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 BB&T’s Net Income Increases 21.3% in 4th Quarter; Earnings Up 33.8% for the Year
   Monday, January 13, 2003 7:33:25 AM ET

WINSTON-SALEM, N.C., Jan 13, 2003 /PRNewswire-FirstCall/ -- BB&T Corporation (BBT ) reported today record net income for the fourth quarter of 2002 totaling $337.3 million, an increase of 21.3% compared to $277.9 million earned in the fourth quarter of 2001. On a diluted per share basis, net income was $.70, an increase of 14.8% compared to $.61 earned in the same period in 2001. Merger-related charges in the fourth quarter had the effect of reducing earnings per share by $.02.

Excluding costs associated with completing mergers and acquisitions from both 2002 and 2001, operating earnings totaled $343.7 million, an increase of 19.5% compared to 2001. Merger-related charges for the fourth quarter of 2002 totaled $6.5 million on an after-tax basis. The charges resulted primarily from the acquisitions and systems integrations of MidAmerica Bancorp, AREA Bancshares Corporation and F&M National Corporation.

BB&T’s fourth quarter 2002 annualized returns on average assets and average shareholders’ equity were 1.71% and 17.97%, respectively. Excluding merger-related charges, the annualized returns on average assets and average shareholders’ equity were 1.74% and 18.32%, respectively.

Cash basis operating results exclude the effects of intangible assets and related amortization expenses, as well as merger-related charges. Cash basis operating earnings totaled $345.6 million for the fourth quarter of 2002. These results reflect an increase of 13.5% compared with the prior year. Cash basis operating earnings for the current quarter produced an annualized return on average tangible assets of 1.79%, and an annualized return on average tangible shareholders’ equity of 24.58%.

For the year ended Dec. 31, 2002, BB&T’s net income was $1.303 billion, or $2.72 per diluted share. Merger-related charges had the effect of reducing earnings per share by $.03 for the year. Net income and earnings per share reflect increases of 33.8% and 28.3%, respectively, compared with 2001.

Operating earnings for the year ended Dec. 31, 2002 totaled $1.318 billion, an increase of 19.8% compared to 2001. These results exclude $24.7 million in charges resulting from mergers and acquisitions, and $9.8 million in income resulting from the adoption of a new accounting standard.

"I am very pleased to report record operating earnings for both the fourth quarter of 2002 and the full year," said Chairman and Chief Executive Officer John A. Allison. "Our results for 2002 mark the 21st consecutive year that BB&T has achieved record performance. This accomplishment is all the more remarkable in light of the challenging business environment of the last two years. Our success was driven by a strong performance from our noninterest income generating businesses and continued healthy net interest margins.

"Our outlook for 2003 is optimistic, although there remain many challenges and uncertainties with respect to economic conditions in our markets," said Allison. "Assuming the economy recovers in the second half of 2003, we are comfortable with current estimates from analysts who report through First Call and project that we will earn between $2.95 and $3.05 per diluted share in 2003.

"BB&T continues to be a rewarding investment," continued Allison. "During 2002, our total return to shareholders was 5.5%, while the S&P 500 Index decreased 22.1%. Our three year return was 13.9% compared to a decrease of 14.5% for the S&P. BB&T’s five year total return was 5.6%, compared with a decrease of .6% for the S&P 500, and the ten year compound annual total return to shareholders was 17.6% for BB&T, while the S&P increased 9.3% for the 10 year period."

Noninterest Income Businesses Produce Strong Growth

Noninterest income growth was a primary driver of performance during the fourth quarter of 2002. Total noninterest income was $491.4 million for the quarter, an increase of 34.4% compared with the same period in 2001. The primary components of this increase were mortgage banking income, insurance commissions and investment banking and brokerage fees and commissions.

Mortgage banking income totaled $137.8 million for the fourth quarter of 2002, an increase of $98.6 million compared to mortgage banking income from the fourth quarter last year. This substantial increase results from the high volume of mortgage origination activity during the year and resulting increases in origination and servicing fee income. BB&T originated a record $14.1 billion of mortgage loans during 2002, compared to $10.5 billion last year. In the fourth quarter, BB&T originated $5.5 billion, up almost 60% compared to the fourth quarter last year.

BB&T’s revenues from insurance operations totaled $87.6 million in the fourth quarter of 2002, up 75.8% compared with the fourth quarter last year. This significant increase results principally from insurance agencies purchased during 2002, the largest of which was the purchase of CRC Insurance Services, Inc., the nation’s largest independent wholesale insurance brokerage firm. In addition to growth resulting from acquisitions, BB&T enjoyed internal growth of approximately 18%.

