BB&T 2011 Annual Report Download - page 31

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
Executive Overview
Significant accomplishments in 2011
In the opinion of BB&T’s management, the Corporation’s most significant accomplishments during 2011 were as follows:
• Credit quality improved significantly – nonperforming assets, excluding covered foreclosed property, declined
$1.5 billion, or 38.3%
• Increased cash dividend as a result of improved earnings – maintained one of the highest dividend yields of the
19 stress tested banks
• Total end of period deposits increased 16.5% – mix improved with 24.5% growth in noninterest-bearing deposits
• Total end of period loans increased 3.7% – growth accelerated during the year and diversification improved with
less exposure to higher-risk real estate loans
• Strong performance in specialized lending, large corporate banking, wealth management, payment services,
direct retail lending and mortgage production
• Continued to enhance risk management structure
Challenges
BB&T’s business has become more dynamic and complex in recent years. Consequently, management has annually evaluated
and, as necessary, adjusted the Corporation’s business strategy in the context of the current operating environment. During this
process, management considers the current financial condition and performance of the Company and its expectations for future
economic activity, both on a national and local market scale. The achievement of BB&T’s key strategic objectives and
established long-term financial goals is subject to many uncertainties and challenges. In the opinion of management, the
challenges that are most relevant and likely to have a near term impact on performance are presented below:
• Slow growth in the U.S. economy and economic impact from European crisis
• Intense competition within the financial services industry
• Cost and risk associated with the regulatory initiatives
Overview of Significant Events and Financial Results
The year 2011 was an outstanding year for BB&T considering the challenges facing the economy and financial services
industry. The Company made significant progress towards emerging from the credit cycle. In addition, loan and deposit
growth improved throughout the year, along with an improved diversification mix.
Consolidated net income available to common shareholders for 2011 totaled $1.3 billion, an increase of $473 million, or
58.0%, compared to $816 million earned during 2010. On a diluted per common share basis, earnings for 2011 were $1.83,
compared to $1.16 for 2010. BB&T’s results of operations for 2011 produced a return on average assets of 0.82% and a
return on average common shareholders’ equity of 7.49% compared to prior year ratios of 0.54% and 4.85%, respectively.
BB&T’s revenues for 2011 were $8.8 billion, on a tax-equivalent basis, which was down 6.9% compared to 2010. This
was primarily due to lower noninterest income in the current year. The majority of the decline in noninterest income was
due to fewer net securities gains and a decline in FDIC loss share income. Net interest income, on a taxable-equivalent
basis, was up 3.6% compared to 2010, due to asset growth and a higher net interest margin. The improvement in the net
interest margin reflects higher yields on assets acquired in the Colonial acquisition and lower funding costs.
Credit costs improved significantly during 2011, as nonperforming assets, excluding covered foreclosed property,
declined $1.5 billion, or 38.3%, compared to year-end 2010 and the overall quality of the loan portfolio improved. BB&T
recorded a $1.2 billion provision for credit losses in 2011 compared to a $2.6 billion provision for credit losses recorded
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