BBVA USA Bancshares, Inc. - FORM 8-K - EX-99.1 - EXHIBIT 99.1

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8-K - 8-K - BBVA USA Bancshares, Inc.	bbvausabancinc093020208k.htm

Exhibit 99.1

October 30, 2020

BBVA USA reports third quarter 2020 results


•	Revenue: Total revenue of $927 million, up 21 percent (annualized) from second quarter 2020 levels as both net interest income (+19 percent annualized) and noninterest income (+23 percent annualized) posts double digit gains


•	Expenses: Noninterest expense totals $596 million, up on a linked quarter basis and down 1 percent from the year ago quarter. Efficiency ratio ends the quarter at 63.55 percent compared to 64.95 percent on a linked quarter basis and 62.76 percent in the year ago quarter


•	Operating income: Operating income¹ in the quarter totals $331 million, up 34 percent (annualized) from the second quarter of 2020 and down 9 percent from third quarter 2019 levels


•	Loans and Deposits: Newly funded loans in the quarter of $3.5 billion brings the total for the first nine months of 2020 to $15.8 billion, a 41 percent increase compared to the same time period a year ago. Total deposits end the quarter at $86.4 billion, up 4 percent (annualized) from the second quarter of 2020 and up 17 percent from the year ago quarter


•	Provision for credit losses: Provision for credit losses of $151 million in the quarter, down significantly from that recorded in the previous two quarters and comparable to the $141 million recorded in the third quarter last year. Provision for loan losses exceeds net charge-offs by $50 million in the quarter


•	Credit quality: Net charge-offs as a percentage of average loans at 59 basis points compared to 72 basis points for the second quarter of 2020. Nonperforming loan ratio at 2.00 percent and coverage ratio at 136 percent


•	Capital and Liquidity: CET1² ratio ends the quarter at 12.79, up 61 basis points from second quarter 2020 levels. Liquidity Coverage Ratio (LCR) at 144 percent, unchanged on a sequential quarter basis and from the quarter a year ago

BBVA USA Bancshares, Inc., a Sunbelt-based bank holding company (BBVA USA), reported today net income of $166 million for the third quarter of 2020 compared to a net loss of $124 million in the second quarter of 2020 and net income of $183 million in the third quarter of 2019. Return on average assets and return on average tangible equity¹ for the third quarter of 2020 were 0.63 percent and 7.32 percent, respectively.

For the first nine months of 2020, the company reported a net loss of $2.2 billion. Included in the first quarter of 2020 was a non-cash, goodwill impairment charge of $2.2 billion that reflected the drastic change in macroeconomic conditions and forecasts brought about by the COVID-19 pandemic and subsequent decline in interest rates and oil prices. Excluding the impact of this non-cash charge, the adjusted net loss¹ for the first nine months of 2020 was $10 million, further reflecting the decline in interest rates and higher provision expense necessary to reflect the economic and business disruption caused by the pandemic.

“During the third quarter we delivered solid results while continuing to successfully navigate the challenges to our customers, communities and our employees brought about by the Covid-19 pandemic,” said Javier Rodríguez Soler, president and CEO of BBVA USA.

Total revenue for the third quarter was $927 million, up 21 percent (annualized) from second quarter 2020 levels and down 2 percent from third quarter 2019 levels. Net interest income in the quarter totaled $642 million compared to $612 million in the second quarter of 2020 and $641 million in the third quarter of 2019. The percent net interest margin for the third quarter of 2020 was 2.68 percent compared to 2.66 percent in the second quarter of 2020 and 3.07 percent in the third quarter of 2019. The decline in the percent net interest margin from a year ago reflects a lower interest rate environment, the subsequent repricing of variable rate loans, offset in part, by efforts to reduce deposit costs.

Noninterest income (excluding securities gains) for the quarter totaled $285 million compared to $269 million in the second quarter of 2020 and $300 million for the third quarter of 2019. While down from a year ago, the increase in noninterest income on a linked quarter basis was driven by service charges on deposit accounts (+$10 million) and card and merchant processing fees (+$5 million) reflecting higher levels of business activity, albeit still below pre-pandemic levels. Other noninterest income increased on a linked quarter basis, primarily as a result of a valuation adjustment to investments held by our small business investment company that

negatively impacted second quarter 2020 levels. While investment banking and advisory fees and mortgage banking declined from second quarter levels, both business lines reflected double digit increases compared to the year ago quarter.

During the third quarter no gains or losses were recorded on investment securities while $3 million of investment securities gains were recorded in the second quarter of 2020 and $21 million was recorded in the third quarter of 2019.

Total noninterest expense was $596 million compared to $579 million in the second quarter of 2020 and $599 million in the third quarter of 2019. While salaries, benefits and commissions increased on a linked quarter basis, compared to the year ago quarter the increase was only 1 percent. Equipment expense also increased on a linked quarter basis and was up 8 percent compared to a year ago. Professional services were flat compared to the second quarter of 2020 while up 7 percent compared to the third quarter of 2019. Operating income¹ in the quarter totaled $331 million, up 34 percent (annualized) from the second quarter of 2020 and down 9 percent from the third quarter 2019 levels.

Total loans at the end of the third quarter of 2020 were $66.4 billion, down 12 percent (annualized) from $68.5 billion at the end of the second quarter of 2020 and up 5 percent from the $63.5 billion at the end of the third quarter of 2019. Commercial loans associated with the energy sector dropped to $2.5 billion at the end of the third quarter of 2020 compared to $3.0 billion at the end of the second quarter of 2020. During the quarter, newly funded loans totaled $3.5 billion bringing the total for the first nine months of 2020 to $15.8 billion, a 41 percent increase compared to the same time period a year ago.