Investment banking and brokerage fees and commissions totaled $53.7 million for the quarter, an increase of 19.2% compared with the fourth quarter last year. This increase resulted from higher fixed income securities underwriting fees, retail brokerage fees and investment banking income.

BB&T Receives Recognition as Industry Leader

BB&T’s commitments to client service and employee benefits lead the banking industry according to the results of recent studies by highly regarded financial publications. For the fifth consecutive year, BB&T is one of the top two "small business friendly" financial holding companies in the nation according to the U.S. Small Business Administration. In a separate survey, BB&T was named by J.D. Power as the No. 1 bank in home mortgage customer satisfaction. Finally, BB&T is the second highest ranked bank in Money magazine’s survey of "Corporate America’s Best Benefits."

"We are extremely gratified to be recognized for these achievements," said Allison. "Our success begins with our people. We work hard to hire excellent employees, and train and reward them to enable BB&T to offer world standard service to all of our clients."

Net Interest Income Increases 12%

Net interest income totaled $708.1 million for the fourth quarter of 2002, an increase of $76.0 million, or 12.0% compared to the prior year. The net interest margin was 4.22% in the fourth quarter, up from 4.20% for the fourth quarter last year. For the full year, the net interest margin was 4.25%, an increase of 7 basis points compared to 4.18% in 2001.

Asset Quality Remains Strong

BB&T’s total nonperforming assets, as a percentage of total assets, increased slightly comparing December 31, 2002 and 2001, while net charge-offs as a percentage of average loans decreased modestly in the fourth quarter of 2002 compared to the same period in 2001. Nonperforming assets as a percentage of total assets were .56% at Dec. 31, 2002, up from .53% at the end of 2001, but relatively stable compared to the last four quarters. Annualized net charge-offs were .51% of average loans and leases for the fourth quarter of 2002, compared with .54% for the fourth quarter last year. Excluding losses at BB&T’s specialized lending subsidiaries, annualized net charge-offs for the fourth quarter of 2002 were .41% of average loans and leases.

BB&T Opens Branches in Florida and Expands in Maryland

On Nov. 12, 2002, BB&T opened 11 full-service banking offices and 11 mortgage loan production offices of the former Regional Financial Corporation, which was based in Tallahassee, Fla. The successful integration of Regional Financial marks BB&T’s initial entry into Florida, which contains many of America’s fastest growing markets.

BB&T also announced plans at the end of the third quarter to acquire Equitable Bank of Wheaton, Md. Equitable has $477 million in assets and operates five full-service banking offices in Montgomery and Prince George’s counties. The acquisition will expand BB&T’s presence in very attractive markets in Maryland.

On Dec. 4, 2002, BB&T announced plans to buy Southeastern Fidelity Corporation of Tallahassee, Fla. Combined with Prime Rate Premium Finance Corporation, BB&T’s wholly-owned insurance premium finance subsidiary, the deal will create one of the largest insurance premium finance companies in the Southeast and mid-Atlantic.

BB&T Insurance Services also expanded through acquisitions of quality agencies during the quarter. On Nov. 1, 2002, BB&T acquired Landrum-Yaeger & Associates, Inc. of Tallahassee, Fla. The transaction provided BB&T Insurance with its initial presence in Florida. Also on Nov. 1, 2002, Carolina Insurance Consultants Inc. of Greenville, S.C., was acquired. On Jan. 2, 2003, BB&T completed the acquisition of Cranman & Company, Inc. of Savannah, Ga.

At Dec. 31, 2002, BB&T had $80.2 billion in assets and operated 1,122 banking offices in the Carolinas, Virginia, West Virginia, Kentucky, Georgia, Maryland, Tennessee, Florida, Alabama, Indiana and Washington, D.C. BB&T’s common stock is traded on the New York Stock Exchange under the trading symbol BBT. The closing price of BB&T’s common stock on Jan. 10 was $38.25 per share.

For additional information about BB&T’s financial performance, company news, and products and services, please visit our web site at www.BBandT.com.

Earnings Webcast

To hear a live webcast of BB&T’s fourth quarter 2002 earnings conference call at 10 a.m. (EST) today, please visit our web site at www.BBandT.com. Replays of the conference call will be available through our web site until 5 p.m. (EST) Jan. 31.

