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The BB&T Company’s Financial Statements Case Study


BB&T Company’s financial analysis for 2007 and 2015 report indicates that the company got a lot of funding from the loans and leases. In 2007 it got 59.19 % of the total funding while in 2015 it got 36.39% of its funds from the same (Clinton 450). The retained earnings stood at 4.5% in 2007 and 3.6% in 2015. Most of its financing comes from loans. The table below illustrates the calculations;

2015 2007
The Funding Sources Composition Amount Allocation Amount Allocation
In Thousands In Thousands
Commercial Real Estate Loans 18,368,000 4.92% 0.00%
Loans and Leases 135,951,000 36.39% 90,907,000 59.19%
Segregated cash due from banks 0 0.00% 208,000 0.14%
Trading securities at fair value 0 0.00% 1,009,000 0.66%
Available-for-sale securities at fair value 25,297,000 6.77% 22,419,000 14.60%
Commercial & industrial loans 48,430,000 12.96% 0 0.00%
Commercial – other lending subsidiaries 6,795,000 1.82% 0 0.00%
Retail – revolving credit 2,510,000 0.67% 0 0.00%
Retail – residential mortgage loans 30,533,000 8.17% 0 0.00%
Retail – sales finance 10,327,000 2.76% 0 0.00%
Notes 15,996,000 4.28% 7,201,000 4.69%
Short-term borrowings 3,593,000 0.96% 10,634,000 6.92%
Floating rate secured borrowings 0 0.00% 4,000,000 2.60%
Federal Home Loan Bank Advances 5,582,000 1.49% 7,210,000 4.69%
Commercial & industrial loans 48,430,000 12.96% 0 0.00%
Additional paid-in capital 8,365,000 2.24% 3,087,000 2.01%
Retained earnings 13,464,000 3.60% 6,919,000 4.50%
Total Funds 373,641,000 100.00% 153,594,000 100.00%
143.27%

Table 1. Funding Sources.

The company’s asset composition revealed that in 2007, it had 75.59% Goodwill. Held-to-maturity securities were 62.67% while Goodwill was 27.60%. Other investing activities performed poorly (Hastings 60). The asset composition grew by 350.75%. The following table gives the information in detail;

2015 2007
Assets Composition Amount Allocation Amount Allocation
In Thousands In Thousands
Interest-bearing deposits with banks 1,435,000 4.63% 388,000 5.65%
Held-to-maturity securities 19,410,000 62.67% 472,000 6.87%
Securities available for sale 721,000 2.33% 328,000 4.77%
Goodwill 8,548,000 27.60% 5,194,000 75.59%
Core deposit & other intangible assets 686,000 2.21% 489,000 7.12%
Other investing activities, net 171,000 0.55% 0 0.00%
Total Funds 30,971,000 100.00% 6,871,000 100.00%
350.75%

Table 2. Asset Composition.

In 2007 the unearned income was 91.43% of the total revenue while in 2015 Interest checking was 80.77% (Hughes 280). There was a drop in revenue of 68.36% by 2015.

2015 2007
Revenue Composition Amount Allocation Amount Allocation
In Thousands In Thousands
Interest charges 25,410,000 80.77% 1,201,000 1.21%
Non-controlling interests 34,000 0.11% 0 0.00%
Interest & fees on loans & leases 5,347,000 17.00% 6,713,000 6.75%
Loans & leases, net of unearned income 0 0.00% 90,907,000 91.43%
Interest on other earning assets 39,000 0.12% 0 0.00%
Service charges 631,000 2.01% 611,000 0.61%
Total Funds 31,461,000 100.00% 99,432,000 100.00%
-68.36%

Table 3. Revenue Composition.

In 2007, the company had 66.8% income from sales and disposals (Lee 216). It increased this to 69.83% in 2015. The table below illustrates the profit composition.

2015 2007
Profit Composition Amount Allocation Amount Allocation
In Thousands In Thousands
Net interest income 5,592,000 25.40% 3,880,000 31.58%
Total securities gains (losses), net -3,000 -0.01% -3,000 -0.02%
Loss (gain) on disposals of premises & equipment, net 0 0.00% -2,000 -0.02%
Net cash from business combinations 1,055,000 4.79% 141,000 1.15%
Proceeds from sales and disposals 15,375,000 69.83% 8,208,000 66.80%
Net proceeds from common stock issued 0 0.00% 64,000 0.52%
Total Funds 22,019,000 100.00% 12,288,000 100.00%
79.19%

Table 4. Profit Composition.

Issuance of loans dominated the assets portfolio and earned the company interest incomes (Paul, Clarke, and Grill 150). The company also financed most of its activities using loans (Robinson 40). The financing activities improved the company’s income. Losses were realized from the investing activities.

References

Clinton, Bill. Back to Work. New York, NY: Alfred A. Knopf, 2011. Print.

Hastings, N. A. J. Physical Asset Management. London, UK: Springer, 2010. Print.

Hughes, Peter. Tax Planning For Businesses and their Owners. London, UK: Thorogood Pub., 2009. Print.

Lee, Jay. Engineering Asset Management 2011. London, UK: Springer, 2014. Print.

Paul, Christopher, Colin P Clarke, and Beth Grill. Victory has a Thousand Fathers. Santa Monica, CA: RAND, 2010. Print.

Robinson, Thomas R. International Financial Statement Analysis. Hoboken, N.J.: John Wiley & Sons, 2009. Print.

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IvyPanda. (2020, September 27). The BB&T Company's Financial Statements. Retrieved from https://ivypanda.com/essays/the-bbampt-companys-financial-statements/

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