Deposit growth continued in the quarter with total deposits ending the quarter at $86.4 billion, up 4 percent (annualized) from the second quarter of 2020 and up $12.8 billion or 17 percent compared to the third quarter of 2019. Low-cost deposits were a key driver of deposit growth as noninterest bearing deposits ended the quarter at $26.8 billion, up 13 percent (annualized) on a linked quarter basis and up $5.8 billion or 28 percent compared to the third quarter of 2019.

As a result of deposit growth outpacing loan growth, the loan to deposit ratio ended the third quarter of 2020 at 76.9 percent compared to 80.2 percent at the end of the second quarter of 2020 and 86.3 percent at the end of the third quarter of 2019. BBVA USA continues to maintain a strong liquidity position with the LCR at 144 percent, unchanged from the levels recorded in both the second quarter of 2020 and the third quarter of 2019.

After two quarters of increased provision expense recorded to primarily address the impact of the COVID-19 pandemic and corresponding impact on economic conditions, provision for credit losses totaled $151 million in the quarter and exceeded net charge-offs by $50 million. Net charge-offs as a percentage of average total loans were 59 basis points in the quarter compared to 72 basis points in the second quarter of 2020 and 110 basis points in the third quarter of 2019. The allowance for loan losses as a percentage of total loans at the end of the quarter rose to 2.73 percent compared to 2.57 percent at the end of the second quarter of 2020 and 1.49 percent in the year ago quarter.

Nonperforming loans as a percentage of total loans ended the third quarter of 2020 at 2.00 percent, up from the 1.21 percent at the end of the second quarter of 2020 and 1.14 percent at the end of the third quarter of 2019. The increase in nonperforming loans on a linked quarter basis was primarily attributed to an increase in nonaccrual loans associated with the commercial loan portfolio (+$271 million), as well as increases in the commercial real estate - mortgage (+$158 million) and residential real estate - mortgage (+$35 million) portfolios. The coverage ratio of nonperforming loans ended the quarter at 136 percent compared to 211 percent at the end of the second quarter of 2020 and 131 percent at the end of the third quarter of 2019.

Total shareholder’s equity at the end of the third quarter of 2020 totaled $11.4 billion compared to $11.3 billion at the end of the second quarter of 2020 and $14.1 billion at the end of the third quarter of 2019. Total tangible shareholder’s equity¹ totaled $9.0 billion at the end of the third quarter of 2020 compared to $8.9 billion at the end of the second quarter of 2020 and $9.1 billion at the end of the third quarter of 2019. The CET1² ratio ended the quarter at 12.79 percent compared to 12.18 percent at the end of the second quarter of 2020 and 12.89 percent at the end of the third quarter of 2019. All of BBVA USA’s regulatory capital ratios² continue to exceed the requirements under “well-capitalized” guidelines.

During the quarter, Global Finance recognized BBVA USA as one of the World's Best Corporate/Institutional Digital Banks in North America for 2020, naming us a winner in the subcategories of Best Mobile Adaptive Site and Best Mobile Banking App.

___________________________________________________________________________________________________

¹ Operating income and adjusted net loss are Non-GAAP financial measures we believe aid in understanding certain areas of our performance. The calculation of these measures is included on the page titled Non-GAAP Reconciliation.

² Regulatory capital ratios at September 30, 2020, are estimated.



Contact Details:
Christina Anderson		Ed Bilek
External Communications		Investor Relations
Tel. 205.903.3706		Tel. 205.612.3378
christina.anderson@bbva.com		ed.bilek@bbva.com

For more BBVA news visit, www.bbva.com and the U.S. Newsroom.

Additional news updates can be found via Twitter and Instagram.

For more financial information about BBVA in the U.S., visit bbvausa.investorroom.com.

About BBVA

BBVA Group

BBVA (NYSE: BBVA) is a customer-centric global financial services group founded in 1857. The Group has a strong leadership position in the Spanish market and is the largest financial institution in Mexico. It has leading franchises in South America and the Sunbelt Region of the United States. It is also the leading shareholder in Turkey’s BBVA Garanti. BBVA’s purpose is to bring the age of opportunities to everyone, based on our customers’ real needs: provide the best solutions, helping them make the best financial decisions, through an easy and convenient experience. The institution rests in solid values: Customer comes first, we think big and we are one team. BBVA’s responsible banking model aspires to achieve a more inclusive and sustainable society.

On February 28, 2020, BBVA filed its annual report on Form 20-F for the year ended December 31, 2019, with the U.S. Securities and Exchange Commission. A copy can be accessed on the BBVA website at https://shareholdersandinvestors.bbva.com/the-share/adrs-english/. Holders of BBVA’s American Depositary Receipts (ADRs) may request a hard copy of the Form 20-F for the year ended December 31, 2019, including complete audited financial statements, free of charge. To request a copy, contact Ed Bilek at ed.bilek@bbva.com.

BBVA USA

In the U.S., BBVA is a Sunbelt-based financial institution that operates 637 branches, including 328 in Texas, 88 in Alabama, 63 in Arizona, 61 in California, 43 in Florida, 37 in Colorado and 17 in New Mexico. The bank ranks among the top 25 largest U.S. commercial banks based on deposit market share and ranks among the largest banks in Alabama (2nd), Texas (4th) and Arizona (6th). In the U.S., BBVA has been recognized as one of the leading small business lenders by the Small Business Administration (SBA) and ranked 14th nationally in terms of dollar volume of SBA loans originated in fiscal year 2019.

