Slide 1: Second Quarter 2014 Earnings Conference Call
Sharing Knowledge fora Brighter Direction Second Quarter 2014 Earnings Conference Call July 21, 2014 Kelly S. King Chairman and Chief Executive Officer Daryl N. Bible Chief Financial Officer
Slide 2: Forward-Looking Information
Forward - Looking Information This presentation contains “forward - looking statements” within the meaning of the Private Securities Litigation Reform Act of 19 95, regarding the financial condition, results of operations, business plans and the future performance of BB&T that are based on the belie
Slide 3: 2014 Second Quarter Performance Highlights
3 3 Earnings Highlights Loans Deposits Credit Quality 6 Revenues Expenses ▪ Net income 2 totaled $425 million vs. $547 million in 2Q13 ▪ Diluted EPS was $0.58, compared with $0.77 in 2Q13 ▪ Earnings reduced by $0.12 per diluted share due to mortgage and tax - related reserve adjustments; and $0.01 d
Slide 4: Selected Items Affecting Earnings
4 4 Pre Tax After Tax Diluted EPS Impact FHA - insured mortgage loan reserve adjustment $ (85) $ (53) $ (0.07) Mortgage loan indemnification reserve adjustment $ (33) $ (21) $ (0.03) Income tax reserve adjustment N/A $ (14) $ (0.02) Merger - related and restructuring charges $ (13) $ (8) $ (0.01) Se
Slide 5: Enhanced Lending Strategies Drive Robust Results
5 5 Enhanced Lending Strategies Drive Robust Results ▪ Average total loan growth for 2H14 is expected to be 3 - 5%; stronger in 3Q14 Driven by C&I, CRE - income producing properties, CRE - construction & development, Other Lending Subsidiaries, Sales Finance and Retail lending Growth in Other Le
Slide 6: Improved Deposit Mix and Cost
6 6 Improved Deposit Mix and Cost $130.0 $127.9 $125.9 $125.7 $129.6 0.32% 0.31% 0.28% 0.27% 0.26% 0.20% 0.30% 0.40% 0.50% $90.0 $100.0 $110.0 $120.0 $130.0 $140.0 2Q13 3Q13 4Q13 1Q14 2Q14 Total Interest-Bearing Deposit Cost Average Total Deposits ($ in billions) ▪ Strong DDA growth of 14.1% annuali
Slide 7: Credit Quality Continues to Improve
7 7 Credit Quality Continues to Improve 1 0.75% 0.49% 0.49% 0.47 2 % 0.40% 0.55% 0.20% 0.70% 1.20% 2Q13 3Q13 4Q13 1Q14 2Q14 Annualized Net Charge - offs / Average Loans Core Charge-offs Accelerated Charge-Offs ▪ Net charge - offs declined 25% vs. 1Q14; 12% excluding 1Q14 process change ▪ 90 days pas
Slide 8: Allowance Coverage Ratios Remain Strong
8 8 Allowance Coverage Ratios Remain Strong 1 ▪ Coverage ratios remain strong at 3.19x and 1.78x for the allowance to net charge - offs and NPLs, respectively ▪ The ALLL release was $39 million for 2Q14 compared to $80 million in 1Q14 ▪ Management anticipates declining ALLL releases, if any, in futu
Slide 9: Net Interest Margin Lower – Core Margin Stabilizing
9 9 Net Interest Margin Lower – Core Margin Stabilizing 3.70% 3.68% 3.56% 3.52% 3.43% 3.40% 3.39% 3.34% 3.29% 3.22% 2.75% 3.25% 3.75% 4.25% 2Q13 3Q13 4Q13 1Q14 2Q14 Reported NIM Core NIM ▪ 2 Q14 NIM declined 9 bps vs. 1Q14 as a result of: Lower earning asset yields Impact of covered assets Parti
Slide 10: Fee Income Improves
10 10 Fee Income Improves ▪ Mortgage income increased $12 million reflecting wider margins and higher residential mortgage production. ▪ Bankcard fees and merchant discounts, and checkcard fees increased due to increased transaction volumes. ▪ Insurance income decreased slightly due to a seasonal de
Slide 11: Expenses Up Due to Special Charges
11 11 Expenses Up Due to Special Charges ▪ Personnel expense increased $27 million vs. 1Q14 due to increased production - related incentives and commissions and seasonally higher equity - based compensation for retirement eligible employees, partially offset by a decrease in fringe benefit expense.
