Slide 1: Fourth Quarter 2014 Earnings Conference Call
BB&T Fourth Quarter 2014 Earnings Conference Call January 22, 2015 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 Fourth Quarter Performance Highlights
3 3 2014 Fourth Quarter Performance Highlights 1 ▪ Record earnings for full year 2014 and 4Q14 2014 net income 2 totaled $2.0 billion, up 28% vs. 2013 3 4Q14 earnings totaled $557 million, up 3.7% vs. 4Q13 Driven by strong results in insurance, investment banking and brokerage fees and commiss
Slide 4: Selected Items Affecting Earnings
4 4 Pre - Tax After Tax Diluted EPS Impact Mortgage reserve adjustments $ (27) $ (17) $ (0.02) Franchise tax adjustment $ 15 $ 9 $ 0.01 Allowance release related to loan sale $ 24 $ 15 $ 0.02 Merger - related and restructuring charges $ (18) $ (13) $ (0.02) Selected Items Affecting Earnings ($ in mi
Slide 5: Broad-based Loan Growth
5 5 Broad - based Loan Growth 1 ▪ Excluding Residential mortgage, loans grew 3.2% annualized ▪ Experienced broad - based loan growth vs. 3Q14 5.0% annualized growth in total commercial led by 23.3% growth in Corporate Banking ▪ Mortgage balances declined due to a 2Q14 management decision to sell a
Slide 6: Improved Deposit Mix and Cost
6 6 Improved Deposit Mix and Cost $125.9 $125.7 $129.6 $130.6 $130.3 0.28% 0.27% 0.26% 0.26% 0.25% 0.20% 0.25% 0.30% 0.35% 0.40% $100.0 $110.0 $120.0 $130.0 $140.0 4Q13 1Q14 2Q14 3Q14 4Q14 Total Interest-Bearing Deposit Cost ▪ Overall Noninterest Bearing DDA growth vs. 4Q13 was 10.7% ▪ Personal, bus
Slide 7: Credit Quality Improved Across the Board
7 7 Credit Quality Improved Across the Board 1 0.49% 0.47% 2 0.41% 0.43% 3 0.39% 0.56% 0.48% 0.00% 0.20% 0.40% 0.60% 0.80% 4Q13 1Q14 2Q14 3Q14 4Q14 Core Charge-offs Other Charge-offs ▪ NPAs declined 16.7% vs. 3Q14 ▪ Delinquent loans declined 3.8% ▪ Net charge - offs decreased 18.3%, including impact
Slide 8: Allowance Coverage Ratios Remain Strong
8 8 Allowance Coverage Ratios Remain Strong 3.06x 2.54x 3.28x 2.67 3.21x 1.85x 1.82x 1.89x 1.92x 2.39x 0.00 1.00 2.00 3.00 4.00 5.00 4Q13 1Q14 2Q14 3Q14 4Q14 ALLL to Net Charge-offs ALLL to NPLs HFI ▪ Coverage ratios remain strong at 3.21x and 2.39x for the allowance to net charge - offs and NPLs, r
Slide 9: Net Interest Margin Stable in 4Q14
9 9 Net Interest Margin Stable in 4Q14 3.56% 3.52% 3.43% 3.38% 3.36% 3.34% 3.29% 3.22% 3.20% 3.20% 2.75% 3.25% 3.75% 4.25% 4Q13 1Q14 2Q14 3Q14 4Q14 Reported NIM Core NIM ▪ 4 Q14 NIM declined 2 bps vs. 3Q14 as a result of: Lower yields on new loans Run off of assets acquired from the FDIC Partial
Slide 10: Strong Fee Income Drives Revenue Growth
10 10 Strong Fee Income Drives Revenue Growth ▪ Insurance income was up $24 million vs. 3Q14 primarily due to $21 million in higher property and casualty insurance commissions ▪ Mortgage banking income was up $21 million vs. 3Q14, reflecting $15 million in higher net mortgage servicing rights valuat
Slide 11: Noninterest Expense Declines 13% vs. 3Q14
11 11 Noninterest Expense Declines 13% 1,2 vs. 3Q14 ▪ Other expense decreased $37 million driven by the $15 million benefit related to franchise taxes and lower insurance - related costs ▪ 4Q14 effective tax rate was 27.9%; expecting 30% effective tax rate for 1Q15 ▪ Achieved positive operating leve
Slide 12: Capital and Liquidity Strength
12 12 Capital and Liquidity Strength 1 11.8% 12.1% 12.1% 12.4% 12.4% 9.9% 10.2% 10.2% 10.5% 10.6% 9.5% 10.5% 11.5% 12.5% 13.5% 4Q13 1Q14 2Q14 3Q14 4Q14 Tier 1 Tier 1 common ▪ Common equity Tier 1 ratio under Basel III was approximately 10.3% at December 31, 2014 2 and September 30, 2014 primarily du