Forward-Looking Statements

Certain statements in this press release may contain forward-looking statements about BBVA USA Bancshares, Inc. (the “Company”) and its industry that involve substantial risks and uncertainties. The use of “we,” “our” and similar terms refer to the Company. Statements other than statements of current or historical fact, including statements regarding our future financial condition, results of operations, business plans, liquidity, cash flows, projected costs, and the impact of any laws or regulations applicable to the Company, constitute forward-looking statements as defined by the Private Securities Litigation Reform Act of 1995. Words such as “anticipates,” “believes,” “estimates,” “expects,” “forecasts,” “intends,” “plans,” “projects,” “may,” “will,” “should,” and other similar expressions are intended to identify these forward-looking statements. These forward-looking statements reflect the Company’s views regarding future events and financial performance. Such statements are subject to risks, uncertainties, assumptions and other important factors, many of which may be beyond the Company’s control, that could cause actual results to differ materially from anticipated results. If the Company’s assumptions and estimates are incorrect, or if the Company becomes subject to significant limitations as the result of litigation or regulatory action, then the Company’s actual results could vary materially from those expressed or implied in these forward-looking statements. The forward-looking statements are and will be based on the Company’s then current views and assumptions regarding future events and speak only as of their dates made. The Company assumes no obligation to update any forward-looking statement, whether as a result of new information, future events, or otherwise, except as required by securities law or regulation. For further information regarding risks and uncertainties associated with the Company’s business, please refer to the “Risk Factors” section of the Company’s Annual Report on Form 10-K filed with the U.S. Securities and Exchange Commission (the “SEC”) on February 28, 2020, as updated by our subsequent SEC filings.

BBVA USA BANCSHARES, INC. (Unaudited) (Dollars in thousands)

	Three Months Ended September 30,						%		Nine Months Ended September 30,						%
	2020			2019			Change		2020			2019			Change
EARNINGS SUMMARY
Net interest income	$	641,850		$	641,041		—		$	1,843,322		$	1,983,879		(7	)
Noninterest income [a]	284,660			300,316			(5	)	868,640			833,399			4
Total revenue [a]	926,510			941,357			(2	)	2,711,962			2,817,278			(4	)
Investment securities gain, net	—			21,003			NM		22,616			29,961			(25	)
Provision for credit losses	150,977			140,629			7		1,047,427			477,939			119
Goodwill impairment	—			—			—		2,185,000			—			NM
Noninterest expense	595,628			598,887			(1	)	1,799,138			1,779,174			1
Pretax (loss) income	179,905			222,844			(19	)	(2,296,987		)	590,126			(489	)
Income tax (benefit) expense	13,664			39,899			(66	)	(101,506		)	106,014			(196	)
Net (loss) income	$	166,241		$	182,945		(9	)	$	(2,195,481	)	$	484,112		(554	)
Adjusted net (loss) income [b]	$	166,241		$	182,945		(9	)	$	(10,481	)	$	484,112		(102	)

SELECTED RATIOS
Return on average assets	0.63		%	0.76		%			(2.90		)%	0.69		%
Return on average assets- adjusted [b]	0.63			0.76					(0.01		)	0.69
Return on average tangible equity [b]	7.32			8.03					(32.36		)	7.36
Return on average tangible equity- adjusted [b]	7.32			8.03					(0.15		)	7.36
Efficiency ratio [b]	63.55			62.76					65.52			62.28
Average common equity to average assets	10.68			14.53					11.76			14.47
Average loans to average total deposits	79.53			87.17					82.85			88.64
Common equity tier I capital (CET1) [c]	12.79			12.89					12.79			12.89
Tier I capital ratio [c]	13.13			13.24					13.13			13.24
Total capital ratio [c]	15.30			15.39					15.30			15.39
Leverage ratio [c]	8.82			10.03					8.82			10.03
[a] Excludes net gain on sales of investment securities.
[b] Non-GAAP financial measure that we believe aids in understanding certain areas of our performance. The calculation of this measure is included on the page titled Non-GAAP Reconciliation.
[c] Current period regulatory capital ratios are estimated.
NM = Not meaningful

BBVA USA BANCSHARES, INC. (Unaudited) (Dollars in thousands)

	Average for Three Months						Average for Nine Months						Ending Balance
	Ended September 30,				%		Ended September 30,				%		September 30,				%
	2020		2019		Change		2020		2019		Change		2020		2019		Change
BALANCE SHEET HIGHLIGHTS
Total loans	$	67,837,185	$	63,629,992	7		$	67,324,774	$	64,382,982	5		$	66,434,066	$	63,454,885	5
Total debt securities	14,422,320		13,715,979		5		14,142,922		13,703,073		3		15,472,108		13,947,224		11
Earning assets	96,896,614		84,528,727		15		92,565,282		83,402,162		11		96,738,163		83,447,829		16
Total assets	104,282,898		94,942,456		10		101,058,770		93,800,891		8		103,652,922		92,914,087		12
Noninterest bearing demand deposits	26,034,478		20,754,143		25		23,527,092		20,409,910		15		26,803,670		21,019,303		28
Interest bearing transaction accounts	52,181,312		37,711,142		38		48,597,866		36,861,148		32		53,346,388		38,614,048		38
Total transaction accounts	78,215,790		58,465,285		34		72,124,958		57,271,058		26		80,150,058		59,633,351		34
Total deposits	85,301,231		72,994,321		17		81,258,400		72,631,301		12		86,371,032		73,569,442		17
Total shareholder's equity	11,394,928		14,056,939		(19	)	12,140,120		13,828,060		(12	)	11,394,964		14,101,618		(19	)
Total shareholder's equity - tangible [a]	9,036,984		9,033,459		—		9,062,151		8,798,038		3		9,037,925		9,081,045		—
[a] Non-GAAP financial measure that we believe aids in understanding certain areas of our performance. The calculation of this measure is included on the page titled Non-GAAP Reconciliation.

