Mortgage

BB&T residential mortgage loans “decreases as planned” in Q3

But mortgage banking revenue increases

BB&T Corp. reported its earnings Thursday which showed a decrease in mortgage banking, however the bank explained this drop was already planned.

The bank’s total loans declined 1.1% from the second to the third quarter, led primarily by a decrease in prime auto, residential mortgage and PCI loans.

“While average total loans declined 1.1% annualized compared with last quarter, core loans increased 3.2%, which excludes prime auto, residential mortgage and PCI loans that are decreasing as planned,”BB&T Chairman and CEO Kelly King said. “Our credit quality is very strong, as nonperforming assets and loans 90 days or more past due were relatively stable and net charge-offs improved from already low levels.”

Averaged residential mortgage loans decreased $468 million, or 6.3%, from last year to $28.9 billion in the third quarter. However, despite this decrease in loans, mortgage banking income increased, partially offsetting the quarterly drop of $54 million in noninterest income to $1.2 billion in the third quarter.

Total mortgage banking income increased a full 21.3% from the second quarter’s $94 million to $114 million in the third quarter. However, this was still down 26% from $154 million in the third quarter of 2016.

Overall the bank’s revenues increased slightly in the third quarter. Total taxable-equivalent revenue increased by $40 million to $2.85 billion in the third quarter, up from $2.81 billion the year before. However, this is a decrease of $41 million from the second quarter’s $2.9 billion.

Net income held relatively steady with a decrease of just 0.3% from last year’s $599 million to $597 million in the third quarter. This is down 5.4% from the second quarter’s $631 million.

Diluted earnings per common share increased just 1.4% from $0.73 per share last year to $0.74 per share in the third quarter. This is down 3.9% from $0.77 in the second quarter.

“We had a solid quarter with growth in revenues and good expense control,” King said. “Taxable-equivalent revenues were $2.9 billion, up 1.4% compared to the third quarter of 2016 and net interest income was up $38 million driven by higher interest rates.”

“Total expenses for the quarter were $1.7 billion and our GAAP efficiency was 62%, primarily due to restructuring charges as we continue to optimize our structure,” he said. “Our year-to-date adjusted efficiency ratio of 58.3% is the lowest level in four years.”

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