This press release contains financial information determined by methods other than in accordance with Generally Accepted Accounting Principles ("GAAP"). BB&T’s management uses these non-GAAP measures in their analysis of the Company’s performance. These measures typically adjust GAAP performance measures to exclude the effects of charges, expenses and gains related to the consummation of mergers and acquisitions, and costs related to the integration of merged entities, as well as the amortization of intangibles in the case of "cash basis" performance measures. These non-GAAP measures may also exclude other significant gains or losses that are unusual in nature or are associated with acquiring and converting merged entities. Since these items and their impact on BB&T’s performance are difficult to predict, management believes presentations of financial measures excluding the impact of these items provide useful supplemental information that is essential to a proper understanding of the operating results of BB&T’s core businesses. These disclosures should not be viewed as a substitute for operating results determined in accordance with GAAP, nor are they necessarily comparable to non-GAAP performance measures which may be presented by other companies.

This press release contains forward-looking statements as defined by federal securities laws. These statements may address issues that involve significant risks, uncertainties, estimates and assumptions made by management. Actual results could differ materially from current projections. Please refer to BB&T’s filings with the Securities and Exchange Commission for a summary of important factors that could affect BB&T’s forward-looking statements. BB&T undertakes no obligation to revise these statements following the date of this press release.

    QUARTERLY PERFORMANCE SUMMARY
    BB&T Corporation  (BBT )
    (Dollars in thousands, except per share data)
                                                                     Percent
                                         For the Three Months Ended Increase
                                          12/31/02       12/31/01  (Decrease)

    INCOME STATEMENT

      Interest income - taxable
        equivalent                       $1,138,023     $1,178,476     (3.4)%

      Interest expense                      395,151        503,471    (21.5)

      Net interest income - taxable
        equivalent                          742,872        675,005     10.1

      Less: Taxable equivalent
        adjustment                           34,801         42,938    (19.0)

        Net interest income                 708,071        632,067     12.0

      Provision for loan & lease
        losses                               84,700         65,000     30.3

        Net interest income after
          provision for loan & lease
          losses                            623,371        567,067      9.9

      Noninterest income (1)                491,370        365,679     34.4

      Noninterest expense (2)               654,315        545,021     20.1

      Income before income taxes            460,426        387,725     18.8

      Provision for income taxes            123,171        109,782     12.2

        Net income                         $337,255       $277,943     21.3 %

    PER SHARE DATA

      Basic Earnings                           $.71           $.61     16.4 %
      Diluted Earnings                          .70            .61     14.8

      Weighted average shares -
        Basic                           474,905,234    454,031,392
        Diluted                         480,065,651    459,369,269
      Dividends paid on common
        shares                                 $.29           $.26     11.5 %
    PERFORMANCE RATIOS

      Return on average assets                 1.71 %         1.56 %
      Return on average equity                17.97          17.93


                                                                     Percent
                                         For the Three Months Ended  Increase
                                          12/31/02       12/31/01   (Decrease)

    OPERATING EARNINGS
      Net Income                           $337,255       $277,943     21.3
       Merger-related charges, net of tax     6,462          9,803    (34.1)
      Operating Earnings                    343,717        287,746     19.5

      Weighted average shares -
        Basic                           474,905,234    454,031,392
        Diluted                         480,065,651    459,369,269

    CASH BASIS OPERATING EARNINGS (5)

      Net Income                           $337,255       $277,943     21.3 %
       Merger-related charges, net of tax     6,462          9,803    (34.1)
        Amortization of intangibles,
         net of tax                           1,847         16,780    (89.0)
      Cash basis operating earnings        $345,564       $304,526     13.5
    PERFORMANCE RATIOS BASED
      ON OPERATING EARNINGS

      Return on average assets                 1.74 %         1.62 %
      Return on average equity                18.32          18.56
      Return on average realized equity (3)   19.08          19.89
      Net yield on earning assets
        (taxable equivalent)                   4.22           4.20
      Efficiency (taxable equivalent) (4)      52.0           50.4
    PERFORMANCE RATIOS BASED  ON
      CASH BASIS OPERATING EARNINGS (5)

      Return on average tangible assets        1.79 %         1.73 %
      Return on average tangible equity       24.58          22.87
      Return on average realized
       tangible equity                        25.96          24.81
      Efficiency ratio (taxable
       equivalent) (4)                         51.7           48.6