BBVA USA BANCSHARES, INC. (Unaudited) (Dollars in thousands)

	2020									2019
	September 30			June 30			March 31			December 31			September 30
NONPERFORMING ASSETS
Nonaccrual loans [a]	$	1,233,040		$	764,744		$	676,716		$	606,843		$	653,242
Loans 90 days or more past due [b]	94,072			66,163			61,774			71,126			67,869
TDRs 90 days or more past due	830			423			335			414			588
Total nonperforming loans [a]	1,327,942			831,330			738,825			678,383			721,699
Foreclosed real estate	15,051			14,871			20,642			20,833			17,381
Other repossessed assets	8,527			8,599			13,338			10,930			17,584
Total nonperforming assets	$	1,351,520		$	854,800		$	772,805		$	710,146		$	756,664

TDRs accruing and past due less than 90 days	$	114,583		$	95,788		$	97,404		$	97,901		$	97,218


Total nonperforming loans as a % of loans	2.00		%	1.21		%	1.09		%	1.06		%	1.14		%
Total nonperforming assets as a % of total loans, foreclosed real estate, and other repossessed assets	2.03			1.25			1.14			1.11			1.19
[a] Includes loans held for sale.
[b] Excludes loans classified as troubled debt restructuring (TDRs).



	Three Months Ended
	2020									2019
	September 30			June 30			March 31			December 31			September 30
ALLOWANCE FOR LOAN LOSSES
Balance at beginning of period	$	1,754,352		$	1,351,072		$	920,993		$	942,191		$	977,660
Adoption of ASC 326	—			—			184,931			—			—
Net charge-offs (NCO)	100,818			123,054			111,798			140,703			176,098
Provision for loan losses	150,889			526,334			356,946			119,505			140,629
Balance at end of period	$	1,804,423		$	1,754,352		$	1,351,072		$	920,993		$	942,191

Allowance for loan losses as a % of total loans	2.73		%	2.57		%	2.00		%	1.44		%	1.49		%
Allowance for loan losses as a % of nonperforming loans [c]	135.88			211.03			182.87			135.76			130.55
Allowance for loan losses as a % of nonperforming assets [c]	133.51			205.24			174.83			129.69			124.52

Annualized as a % of average loans:
NCO - QTD	0.59			0.72			0.69			0.87			1.10
NCO - YTD	0.67			0.71			0.69			0.88			0.88
[c] Includes loans held for sale that are on nonaccrual status.

BBVA USA BANCSHARES, INC. (Unaudited) (Dollars in thousands)

	Three Months Ended September 30,
	2020							2019
	Average Balance			Income/ Expense		Yield/ Rate		Average Balance			Income/ Expense		Yield/ Rate
YIELD/RATE ANALYSIS
(Taxable Equivalent Basis)
Assets
Earning assets:
Loans	$	67,837,185		$	654,687	3.84	%	$	63,629,992		$	782,948	4.88	%
Debt securities available for sale [a]	5,325,937			19,474		1.45		7,987,642			36,051		1.79
Debt securities held to maturity	8,967,670			50,747		2.25		5,737,726			40,075		2.77
Other earning assets [b]	14,637,109			7,328		0.20		7,182,756			47,015		2.60
Total earning assets [a]	96,767,901			732,236		3.01		84,538,116			906,089		4.25
Allowance for credit losses	(1,768,829		)					(971,396		)
Unrealized gain (loss) on debt securities available for sale	128,713							(9,389		)
Other assets	9,155,113							11,385,125
Total assets	$	104,282,898						$	94,942,456

Liabilities and Shareholder's Equity
Interest bearing liabilities:
Interest bearing demand deposits	$	14,188,763		$	9,777	0.27		$	8,870,753		$	25,179	1.13
Savings and money market accounts	37,992,549			26,476		0.28		28,840,389			96,060		1.32
Certificates and other time deposits	7,085,441			24,894		1.40		14,529,036			82,740		2.26
Total interest bearing deposits	59,266,753			61,147		0.41		52,240,178			203,979		1.55
FHLB and other borrowings	3,567,285			14,644		1.63		3,860,727			32,975		3.39
Federal funds purchased and securities sold under agreement to repurchase [b]	1,492,378			3,736		1.00		1,401,320			15,137		4.29
Other short-term borrowings	5,984			49		3.26		13,348			72		2.14
Total interest bearing liabilities	64,332,400			79,576		0.49		57,515,573			252,163		1.74
Noninterest bearing deposits	26,034,478							20,754,143
Other noninterest bearing liabilities	2,521,092							2,615,801
Total liabilities	92,887,970							80,885,517
Shareholder's equity	11,394,928							14,056,939
Total liabilities and shareholder's equity	$	104,282,898						$	94,942,456

Net interest income/ net interest spread				652,660		2.52	%				653,926		2.51	%
Net yield on earning assets						2.68	%						3.07	%

Total taxable equivalent adjustment				10,810							12,885

Net interest income				$	641,850						$	641,041
[a] Excludes adjustment for market valuation.
[b] Yield/rate reflects impact of balance sheet offsetting.

BBVA USA BANCSHARES, INC. (Unaudited) (Dollars in thousands)

	Nine Months Ended September 30,
	2020							2019
	Average Balance			Income/ Expense		Yield/ Rate		Average Balance			Income/ Expense		Yield/ Rate
YIELD/RATE ANALYSIS
(Taxable Equivalent Basis)
Assets
Earning assets:
Loans	$	67,324,774		$	2,061,376	4.09	%	$	64,382,982		$	2,395,043	4.97	%
Debt securities available for sale [a]	5,923,281			36,787		0.83		8,957,354			134,698		2.01
Debt securities held to maturity	8,125,463			133,462		2.19		4,845,107			105,298		2.91
Other earning assets [b]	11,097,586			65,798		0.79		5,316,107			106,946		2.69
Total earning assets [a]	92,471,104			2,297,423		3.32		83,501,550			2,741,985		4.39
Allowance for credit losses	(1,404,498		)					(952,170		)
Unrealized gain (loss) on debt securities available for sale	94,178							(99,388		)
Other assets	9,897,986							11,350,899
Total assets	$	101,058,770						$	93,800,891

