Ahead Of Suntrust Merger, BB&T Sees Strong Loan Growth, Credit Quality

BB&T Corp., ahead of its planned buy of SunTrust banks, posted results that beat expectations and showed a slight decrease in non-performing assets.

In terms of headline numbers, the company posted adjusted earnings of $1.07 a share that topped expectations by four cents. A consolidated top line of $3 billion edged analyst expectations by about $10 million.

The timing of the merger, according to management, hinges on final regulatory approval, where CEO Kelly King has said the deal might see a fourth-quarter finalization. As recapped in The Winston-Salem Journal on Thursday (Oct. 17), approval for the merger from the North Carolina Commissioner of Banks came in July of this year, and approval from both companies’ boards came that same month. The deal needs further approval from the U.S. Justice Department, the Federal Deposit Insurance Corp. and the Federal Reserve.

The company said in materials released alongside earnings that roughly 75 percent of leadership roles have been named for the combined entity, which will be named Truist.

Total loan income was up 2 percent to $1.6 billion, while the company said provision for loan losses slipped to $117 million. Within fee income, which gained 5.2 percent to $1.3 billion, insurance income gained 8.7 percent to $487 million. The Winston-Salem Journal report noted that the company’s insurance and brokerage operations are among the largest in the United States and the world.

As had been reported in this space earlier in the year, BB&T and SunTrust said the merger between the two banks would create the sixth-largest bank in the country based on assets and deposits, with a combined base of $442 billion in assets, more than $300 billion in loans and $324 billion in deposits across 10 million households in the U.S. The “merger of equals,” as it had been described by the companies, will have cost synergies in place of $1.6 billion.

Drilling down into the supplemental materials offered by the company alongside earnings, BB&T said loan growth was strong, even excluding the impact of mortgage sales. The average loans held for investment stood at $148.7 billion, up from $146.2 billion a year ago; revolving credit reflected an annualized growth rate of 8.4 percent to $3.2 billion. Average client deposits, which span non-interest bearing, interest checking, money market and savings and time deposits, saw a 3.6 percent annualized boost to $145 billion.

The company said net charge-offs were steady, up three basis points year on year (as a percentage of loans) to $153 million. Total non-performing asset ratios slipped by one basis point sequentially to 22 basis points, down five basis points from last year.

In advance of the merger, the company said total non-interest expenses were up a bit more than 5 percent to $1.8 billion, and drilling down, there was a $41 million increase in the third quarter versus the second quarter of this year.