    NOTES: Applicable ratios are annualized.
           (1) Excluding purchase accounting transactions, noninterest income
               would have increased $78.3 million, or 21.9%, for the
               quarter compared to the same period in 2001.
           (2) Excluding purchase accounting transactions, noninterest expense
               would have increased $50.3 million, or 9.7%, for the quarter
               compared to the same period in 2001.
           (3) Excludes the effect on average shareholders’ equity of
               unrealized gains (losses) on securities available for sale.
           (4) Excludes securities gains (losses), foreclosed property
               expense and provisions for the impairment of mortgage servicing
               rights.
           (5) Cash basis operating earnings exclude the effect on earnings of
               amortization expense applicable to intangible assets that do
               not qualify as regulatory capital.  Performance ratios based on
               cash basis operating earnings exclude the amortization of
               nonqualifying intangible assets from earnings and the
               unamortized balances of nonqualifying intangibles from
               assets and equity.
            NM - not meaningful.


    QUARTERLY PERFORMANCE SUMMARY
    BB&T Corporation  (BBT )

                                                                     Percent
                                        For the Twelve Months Ended Increase
    (Dollars in thousands, except per     12/31/02       12/31/01   (Decrease)
     share data)
    INCOME STATEMENT

      Interest income - taxable
        equivalent                       $4,584,608     $5,039,480     (9.0)%
      Interest expense                    1,686,584      2,414,936    (30.2)

      Net interest income - taxable
        equivalent                        2,898,024      2,624,544     10.4

      Less: Taxable equivalent
        adjustment                          150,564        190,865    (21.1)

        Net interest income               2,747,460      2,433,679     12.9

      Provision for loan & lease losses     263,700        224,318     17.6

        Net interest income after
          provision for loan & lease
          losses                          2,483,760      2,209,361     12.4

      Noninterest income                  1,692,475      1,380,339     22.6

      Noninterest expense                 2,385,538      2,229,272      7.0

      Income before income taxes
        and change in accounting
         principle                        1,790,697      1,360,428     31.6

      Provision for income taxes            497,468        386,790     28.6

        Income before cumulative effect of
          change in accounting
           principle                      1,293,229        973,638     32.8

        Cumulative effect of change in
          accounting principle                9,780              0       NM

        Net income                       $1,303,009       $973,638     33.8 %

    PER SHARE DATA

      Basic earnings
        Income before cumulative effect
            of change in accounting
             principle                        $2.73          $2.15     27.0 %
        Cumulative effect of change
            in accounting principle             .02              0       NM
        Net Income                             2.75           2.15     27.9
      Diluted earnings
        Income before cumulative effect
            of change in accounting
             principle                         2.70           2.12     27.4
        Cumulative effect of change
            in accounting principle             .02              0       NM
        Net Income                            $2.72          $2.12     28.3 %

      Weighted average shares -
        Basic                           473,303,770    453,188,403
        Diluted                         478,792,558    459,269,330
      Dividends paid on common                $1.10           $.98     12.2 %
        shares
    PERFORMANCE RATIOS

      Return on average assets                 1.72 %         1.41 %
      Return on average equity                18.32          16.78

                                                                     Percent
                                        For the Twelve Months Ended  Increase
    (Dollars in thousands, except per     12/31/02       12/31/01   (Decrease)
     share data)
    OPERATING EARNINGS
      Net Income                         $1,303,009       $973,638     33.8 %
        Merger-related charges, net of
         tax                                 24,706        154,664    (84.0)
        Other, net (4)                       (9,780)       (28,169)   (65.3)
      Operating Earnings                  1,317,935      1,100,133     19.8

      Weighted average shares -
        Basic                           473,303,770    453,188,403
        Diluted                         478,792,558    459,269,330

    CASH BASIS OPERATING EARNINGS (3)

      Net Income                         $1,303,009       $973,638     33.8 %
        Merger-related charges, net of
         tax                                 24,706        154,664    (84.0)
        Other, net                           (9,780)       (28,169)   (65.3)
        Amortization of intangibles,
         net of tax                          12,740         69,032    (81.5)
      Cash basis operating earnings       1,330,675     $1,169,165     13.8
    PERFORMANCE RATIOS BASED
      ON OPERATING EARNINGS

      Return on average assets                 1.74 %         1.60 %
      Return on average equity                18.53          18.96
      Return on average realized equity (1)   19.32          19.88
      Net yield on earning assets
        (taxable equivalent)                   4.25           4.18
      Noninterest income as a percentage
        of total income (taxable
         equivalent) (2)                       36.7           33.4
      Efficiency (taxable equivalent) (2)      51.1           51.4
    PERFORMANCE RATIOS BASED  ON
      CASH BASIS OPERATING EARNINGS (3)