Liabilities and Shareholder's Equity
Interest bearing liabilities:
Interest bearing demand deposits	$	13,350,036		$	47,758	0.48		$	8,954,456		$	72,061	1.08
Savings and money market accounts	35,247,830			155,211		0.59		27,906,692			261,172		1.25
Certificates and other time deposits	9,133,442			120,199		1.76		15,360,243			255,578		2.22
Total interest bearing deposits	57,731,308			323,168		0.75		52,221,391			588,811		1.51
FHLB and other borrowings	3,623,293			57,756		2.13		4,057,769			104,901		3.46
Federal funds purchased and securities sold under agreement to repurchase [b]	1,379,052			38,668		3.75		763,681			24,886		4.36
Other short-term borrowings	12,844			440		4.58		16,235			368		3.03
Total interest bearing liabilities	62,746,497			420,032		0.89		57,059,076			718,966		1.68
Noninterest bearing deposits	23,527,092							20,409,910
Other noninterest bearing liabilities	2,645,061							2,503,845
Total liabilities	88,918,650							79,972,831
Shareholder's equity	12,140,120							13,828,060
Total liabilities and shareholder's equity	$	101,058,770						$	93,800,891

Net interest income/ net interest spread				1,877,391		2.43	%				2,023,019		2.71	%
Net yield on earning assets						2.71	%						3.24	%

Total taxable equivalent adjustment				34,069							39,140

Net interest income				$	1,843,322						$	1,983,879
[a] Excludes adjustment for market valuation.
[b] Yield/rate reflects impact of balance sheet offsetting.

BBVA USA BANCSHARES, INC. (Unaudited) (Dollars in thousands)

	Nine Months						Three Months Ended
	Ended September 30,				%		2020						2019
	2020		2019		Change		September 30		June 30		March 31		December 31		September 30
NONINTEREST INCOME
Service charges on deposit accounts	$	160,474	$	185,782	(14	)	$	54,710	$	44,233	$	61,531	$	64,585	$	65,143
Card and merchant processing fees	142,135		146,742		(3	)	48,628		43,416		50,091		50,805		50,385
Investment services sales fees	85,596		87,316		(2	)	26,218		24,971		34,407		28,130		29,287
Investment banking and advisory fees	111,805		67,939		65		40,013		45,061		26,731		15,720		28,324
Money transfer income	77,118		73,273		5		27,109		25,461		24,548		25,871		26,020
Corporate and correspondent investment sales	33,050		24,298		36		3,478		18,855		10,717		14,263		11,799
Asset management fees	35,488		34,039		4		12,024		11,560		11,904		11,532		11,405
Mortgage banking	55,060		19,011		190		13,741		23,868		17,451		9,048		8,204
Bank owned life insurance	14,691		12,895		14		4,972		5,094		4,625		4,584		3,508
Other	153,223		182,104		(16	)	53,767		26,358		73,098		48,046		66,241
	868,640		833,399		4		284,660		268,877		315,103		272,584		300,316
Investment securities gains, net	22,616		29,961		(25	)	—		3,477		19,139		—		21,003
Total noninterest income	$	891,256	$	863,360	3		$	284,660	$	272,354	$	334,242	$	272,584	$	321,319

NONINTEREST EXPENSE
Salaries, benefits and commissions	$	858,541	$	884,111	(3	)	$	296,708	$	251,697	$	310,136	$	297,823	$	295,092
Equipment	198,226		191,940		3		68,793		64,752		64,681		64,826		63,908
Professional services	226,338		210,583		7		78,018		78,100		70,220		82,343		72,903
Net occupancy	122,573		123,298		(1	)	41,145		41,585		39,843		43,302		42,241
Money transfer expense	53,991		50,273		7		18,897		17,958		17,136		17,951		18,005
Marketing	29,960		42,276		(29	)	9,283		8,778		11,899		12,888		15,471
Communications	16,721		16,603		1		5,542		5,808		5,371		5,179		5,469
Goodwill impairment	2,185,000		—		NM		—		—		2,185,000		470,000		—
Other	292,788		260,090		13		77,242		110,772		104,774		92,594		85,798
Total noninterest expense	$	3,984,138	$	1,779,174	124		$	595,628	$	579,450	$	2,809,060	$	1,086,906	$	598,887
NM = Not meaningful

BBVA USA BANCSHARES, INC. (Unaudited) (Dollars in thousands)

	Nine Months						Three Months Ended
	Ended September 30,						2020									2019
	2020			2019			September 30			June 30			March 31			December 31			September 30
NON-GAAP RECONCILIATION
Computation of Operating Income:
Net interest income (GAAP)	$	1,843,322		$	1,983,879		$	641,850		$	612,017		$	589,455		$	623,154		$	641,041
Plus: noninterest income (GAAP)	891,256			863,360			284,660			272,354			334,242			272,584			321,319
Less: noninterest expense (GAAP)	3,984,138			1,779,174			595,628			579,450			2,809,060			1,086,906			598,887
Plus: goodwill impairment (GAAP)	2,185,000			—			—			—			2,185,000			470,000			—
Operating income (non-GAAP)	$	935,440		$	1,068,065		$	330,882		$	304,921		$	299,637		$	278,832		$	363,473

Computation of Tangible Shareholder's Equity:
Total shareholder's equity	$	11,394,964		$	14,101,618		$	11,394,964		$	11,270,789		$	11,358,354		$	13,386,589		$	14,101,618
Less: goodwill and other intangibles (GAAP)	2,357,039			5,020,573			2,357,039			2,357,343			2,359,540			4,555,330			5,020,573
Tangible shareholder's equity (non-GAAP)	$	9,037,925		$	9,081,045		$	9,037,925		8,913,446			8,998,814			8,831,259			$	9,081,045

