BBVA USA reports second quarter 2020 results

Rhea-AI Summary

BBVA USA reported a net loss of $124 million for Q2 2020, down from a profit of $160 million in Q2 2019. The bank’s total loans rose to $68.5 billion, an 8% increase year-over-year, driven by the commercial loan portfolio and $3.3 billion in PPP loans. Total deposits reached $85.4 billion, a 42% annualized increase from Q1 2020. Despite robust loan and deposit growth, total revenue fell to $881 million, down 10% Q/Q and 7% Y/Y, primarily due to lower interest rates. Nonperforming loans rose to 1.21% of total loans, with a significant increase in provisions for credit losses amid the pandemic.

Positive

• Total loans increased by 8% year-over-year to $68.5 billion.
• Deposits rose by 42% annualized from Q1 2020 to $85.4 billion.
• Funded approximately $3.3 billion in small business loans under the PPP, impacting an estimated 360,000 jobs.
• Noninterest expense decreased by 3% compared to Q2 2019.

Negative

• Reported a net loss of $124 million in Q2 2020 compared to a profit of $160 million in Q2 2019.
• Total revenue declined by 10% from Q1 2020 and 7% from Q2 2019 to $881 million.
• Nonperforming loans increased to 1.21%, up from 1.09% in Q1 2020.
• Provision for credit losses surged to $539 million, reflecting adverse economic conditions.

HOUSTON, July 30, 2020 /PRNewswire/ -- BBVA USA Bancshares, Inc., a Sunbelt-based bank holding company (BBVA USA), reported today a net loss of $124 million for the second quarter of 2020 compared to earnings of $160 million in the second quarter of 2019. Included in the second quarter 2020 results is a substantial increase in provision for credit losses, well in excess of net-charge-offs, that reflects the ongoing adverse macroeconomic environment and corresponding forecasts given the COVID-19 pandemic and subsequent impact to certain segments of the loan portfolio.

For the first six months of 2020, the company reported a net loss of $2.4 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 six months of 2020 was $177 million, further reflecting the decline in interest rates and higher provision expense necessary to reflect the economic and business disruption caused by the pandemic.

"The COVID-19 pandemic certainly represents an unprecedented time in global history but it has not deterred our team at BBVA USA from continuing to meet our customers' needs while also providing support to the communities in which we operate," said Javier Rodríguez Soler, president and CEO of BBVA USA.

"Despite the challenging economic environment, our second quarter results continued to build on the momentum over the past two quarters in terms of customer activity, driven by solid loan growth and robust deposit generation at significantly lower rates. While we continue to navigate the challenges ahead, and work to systematically reopen our branch lobbies while protecting the safety of our employees and customers, we firmly believe this increased activity, coupled with our solid capital and strong liquidity positions, will enable us to continue aiding our customers' during this time while also building long-term value."

Total loans at the end of the second quarter of 2020 were $68.5 billion, up 5 percent (annualized) from $67.7 billion at the end of the first quarter of 2020 and up 8 percent from the $63.4 billion at the end of the second quarter of 2019. The increase in total loans was fueled by an increase in the commercial loan portfolio, primarily as a result of customer draws and small business loans originated under the SBA's PPP. Under the PPP, a key small business component of the CARES Act, BBVA USA funded approximately $3.3 billion in small business loans, processing more than 22,000 applications, providing loans to nearly 3,100 borrowers who did not previously have a relationship with BBVA USA and impacting an estimated 360,000 jobs.

To support and expedite the demand for this program, BBVA USA utilized its digital capabilities to build an on-line app in just three days. As a result, the bank was able to begin funding loans just three days after the program opened.

During the second quarter, approximately $7.7 billion of customer loans were funded, a 121 percent increase from the second quarter a year ago. Excluding the impact of the PPP, newly funded customer loans were 26 percent ahead of the pace set last year. For the first six months of 2020, newly funded loans totaled more than $12.3 billion, up 84 percent compared to the first six months of 2019, and up 35 percent excluding the impact of the PPP.  

Deposit generation in the quarter was robust and reflected customers, both commercial and consumer, maintaining higher levels of liquidity given the uncertainty related to the COVID-19 pandemic, reduced spending, and aided somewhat by government stimulus programs/payments. Total deposits ended the quarter at $85.4 billion, up $8.2 billion or 42 percent (annualized) from the first quarter of 2020, and up $12.8 billion or 18 percent compared to the second quarter of 2019. Noninterest bearing deposits totaled $26.0 billion, up $5.6 billion or 109 percent (annualized) on a linked quarter basis, and up $5.3 billion or 26 percent compared to the second quarter of 2019. Growth in interest bearing transaction accounts was similarly robust, ending the quarter at $51.3 billion, up $5.0 billion or 43 percent (annualized) on a linked quarter basis, and up $14.3 billion or 39 percent compared to the second quarter of 2019.