      Return on average tangible assets        1.79 %         1.72 %
      Return on average tangible equity       23.93          23.58
      Return on average realized
       tangible equity (1)                    25.25          24.93
      Efficiency ratio (taxable
       equivalent) (2)                         50.6           49.5

    NOTES:  Applicable ratios are annualized.
           (1) Excludes the effect on average shareholders’ equity of
               unrealized gains (losses) on securities available
               for sale.
           (2) Excludes securities gains (losses), foreclosed property expense
               and provisions for the impairment of mortgage servicing
               rights.
           (3) Cash basis operating results exclude the effect on earnings of
               amortization expense applicable to intangible assets that
               do not qualify as regulatory capital.  Performance ratios based
               on cash basis operating earnings exclude the amortization of
               nonqualifying intangible assets from earnings and the
               unamortized balances of nonqualifying intangibles from
               assets and equity.
           (4) Other, net includes $9.8 million resulting from the cumulative
               effect of adopting a new accounting standard in 2002 and
               $28.2 million resulting from a one-time gain on an investment
               in an electronic transaction processing company offset by a
               provision for the impairment of mortgage servicing rights in
               2001.
           NM - not meaningful.


    QUARTERLY PERFORMANCE SUMMARY
    BB&T Corporation  (BBT )
    (Dollars in thousands)

                                      As of / For the Twelve Months  Percent
                                                  Ended             Increase
                                          12/31/02       12/31/01  (Decrease)

    SELECTED BALANCE SHEET DATA

      End of period balances

      Securities available for sale     $17,599,477    $16,621,684      5.9 %
      Securities held to maturity            55,523         40,496     37.1
      Trading securities                    148,488         97,675     52.0

        Total securities                 17,803,488     16,759,855      6.2

      Commercial loans & leases          28,968,482     25,959,142     11.6
      Consumer loans                     12,896,870     11,214,193     15.0
      Revolving credit loans              1,050,738        951,319     10.5
      Mortgage loans                     10,601,923      9,318,519     13.8

        Total loans and leases           53,518,013     47,443,173     12.8

      Allowance for loan & lease
        losses                              723,685        644,418     12.3
      Other earning assets                  442,570        360,789     22.7

        Total earning assets             71,227,929     64,087,088     11.1

        Total assets                     80,216,816     70,869,945     13.2

      Noninterest-bearing deposits        7,864,338      6,939,640     13.3
      Savings & interest checking         3,071,551      3,013,702      1.9
      Money rate savings                 17,188,942     13,902,088     23.6
      CDs and other time deposits        23,155,185     20,877,845     10.9

        Total deposits                   51,280,016     44,733,275     14.6

      Short-term borrowed funds           5,396,959      6,649,100    (18.8)
      Long-term debt                     13,587,841     11,721,076     15.9

        Total interest-bearing
          liabilities                    62,400,478     56,163,811     11.1

        Total shareholders’ equity       $7,387,914     $6,150,209     20.1 %

      Average balances

      Securities, at amortized cost     $16,939,089    $15,886,732      6.6 %

      Commercial loans & leases          27,974,145     25,263,326     10.7
      Consumer loans                     12,296,444     11,166,382     10.1
      Revolving credit loans                982,923        885,245     11.0
      Mortgage loans                      9,597,905      9,272,827      3.5

        Total loans and leases           50,851,417     46,587,780      9.2

      Other earning assets                  439,097        430,912      1.9

        Total earning assets             68,229,603     62,905,424      8.5

        Total assets                     75,779,033     68,823,029     10.1

      Noninterest-bearing deposits        7,202,129      6,206,746     16.0
      Savings & interest checking         3,363,118      3,361,694      0.0
      Money rate savings                 14,824,396     12,502,120     18.6
      CDs and other time deposits        23,728,465     22,171,321      7.0

        Total deposits                   49,118,108     44,241,881     11.0

      Short-term borrowed funds           5,393,479      6,264,100    (13.9)
      Long-term debt                     12,134,712     11,030,312     10.0

        Total interest-bearing
          liabilities                    59,444,170     55,329,547      7.4

        Total shareholders’ equity       $7,113,490     $5,802,189     22.6 %


    NOTES:  All items referring to loans & leases include loans held for sale
            & are net of unearned income.

SOURCE BB&T Corporation

Copyright (C) 2003 PR Newswire. All rights reserved.



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