UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
Quarterly Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the quarterly period ended:
March 31, 2004
Commission file number: 1-10853
BB&T CORPORATION
(exact name of registrant as specified in its charter)
| North Carolina | 56-0939887 |
| (State of Incorporation) | (I.R.S. Employer Identification No.) |
| 200 West Second Street | 27101 |
| Winston-Salem, North Carolina | (Zip Code) |
| (Address of Principal Executive Offices) |
(336) 733-2000
(Registrant's Telephone Number, Including Area Code)
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [ X ] No [__]
Indicate by check mark whether the Registrant is an accelerated filer (as defined in Rule 12b-2 of the Act). Yes [ X ] No [__]
At April 30, 2004, 554,684,884 shares of the registrant's common stock, $5 par value, were outstanding.
BB&T CORPORATION
FORM 10-Q
March 31, 2004
| Page No. | |
|---|---|
| Part I. FINANCIAL INFORMATION | |
| Item 1. Financial Statements (Unaudited) | 2 |
| Consolidated Financial Statements | 2 |
| Notes to Consolidated Financial Statements | 6 |
| Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations | 20 |
| Analysis of Financial Condition | 22 |
| Market Risk Management | 29 |
| Capital Adequacy and Resources | 33 |
| Analysis of Results of Operations | 35 |
| Item 3. Quantitative and Qualitative Disclosures About Market Risk | 45 |
| Item 4. Controls and Procedures | 45 |
| Part II. OTHER INFORMATION | |
| Item 1. Legal Proceedings | 45 |
| Item 2. Changes in Securities, Use of Proceeds and Issuer Purchases of Equity Securities | 46 |
| Item 6. Exhibits and Reports on Form 8-K | 46 |
| SIGNATURES | 50 |
| CERTIFICATIONS | 51 |
BB&T Corporation Page 1 First Quarter 2004 10-Q
BB&T CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited)
(Dollars in thousands, except per share data)
| March 31, | December 31, | |||||||
|---|---|---|---|---|---|---|---|---|
| 2004 | 2003 | |||||||
| Assets | ||||||||
| Cash and due from banks | $ | 1,867,913 | $ | 2,217,961 | ||||
| Interest-bearing deposits with banks | 250,179 | 271,157 | ||||||
| Federal funds sold and securities purchased under resale agreements or | ||||||||
| similar arrangements | 260,113 | 332,849 | ||||||
| Trading securities at fair value | 364,481 | 693,819 | ||||||
| Securities available for sale at fair value | 17,584,687 | 15,562,954 | ||||||
| Securities held to maturity at amortized cost (fair value:$125 at March 31, 2004 | ||||||||
| and $60,125 at December 31, 2003) | 125 | 60,122 | ||||||
| Loans held for sale | 1,220,935 | 725,459 | ||||||
| Loans and leases, net of unearned income | 63,150,151 | 61,579,927 | ||||||
| Allowance for loan and lease losses | (790,271 | ) | (784,937 | ) | ||||
| Loans and leases, net | 62,359,880 | 60,794,990 | ||||||
| Premises and equipment, net of accumulated depreciation | 1,227,251 | 1,201,342 | ||||||
| Goodwill | 3,837,956 | 3,616,526 | ||||||
| Core deposit and other intangible assets | 552,527 | 401,944 | ||||||
| Other assets | 4,755,456 | 4,587,490 | ||||||
| Total assets | $ | 94,281,503 | $ | 90,466,613 | ||||
| Liabilities and Shareholders' Equity | ||||||||
| Deposits: | ||||||||
| Noninterest-bearing deposits | $ | 11,500,136 | $ | 11,098,251 | ||||
| Savings and interest checking | 4,379,735 | 4,307,069 | ||||||
| Money rate savings | 20,569,144 | 20,348,969 | ||||||
| Certificates of deposit and other time deposits | 27,675,877 | 23,595,496 | ||||||
| Total deposits | 64,124,892 | 59,349,785 | ||||||
| Short-term borrowed funds | 5,748,572 | 7,334,900 | ||||||
| Long-term debt | 10,625,382 | 10,807,700 | ||||||
| Accounts payable and other liabilities | 3,355,829 | 3,039,497 | ||||||
| Total liabilities | 83,854,675 | 80,531,882 | ||||||
| Shareholders' equity: | ||||||||
| Preferred stock, $5 par, 5,000,000 shares authorized, none issued or | ||||||||
| outstanding at March 31, 2004 or at December 31, 2003 | -- | -- | ||||||
| Common stock, $5 par, 1,000,000,000 shares authorized; | ||||||||
| 548,022,164 issued and outstanding at March 31, 2004, and | ||||||||
| 541,942,987 issued and outstanding at December 31, 2003 | 2,740,111 | 2,709,715 | ||||||
| Additional paid-in capital | 3,072,975 | 2,893,812 | ||||||
| Retained earnings | 4,462,600 | 4,309,635 | ||||||
| Unvested restricted stock | (264 | ) | (310 | ) | ||||
| Accumulated other comprehensive income, net of deferred income | ||||||||
| taxes of $82,613 at March 31, 2004, and $13,010 at December 31, 2003 | 151,406 | 21,879 | ||||||
| Total shareholders' equity | 10,426,828 | 9,934,731 | ||||||
| Total liabilities and shareholders' equity | $ | 94,281,503 | $ | 90,466,613 | ||||
The accompanying notes are an integral part of these consolidated financial statements.