With deposit growth outpacing loan growth, the loan to deposit ratio ended the quarter at 80.2 percent compared to 87.6 percent at the end of the first quarter of 2020 and 87.3 percent at the end of the second quarter of 2019. At the same time, BBVA USA continues to maintain a very strong liquidity position with the LCR at 144 percent, unchanged from first quarter 2020 levels.

Total shareholder's equity at the end of the second quarter of 2020 totaled $11.3 billion compared to $11.4 billion at the end of the first quarter of 2020 and $13.9 billion at the end of the second quarter of 2019. The CET1² ratio ended the second quarter of 2020 at 12.18 percent compared to 11.97 percent at the end of the first quarter of 2020 and 12.57 percent at the end of the second quarter of 2019. The decrease in shareholder's equity from the prior year reflects the non-cash goodwill impairment charge recorded in the first quarter of 2020, which does not impact tangible capital levels and therefore has no impact on regulatory capital and regulatory capital ratios. All of BBVA USA's regulatory capital ratios² continue to exceed the requirements under "well-capitalized" guidelines.

While increased business activity in terms of loans and deposits was positive during the quarter, revenue growth was challenged by the impact of the drastic decrease in interest rates, decreased other business activity due to the lockdown and higher provision for credit losses necessary given the ongoing adverse macroeconomic environment and corresponding forecasts as a result of the COVID-19 pandemic. 

Total revenue for the second quarter of 2020 was $881 million, down 10 percent (annualized) from first quarter 2020 levels and down 7 percent from second quarter 2019 levels. Net interest income in the quarter totaled $612 million compared to $589 million in the first quarter of 2020 and $660 million in the second quarter of 2019. The percent net interest margin in the second quarter of 2020 was 2.66 percent compared to 2.80 percent in the first quarter of 2020 and 3.24 percent in the second quarter of 2019. The decline in the percent net interest margin reflects the sudden decline in interest rates and subsequent repricing of variable rate loans.

Noninterest income (excluding securities gains) for the quarter totaled $269 million compared to $315 million in the first quarter of 2020 and $284 million in the second quarter of 2019. The decrease in noninterest income was primarily the result of decrease in service charges on deposit accounts driven by a decline in consumer spending activity, which also impacted card and merchant processing fees, as well fee waivers implemented by the bank to offer relief to those customers impacted by the COVID-19 pandemic. The decrease in other income was primarily the result of valuation adjustment to investments held by our small business investment company. At the same time, investment banking and advisory fees, corporate and correspondent investment sales and mortgage banking recorded positive growth both on a linked quarter basis and compared to the year ago quarter.

During the second quarter of 2020, investment securities gains totaled $3 million compared to $19 million in the first quarter of 2020. No investment securities gains were recorded in the second quarter of 2019.

Overall, expenses were well contained in the quarter as total noninterest expense totaled $579 million. On a linked quarter basis (excluding goodwill impairment) noninterest expense declined 29 percent (annualized) and represented a decrease of 3 percent compared to the second quarter of 2019. The decline in noninterest expense was primarily due to a decrease in salaries, benefits and commissions, marketing expenses and lower travel expenses, offset in part by an increase in provisions for unfunded commitments recorded in other noninterest expense. Operating income¹ in the quarter totaled $305 million, up 7 percent (annualized) from the first quarter of 2020 and down 12 percent from second quarter 2019 levels.

Provision for credit losses for the quarter was $539 million compared to $357 million in the first quarter of 2020 and $155 million in the second quarter of 2019. The increase in provision expense reflects the decline in forecasted economic conditions and the expected future losses that could result as a result of the ongoing COVID-19 pandemic. While oil prices have recovered from the drastic drop in the first quarter of 2020, demand continues to lag supply during the COVID-19 pandemic. At the end of the second quarter, our energy portfolio totaled $3.0 billion compared to $3.4 billion at the end of the first quarter of 2020.

Nonperforming loans as a percentage of total loans ended the second quarter of 2020 at 1.21 percent, up from the 1.09 percent at the end of the first quarter of 2020 and down from 1.26 percent at the end of the second quarter of 2019. The increase in nonperforming loans on a linked quarter basis was attributable to the commercial loan portfolio, primarily in the energy sector. Provision for loan losses in the quarter totaled $526 million, exceeding net charge-offs by $403 million. Net charge-offs as a percentage of average total loans were 72 basis points in the quarter compared to 69 basis points in the first quarter of 2020 and 90 basis points in the second quarter of 2019.     

