BB&T 2015 Annual Report Download - page 47

TableofContents
The allocated provision for credit losses was a benefit of $107 million in 2014, compared to expense of $12 million in 2013, reflecting the benefit of the
previously discussed sales of residential mortgage loans during 2014 and a decrease in loan balances consistent with the current strategy of selling
substantially all conforming mortgage loan production. Noninterest expense increased $141 million, which primarily reflects a $27 million charge in the
fourth quarter of 2014 related to the previously discussed ongoing review of mortgage processes, as well as adjustments in the second quarter of 2014
totaling $118 million related to the previously discussed FHA-insured loan exposures.
Dealer Financial Services
Dealer Financial Services net income was $183 million in 2014, a decrease of $21 million, or 10.3%, compared to 2013.
The allocated provision for credit losses increased $23 million primarily due to higher charge-offs in the nonprime automobile loan portfolio as credit trends
in that portfolio continue to normalize. Noninterest expense increased $8 million, driven by higher personnel expense, primarily related to Regional
Acceptance Corporation’s geographic expansion, and operating charge-offs.
Dealer Financial Services grew average loans by $1.1 billion, or 10.5%, compared to 2013 as a result of strong growth in both the prime and nonprime auto
lending businesses.
Specialized Lending
Specialized Lending net income was $257 million in 2014, a decrease of $16 million, or 5.9%, compared to 2013.
Segment net interest income decreased $120 million to $432 million, which primarily reflects the sale of a consumer lending subsidiary during the fourth
quarter of 2013 and lower credit spreads on loans earned during 2014. Noninterest income increased $10 million driven by higher operating lease income.
The sale of the specialized lending subsidiary also had a beneficial impact on the allocated provision for credit losses, which decreased $46 million.
Noninterest expense decreased $34 million driven by lower personnel, occupancy and equipment, loan processing and professional services expense.
Small ticket consumer finance, equipment finance, governmental finance and commercial mortgage experienced strong loan growth compared to 2013.
Insurance Services
Insurance Services net income was $233 million in 2014, an increase of $46 million, or 24.6%, compared to 2013.
Insurance Services’ noninterest income of $1.7 billion increased $128 million, primarily due to increased commissions on new and renewal property and
casualty business, higher performance-based commissions and an increase in employee benefit commissions. Noninterest expense increased $54 million
driven by higher salaries, performance-based incentives, operating charge-offs and business referral expense.
Financial Services
Financial Services net income was $282 million in 2014, a decrease of $23 million, or 7.5%, compared to 2013.
Noninterest income increased $22 million, primarily due to higher trust, investment advisory and investment banking income. Client invested assets totaled
$119.0 billion as of December 31, 2014, an increase of $7.8 billion, or 7.0%, compared to 2013.
The allocated provision for credit losses increased $7 million compared to the prior year as a result of growth in the Corporate Banking and BB&T Wealth
loan portfolios. Noninterest expense increased $30 million, primarily due to higher personnel expense, operating charge-offs, sub-advisory fees and
occupancy and equipment expense. Allocated corporate expenses increased $19 million, primarily driven by internal business initiatives and growth in the
segment.
Financial Services continued to generate significant loan growth through expanded lending strategies. Corporate Banking’s average loan balances increased
$1.7 billion, or 23.4%, compared to 2013, while BB&T Wealth’s average loan balances increased $229 million, or 25.6%. BB&T Wealth also grew
transaction account balances by $438 million, or 18.8%, and money market and savings balances by $534 million, or 8.6%, compared to 2013.
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Source: BB&T CORP, 10-K, February 25, 2016 Powered by Morningstar® Document Research℠
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