 million compared to the prior quarter and outside IT expense decreased $10 million; both of which were primarily due to expenses related to BSA/AML efforts. Other expense increased $16 million compared to the prior quarter, primarily due to higher operating charge-offs, charitable donations and employee travel.

Merger-related and restructuring charges decreased $26 million compared to the prior quarter. The decrease largely relates to the write-off of certain capitalized costs on software never placed in service and the writedown of real estate in connection with restructuring activities, both of which were recorded in the prior quarter.

Second Quarter 2017 compared to Second Quarter 2016

Noninterest expense for the second quarter of 2017 was down $55 million compared to the earlier quarter. This decrease was driven by lower merger-related and restructuring charges in the current year.

Personnel expense was essentially flat. Salaries and incentives expense was higher by $20 million, which was mostly offset by a decrease of $17 million in employee benefits expense. The decrease in employee benefits expense was related to certain post-employment benefits, which is largely offset in other income.

Merger-related and restructuring charges decreased $82 million, primarily the result of acquisitions and restructuring activities in the earlier quarter.

Professional services expense increased $12 million compared to the earlier quarter due to an increase in BSA/AML related services.

Regulatory charges were up $4 million primarily due to a $21 million FDIC insurance premium surcharge, which was partially offset by a lower assessment rate.

Average loans held for investment for the second quarter of 2017 were $143.1 billion, up $1.1 billion, or 3.0 percent compared to the first quarter of 2017. Excluding planned runoff from sales finance loans, residential mortgage loans and PCI loans, average loans held for investment increased $1.9 billion, or an annualized 7.5 percent compared to the prior quarter.

Average commercial and industrial loans increased $781 million due to growth from the Financial Services and Community Banking segments, as well as seasonal growth from mortgage warehouse lending. In addition, average CRE-income producing properties increased $262 million. Average other lending subsidiaries loans increased $717 million, which includes an increase due to the purchase of a near-prime automobile portfolio late in the first quarter with the remaining increase due to seasonality and strong growth in small ticket consumer finance, commercial mortgage lending and premium finance.

Average sales finance loans decreased $446 million, as we are strategically optimizing the size of this portfolio and directing investments towards higher-yielding assets. In addition, average residential mortgage loans decreased $309 million as all conforming loans continue to be sold in the secondary market.

Average deposits for the second quarter were $160.3 billion, down $1.1 billion compared to the prior quarter.

Average noninterest-bearing deposits increased $1.5 billion, primarily due to increases in commercial balances.

Interest checking decreased $729 million, primarily due to decreases in public funds and commercial balances.

Money market and savings decreased $563 million primarily due to commercial balances.

Average time deposits decreased $836 million due to decreases in commercial and personal balances.

Average foreign office deposits decreased $470 million due to changes in the overall funding mix.

Noninterest-bearing deposits represented 32.8 percent of total average deposits for the second quarter, compared to 31.7 percent for the prior quarter and 30.4 percent a year ago. The cost of interest-bearing deposits was 0.30 percent for the second quarter, up four basis points compared to the prior quarter.

During the second quarter of 2017, a change was made in the method for allocation of capital to the operating segments impacting both the allocated balances and funding credit. Results for prior periods have been revised to reflect the new allocations.

Second Quarter 2017 compared to First Quarter 2017

Community Banking

Community Banking serves individual and business clients by offering a variety of loan and deposit products and other financial services. The segment is primarily responsible for acquiring and servicing client relationships.

Community Banking net income was $345 million for the second quarter of 2017, an increase of $5 million compared to the prior quarter. Segment net interest income increased $32 million due to improved funding spreads on deposits, loan and deposit growth and one additional day in the current quarter. Noninterest income increased $28 million with increases across all categories and primarily driven by higher bankcard fees and merchant discounts due in part to a reduction in the accrual for rewards as well as increased service charges on deposits.

The allocated provision for credit losses increased $38 million primarily due to an increase in loss estimates, higher net charge-offs and loan growth. Noninterest expense increased $22 million driven by higher operating charge-offs, personnel expense and donations and contributions expense.

Residential Mortgage Banking

Residential Mortgage Banking originates and purchases mortgage loans to either hold for investment or sell to third-parties. BB&T generally retains the servicing rights to loans sold. Mortgage products include fixed and adjustable-rate government guaranteed and conventional loans used for the purpose of constructing, purchasing or refinancing residential properties. Substantially all of the properties are owner-occupied. Residential Mortgage Banking also includes Mortgage Warehouse Lending which provides short-term lending solutions to finance first-lien residential mortgages held-for-sale by independent mortgage companies.