With the increase in provision for loan losses, the allowance for loan losses as a percentage of total loans at the end of the quarter rose to 2.57 percent compared to 2.00 percent at the end of the first quarter of 2020 and 1.54 percent at the end of the second quarter of 2019. The coverage ratio of nonperforming loans also increased to 211 percent at the end of the quarter compared to 183 percent at the end of the first quarter of 2020 and 123 percent at the end of the second quarter of 2019.

During the quarter, BBVA USA announced that it had received approval to open 15 new branches across Texas, the bank's largest market in its U.S. footprint. The branches, set to open in 2021, underscore the bank's 5-year strategic plan launched in early 2020, which aims to help clients improve their financial health. Adding branches at a time when digital transactions are increasing demonstrates the bank's belief that the branch format naturally facilitates face-to-face relationships between bankers and their customers, building a deep understanding of their financial needs.

The announcement came within a week of BBVA USA launching its new mobile banking app, Mobile 9.0, and expanded transaction detail screen in mobile and online banking, both aimed at leveraging the bank's technology expertise to provide a better experience and more transparency and control for customers.

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 June 30, 2020, are estimated.

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 641 branches, including 330 in Texas, 89 in Alabama, 63 in Arizona, 61 in California, 44 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 June 30,				%		Six Months Ended June 30,				%
		2020		2019		Change		2020		2019		Change
EARNINGS SUMMARY
Net interest income		$         612,017		$         659,749		(7)		$       1,201,472		$      1,342,838		(11)
Noninterest income [a]		268,877		284,281		(5)		583,980		533,083		10
Total revenue [a]		880,894		944,030		(7)		1,785,452		1,875,921		(5)
Investment securities gain, net		3,477		—		NM		22,616		8,958		152
Provision for credit losses		539,459		155,018		248		896,450		337,310		166
Goodwill impairment		—		—		—		2,185,000		—		NM
Noninterest expense		579,450		598,314		(3)		1,203,510		1,180,287		2
Pretax (loss) income		(234,538)		190,698		(223)		(2,476,892)		367,282		(774)
Income tax (benefit) expense		(110,101)		30,512		(461)		(115,170)		66,115		(274)
Net (loss) income		$        (124,437)		$         160,186		(178)		$     (2,361,722)		$         301,167		(884)
Adjusted net (loss) income [b]		$        (124,437)		$         160,186		(178)		$        (176,722)		$         301,167		(159)
SELECTED RATIOS
Return on average assets		(0.48)%		0.69 %				(4.74)%		0.65 %
Return on average assets- adjusted [b]		(0.48)		0.69				(0.35)		0.65
Return on average tangible equity [b]		(5.45)		7.34				(52.34)		7.00
Return on average tangible equity- adjusted [b]		(5.45)		7.34				(3.92)		7.00
Efficiency ratio [b]		64.95		62.50				66.54		62.04
Average common equity to average assets		10.82		14.47				12.22		14.43
Average loans to average total deposits		82.89		88.13				84.66		89.40
Common equity tier I capital (CET1) [c]		12.18		12.57				12.18		12.57
Tier I capital ratio [c]		12.51		12.91				12.51		12.91
Total capital ratio [c]		14.66		15.08				14.66		15.08
Leverage ratio [c]		8.66		9.99				8.66		9.99
		Average for Three Months						Average for Six Months						Ending Balance
		Ended June 30,				%		Ended June 30,				%		June 30,				%
		2020		2019		Change		2020		2019		Change		2020		2019		Change
BALANCE SHEET HIGHLIGHTS
Total loans		$   69,256,412		$   64,056,915		8		$    67,065,753		$   64,765,717		4		$   68,487,351		$    63,402,090		8
Total debt securities		14,110,021		13,625,034		4		14,001,688		13,696,513		2		14,473,646		13,923,433		4
Earning assets		94,247,127		83,152,459		13		90,375,817		82,829,544		9		95,504,447		82,741,439		15
Total assets		104,204,062		93,452,839		12		100,280,087		93,220,648		8		102,267,616		92,184,045		11
Noninterest bearing demand deposits		24,225,740		20,286,244		19		22,259,622		20,234,941		10		25,978,354		20,646,209		26
Interest bearing transaction accounts		49,896,129		36,948,180		35		46,786,454		36,429,106		28		51,304,239		36,967,442		39
Total transaction accounts		74,121,869		57,234,424		30		69,046,076		56,664,047		22		77,282,593		57,613,651		34
Total deposits		83,547,718		72,687,054		15		79,214,772		72,446,783		9		85,426,414		72,588,810		18
Total shareholder's equity		11,533,007		13,782,011		(16)		12,516,811		13,711,724		(9)		11,270,789		13,870,723		(19)
Total shareholder's equity - tangible [b]		9,175,875		8,750,882		5		9,074,873		8,678,376		5		8,913,446		8,845,449		1

