Slide 1: Second Quarter 2016 Earnings Conference Call
BB&T Second Quarter 2016 Earnings Conference Call July 21, 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 Second Quarter Performance Highlights
3 2016 Second Quarter Performance Highlights1 Net income totaled $541 million2, up 19.2% vs. 2Q15 and 10.7% vs. 1Q16 Diluted EPS totaled $0.66, up from $0.62 in 2Q15 and down from $0.67 in 1Q16 Adjusted diluted EPS totaled $0.71 excluding merger-related and restructuring charges and benefits f
Slide 4: Selected Items Affecting Earnings
4 Pre-Tax After Tax Diluted EPS Impact Merger-related and restructuring charges1 $ (92) $ (58) $ (0.07) Benefits from specific tax-advantaged assets N/A $ 13 $ 0.02 Selected Items Affecting Earnings ($ in millions, except per share impact) 1 Includes $63 million in pretax merger-related charges and
Slide 5: Loans Reflect Seasonal Strength and Targeted Runoff
5 Loans Reflect Seasonal Strength and Targeted Runoff1 Average loans and leases held for investment (excluding National Penn) increased 2.6% in 2Q16 primarily due to growth in C&I, CRE – IPP, and other lending subsidiaries Excluding residential mortgage and National Penn, average loans held for
Slide 6: Noninterest-Bearing Deposits Reflect Strong Growth
6 Noninterest-Bearing Deposits Reflect Strong Growth $131.9 $143.8 $148.5 $149.9 $160.3 0.24% 0.24% 0.24% 0.25% 0.23% 0.20% 0.25% 0.30% 0.35% 0.40% $115.0 $125.0 $135.0 $145.0 $155.0 $165.0 2Q15 3Q15 4Q15 1Q16 2Q16 Total Interest-Bearing Deposit Cost Total deposits averaged $160.3 billion, an incr
Slide 7: Credit Quality Reflects Lower Charge-offs
7 Credit Quality Reflects Lower Charge-offs1 Net charge-offs totaled $97 million, down 37.0% vs. 1Q16 Net charge-offs as a percentage of average loans were 0.28%, the lowest percentage since 2006 Loans 90 days or more past due and still accruing were essentially flat vs. 1Q16 Loans 30-89 day
Slide 8: Energy Portfolio – Stabilized in 2Q16
8 Energy Portfolio – Stabilized in 2Q16 Total commitments, outstanding balances, nonaccruals and losses decreased vs. 1Q16 41% Utilization rate 42% of the portfolio is Criticized & Classified Allocated reserves = 9.3% 92% of nonperforming Oil and Gas borrowers are paying as agreed Comple
Slide 9: Allowance Coverage Ratios Remain Strong
9 Allowance Coverage Ratios Remain Strong 3.71x 3.44x 2.83x 2.40x 3.88x 2.55x 2.49x 2.53x 1.89x 1.90x 1.00 2.00 3.00 4.00 2Q15 3Q15 4Q15 1Q16 2Q16 ALLL to Net Charge-offs ALLL to NPLs HFI Coverage ratios remain strong at 3.88x and 1.90x for the allowance to net charge-offs and NPLs, respectively
Slide 10: Net Interest Margin Decreases Slightly to 3.41%
10 Net Interest Margin Decreases Slightly to 3.41% 3.27% 3.35% 3.35% 3.43% 3.41% 3.16% 3.15% 3.12% 3.18% 3.16% 2.50% 3.00% 3.50% 4.00% 2Q15 3Q15 4Q15 1Q16 2Q16 Reported NIM Core NIM 2Q16 NIM decreased 2 bps due to: Lower interest rate environment Higher securities balances acquired from Nation
Slide 11: Fee Income Reflects Strong Growth From Acquisitions
11 Fee Income Reflects Strong Growth From Acquisitions Insurance income increased $46 million driven by $57 million from Swett & Crawford, a $34 million seasonal increase in P&C commissions and a $13 million increase in other insurance revenues Partially offset by: A $36 million seasonal decline