Slide 13: Community Banking Segment
13 13 ($ in millions) Inc/(Dec) vs 3Q14 Inc/(Dec) 4Q13 4Q14 Comments 3 Net Interest Income Noninterest Income 1 Provision for Credit Losses Noninterest Expense 2 Income Tax Expense Segment Net Income Highlighted Metrics $ 730 346 20 655 147 $ 254 $ (3) (7) (32) (16) 15 $ 23 $ (20) 4 12 (27) (1) $ -
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) vs 3Q14 Inc/(Dec) 4Q13
Slide 15: Dealer Financial Services Segment
15 15 Primarily originates indirect loans to consumers on a prime and nonprime basis for the purchase of automobiles and other vehi cle s through approved dealers both in BB&T’s market and nationally (through Regional Acceptance Corporation) Comments 4 ($ in millions) Inc /(Dec) vs 3Q14 Inc /(Dec) 4
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 Services Segment
17 17 Comments ($ in millions) Inc/(Dec) vs 3Q14 Inc/(Dec) 4Q13 4Q14 Net Interest Income Noninterest Income 1 Provision for Credit Losses Noninterest Expense 2 Income Tax Expense Segment Net Income Highlighted Metrics Noninterest Income Number of Stores 4 EBITDA Margin 4Q14 Like Provides property an
Slide 18: Financial Services Segment
18 18 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 Comments 4 ($ in millions) Inc/(Dec) vs 3Q14 Inc/(Dec) 4Q13
Slide 19: 19
19
Slide 20: Appendix
Appendix
Slide 21: Selected Capital Information
As of / Quarter Ended Dec. 31 Sept. 30 June 30 March 31 Dec. 31 2014 2014 2014 2014 2013 Selected Capital Information Risk - based capital: Tier 1 $ 17,840 $ 17,402 $ 16,984 $ 16,699 $ 16,074 Total 21,381 21,281 20,270 20,154 19,514 Risk - weighted assets (2) 143,745 140,499 140,829 137,947 136,489
Slide 22: Basel III Common Equity Tier 1 Ratio
Basel III Common Equity Tier 1 Ratio 1 22 (Dollars in millions) Dec. 31 Sept. 30 June 30 March 31 Dec. 31 Basel III Common Equity Tier 1 Ratio - Preliminary (2)(3) 2014 2014 2014 2014 2013 Tier 1 common equity under Basel 1 $ 15,237 $ 14,799 $ 14,381 $ 14,096 $ 13,471 Adjustments 86 91 92 96 98 Comm
Slide 23: Non-GAAP Reconciliations
Non - GAAP Reconciliations 1 As of / Quarter Ended Dec. 31 2014 Sept. 30 2014 June 30 2014 March 31 2014 Dec. 31 2013 Calculations of tangible common equity, Tier 1 common equity, tangible assets and related measures (3): Total shareholders’ equity $ 24,426 $ 24,314 $ 23,965 $ 23,556 $ 22,809 Less:
Slide 24: Non-GAAP Reconciliations: Efficiency and Fee Income Ratios
Non - GAAP Reconciliations 1 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 o
Slide 25: Non-GAAP Reconciliations: Return on Tangible Common Equity
Quarter Ended Dec. 31 Sept. 30 June 30 March 31 Dec. 31 Return on Average Tangible Common Shareholders' Equity 2014 2014 2014 2014 2013 Net income available to common shareholders $ 557 $ 520 $ 425 $ 501 $ 537 Plus: Amortization of intangibles, net of tax 14 14 15 14 16 Tangible net income available
Slide 26: Non-GAAP Reconciliations: Core Net Interest Margin
Non - GAAP Reconciliations 1 Quarter Ended Reported net interest margin vs. core net interest margin Dec. 31 2014 Sept. 30 2014 June 30 2014 March 31 2014 Dec. 31 2013 Reported net interest margin - GAAP 3.36% 3.38% 3.43% 3.52% 3.56% Adjustments to interest income for assets acquired from FDIC: Effe
Slide 27: Non-GAAP Reconciliations: Adjusted Noninterest Expense
Non - GAAP Reconciliations 27 1 Amount differs from noninterest expense used to calculate efficiency, which also excludes amortization of intangibles and for ecl osed property expense to remain consistent with SNL Financial definition. Quarter Ended Dec. 31 Sept. 30 June 30 March 31 Dec. 31 Adjusted