Residential Mortgage Banking net income was $46 million for the second quarter of 2017, a decrease of $8 million compared to the prior quarter. This decrease was primarily due to higher personnel expense, loan processing expense and allocated provision for credit losses.

During the second quarter of 2017, residential mortgage loans totaling $300 million were sold, which included $40 million of nonaccrual loans and $199 million of performing TDRs.

Dealer Financial Services

Dealer Financial Services originates loans to consumers for the purchase of automobiles. These loans are originated on an indirect basis through approved franchised and independent automobile dealers throughout BB&T's market area through BB&T Dealer Finance, and on a national basis through Regional Acceptance Corporation. Dealer Financial Services also originates loans for the purchase of recreational and marine vehicles. In conjunction with Community Banking, Dealer Financial Services provides financing and servicing to dealers for their inventories in Community Banking's footprint.

Dealer Financial Services net income was $38 million for the second quarter of 2017, an increase of $9 million compared to the prior quarter. Results were primarily driven by a $14 million decrease in the allocated provision for credit losses, which was largely the result of seasonally lower net charge-offs in the Regional Acceptance loan portfolio.

Dealer Financial Services average loans held for investment decreased $115 million, or 2.9 percent annualized, primarily due to the strategy to optimize the auto portfolio.

Specialized Lending

Specialized Lending consists of businesses that provide specialty finance solutions to commercial and consumer clients including: commercial finance, tax-exempt financing for local governments and special-purpose districts, equipment leasing, full-service commercial mortgage banking, commercial and retail insurance premium finance and small ticket dealer-based financing of equipment for consumers and small businesses.

Specialized Lending net income was $54 million for the second quarter of 2017, an increase of $3 million compared to the prior quarter. This increase was primarily due to a lower allocated provision for credit losses.

Specialized Lending average loans held for investment increased $621 million, or 15.7 percent annualized, primarily due to higher small ticket dealer-based finance, commercial mortgage and insurance premium finance loans.

Insurance Holdings

BB&T's insurance agency / brokerage network is the fifth largest in the United States and in the world. Insurance Holdings provides property and casualty, life and health insurance to businesses and individual clients. It also provides small business and corporate products, such as workers compensation and professional liability, as well as surety coverage and title insurance.

Insurance Holdings net income was $55 million in the second quarter of 2017, an increase of $9 million compared to the prior quarter. Noninterest income increased $21 million, driven by seasonally higher property and casualty insurance commissions and other insurance commissions, partially offset by seasonally lower employee benefit commissions. This increase was partially offset by higher personnel expense.

Financial Services

Financial Services provides personal trust administration, estate planning, investment counseling, wealth management, asset management, employee benefits services, corporate banking and corporate trust services to individuals, corporations, institutions, foundations and government entities. In addition, Financial Services offers clients a variety of investment services, including discount brokerage services, equities, annuities, mutual funds and government bonds through BB&T Investment Services, Inc. The segment includes BB&T Securities, a full-service brokerage and investment banking firm, and the Corporate Banking Division, which originates and services large corporate relationships, syndicated lending relationships and client derivatives. The segment also includes the company's SBIC private equity investments.

Financial Services net income was $115 million in the second quarter of 2017, an increase of $23 million compared to the prior quarter. Noninterest income increased $14 million primarily due to higher investment banking and brokerage fees and commissions as several deals closed this quarter. Segment net interest income increased $12 million due to improved funding spreads on deposits, loan growth and one additional day in the current quarter.

The allocated provision for credit losses decreased $18 million due to a decline in net charge-offs and a decrease in loss estimates related to commercial and industrial loans. Noninterest expense increased $12 million due to higher personnel expense driven by improved production.

Corporate Banking's average loans held for investment increased $327 million, or an annualized 9.1 percent, compared to the prior quarter, while BB&T Wealth's average loans held for investment increased $72 million, or an annualized 18.2 percent. Corporate Banking's average transaction account deposits decreased $69 million, or 11.6 percent on an annualized basis compared to the prior quarter. BB&T Wealth's average transaction account deposits increased $43 million, or 3.8 percent on an annualized basis.