Slide 12: Noninterest Expense Driven by Acquisitions and Restructuring
12 Noninterest Expense Driven by Acquisitions and Restructuring 2Q16 2Q16 v. 1Q162 Increase (Decrease) 2Q16 v. 2Q15 Increase (Decrease) Personnel expense $ 1,039 54.5 % 20.3 % Occupancy and equipment expense 194 6.3 16.9 Software expense 53 15.8 15.2 Loan-related expense 36 50.3 (2.7) Outside IT ser
Slide 13: Capital and Liquidity Remain Strong
13 Capital and Liquidity Remain Strong 10.4% 10.1% 10.3% 10.4% 10.0% 9.0% 9.5% 10.0% 10.5% 11.0% 2Q15 3Q15 4Q15 1Q16 2Q16 The common equity tier 1 ratio was 9.8% fully phased-in BB&T’s 2Q16 LCR was 135% BB&T’s 2Q16 liquid asset buffer was 13.7% (high quality liquid assets as a percentage of to
Slide 14: Community Banking Segment
14 ($ in millions) Inc/(Dec) vs 1Q16 Inc/(Dec) vs 2Q15 2Q16 Comments5 Net Interest Income Noninterest Income1 Provision for Credit Losses Noninterest Expense2 Income Tax Expense Segment Net Income Highlighted Metrics5 $ 923 345 23 783 168 $ 294 $ 5 27 33 10 (4) $ (7) ($ in billions) 1 Noninterest In
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 1Q16 Inc/(Dec) vs 2Q15 2Q1
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 ($ in millions) Inc/(Dec) vs 1Q16 Inc/(Dec) vs 2Q15 2
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 ($ in millions) Inc/(Dec) vs 1Q
Slide 18: Insurance Holdings Segment
18 Comments4 ($ in millions) Inc/(Dec) vs 1Q16 Inc/(Dec) 2Q15 2Q16 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 2Q16 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 ($ in millions) Inc/(Dec) vs 1Q16 Inc/(Dec) vs 2Q15
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Slide 22: Capital Measures
Capital Measures1 (Dollars in millions, except per share data) 1 2 Current quarter regulatory capital is preliminary Risk-weighted assets are determined based on regulatory capital requirements in effect for the period presented 3 Tangible common equity and related ratios are non-GAAP measures. BB&T
Slide 23: Non-GAAP Reconciliations
Non-GAAP Reconciliations1 23 (Dollars in millions, except per share data) 1 2 Current quarter regulatory capital is preliminary Tangible common equity and related ratios are non-GAAP measures. BB&T's management uses these measures to assess the quality of capital and believes that investors may find
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 June 30 March 31 Dec. 31 Sept. 30 June 30 Ret
Slide 26: Non-GAAP Reconciliations
Non-GAAP Reconciliations1 Quarter Ended Reported net interest margin vs. core net interest margin June 30 2016 March 31 2016 Dec. 31 2015 Sept. 30 2015 June 30 2015 Reported net interest margin - GAAP 3.41% 3.43% 3.35% 3.35% 3.27% Adjustments to interest income for assets acquired: Effect of securit
Slide 27: Non-GAAP Reconciliations
Non-GAAP Reconciliations1 27 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 28: Non-GAAP Reconciliations
Non-GAAP Reconciliations1 28 (Dollars in millions) 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 demonstr
Slide 29: Non-GAAP Reconciliations
29 Non-GAAP Reconciliations1 (Dollars in millions) Link Quarter Average Balance Growth Adjusted for Acquisitions June 30, 2016 Link Qtr. Loans and Leases: Reported Acquired Adjusted Adj. Growth Ann.% Commercial and industrial $51,646 $(2,505) $49,141 $1,128 9.4% CRE-income producing properties 14,78