Computation of Average Tangible Equity:
Total stockholder's equity (average) (GAAP)	$	12,140,120		$	13,828,060		$	11,394,928		$	11,533,007		$	13,500,615		$	14,090,315		$	14,056,939
Less: goodwill and other intangibles (average) (GAAP)	3,077,969			5,030,022			2,357,944			2,357,132			4,526,744			5,016,935			5,023,480
Average tangible equity (non-GAAP) [B]	$	9,062,151		$	8,798,038		$	9,036,984		9,175,875			8,973,871			9,073,380			$	9,033,459
Net income (loss) (GAAP) [A]	$	(2,195,481	)	$	484,112		$	166,241		$	(124,437	)	$	(2,237,285	)	$	(330,705	)	$	182,945
Return on average tangible equity (non-GAAP) ([A]/[B], annualized)	(32.36		)%	7.36		%	7.32		%	(5.45		)%	(100.27		)%	(14.46		)%	8.03		%

Computation of Adjusted Net Income, Return on Average Assets and Return on Average Tangible Equity:
Net income (loss) (GAAP)	$	(2,195,481	)	$	484,112		$	166,241		$	(124,437	)	$	(2,237,285	)	$	(330,705	)	$	182,945
Plus: goodwill impairment (GAAP)	2,185,000			—			—			—			2,185,000			470,000			—
Adjusted net income (non-GAAP) [C]	$	(10,481	)	$	484,112		$	166,241		$	(124,437	)	$	(52,285	)	$	139,295		$	182,945
Average assets (GAAP) [D]	$	101,058,770		$	93,800,891		$	104,282,898		$	104,204,062		$	96,356,113		$	95,754,954		$	94,942,456
Return on average assets - adjusted (non-GAAP) ([C]/[D], annualized)	(0.01		)%	0.69		%	0.63		%	(0.48		)%	(0.22		)%	0.58		%	0.76		%
Return on average tangible equity - adjusted (non-GAAP) ([C]/[B], annualized)	(0.15		)	7.36			7.32			(5.45		)	(2.34		)	6.09			8.03

Computation of Efficiency Ratio:
Noninterest expense (GAAP)	$	3,984,138		$	1,779,174		$	595,628		$	579,450		$	2,809,060		$	1,086,906		$	598,887
Less: securities and goodwill impairment (GAAP)	2,185,000			113			—			—			2,185,000			470,102			—
Total expense (GAAP) [E]	$	1,799,138		$	1,779,061		$	595,628		$	579,450		$	624,060		$	616,804		$	598,887
Net interest income, taxable equivalent basis	$	1,877,391		$	2,023,019		$	652,660		$	623,242		$	601,489		$	635,552		$	653,926
Plus: noninterest income (GAAP)	891,256			863,360			284,660			272,354			334,242			272,584			321,319
Less: investment securities gains, net (GAAP)	22,616			29,961			—			3,477			19,139			—			21,003
Total revenue [F]	$	2,746,031		$	2,856,418		$	937,320		$	892,119		$	916,592		$	908,136		$	954,242
Efficiency ratio (non-GAAP) ([E]/[F])	65.52		%	62.28		%	63.55		%	64.95		%	68.08		%	67.92		%	62.76		%

BBVA USA BANCSHARES, INC SUPPLEMENTAL LOAN PORTFOLIO INFORMATION (Unaudited) (In Thousands)

	At or Quarter Ended September 30, 2020
	30-59 Days Past Due		60-89 Days Past Due		90 Days or More Past Due		Nonaccrual		Accruing TDRs		Not Past Due, Nonaccrual, or TDR		Total		Net Charge Offs (Recoveries)

Commercial, financial and agricultural	$	22,632	$	12,890	$	21,261	$	660,254	$	19,713	$	26,203,423	$	26,940,173	$	50,789
Real estate – construction	2,861		303		532		12,614		61		2,387,303		2,403,674		153
Commercial real estate – mortgage	19,280		3,968		1,816		275,668		1,831		13,393,237		13,695,800		98
Residential real estate – mortgage	88,035		49,344		39,728		204,442		55,132		13,027,076		13,463,757		(117		)
Equity lines of credit	13,418		6,300		3,445		37,216		—		2,381,344		2,441,723		233
Equity loans	1,847		1,158		271		8,758		20,750		161,583		194,367		(195		)
Credit card	9,776		7,526		16,542		—		—		873,949		907,793		18,527
Consumer – direct	25,762		11,730		6,643		9,134		17,926		1,952,501		2,023,696		24,559
Consumer – indirect	34,116		9,744		3,834		24,954		—		4,036,981		4,109,629		6,771
Total loans	$	217,727	$	102,963	$	94,072	$	1,233,040	$	115,413	$	64,417,397	$	66,180,612	$	100,818
Loans held for sale	$	—	$	—	$	—	$	—	$	—	$	253,454	$	253,454	$	—



	At or Quarter Ended June 30, 2020
	30-59 Days Past Due		60-89 Days Past Due		90 Days or More Past Due		Nonaccrual		Accruing TDRs		Not Past Due or Impaired		Total		Net Charge Offs (Recoveries)

Commercial, financial and agricultural	$	51,207	$	5,130	$	8,450	$	389,615	$	1,866	$	28,325,856	$	28,782,124	$	29,038
Real estate – construction	12,907		—		532		13,317		64		2,271,650		2,298,470		(36		)
Commercial real estate – mortgage	8,592		2,190		415		117,213		1,876		13,670,383		13,800,669		8,670
Residential real estate – mortgage	70,252		22,495		13,140		169,387		54,289		13,099,576		13,429,139		182
Equity lines of credit	8,461		8,162		3,555		34,915		—		2,461,741		2,516,834		(476		)
Equity loans	1,311		692		148		8,457		21,280		178,092		209,980		(120		)
Credit card	6,668		7,286		22,134		—		—		929,484		965,572		20,107
Consumer – direct	19,927		10,923		11,623		7,624		16,836		2,067,175		2,134,108		42,271
Consumer – indirect	32,519		11,162		6,166		24,216		—		4,030,541		4,104,604		23,418
Total loans	$	211,844	$	68,040	$	66,163	$	764,744	$	96,211	$	67,034,498	$	68,241,500	$	123,054
Loans held for sale	$	—	$	—	$	—	$	—	$	—	$	245,851	$	245,851	$	—



