Slide 1: Third Quarter 2016 Earnings Conference Call
BB&T Third Quarter 2016 Earnings Conference Call October 19, 2016 Kelly S. King Chairman and Chief Executive Officer Daryl N. Bible Chief Financial Officer
Slide 2: Forward-looking statements
• general economic or business conditions, either nationally or regionally, may be less favorable than expected, resulting in, among other things, a deterioration in credit quality and/or a reduced demand for credit, insurance or other services; • disruptions to the national or global financial mark
Slide 3: 2016 Third Quarter Performance Highlights
3 2016 Third Quarter Performance Highlights1 Net income totaled $599 million2, up 21.7% vs. 3Q15 and 42.7% vs. 2Q16 Diluted EPS totaled $0.73, up 14.1% vs. 3Q15 and up 42.2% vs. 2Q16 Adjusted EPS totaled $0.76 excluding merger-related and restructuring charges and other items described on slid
Slide 4: Selected Items Affecting Earnings
4 Pre-Tax After Tax1 Diluted EPS Impact Merger-related and restructuring charges $ (43) $ (27) $ (0.03) Charitable contribution (50) (31) (0.04) Settlement of FHA-insured loans matter, net of recoveries 73 46 0.05 Termination of FDIC loss share agreements (18) (11) (0.01) Selected Items Affecting Ea
Slide 5: Loans Reflect Slower Commercial Growth and Targeted Runoff
5 Loans Reflect Slower Commercial Growth and Targeted Runoff1 Average loans and leases held for investment increased 0.3% annualized in 3Q16 vs. 2Q16 Excluding residential mortgage and sales finance, average loans held for investment grew approximately 2.2% annualized vs. 2Q16 Experienced loan
Slide 6: Noninterest-Bearing Deposits Reflect Strong Growth
6 Noninterest-Bearing Deposits Reflect Strong Growth $143.8 $148.5 $149.9 $160.3 $159.5 0.24% 0.24% 0.25% 0.23% 0.23% 0.20% 0.25% 0.30% 0.35% 0.40% $120.0 $130.0 $140.0 $150.0 $160.0 $170.0 3Q15 4Q15 1Q16 2Q16 3Q16 Total Interest-Bearing Deposit Cost Total deposits averaged $159.5 billion, a decre
Slide 7: Credit Quality Reflects Seasonal Increase
7 Credit Quality Reflects Seasonal Increase1 Credit quality results reflect expected seasonal increase in consumer-related portfolios Net charge-offs totaled $130 million, up 9 bps vs. 2Q16 Loans 90 days or more past due2 decreased 3.0% vs. 2Q16 Loans 30-89 days past due2 increased 7.2% vs.
Slide 8: Energy Portfolio – Stabilized in 3Q16
8 Energy Portfolio – Stabilized in 3Q16 Outstanding balances declined 11.2% compared with last quarter Total commitments and nonaccruals decreased vs. 2Q16 37% Utilization rate 47% of portfolio is Criticized & Classified Allocated reserves = 11.5% All nonperforming borrowers are paying a
Slide 9: Allowance Coverage Ratios Remain Strong
9 Allowance Coverage Ratios Remain Strong 3.44x 2.83x 2.40x 3.88x 2.91x 2.49x 2.53x 1.89x 1.90x 2.00x 1.00 2.00 3.00 4.00 3Q15 4Q15 1Q16 2Q16 3Q16 ALLL to Net Charge-offs ALLL to NPLs HFI Coverage ratios remain strong at 2.91x and 2.00x for the allowance to net charge-offs and NPLs, respectively
Slide 10: Net Interest Margin Decreases Slightly to 3.39%
10 Net Interest Margin Decreases Slightly to 3.39% 3.35% 3.35% 3.43% 3.41% 3.39% 3.15% 3.12% 3.18% 3.16% 3.17% 2.50% 3.00% 3.50% 4.00% 3Q15 4Q15 1Q16 2Q16 3Q16 Reported NIM Core NIM 3Q16 NIM decreased 2 bps due to: Lower investment portfolio yields, down 15 bps 4Q16 management expectations G
Slide 11: Fee Income Reflects Stronger Mortgage Banking Income and Loss Share Settlement Impact
11 Fee Income Reflects Stronger Mortgage Banking Income and Loss Share Settlement Impact Insurance income decreased $55 million, primarily due to lower property and casualty commissions as a result of normal seasonality Mortgage banking income increased $43 million due to net mortgage servicing
Slide 12: Noninterest Expense Reflects Lower Personnel Expense and Merger-Related Charges
12 Noninterest Expense Reflects Lower Personnel Expense and Merger-Related Charges 3Q16 3Q16 v. 2Q162 Increase (Decrease) 3Q16 v. 3Q15 Increase (Decrease) Personnel expense $ 1,006 (12.6) % 14.1 % Occupancy and equipment expense 203 18.5 10.9 Software expense 63 75.1 26.0 Loan-related expense 33 (33