BB&T Corporation Page 2 First Quarter 2004 10-Q
BB&T CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
(Dollars in thousands, except per share data)
| For the Three Months Ended | ||||||||
|---|---|---|---|---|---|---|---|---|
| March 31, | ||||||||
| 2004 | 2003 | |||||||
| Interest Income | ||||||||
| Interest and fees on loans and leases | $ | 912,156 | $ | 846,671 | ||||
| Interest and dividends on securities | 165,784 | 206,408 | ||||||
| Interest on short-term investments | 2,509 | 1,801 | ||||||
| Total interest income | 1,080,449 | 1,054,880 | ||||||
| Interest Expense | ||||||||
| Interest on deposits | 166,777 | 207,624 | ||||||
| Interest on short-term borrowed funds | 17,395 | 13,664 | ||||||
| Interest on long-term debt | 89,454 | 141,414 | ||||||
| Total interest expense | 273,626 | 362,702 | ||||||
| Net Interest Income | 806,823 | 692,178 | ||||||
| Provision for loan and lease losses | 62,500 | 63,000 | ||||||
| Net Interest Income After Provision for Loan and Lease Losses | 744,323 | 629,178 | ||||||
| Noninterest Income | ||||||||
| Service charges on deposits | 122,763 | 96,778 | ||||||
| Mortgage banking income | 7,110 | 59,972 | ||||||
| Trust income | 29,985 | 26,009 | ||||||
| Investment banking and brokerage fees and commissions | 76,598 | 52,325 | ||||||
| Insurance commissions | 123,706 | 88,658 | ||||||
| Bankcard fees and merchant discounts | 22,845 | 16,720 | ||||||
| Other nondeposit fees and commissions | 48,789 | 39,552 | ||||||
| Securities gains (losses), net | (511 | ) | 34,234 | |||||
| Other income | 46,893 | 30,673 | ||||||
| Total noninterest income | 478,178 | 444,921 | ||||||
| Noninterest Expense | ||||||||
| Personnel expense | 422,966 | 352,701 | ||||||
| Occupancy and equipment expense | 100,147 | 87,727 | ||||||
| Amortization of intangibles | 24,056 | 6,754 | ||||||
| Professional services | 19,408 | 16,046 | ||||||
| Merger-related and restructuring charges | 9,650 | 4,729 | ||||||
| Other expense | 161,759 | 136,131 | ||||||
| Total noninterest expense | 737,986 | 604,088 | ||||||
| Earnings | ||||||||
| Income before income taxes | 484,515 | 470,011 | ||||||
| Provision for income taxes | 156,015 | 142,263 | ||||||
| Net income | $ | 328,500 | $ | 327,748 | ||||
| Per Common Share | ||||||||
| Net Income: | ||||||||
| Basic | $ | .60 | $ | .70 | ||||
| Diluted | $ | .60 | $ | .69 | ||||
| Cash dividends paid | $ | .32 | $ | .29 | ||||
| Weighted Average Shares Outstanding | ||||||||
| Basic | 546,576,484 | 470,529,359 | ||||||
| Diluted | 550,547,045 | 474,348,203 | ||||||
The accompanying notes are an integral part of these consolidated financial statements.
BB&T Corporation Page 3 First Quarter 2004 10-Q
BB&T CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
For the Three Months Ended March 31, 2004 and 2003
(Unaudited)
(Dollars in thousands)
| Accumulated | ||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Shares of | Additional | Retained | Other | Total | ||||||||||||||||
| Common | Common | Paid-In | Earnings | Comprehensive | Shareholders' | |||||||||||||||
| Stock | Stock | Capital | and Other (1) | Income | Equity | |||||||||||||||
| Balance, December 31, 2002 | 470,452,260 | $ | 2,352,261 | $ | 793,123 | $ | 3,911,821 | $ | 330,709 | $ | 7,387,914 | |||||||||
| Add (Deduct): | ||||||||||||||||||||
| Comprehensive income: | ||||||||||||||||||||
| Net income | -- | -- | -- | 327,748 | -- | 327,748 | ||||||||||||||
| Unrealized holding gains (losses) arising during the | ||||||||||||||||||||
| period on securities available for sale, net of tax of | ||||||||||||||||||||
| $17,874 | -- | -- | -- | -- | (27,957 | ) | (27,957 | ) | ||||||||||||
| Reclassification adjustment for losses (gains) | ||||||||||||||||||||
| on securities available for sale included in net | ||||||||||||||||||||
| income, net of tax of $13,351 | -- | -- | -- | -- | (20,883 | ) | (20,883 | ) | ||||||||||||
| Change in unrealized gains (losses) on securities, net of tax | -- | -- | -- | -- | (48,840 | ) | (48,840 | ) | ||||||||||||
| Change in unrecognized gain (loss) on cash flow hedge, | ||||||||||||||||||||
| net of tax of $17,576 | -- | -- | -- | -- | 26,935 | 26,935 | ||||||||||||||
| Total comprehensive income | -- | -- | -- | 327,748 | (21,905 | ) | 305,843 | |||||||||||||
| Common stock issued: | ||||||||||||||||||||
| In purchase acquisitions | 1,582,968 | 7,915 | 45,596 | -- | -- | 53,511 | ||||||||||||||