BB&T 2014 Annual Report Download - page 46

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Table of Contents
Provision for Income Taxes
BB&T’s provision for income taxes totaled $760 million, $1.4 billion and $764 million for 2014, 2013 and 2012, respectively. BB&T’s effective tax rates for
the years ended 2014, 2013 and 2012 were 25.5%, 44.7% and 27.4%, respectively.
The decrease in the effective tax rate for 2014 compared to 2013 was primarily due to prior year adjustments totaling $516 million related to uncertain tax
positions. During 2013, the U.S. Court of Federal Claims denied BB&T’s refund claim related to the IRS’s disallowance of tax deductions and foreign tax
credits taken in connection with a financing transaction entered into by BB&T in 2002. BB&T has appealed this ruling. The decrease in the effective tax rate
also reflects a net $36 million benefit recorded during 2014 as a result of developments in the IRS’s examination of tax years 2008-2010.
BB&T has extended credit to and invested in the obligations of states and municipalities and their agencies and has made other investments and loans that
produce tax-exempt income. The income generated from these investments, together with certain other transactions that have favorable tax treatment, have
reduced BB&T’s overall effective tax rate from the statutory rate in all periods presented.
Refer to Note 13 “Income Taxes” in the “Notes to Consolidated Financial Statements” for a reconciliation of the effective tax rate to the statutory tax rate and
a discussion of uncertain tax positions and other tax matters.
Segment Results
See Note 21 “Operating Segments” in the “Notes to Consolidated Financial Statements” herein for additional disclosures related to BB&T’s operating
segments, the internal accounting and reporting practices used to manage these segments and financial disclosures for these segments.
Fluctuations in noninterest income and noninterest expense incurred directly by the segments are more fully discussed in the “Noninterest Income” and
“Noninterest Expense” sections above.
2014 compared to 2013
Community Banking
Community Banking had a network of 1,839 banking offices at the end of 2014, an increase of 14 offices compared to December 31, 2013. The increase in
offices was primarily driven by the acquisition of 21 branches in Texas, partially offset by the closure of certain lower volume branches.
Community Banking net income was $923 million in 2014, an increase of $32 million, or 3.6%, compared to 2013.
Segment net interest income totaled $2.9 billion, a decrease of $134 million compared to 2013, primarily due to lower yields on new loans and lower funding
spreads earned on deposits, partially offset by loan and noninterest-bearing deposit growth.
The allocated provision for credit losses decreased $156 million driven by lower business and consumer loan charge-offs, partially offset by a stabilization in
loss factors.
Noninterest income of $1.2 billion increased $18 million, primarily due to higher service charges on deposits and bankcard fees.
Noninterest expense totaled $1.5 billion for 2014. The $157 million decrease was primarily attributable to lower personnel, occupancy and equipment,
professional services and regulatory expense.
Intersegment net referral fees decreased $60 million driven by lower mortgage banking referrals.
Allocated corporate expenses increased $96 million driven primarily by internal business initiatives, including the ongoing implementation of the ERP
system.
During the second quarter of 2014, BB&T completed the acquisition of 21 branches in Texas, which included $1.2 billion in deposits and $112 million in
loans.
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Source: BB&T CORP, 10-K, February 25, 2015 Powered by Morningstar® Document Research℠
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