	At or Quarter Ended March 31, 2020
	30-59 Days Past Due		60-89 Days Past Due		90 Days or More Past Due		Nonaccrual		Accruing TDRs		Not Past Due or Impaired		Total		Net Charge Offs (Recoveries)

Commercial, financial and agricultural	$	31,493	$	7,588	$	3,013	$	323,881	$	1,931	$	27,464,207	$	27,832,113	$	19,014
Real estate – construction	9,356		66		574		13,676		69		2,147,973		2,171,714		(13		)
Commercial real estate – mortgage	13,439		5,241		912		114,839		3,333		13,715,641		13,853,405		(73		)
Residential real estate – mortgage	67,938		25,187		5,744		147,058		55,116		13,144,975		13,446,018		(172		)
Equity lines of credit	16,382		6,244		3,295		33,354		—		2,552,075		2,611,350		536
Equity loans	2,636		1,147		293		8,027		22,392		194,874		229,369		212
Credit card	13,230		8,932		23,707		—		—		977,503		1,023,372		19,517
Consumer – direct	34,553		19,738		15,196		7,160		14,898		2,184,500		2,276,045		51,726
Consumer – indirect	76,547		24,249		9,040		28,721		—		3,957,471		4,096,028		21,051
Total loans	$	265,574	$	98,392	$	61,774	$	676,716	$	97,739	$	66,339,219	$	67,539,414	$	111,798
Loans held for sale	$	—	$	—	$	—	$	—	$	—	$	117,752	$	117,752	$	—



	At or Quarter Ended December 31, 2019
	30-59 Days Past Due		60-89 Days Past Due		90 Days or More Past Due		Nonaccrual		Accruing TDRs		Not Past Due or Impaired		Total		Net Charge Offs (Recoveries)

Commercial, financial and agricultural	$	29,273	$	16,462	$	6,692	$	268,288	$	1,456	$	24,110,067	$	24,432,238	$	37,788
Real estate – construction	7,603		2		571		8,041		72		2,012,393		2,028,682		(126		)
Commercial real estate – mortgage	5,325		5,458		6,576		98,077		3,414		13,742,628		13,861,478		(285		)
Residential real estate – mortgage	72,571		21,909		4,641		147,337		57,165		13,230,331		13,533,954		107
Equity lines of credit	15,766		6,581		1,567		38,113		—		2,530,653		2,592,680		857
Equity loans	2,856		1,028		195		8,651		23,770		208,468		244,968		137
Credit card	11,275		9,214		22,796		—		—		959,080		1,002,365		16,760
Consumer – direct	33,658		20,703		18,358		6,555		12,438		2,246,430		2,338,142		58,190
Consumer – indirect	83,966		28,430		9,730		31,781		—		3,758,443		3,912,350		27,275
Total loans	$	262,293	$	109,787	$	71,126	$	606,843	$	98,315	$	62,798,493	$	63,946,857	$	140,703
Loans held for sale	$	—	$	—	$	—	$	—	$	—	$	112,058	$	112,058	$	—



	At or Quarter Ended September 30, 2019
	30-59 Days Past Due		60-89 Days Past Due		90 Days or More Past Due		Nonaccrual		Accruing TDRs		Not Past Due or Impaired		Total		Net Charge Offs (Recoveries)

Commercial, financial and agricultural	$	30,779	$	24,036	$	11,179	$	301,021	$	1,552	$	24,314,563	$	24,683,130	$	69,942
Real estate – construction	3,831		185		532		1,616		76		1,999,107		2,005,347		(59		)
Commercial real estate – mortgage	13,939		41		2,375		110,632		3,492		12,943,694		13,074,173		2,250
Residential real estate – mortgage	74,796		22,329		4,778		153,078		60,537		13,187,809		13,503,327		1,280
Equity lines of credit	11,088		4,616		2,072		36,879		—		2,563,457		2,618,112		431
Equity loans	2,452		978		524		8,728		24,789		225,973		263,444		(59		)
Credit card	10,372		8,092		20,037		—		—		897,646		936,147		16,398
Consumer – direct	35,762		23,075		17,773		7,348		7,360		2,297,040		2,388,358		63,992
Consumer – indirect	81,075		26,294		8,599		33,940		—		3,698,625		3,848,533		21,923
Total loans	$	264,094	$	109,646	$	67,869	$	653,242	$	97,806	$	62,127,914	$	63,320,571	$	176,098
Loans held for sale	$	—	$	—	$	—	$	—	$	—	$	134,314	$	134,314	$	—

BBVA USA BANCSHARES, INC. BALANCE SHEET (Unaudited) (In Thousands)