[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)
		2020				2019
		June 30		March 31		December 31		September 30		June 30
NONPERFORMING ASSETS
Nonaccrual loans [a]		$    764,744		$    676,716		$       606,843		$         653,242		$ 732,696
Loans 90 days or more past due [b]		66,163		61,774		71,126		67,869		64,337
TDRs 90 days or more past due		423		335		414		588		304
Total nonperforming loans [a]		831,330		738,825		678,383		721,699		797,337
Foreclosed real estate		14,871		20,642		20,833		17,381		13,752
Other repossessed assets		8,599		13,338		10,930		17,584		13,040
Total nonperforming assets		$    854,800		$    772,805		$       710,146		$         756,664		$ 824,129
TDRs accruing and past due less than 90 days		$      95,788		$      97,404		$         97,901		$           97,218		$ 112,383
Total nonperforming loans as a % of loans		1.21 %		1.09 %		1.06 %		1.14 %		1.26 %
Total nonperforming assets as a % of total loans, foreclosed real estate, and other repossessed assets		1.25		1.14		1.11		1.19		1.30
		Three Months Ended
		2020				2019
		June 30		March 31		December 31		September 30		June 30
ALLOWANCE FOR LOAN LOSSES
Balance at beginning of period		$ 1,351,072		$    920,993		$       942,191		$         977,660		$ 966,022
Adoption of ASC 326		—		184,931		—		—		—
Net charge-offs (NCO)		123,054		111,798		140,703		176,098		143,380
Provision for loan losses		526,334		356,946		119,505		140,629		155,018
Balance at end of period		$ 1,754,352		$ 1,351,072		$       920,993		$         942,191		$ 977,660
Allowance for loan losses as a % of total loans		2.57 %		2.00 %		1.44 %		1.49 %		1.54 %
Allowance for loan losses as a % of nonperforming loans [c]		211.03		182.87		135.76		130.55		122.62
Allowance for loan losses as a % of nonperforming assets [c]		205.24		174.83		129.69		124.52		118.63
Annualized as a % of average loans:
NCO - QTD		0.72		0.69		0.87		1.10		0.90
NCO - YTD		0.71		0.69		0.88		0.88		0.77

[a]  Includes loans held for sale.
[b]  Excludes loans classified as troubled debt restructuring (TDRs).
[c]  Includes loans held for sale that are on nonaccrual status.

 

BBVA USA BANCSHARES, INC.
(Unaudited)
(Dollars in Thousands)
	Three Months Ended June 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	$          69,256,412		$               680,157		3.95 %		$          64,056,915		$               799,680		5.01 %
Debt securities available for sale [a]	5,780,912		18,805		1.31		8,983,280		45,125		2.01
Debt securities held to maturity	8,207,298		40,635		1.99		4,744,584		34,458		2.91
Other earning assets [b]	10,880,694		15,173		0.56		5,470,510		36,424		2.67
Total earning assets [a]	94,125,316		754,770		3.23		83,255,289		915,687		4.41
Allowance for credit losses	(1,375,912)						(974,772)
Unrealized gain (loss) on debt securities available for sale	121,811						(102,830)
Other assets	11,332,847						11,275,152
Total assets	$        104,204,062						$          93,452,839
Liabilities and Shareholder's Equity
Interest bearing liabilities:
Interest bearing demand deposits	$          14,153,639		$                 13,430		0.38		$            9,304,889		$                 26,536		1.14
Savings and money market accounts	35,742,490		43,943		0.49		27,643,291		88,203		1.28
Certificates and other time deposits	9,425,849		39,906		1.70		15,452,630		87,739		2.28
Total interest bearing deposits	59,321,978		97,279		0.66		52,400,810		202,478		1.55
FHLB and other borrowings	3,567,010		21,936		2.47		4,026,581		34,300		3.42
Federal funds purchased and securities sold under agreement to repurchase [b]	1,192,030		12,274		4.14		466,926		6,002		5.16
Other short-term borrowings	12,588		39		1.25		7,402		100		5.42
Total interest bearing liabilities	64,093,606		131,528		0.83		56,901,719		242,880		1.71
Noninterest bearing deposits	24,225,740						20,286,244
Other noninterest bearing liabilities	4,351,709						2,482,865
Total liabilities	92,671,055						79,670,828
Shareholder's equity	11,533,007						13,782,011
Total liabilities and shareholder's equity	$        104,204,062						$          93,452,839
Net interest income/ net interest spread			623,242		2.40 %				672,807		2.70 %
Net yield on earning assets					2.66 %						3.24 %
Total taxable equivalent adjustment			11,225						13,058
Net interest income			$               612,017						$               659,749

[a] Excludes adjustment for market valuation.

[b] Yield/rate reflects impact of balance sheet offsetting.

