BB&T in Winston-Salem, N.C., reported a higher quarterly profit that reflected strong commercial loan growth, higher fee income and other factors.

The $222 billion-asset company said in a press release Thursday that its fourth-quarter net income available to shareholders rose by 4% from a year earlier to $614 million. Its earnings of 77 cents a share matched analysts' estimates compiled by FactSet Research Systems. Revenue rose by 5% to $2.9 billion.

BB&T recorded $43 million in after-tax expenses associated with tax reform. While the company had $43 million in net tax benefits, it absorbed $23 million in expenses after giving one-time bonuses to certain employees and recorded a $63 million expense tied to a contribution to its philanthropic fund.

Kelly King, chairman and CEO of BB&T Corp.
Drilling down
"While average total loans were essentially flat compared with last quarter, core loans increased an annualized 3.9%,” BB&T Chairman and CEO Kelly King says. Bloomberg News

Net interest income increased by 5% to $1.6 billion. Total loans fell by 0.2% to $145 billion, while deposits decreased by 1.8% to $157 billion. The net interest margin expanded by 11 basis points to 3.43%.

Commercial loans increased by 2%, to $59.2 billion, while commercial real estate loans rose by 8% to $21.3 billion.

BB&T’s is purposely decreasing the size of its prime auto and residential mortgage and portfolios.

The loan-loss provision increased by 7% to $138 million. Net chargeoffs fell by 14% to $130 million, while nonperforming assets decreased by 23% to $627 million.

"We had a very strong fourth quarter with record revenues and good expense control," Kelly King, BB&T’s chairman and CEO, said in the release.

"While average total loans were essentially flat compared with last quarter, core loans increased an annualized 3.9%,” King said. “Our credit quality is very strong, as nonperforming assets improved and loans 90 days or more past due and net chargeoffs were relatively stable at very low levels."

Noninterest income increased by 5.4% to $1.2 billion, led by a double-digit increase in service charges tied to deposit accounts. Bankcard and checkcard fees also increased.

Noninterest expense rose by 11% to $1.9 billion, though it included merger-related expenses and actions taken after the passage of tax reform. Excluding those items, noninterest expense increased by 4.8%, as BB&T reduced occupancy expenses and costs associated with outside IT services.

BB&T closed 78 branches and cut 729 jobs during the fourth quarter.

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