Other, Treasury & Corporate

Net income in Other, Treasury & Corporate can vary due to the changing needs of the Corporation, including the size of the investment portfolio, the need for wholesale funding and income received from derivatives used to hedge the balance sheet.

Other, Treasury & Corporate net income was $21 million for the second quarter of 2017, an increase of $207 million compared to the prior quarter. Segment net interest income decreased $21 million due to an increase in long-term debt, an increase in the net credit for funds provided to other operating segments and a decrease in PCI loans, partially offset by an increase in securities. Noninterest income fell primarily due to lower income related to assets for certain post-employment benefits.

Noninterest expense decreased $408 million due to the first quarter loss of $392 million on the early extinguishment of higher-cost FHLB advances, as well as a decline in merger-related and restructuring charges and lower expense related to assets for certain post-employment benefits, partially offset by higher employee incentive expense and employee insurance expense. The allocated provision for credit losses decreased $20 million primarily due to a provision benefit recorded in the current period for PCI loans. The provision for income taxes increased $179 million due to higher pre-tax income and $35 million of excess tax benefits from equity-based compensation plans in the first quarter.

Second Quarter 2017 compared to Second Quarter 2016

The financial information related to National Penn's operations was included in the Other, Treasury & Corporate segment until the systems conversion, which occurred during July 2016. The majority of National Penn's operations are now included in Community Banking.

Community Banking

Community Banking net income was $345 million for the second quarter of 2017, an increase of $43 million compared to the earlier quarter. Segment net interest income increased $99 million driven by higher funding spreads on deposits as well as loan and deposit growth partially from the acquisition of National Penn. Noninterest income increased $34 million due to higher bankcard fees and merchant discounts, service charges on deposits and checkcard fees, partially driven by the National Penn acquisition. Bankcard and merchant discounts benefited from a reduction in the accrual for rewards and increased transaction volumes.

The allocated provision for credit losses increased $40 million primarily due to an increase in loss estimates related to commercial real estate loans and higher net charge-offs. Noninterest expense increased $22 million, driven by higher personnel expense and occupancy and equipment expense which were primarily attributable to the National Penn acquisition as well as an increase in operating charge-offs. Allocated corporate expense increased largely due to the National Penn acquisition.

Residential Mortgage Banking

Residential Mortgage Banking net income was $46 million for the second quarter of 2017, a decrease of $9 million compared to the earlier quarter. Segment net interest income decreased due to a decline in average loans. Noninterest income decreased primarily due to lower net mortgage servicing income. Noninterest expense decreased due to declines in loan processing expense, personnel expense and operating charge-offs.

Dealer Financial Services

Dealer Financial Services net income was $38 million for the second quarter of 2017, a decrease of $13 million compared to the earlier quarter. This decrease was driven by a $23 million increase in the allocated provision for credit losses, which was primarily due to higher net charge-offs and an increase in the allowance for loan and lease losses, both due to increased loss severity.

Specialized Lending

Specialized Lending net income was $54 million for the second quarter of 2017, a decrease of $3 million compared to the earlier quarter.

Specialized Lending average loans increased $1.6 billion, or 10.8 percent, primarily due to higher insurance premium finance, equipment finance and commercial mortgage loans.

Insurance Holdings

Insurance Holdings net income was $55 million for the second quarter of 2017, an increase of $13 million compared to the earlier quarter. Noninterest income increased $18 million primarily due to the timing of wholesale commission payments and other commission income.

Financial Services

Financial Services net income was $115 million for the second quarter of 2017, an increase of $30 million compared to the earlier quarter. Segment net interest income increased $16 million, primarily driven by loan and deposit growth and higher funding spreads on deposits, partially offset by lower credit spreads on loans for Corporate Banking. Noninterest income increased $18 million, primarily due to higher trust and investment advisory fees, investment banking and brokerage fees and commissions, and hedge and client derivative income.

The allocated provision for credit losses decreased $23 million due to a decline in loss estimates related to commercial and industrial loans and lower net charge-offs. Allocated corporate expenses rose due to increased investments in business initiatives and additional support area costs. Noninterest expense increased due to higher personnel expense, partially offset by lower merger-related and restructuring charges.

Other, Treasury & Corporate

Other, Treasury & Corporate net income was $21 million in the second quarter of 2017, an increase of $26 million compared to the earlier quarter. Segment net interest income decreased $98 million primarily due to the inclusion of National Penn results in the earlier quarter. Noninterest income increased $32 million, driven by a $64 million improvement in FDIC loss share income as a result of terminating the loss share agreements in the third quarter of 2016. This increase was partially offset by a decline in income related to assets for certain post-employment benefits.