 

BBVA USA BANCSHARES, INC.
(Unaudited)
(Dollars in Thousands)
		Six Months Ended June 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		$              67,065,753		$                1,406,689		4.22 %		$              64,765,717		$                1,612,095		5.02 %
Debt securities available for sale [a]		6,225,236		17,313		0.56		9,450,246		98,647		2.11
Debt securities held to maturity		7,699,732		82,715		2.16		4,391,400		65,223		3.00
Other earning assets [b]		9,308,376		58,470		1.26		4,367,314		59,931		2.77
Total earning assets [a]		90,299,097		1,565,187		3.49		82,974,677		1,835,896		4.46
Allowance for credit losses		(1,220,331)						(942,398)
Unrealized gain (loss) on debt securities available for sale		76,720						(145,133)
Other assets		11,124,601						11,333,502
Total assets		$            100,280,087						$              93,220,648
Liabilities and Shareholder's Equity
Interest bearing liabilities:
Interest bearing demand deposits		$              12,926,063		37,981		0.59		$                8,997,002		46,882		1.05
Savings and money market accounts		33,860,391		128,735		0.76		27,432,104		165,112		1.21
Certificates and other time deposits		10,168,696		95,305		1.88		15,782,736		172,838		2.21
Total interest bearing deposits		56,955,150		262,021		0.93		52,211,842		384,832		1.49
FHLB and other borrowings		3,651,605		43,112		2.37		4,157,923		71,926		3.49
Federal funds purchased and securities sold under agreement to repurchase [b]		1,321,766		34,932		5.31		439,577		9,749		4.47
Other short-term borrowings		16,312		391		4.82		17,702		296		3.37
Total interest bearing liabilities		61,944,833		340,456		1.11		56,827,044		466,803		1.66
Noninterest bearing deposits		22,259,622						20,234,941
Other noninterest bearing liabilities		3,558,821						2,446,939
Total liabilities		87,763,276						79,508,924
Shareholder's equity		12,516,811						13,711,724
Total liabilities and shareholder's equity		$            100,280,087						$              93,220,648
Net interest income/ net interest spread				1,224,731		2.38 %				1,369,093		2.80 %
Net yield on earning assets						2.73 %						3.33 %
Total taxable equivalent adjustment				23,259						26,255
Net interest income				$                1,201,472						$                1,342,838

[a] Excludes adjustment for market valuation.

[b] Yield/rate reflects impact of balance sheet offsetting.

 

BBVA USA BANCSHARES, INC.
(Unaudited)
(Dollars in Thousands)
		Six Months						Three Months Ended
		Ended June 30,				%		2020				2019
		2020		2019		Change		June 30		March 31		December 31		September 30		June 30
NONINTEREST INCOME
Service charges on deposit accounts		$   105,764		$   120,639		(12)		$   44,233		$      61,531		$            64,585		$              65,143		$   61,731
Card and merchant processing fees		93,507		96,357		(3)		43,416		50,091		50,805		50,385		50,355
Investment services sales fees		59,378		58,029		2		24,971		34,407		28,130		29,287		31,333
Investment banking and advisory fees		71,792		39,615		81		45,061		26,731		15,720		28,324		20,758
Money transfer income		50,009		47,253		6		25,461		24,548		25,871		26,020		25,272
Corporate and correspondent investment sales		29,572		12,499		137		18,855		10,717		14,263		11,799		5,607
Asset management fees		23,464		22,634		4		11,560		11,904		11,532		11,405		11,867
Mortgage banking		41,319		10,807		282		23,868		17,451		9,048		8,204		5,870
Bank owned life insurance		9,719		9,387		4		5,094		4,625		4,584		3,508		4,803
Other		99,456		115,863		(14)		26,358		73,098		48,046		66,241		66,685
		583,980		533,083		10		268,877		315,103		272,584		300,316		284,281
Investment securities gains, net		22,616		8,958		152		3,477		19,139		—		21,003		—
Total noninterest income		$   606,596		$   542,041		12		$ 272,354		$    334,242		$          272,584		$            321,319		$ 284,281
NONINTEREST EXPENSE
Salaries, benefits and commissions		$   561,833		$   589,019		(5)		$ 251,697		$    310,136		$          297,823		$            295,092		$ 296,303
Equipment		129,433		128,032		1		64,752		64,681		64,826		63,908		62,638
Professional services		148,320		137,680		8		78,100		70,220		82,343		72,903		73,784
Net occupancy		81,428		81,057		—		41,585		39,843		43,302		42,241		40,116
Money transfer expense		35,094		32,268		9		17,958		17,136		17,951		18,005		17,290
Marketing		20,677		26,805		(23)		8,778		11,899		12,888		15,471		16,412
Communications		11,179		11,134		—		5,808		5,371		5,179		5,469		5,733
Goodwill impairment		2,185,000		—		NM		—		2,185,000		470,000		—		—
Other		215,546		174,292		24		110,772		104,774		92,594		85,798		86,038
Total noninterest expense		$3,388,510		$1,180,287		187		$ 579,450		$ 2,809,060		$       1,086,906		$            598,887		$ 598,314
NM = Not meaningful