Slide 12: Capital and Liquidity Strength
12 12 Capital and Liquidity Strength 1 11.1% 11.3% 11.8% 12.1% 12.0% 9.3% 9.4% 9.9% 10.2% 10.2% 8.5% 9.5% 10.5% 11.5% 12.5% 2Q13 3Q13 4Q13 1Q14 2Q14 Basel I Capital Ratios Tier 1 Tier 1 common ▪ Common equity Tier 1 ratio under Basel III was approximately 10.0% at June 30, 2014 2 and March 31, 2014
Slide 13: Community Banking Segment
13 13 ▪ Balance sheet growth in early July reflects positive loan production and pipeline momentum ▪ Total C&I and Dealer Floor Plan production increased $317.3 million, or 15.5%, compared to 1Q14 □ C&I increased $270.5 million, or 14.0% ▪ Total CRE production increased $321.7 million, or 30.9%, com
Slide 14: Residential Mortgage Banking Segment
14 14 Retains and services mortgage loans originated by the Residential Mortgage Lending Division and through its referral relation shi p with the Community Bank and referral partners as well as those purchased from various correspondent originators ($ in millions) Inc /(Dec) 1Q14 Inc/(Dec) 2Q13 2Q1
Slide 15: Dealer Financial Services Segment
15 15 ▪ C ontinued to generate strong loan production: □ Average loans were up 22.5% for Dealer Finance and 6.1% for Regional Acceptance vs. 1Q14 □ Regional Acceptance loan originations were up 31.6% vs. 1Q14 and 28.4% vs. 2Q13 □ Dealer Finance, including acquired portfolios, was up 29.4% vs.1Q14 an
Slide 16: Specialized Lending Segment
16 16 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 Comments 4 ($ in millions) Inc/(De
Slide 17: Insurance Segment
17 17 Insurance Segment Comments 7 ($ in millions) Inc/(Dec) 1Q14 Inc/(Dec) 2Q13 2Q14 Net Interest Income Noninterest Income 1 Provision for Credit Losses Noninterest Expense 2 Income Tax Expense Segment Net Income Highlighted Metrics Same Store Sales Growth Noninterest Income Number of Stores 4 EBI
Slide 18: Financial Services Segment
18 18 ▪ Average loan and deposit growth was driven by: □ Corporate Banking, which generated 38.1% annualized loan growth vs. 1Q14 □ BB&T Wealth, which generated 40.6% annualized loan growth and 33.9% annualized transaction deposit growth vs. 1Q14 ▪ Increase in noninterest income vs. 1Q14 was driven
Slide 19: Sharing Knowledge for a Brighter Direction
BB&d Sharing Knowledge fora Brighter Direction
Slide 20: Appendix
Appendix
Slide 21: Capital Measures
Capital Measures 1 As of / Quarter Ended (Dollars in millions, except per share data) June 30 2014 March 31 2014 Dec. 31 2013 Sept. 30 2013 June 30 2013 Selected Capital Information Risk - based capital Tier 1 $16,984 $16,699 $16,074 $ 15,606 $ 15,397 Total 20,270 20,154 19,514 19,255 19,193 Risk -
Slide 22: Basel III Common Equity Tier 1 Ratio
Basel III Common Equity Tier 1 Ratio 1 (Dollars in millions) June 30 2014 Tier 1 common equity under Basel I definition $ 14,381 Adjustments: Other adjustments 92 Common equity Tier 1 under Basel III definition $ 14,473 Estimated risk - weighted assets under Basel III definition $ 145,062 Basel III
Slide 23: Non-GAAP Reconciliations
Non - GAAP Reconciliations 1 (Dollars in millions, except per share data) As of / Quarter Ended June 30 2014 March 31 2014 Dec. 31 2013 Sept. 30 2013 June 30 2013 Calculations of tangible common equity, Tier 1 common equity, tangible assets and related measures: Total shareholders’ equity $ 23,965 $
Slide 24: Non-GAAP Reconciliations
Non - GAAP Reconciliations As of / Quarter Ended June 30 2014 March 31 2014 Dec. 31 2013 Sept. 30 2013 June 30 2013 Asset Quality Ratios (including amounts related to covered loans and covered foreclosed property) Loans 30 - 89 days past due and still accruing as a percentage of total loans and leas
Slide 25: Non-GAAP Reconciliations
Non - GAAP Reconciliations Applicable ratios are annualized. 1 Excludes mortgage loans guaranteed by GNMA that BB&T does not have the obligation to repurchase. 2 These asset quality ratios have been adjusted to remove the impact of covered loans and covered foreclosed property. Appropr i ate adjustm
Slide 26: Non-GAAP Reconciliations
Non - GAAP Reconciliations 1 Quarter Ended Efficiency and Fee Income Ratios June 30 2014 March 31 2014 Dec. 31 2013 Sept. 30 2013 June 30 2013 Efficiency ratio – GAAP 67.1 % 61.2 % 61.1 % 62.4 % 59.9 % Effect of securities gains (losses), net - - 0.1 - 0.5 Effect of merger - related and restructurin
Slide 27: Return on Average Tangible Common Shareholders' Equity
(Dollars in millions) Quarter Ended June 30 March 31 Dec. 31 Sept. 30 June 30 Return on Average Tangible Common Shareholders' Equity 2014 2014 2013 2013 2013 Net income available to common shareholders $ 425 $ 501 $ 537 $ 268 $ 547 Plus: Amortization of intangibles, net of tax 15 14 16 16 17 Tangibl
Slide 28: Non-GAAP Reconciliations
Non - GAAP Reconciliations 1 (Dollars in millions) Quarter Ended June 30, 2014 Certain Performance Measures As Reported FHA - insured Reserve Adj. Mortgage Indem . Reserve Adj. Tax Adj. As Adjusted Net income $ 478 $ 53 $ 21 $ 14 $ 566 Average assets 185,065 - - - 185,065 Return on average assets 1.
Slide 29: Reported vs. Core Net Interest Margin
Non - GAAP Reconciliations Quarter Ended Reported net interest margin vs. core net interest margin June 30 2014 March 31 2014 Dec. 31 2013 Sept. 30 2013 June 30 2013 Reported net interest margin - GAAP 3.43% 3.52% 3.56% 3.68% 3.70% Adjustments to interest income for covered assets: Effect of covered
Slide 30: Sharing Knowledge for a Brighter Direction
BB&d Sharing Knowledge fora Brighter Direction