BBVA Compass Bancshares, Inc., a Sunbelt-based bank holding company (BBVA Compass), reported today net income of $120 million for the third quarter of 2016 compared to $130 million earned during the third quarter of 2015. Return on average assets and return on average tangible equity(1) for the third quarter of 2016 were 0.53 percent and 6.21 percent, respectively.

Net income for the first nine months of 2016 was $282 million compared to $416 million earned during the first nine months of 2015. Return on average assets and return on average tangible equity(1) for the first nine months of 2016 were 0.41 percent and 4.92 percent, respectively.

“Our results for the third quarter reflect our focus on targeted loan and deposit growth, improving spreads on earning assets and optimization of our capital base,” said Manolo Sánchez, chairman and CEO of BBVA Compass. “We believe this to be a prudent strategy given the low interest rate environment and tempered economic growth forecast in the U.S. At the same time, we continue to move forward with our digital transformation efforts to improve the customer experience and increase our digital sales capabilities to meet our customers’ needs.”

Total revenue increased 2 percent from the prior year for both the three and nine month periods

Average total loans for the third quarter of 2016 were $61.1 billion, an increase of 1 percent,” Sánchez noted. “While year-over-year growth was muted by strategic loan sales, during the first nine months of 2016 we funded $11.1 billion in customer loans. Equally important, our loan portfolio is fully funded by our ability to generate deposits.  Average deposits totaled $68.0 billion, an increase of $4.0 billion or 6 percent. Growth in this portfolio was led by a 7 percent increase in average noninterest bearing deposits which now represent 30.5 percent of total deposits.”

Total revenue increased 2 percent from the prior year for both the three and nine month periods. Net interest income totaled $515 million in the quarter, an increase of 1 percent from prior year levels. The percent net interest margin in the third quarter of 2016 was 2.73 percent, up 3 basis points from a year ago and 7 basis points from second quarter 2016 levels. This improvement reflected the company’s focus on spread management and disciplined balance sheet growth.

On a year-to-date basis, total expenses have increased just 3 percent, reflecting the company’s focus on disciplined expense management

Noninterest income for the quarter totaled $264 million, an increase of 4 percent compared to $254 million recorded in the third quarter of 2015. Growth was widespread as all major fee-based businesses posted gains, most notably in investment banking and advisory fees and a rebound in mortgage banking income. Expense growth was also well-contained in the quarter with total noninterest expense totaling $556 million, a slight decrease compared to the year ago quarter. On a year-to-date basis, total expenses have increased just 3 percent, reflecting the company’s focus on disciplined expense management.

Credit quality metrics remained sound and further reflect the continued active management of our energy portfolio. Provision expense for the quarter totaled $65 million compared to $87 million in the second quarter of 2016 and exceeded net charge-offs by $19 million. Net charge-offs as a percentage of total loans were 30 basis points compared to 43 basis points for the second quarter of 2016. The allowance for loan losses as a percentage of total loans ended the quarter at 1.43 percent, up from the 1.37 percent at the end of the second quarter this year and 1.20 percent at the end of the third quarter a year ago. Nonperforming loans as a percentage of total loans were 1.91 percent compared to 1.76 percent at the end of the second quarter 2016.

“Our asset quality metrics continue to reflect our commitment to maintaining sound underwriting standards and a strong risk profile,” Sánchez said. “This commitment is reflected in the actions we have taken to address the stress on our energy portfolio as a result of a prolonged period of low oil prices. Our energy portfolio totaled $3.3 billion at the end of the quarter, down $410 million compared to second quarter 2016 levels and $829 million compared to first quarter 2016 levels. Our energy portfolio now represents 5.5 percent of our total loan portfolio compared to 6.0 percent at the end of the second quarter this year and 6.7 percent at the end of the first quarter.”

Our energy portfolio now represents 5.5 percent of our total loan portfolio compared to 6.0 percent at the end of the second quarter this year

Total shareholder’s equity ended the third quarter of 2016 at $12.8 billion, a 3 percent increase from $12.4 billion at the end of the third quarter of 2015. Each of the company’s regulatory capital ratios remain significantly above “well-capitalized” guidelines. The total capital ratio ended the quarter at 14.18 percent(2) compared to 13.38 percent a year ago and the CET1 ratio rose to 11.28 percent(2) from 10.68 percent(2) at the end of the third quarter of 2015.

 

 

(1) Average tangible equity is a non-GAAP financial measure that we believe aids in understanding certain areas of our performance.

(2) Regulatory capital ratios at September 30, 2016, are estimated.

Contact: Communications

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