 

BBVA USA BANCSHARES, INC.
(Unaudited)
(Dollars in Thousands)
		Six Months					Three Months Ended
		Ended June 30,					2020				2019
		2020		2019			June 30		March 31		December 31		September 30		June 30
NON-GAAP RECONCILIATION
Computation of Operating Income:
Net interest income (GAAP)		$     1,201,472		$   1,342,838			$        612,017		$     589,455		$          623,154		$            641,041		$      659,749
Plus: noninterest income (GAAP)		606,596		542,041			272,354		334,242		272,584		321,319		284,281
Less: noninterest expense (GAAP)		3,388,510		1,180,287			579,450		2,809,060		1,086,906		598,887		598,314
Plus: goodwill impairment (GAAP)		2,185,000		—			—		2,185,000		470,000		—		—
Operating income (non-GAAP)		$        604,558		$      704,592			$        304,921		$     299,637		$          278,832		$            363,473		$      345,716
Computation of Tangible Shareholder's Equity:
Total shareholder's equity		$   11,270,789		$ 13,870,723			$   11,270,789		$11,358,354		$     13,386,589		$       14,101,618		$ 13,870,723
Less: goodwill and other intangibles (GAAP)		2,357,343		5,025,274			2,357,343		2,359,540		4,555,330		5,020,573		5,025,274
Tangible shareholder's equity (non-GAAP)		$     8,913,446		$   8,845,449			$     8,913,446		$  8,998,814		$       8,831,259		$         9,081,045		$   8,845,449
Computation of Average Tangible Equity:
Total stockholder's equity (average) (GAAP)		$   12,516,811		$ 13,711,724			$   11,533,007		$13,500,615		$     14,090,315		$       14,056,939		$ 13,782,011
Less: goodwill and other intangibles (average) (GAAP)		3,441,938		5,033,348			2,357,132		4,526,744		5,016,935		5,023,480		5,031,129
Average tangible equity (non-GAAP) [B]		$     9,074,873		$   8,678,376			$     9,175,875		$  8,973,871		$       9,073,380		$         9,033,459		$   8,750,882
Net income (loss) (GAAP) [A]		$   (2,361,722)		$      301,167			$      (124,437)		$ (2,237,285)		$         (330,705)		$            182,945		$      160,186
Return on average tangible equity (non-GAAP) ([A]/[B], annualized)		(52.34)%		7.00 %			(5.45)%		(100.27)%		(14.46)%		8.03 %		7.34 %
Computation of Adjusted Net Income, Return on Average Assets and Return on Average Tangible Equity:
Net income (loss) (GAAP)		$   (2,361,722)		$      301,167			$      (124,437)		$ (2,237,285)		$         (330,705)		$            182,945		$      160,186
Plus: goodwill impairment (GAAP)		2,185,000		—			—		2,185,000		470,000		—		—
Adjusted net income (non-GAAP) [C]		$      (176,722)		$      301,167			$      (124,437)		$      (52,285)		$          139,295		$            182,945		$      160,186
Average assets (GAAP) [D]		$ 100,280,087		$ 93,220,648			$ 104,204,062		$96,356,113		$     95,754,954		$       94,942,456		$ 93,452,839
Return on average assets - adjusted (non-GAAP) ([C]/[D], annualized)		(0.35)%		0.65 %			(0.48)%		(0.22)%		0.58 %		0.76 %		0.69 %
Return on average tangible equity - adjusted (non-GAAP) ([C]/[B], annualized)		(3.92)		7.00			(5.45)		(2.34)		6.09		8.03		7.34
Computation of Efficiency Ratio:
Noninterest expense (GAAP)		$     3,388,510		$   1,180,287			$        579,450		$  2,809,060		$       1,086,906		$            598,887		$      598,314
Less: securities and goodwill impairment (GAAP)		2,185,000		113			—		2,185,000		470,102		—		113
Total expense (GAAP) [E]		$     1,203,510		$   1,180,174			$        579,450		$     624,060		$          616,804		$            598,887		$      598,201
Net interest income, taxable equivalent basis		$     1,224,731		$   1,369,093			$        623,242		$     601,489		$          635,552		$            653,926		$      672,807
Plus: noninterest income (GAAP)		606,596		542,041			272,354		334,242		272,584		321,319		284,281
Less: investment securities gains, net (GAAP)		22,616		8,958			3,477		19,139		—		21,003		—
Total revenue [F]		$     1,808,711		$   1,902,176			$        892,119		$     916,592		$          908,136		$            954,242		$      957,088
Efficiency ratio (non-GAAP) ([E]/[F])		66.54 %		62.04 %			64.95 %		68.08 %		67.92 %		62.76 %		62.50 %