Noninterest expense decreased $76 million due to lower merger-related and restructuring charges and personnel expense, both primarily due to the inclusion of National Penn results in the earlier quarter. These decreases were partially offset by higher professional services expense related to BSA/AML efforts. The segment allocated $31 million of additional corporate expenses to other operating segments compared to the earlier quarter. The allocated provision for credit losses decreased primarily due to a provision benefit recorded in the current period for PCI loans.

Capital levels remained strong at June 30, 2017. BB&T declared common dividends of $0.30 per share during the second quarter of 2017, which resulted in a dividend payout ratio of 38.4 percent. BB&T completed $160 million of open market share repurchases during the second quarter. The total payout ratio for the second quarter of 2017 was 63.8 percent.

BB&T's estimated common equity Tier 1 ratio under Basel III, on a fully-phased in basis, was approximately 10.2 percent at June 30, 2017 and 10.1 percent at March 31, 2017.

BB&T's liquidity coverage ratio was approximately 122 percent at June 30, 2017, compared to the regulatory minimum of 100 percent. In addition, the liquid asset buffer, which is defined as high quality unencumbered liquid assets as a percentage of total assets, was 13.0 percent at June 30, 2017.

During the second quarter, the Company completed the sale of residential mortgage loans with a carrying value before allowance for loan losses of $300 million. The sale included $40 million of nonaccrual loans and $199 million of performing TDRs.

Nonperforming assets totaled $690 million at June 30, 2017, down $111 million compared to March 31, 2017. The decrease was driven by a $49 million decline in nonperforming commercial and industrial loans, primarily due to payoffs, sales and writedowns and a $41 million decline in nonperforming residential mortgage loans due to the previously mentioned loan sale. Nonperforming loans and leases represented 0.43 percent of loans and leases held for investment, an improvement of eight basis points compared to March 31, 2017.

Performing TDRs were down $158 million during the second quarter, driven by the previously mentioned loan sale.

Loans 90 days or more past due and still accruing totaled $493 million at June 30, 2017, down $49 million compared to the prior quarter, primarily due to a decrease in residential mortgage loans. The ratio of loans 90 days or more past due and still accruing as a percentage of loans and leases was 0.34 percent at June 30, 2017, compared to 0.38 percent for the prior quarter. Excluding government guaranteed and PCI loans, the ratio of loans 90 days or more past due and still accruing as a percentage of loans and leases was 0.05 percent at June 30, 2017, a decrease of one basis point compared to the prior quarter.

Loans 30-89 days past due and still accruing totaled $874 million at June 30, 2017, up $69 million compared to the prior quarter. This increase was primarily due to seasonality in other lending subsidiaries retail portfolios.

Net charge-offs during the second quarter totaled $132 million, down $16 million compared to the prior quarter. As a percentage of average loans and leases, annualized net charge-offs were 0.37 percent, down five basis points compared to the prior quarter. Net charge-offs for the current quarter include $16 million recorded in connection with the residential mortgage loan sale previously mentioned.

The allowance for loan and lease losses, excluding the allowance for PCI loans, was $1.5 billion, up $14 million compared to the prior quarter. As of June 30, 2017, the total allowance for loan and lease losses was 1.03 percent of loans and leases held for investment, down slightly compared to March 31, 2017.

The allowance for loan and lease losses was 2.43 times nonperforming loans and leases held for investment, compared to 2.05 times at March 31, 2017. At June 30, 2017, the allowance for loan and lease losses was 2.80 times annualized net charge-offs, compared to 2.49 times at March 31, 2017.

 

About BB&T

BB&T is one of the largest financial services holding companies in the U.S. with $221.2 billion in assets and market capitalization of $36.7 billion as of June 30, 2017. Building on a long tradition of excellence in community banking, BB&T offers a wide range of financial services including retail and commercial banking, investments, insurance, wealth management, asset management, mortgage, corporate banking, capital markets and specialized lending. Based in Winston-Salem, N.C., BB&T operates over 2,100 financial centers in 15 states and Washington, D.C. A Fortune 500 company, BB&T was recognized as one of Forbes' 2017 Best Banks in America and is consistently recognized for outstanding client service by Greenwich Associates for small business and middle market banking. More information about BB&T and its full line of products and services is available at BBT.com.