Slide 13: Capital and Liquidity Remain Strong
13 Capital and Liquidity Remain Strong 10.1% 10.3% 10.4% 10.0% 10.1% 9.0% 9.5% 10.0% 10.5% 11.0% 3Q15 4Q15 1Q16 2Q16 3Q16 The common equity tier 1 ratio was 9.9% fully phased-in BB&T’s 3Q16 LCR was 122% BB&T’s 3Q16 liquid asset buffer was 13.6% (high quality liquid assets as a percentage of to
Slide 14: Community Banking Segment
14 ($ in millions) Inc/(Dec) vs 2Q16 Inc/(Dec) vs 3Q15 3Q16 Comments5,6 Net Interest Income Noninterest Income1 Provision for Credit Losses Noninterest Expense2 Income Tax Expense Segment Net Income Highlighted Metrics5,6 $ 972 358 (3) 800 195 $ 338 $ 49 13 (26) 18 27 $ 43 ($ in billions) 1 Noninter
Slide 15: Residential Mortgage Banking Segment
15 Retains and services mortgage loans originated by the Residential Mortgage Lending Division and through its referral relationship with the Community Bank and referral partners as well as those purchased from various correspondent originators ($ in millions) Inc/(Dec) vs 2Q16 Inc/(Dec) vs 3Q15 3Q1
Slide 16: Dealer Financial Services Segment
16 Primarily originates indirect loans to consumers on a prime and nonprime basis for the purchase of automobiles and other vehicles through approved dealers both in BB&T’s market and nationally (through Regional Acceptance Corporation) Comments4,5 ($ in millions) Inc/(Dec) vs 2Q16 Inc/(Dec) vs 3Q15
Slide 17: Specialized Lending Segment
17 Provides specialty lending including: commercial finance, mortgage warehouse lending, tax-exempt governmental finance, equipment leasing, commercial mortgage banking, insurance premium finance, dealer-based equipment financing, and direct consumer finance Comments4,6 ($ in millions) Inc/(Dec) vs
Slide 18: Insurance Holdings Segment
18 Comments4 ($ in millions) Inc/(Dec) vs 2Q16 Inc/(Dec) 3Q15 3Q16 Net Interest Income Noninterest Income1 Provision for Credit Losses Noninterest Expense2 Income Tax Expense Segment Net Income Highlighted Metrics Noninterest Income Total Agencies3 EBITDA Margin5 3Q16 Like Provides property and casu
Slide 19: Financial Services Segment
19 Provides trust services, wealth management, investment counseling, asset management, estate planning, employee benefits, corporate banking, and capital market services to individuals, corporations, governments, and other organizations Comments4,5 ($ in millions) Inc/(Dec) vs 2Q16 Inc/(Dec) vs 3Q1
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Slide 22: Capital Measures
Capital Measures1 (Dollars in millions, except per share data) 1 Current quarter regulatory capital is preliminary 22 As of / Quarter Ended Sept. 30 June 30 March 31 Dec. 31 Sept. 30 2016 2016 2016 2015 2015 Selected Capital Information Risk-based capital: Common equity tier 1 $ 17,824 $ 17,568 $ 17
Slide 23: Non-GAAP Reconciliations
Non-GAAP Reconciliations 23 (Dollars in millions, except per share data) 1 Tangible common equity is a non-GAAP measures. BB&T's management uses these measures to assess the quality of capital and believes that investors may find them useful in their analysis of the Corporation. These capital measur
Slide 24: Non-GAAP Reconciliations
Non-GAAP Reconciliations1 24 1 BB&T’s management uses these measures in their analysis of the Corporation’s performance and believes these measures provide a greater understanding of ongoing operations and enhance comparability of results with prior periods, as well as demonstrating the effects of s
Slide 25: Non-GAAP Reconciliations
25 1 BB&T’s management believes investors use this measure to evaluate the return on average common shareholders’ equity without the impact of intangible assets and their related amortization. Non-GAAP Reconciliations1 (Dollars in millions) Quarter Ended Sept. 30 June 30 March 31 Dec. 31 Sept. 30 Re
Slide 26: Non-GAAP Reconciliations
Non-GAAP Reconciliations1 Quarter Ended Reported net interest margin vs. core net interest margin Sept. 30 2016 June 30 2016 March 31 2016 Dec. 31 2015 Sept. 30 2015 Reported net interest margin - GAAP 3.39% 3.41% 3.43% 3.35% 3.35% Adjustments to interest income for assets acquired: Effect of securi