 

BBVA USA BANCSHARES, INC.
SUPPLEMENTAL LOAN PORTFOLIO INFORMATION (Unaudited)
(Dollars in Thousands)
	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, Nonaccrual, or TDR		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		$                           —
BBVA USA BANCSHARES, INC.
SUPPLEMENTAL LOAN PORTFOLIO INFORMATION (Unaudited)
(Dollars in Thousands)
	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.
SUPPLEMENTAL LOAN PORTFOLIO INFORMATION (Unaudited)
(Dollars in Thousands)
	At or Quarter Ended June 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	$                     49,037		$                       8,246		$                12,785		$   389,779		$           19,150		$                    24,373,659		$ 24,852,656		$                    45,916
Real estate – construction	3,159		114		532		2,097		107		1,976,637		1,982,646		(477)
Commercial real estate –  mortgage	4,716		3,283		360		107,137		3,687		12,850,522		12,969,705		61
Residential real estate – mortgage	74,767		25,226		6,681		154,247		59,130		13,084,079		13,404,130		1,523
Equity lines of credit	12,604		7,972		3,394		35,356		—		2,613,504		2,672,830		371
Equity loans	2,549		788		224		9,361		25,361		237,495		275,778		194
Credit card	11,119		7,007		18,762		—		—		841,213		878,101		16,436
Consumer – direct	36,657		22,986		14,786		6,926		5,252		2,390,021		2,476,628		57,142
Consumer – indirect	77,523		21,908		6,813		27,793		—		3,665,042		3,799,079		22,214
Total loans	$                   272,131		$                     97,530		$                64,337		$   732,696		$         112,687		$                    62,032,172		$ 63,311,553		$                  143,380
Loans held for sale	$                            —		$                            —		$                       —		$             —		$                   —		$                           90,537		$        90,537		$                           —

 

BBVA USA BANCSHARES, INC.
BALANCE SHEET (Unaudited)
(Dollars in Thousands)
	2020				2019
	June 30		March 31		December 31		September 30		June 30
Assets:
Cash and due from banks	$     1,019,127		$   1,033,733		$      1,149,734		$       1,117,458		$   1,027,400
Federal funds sold, securities purchased under agreements to resell and interest bearing deposits	11,738,063		4,479,535		5,788,964		5,356,141		4,773,761
Cash and cash equivalents	12,757,190		5,513,268		6,938,698		6,473,599		5,801,161
Trading account assets	1,016,966		1,009,130		473,976		564,000		440,098
Debt securities available for sale	5,765,192		6,344,816		7,235,305		7,612,590		9,010,950
Debt securities held to maturity, net	8,693,437		7,876,266		6,797,046		6,334,634		4,912,483
Loans held for sale	245,851		117,752		112,058		134,314		90,537
Loans	68,241,500		67,539,414		63,946,857		63,320,571		63,311,553
Allowance for loan losses	(1,754,352)		(1,351,072)		(920,993)		(942,191)		(977,660)
Net loans	66,487,148		66,188,342		63,025,864		62,378,380		62,333,893
Premises and equipment, net	1,070,358		1,068,741		1,087,698		1,085,635		1,105,819
Bank owned life insurance	754,908		754,409		750,224		746,819		745,130
Goodwill	2,328,296		2,328,296		4,513,296		4,983,296		4,983,296
Other assets	3,148,270		3,124,539		2,669,182		2,600,820		2,760,678
Total assets	$ 102,267,616		$ 94,325,559		$    93,603,347		$     92,914,087		$ 92,184,045
Liabilities:
Deposits:
Noninterest bearing	$   25,978,354		$ 20,418,504		$    21,850,216		$     21,019,303		$ 20,646,209
Interest bearing	59,448,060		56,816,003		53,135,067		52,550,139		51,942,601
Total deposits	85,426,414		77,234,507		74,985,283		73,569,442		72,588,810
FHLB and other borrowings	3,571,933		3,790,137		3,690,044		3,709,949		4,052,969
Federal funds purchased and securities sold under agreements to repurchase	249,481		409,784		173,028		117,421		191,739
Other short-term borrowings	1,619		—		—		45		2,067
Accrued expenses and other liabilities	1,747,380		1,532,777		1,368,403		1,415,612		1,477,737
Total liabilities	90,996,827		82,967,205		80,216,758		78,812,469		78,313,322
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	14,035,607		14,039,572		14,043,727		14,359,966		14,364,527
Retained deficit	(3,430,135)		(3,305,226)		(917,227)		(585,859)		(768,290)
Accumulated other comprehensive income (loss)	404,165		362,339		(1,072)		66,009		13,508
Total BBVA USA Bancshares, Inc. shareholder's equity	11,241,342		11,328,390		13,357,133		14,071,821		13,841,450
Noncontrolling interests	29,447		29,964		29,456		29,797		29,273
Total shareholder's equity	11,270,789		11,358,354		13,386,589		14,101,618		13,870,723
Total liabilities and shareholder's equity	$ 102,267,616		$ 94,325,559		$    93,603,347		$     92,914,087		$ 92,184,045

