BB&T 2014 Annual Report Download - page 50

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Table of Contents
The allocated provision for loan and lease losses increased $50 million, primarily due to a more normalized volume of charge-offs in the Regional
Acceptance Corporation portfolio after experiencing a lower charge-off volume in the prior year.
Specialized Lending
Specialized Lending net income was $270 million in 2013, an increase of $33 million, or 13.9%, compared to 2012.
Segment net interest income of $552 million decreased $10 million compared to 2012. During the fourth quarter, BB&T sold a consumer lending subsidiary
that focused its business on the nonprime consumer market. The sale of this subsidiary included loans totaling approximately $500 million. In connection
with this sale transaction, loans totaling approximately $230 million were transferred to Residential Mortgage Banking.
Excluding this sales transaction, Specialized Lending grew average balances by $966 million, or 6.9%, over 2012. This increase was primarily driven by
growth in small ticket consumer finance, commercial insurance premium finance and equipment finance.
The allocated provision for loan and lease losses decreased $50 million, which primarily reflects the removal of reserves in connection with the loan sales and
transfers previously discussed. Loss rates are also affected by shifts in the portfolio mix of the underlying subsidiaries.
Insurance Services
Insurance Services net income was $187 million in 2013, an increase of $44 million, or 30.8%, compared to 2012.
Noninterest income was $1.5 billion, an increase of $170 million compared to 2012. The increase reflects the acquisition of Crump Insurance during April
2012, firming market conditions for insurance premiums, organic growth in wholesale and retail property and casualty insurance operations, wholesale life
insurance growth and an experience-based refund of reinsurance premiums totaling $13 million that was received during the second quarter of 2013.
Wholesale property and casualty insurance income increased $59 million, while retail property and casualty insurance income increased $36 million
compared to 2012. Wholesale life insurance income increased $43 million compared to 2012, primarily attributable to the Crump Insurance acquisition.
Higher noninterest income growth was offset by a $119 million increase in noninterest expense, primarily the result of higher salary costs and performance-
based incentives. The increase in noninterest expense was partially attributable to the Crump Insurance acquisition in 2012.
Financial Services
Financial Services net income was $303 million in 2013, an increase of $26 million, or 9.4%, compared to 2012.
Segment net interest income for Financial Services increased $13 million to $448 million in 2013. The increase in segment net interest income during 2013
was primarily attributable to strong organic loan growth and an improved deposit mix, partially offset by lower NIM.
Corporate Banking’s average loan balances increased by $1.6 billion, or 26.5%, in 2013.
The allocated provision for loan and lease losses increased $7 million, primarily attributable to lower reserves in 2012 resulting from improved credit trends
in the commercial and industrial loan portfolio.
Noninterest income for Financial Services increased $20 million, primarily due to higher investment banking and brokerage fees and commissions and trust
and investment advisory revenues. Client invested assets totaled $111.2 billion as of December 31, 2013, an increase of $15.0 billion, or 15.6%, compared to
2012.
Noninterest expense incurred by Financial Services decreased $25 million, primarily due to lower occupancy and equipment expense and an operating
charge-off in the prior year, partially offset by an increase in personnel expense.
49
Source: BB&T CORP, 10-K, February 25, 2015 Powered by Morningstar® Document Research℠
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