	2020									2019
	September 30			June 30			March 31			December 31			September 30
Assets:
Cash and due from banks	$	1,035,307		$	1,019,127		$	1,033,733		$	1,149,734		$	1,117,458
Federal funds sold, securities purchased under agreements to resell and interest bearing deposits	14,041,538			11,738,063			4,479,535			5,788,964			5,356,141
Cash and cash equivalents	15,076,845			12,757,190			5,513,268			6,938,698			6,473,599
Trading account assets	926,497			1,016,966			1,009,130			473,976			564,000
Debt securities available for sale	6,028,072			5,765,192			6,344,816			7,235,305			7,612,590
Debt securities held to maturity, net	9,428,931			8,693,437			7,876,266			6,797,046			6,334,634
Loans held for sale	253,454			245,851			117,752			112,058			134,314
Loans	66,180,612			68,241,500			67,539,414			63,946,857			63,320,571
Allowance for loan losses	(1,804,423		)	(1,754,352		)	(1,351,072		)	(920,993		)	(942,191		)
Net loans	64,376,189			66,487,148			66,188,342			63,025,864			62,378,380
Premises and equipment, net	1,063,923			1,070,358			1,068,741			1,087,698			1,085,635
Bank owned life insurance	758,391			754,908			754,409			750,224			746,819
Goodwill	2,328,296			2,328,296			2,328,296			4,513,296			4,983,296
Other assets	3,412,324			3,148,270			3,124,539			2,669,182			2,600,820
Total assets	$	103,652,922		$	102,267,616		$	94,325,559		$	93,603,347		$	92,914,087
Liabilities:
Deposits:
Noninterest bearing	$	26,803,670		$	25,978,354		$	20,418,504		$	21,850,216		$	21,019,303
Interest bearing	59,567,362			59,448,060			56,816,003			53,135,067			52,550,139
Total deposits	86,371,032			85,426,414			77,234,507			74,985,283			73,569,442
FHLB and other borrowings	3,560,973			3,571,933			3,790,137			3,690,044			3,709,949
Federal funds purchased and securities sold under agreements to repurchase	189,474			249,481			409,784			173,028			117,421
Other short-term borrowings	—			1,619			—			—			45
Accrued expenses and other liabilities	2,136,479			1,747,380			1,532,777			1,368,403			1,415,612
Total liabilities	92,257,958			90,996,827			82,967,205			80,216,758			78,812,469
Shareholder’s Equity:
Preferred stock	229,475			229,475			229,475			229,475			229,475
Common stock — $0.01 par value	2,230			2,230			2,230			2,230			2,230
Surplus	14,032,321			14,035,607			14,039,572			14,043,727			14,359,966
Retained deficit	(3,264,295		)	(3,430,135		)	(3,305,226		)	(917,227		)	(585,859		)
Accumulated other comprehensive income (loss)	365,374			404,165			362,339			(1,072		)	66,009
Total BBVA USA Bancshares, Inc. shareholder’s equity	11,365,105			11,241,342			11,328,390			13,357,133			14,071,821
Noncontrolling interests	29,859			29,447			29,964			29,456			29,797
Total shareholder’s equity	11,394,964			11,270,789			11,358,354			13,386,589			14,101,618
Total liabilities and shareholder’s equity	$	103,652,922		$	102,267,616		$	94,325,559		$	93,603,347		$	92,914,087

BBVA USA BANCSHARES, INC. INCOME STATEMENTS (Unaudited) (In Thousands)

	Three Months Ended
	2020								2019
	September 30		June 30			March 31			December 31			September 30
Interest income:
Interest and fees on loans	$	644,643	$	669,767		$	715,476		$	738,140		$	771,245
Interest on debt securities available for sale	19,474		18,805			(1,492		)	33,333			36,051
Interest on debt securities held to maturity	49,981		39,800			41,102			43,097			38,893
Interest on trading account assets	892		1,157			1,122			1,326			487
Interest and dividends on other earning assets	6,436		14,016			42,175			39,915			46,528
Total interest income	721,426		743,545			798,383			855,811			893,204
Interest expense:
Interest on deposits	61,147		97,279			164,742			189,345			203,979
Interest on FHLB and other borrowings	14,644		21,936			21,176			31,263			32,975
Interest on federal funds purchased and securities sold under agreements to repurchase	3,736		12,274			22,658			11,850			15,137
Interest on other short-term borrowings	49		39			352			199			72
Total interest expense	79,576		131,528			208,928			232,657			252,163
Net interest income	641,850		612,017			589,455			623,154			641,041
Provision for credit losses	150,977		539,459			356,991			119,505			140,629
Net interest income after provision for credit losses	490,873		72,558			232,464			503,649			500,412
Noninterest income:
Service charges on deposit accounts	54,710		44,233			61,531			64,585			65,143
Card and merchant processing fees	48,628		43,416			50,091			50,805			50,385
Investment services sales fees	26,218		24,971			34,407			28,130			29,287
Investment banking and advisory fees	40,013		45,061			26,731			15,720			28,324
Money transfer income	27,109		25,461			24,548			25,871			26,020
Corporate and correspondent investment sales	3,478		18,855			10,717			14,263			11,799
Asset management fees	12,024		11,560			11,904			11,532			11,405
Mortgage banking	13,741		23,868			17,451			9,048			8,204
Bank owned life insurance	4,972		5,094			4,625			4,584			3,508
Investment securities gains, net	—		3,477			19,139			—			21,003
Other	53,767		26,358			73,098			48,046			66,241
Total noninterest income	284,660		272,354			334,242			272,584			321,319
Noninterest expense:
Salaries, benefits and commissions	296,708		251,697			310,136			297,823			295,092
Equipment	68,793		64,752			64,681			64,826			63,908
Professional services	78,018		78,100			70,220			82,343			72,903
Net occupancy	41,145		41,585			39,843			43,302			42,241
Money transfer expense	18,897		17,958			17,136			17,951			18,005
Marketing	9,283		8,778			11,899			12,888			15,471
Communications	5,542		5,808			5,371			5,179			5,469
Goodwill impairment	—		—			2,185,000			470,000			—
Other	77,242		110,772			104,774			92,594			85,798
Total noninterest expense	595,628		579,450			2,809,060			1,086,906			598,887
Net (loss) income before income tax expense	179,905		(234,538		)	(2,242,354		)	(310,673		)	222,844
Income tax (benefit) expense	13,664		(110,101		)	(5,069		)	20,032			39,899
Net (loss) income	166,241		(124,437		)	(2,237,285		)	(330,705		)	182,945
Less: net income attributable to noncontrolling interests	401		472			501			663			514
Net (loss) income attributable to BBVA USA Bancshares, Inc.	$	165,840	$	(124,909	)	$	(2,237,786	)	$	(331,368	)	$	182,431

BBVA USA Bancshares, Inc. - FORM 8-K - EX-99.1 - EXHIBIT 99.1 - October 30, 2020

Attached files

BBVA USA Bancshares, Inc. Reports