 

BBVA USA BANCSHARES, INC.
INCOME STATEMENT (Unaudited)
(Dollars in Thousands)
	Three Months Ended
	2020				2019
	June 30		March 31		December 31		September 30		June 30
Interest income:
Interest and fees on loans	$    669,767		$        715,476		$         738,140		$          771,245		$   787,767
Interest on debt securities available for sale	18,805		(1,492)		33,333		36,051		45,125
Interest on debt securities held to maturity	39,800		41,102		43,097		38,893		33,313
Interest on trading account assets	1,157		1,122		1,326		487		601
Interest and dividends on other earning assets	14,016		42,175		39,915		46,528		35,823
Total interest income	743,545		798,383		855,811		893,204		902,629
Interest expense:
Interest on deposits	97,279		164,742		189,345		203,979		202,478
Interest on FHLB and other borrowings	21,936		21,176		31,263		32,975		34,300
Interest on federal funds purchased and securities sold under agreements to repurchase	12,274		22,658		11,850		15,137		6,002
Interest on other short-term borrowings	39		352		199		72		100
Total interest expense	131,528		208,928		232,657		252,163		242,880
Net interest income	612,017		589,455		623,154		641,041		659,749
Provision for credit losses	539,459		356,991		119,505		140,629		155,018
Net interest income after provision for credit losses	72,558		232,464		503,649		500,412		504,731
Noninterest income:
Service charges on deposit accounts	44,233		61,531		64,585		65,143		61,731
Card and merchant processing fees	43,416		50,091		50,805		50,385		50,355
Investment services sales fees	24,971		34,407		28,130		29,287		31,333
Investment banking and advisory fees	45,061		26,731		15,720		28,324		20,758
Money transfer income	25,461		24,548		25,871		26,020		25,272
Asset management fees	11,560		11,904		11,532		11,405		11,867
Corporate and correspondent investment sales	18,855		10,717		14,263		11,799		5,607
Mortgage banking	23,868		17,451		9,048		8,204		5,870
Bank owned life insurance	5,094		4,625		4,584		3,508		4,803
Investment securities gains, net	3,477		19,139		—		21,003		—
Other	26,358		73,098		48,046		66,241		66,685
Total noninterest income	272,354		334,242		272,584		321,319		284,281
Noninterest expense:
Salaries, benefits and commissions	251,697		310,136		297,823		295,092		296,303
Equipment	64,752		64,681		64,826		63,908		62,638
Professional services	78,100		70,220		82,343		72,903		73,784
Net occupancy	41,585		39,843		43,302		42,241		40,116
Money transfer expense	17,958		17,136		17,951		18,005		17,290
Marketing	8,778		11,899		12,888		15,471		16,412
Communications	5,808		5,371		5,179		5,469		5,733
Goodwill impairment	—		2,185,000		470,000		—		—
Other	110,772		104,774		92,594		85,798		86,038
Total noninterest expense	579,450		2,809,060		1,086,906		598,887		598,314
Net (loss) income before income tax expense	(234,538)		(2,242,354)		(310,673)		222,844		190,698
Income tax (benefit) expense	(110,101)		(5,069)		20,032		39,899		30,512
Net (loss) income	(124,437)		(2,237,285)		(330,705)		182,945		160,186
Less: net income attributable to noncontrolling interests	472		501		663		514		599
Net (loss) income attributable to BBVA USA Bancshares, Inc.	$   (124,909)		$   (2,237,786)		$       (331,368)		$          182,431		$   159,587

 

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SOURCE BBVA USA

FAQ

What is BBVA's net loss for Q2 2020?

BBVA reported a net loss of $124 million for Q2 2020.

How much did BBVA fund through the PPP?

BBVA funded approximately $3.3 billion in small business loans under the PPP.

What was BBVA's total loans at the end of Q2 2020?

Total loans at the end of Q2 2020 were $68.5 billion.

What was the total revenue for BBVA in Q2 2020?

Total revenue for Q2 2020 was $881 million.

What percentage of BBVA's loans were nonperforming at the end of Q2 2020?

Nonperforming loans as a percentage of total loans ended at 1.21%.