BBVA USA reports first quarter 2021 results

“During the first 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. “Momentum continued in the quarter highlighted by stable revenue and well-contained expenses. At the same time, we continue to maintain strong liquidity and capital positions. We are focused on continuing to meet the challenges ahead, and subject to regulatory approval and closing, successfully integrating our operations with PNC and the opportunities that this combination will bring to our customers, our communities and our employees.”

Rodríguez Soler: During the first 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.

Total revenue for the first quarter was $968 million, down slightly from fourth quarter 2020 levels and up 7 percent from first quarter 2020 levels. Net interest income in the quarter totaled $664 million compared to $667 million in the fourth quarter of 2020 and $589 million in the first quarter of 2020. The percent net interest margin for the first quarter of 2021 was 2.83 percent compared to 2.78 percent in the fourth quarter of 2020 and 2.80 percent in the first quarter of 2020. The increase in net interest margin reflects the efforts to reduce deposit costs and manage the lower interest rate environment.

Noninterest income (excluding securities gains) for the quarter totaled $304 million compared to $301 million in the fourth quarter of 2020 and $315 million for the first quarter of 2020. The increase in noninterest income on a linked quarter basis was driven by an increase in investment services sales fees (+$3 million) and money transfer income (+$3 million). Other noninterest income increased on a linked quarter basis (+$10 million), primarily as a result of a valuation adjustment to investments held by the company’s small business investment company that negatively impacted fourth quarter 2020 levels. Following a strong fourth quarter, mortgage banking slowed on a linked quarter basis (-$5 million).

During the first quarter of 2021 and the fourth quarter of 2020 no gains or losses were recorded on investment securities while $19 million of gains on investment securities was recorded in the first quarter of 2020.

Total noninterest expense was $619 million in the first quarter of 2021 compared to $578 million in the fourth quarter of 2020 and $624 million, excluding goodwill impairment, in the first quarter of 2020. The rise in noninterest expense was driven by an increase in salaries, benefits and commissions on a linked quarter basis.

Operating income(1) in the quarter totaled $349 million, down 43 percent (annualized) from the fourth quarter of 2020 and up 16 percent from the first quarter 2020 levels.

Total loans at the end of the first quarter of 2021 were $64.3 billion, down 9 percent (annualized) from $65.8 billion at the end of the fourth quarter of 2020 and down 5 percent from the $67.7 billion at the end of the first quarter of 2020. During the quarter, newly funded loans totaled $4.6 billion, which was flat compared to the same time period a year ago.

Deposit growth continued in the quarter with total deposits ending the quarter at $86.0 billion, up slightly from fourth quarter of 2020 and up $8.7 billion or 11 percent compared to the first quarter of 2020. Low-cost deposits were a key driver of deposit growth as noninterest bearing deposits ended the quarter at $29.5 billion, up 26 percent (annualized) on a linked quarter basis and up $9.1 billion or 45 percent compared to the first quarter of 2020.

As a result of deposit growth outpacing loan growth, the loan to deposit ratio ended the first quarter of 2021 at 76.4 percent compared to 77.1 percent at the end of the fourth quarter of 2020 and 86.6 percent at the end of the first quarter of 2020.

During the first quarter of 2021, the company recorded provision recapture of credit losses totaling $120 million compared to provision recapture of credit losses of $81 million in the fourth quarter of 2020 and provision for credit losses of $357 million in the first quarter of 2020. The recapture of provision expense primarily reflected improvements in macroeconomic factors and forecasts. Net charge-offs as a percentage of average total loans were 38 basis points in the quarter compared to 34 basis points in the fourth quarter of 2020 and 69 basis points in the first quarter of 2020. The allowance for loan losses as a percentage of total loans at the end of the quarter was 2.34 percent compared to 2.56 percent at the end of the fourth quarter of 2020 and 2.00 percent in the year ago quarter.

Nonperforming loans as a percentage of total loans ended the first quarter of 2021 at 2.18 percent, down from the 2.21 percent at the end of the fourth quarter of 2020 and up from the 1.09 percent at the end of the first quarter of 2020. The coverage ratio of nonperforming loans ended the quarter at 107 percent compared to 116 percent at the end of the fourth quarter of 2020 and 183 percent at the end of the first quarter of 2020.

The CET1(2) ratio ended the quarter at 14.23 percent compared to 13.28 percent at the end of the fourth quarter of 2020 and 11.97 percent at the end of the first quarter of 2020. All of BBVA USA’s regulatory capital ratios(2) continue to exceed the requirements under “well-capitalized” guidelines.

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(1) Return on average tangible equity and operating income 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 March 31, 2021, are estimated.