Slide 1: First Quarter 2016 Earnings Conference Call
BBS&ST First Quarter 2016 Earnings Conference Call April 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 First Quarter Performance Highlights
3 2016 First Quarter Performance Highlights1 Net income totaled $527 million2, up 8.0% vs. 1Q15 and 20.0% vs. 4Q15 Diluted EPS totaled $0.67, flat vs. 1Q15 and up 18.9% vs. 4Q15 Adjusted diluted EPS totaled $0.69 excluding merger-related charges; adjusted diluted EPS totaled $0.67 excluding se
Slide 4: Selected Items Affecting Earnings
4 Pre-Tax After Tax Diluted EPS Impact Merger-related and restructuring charges $ (23) $ (15) $ (0.02) Securities gains $ 45 $ 28 $ 0.04 Energy-related provision in excess of charge-offs $ (28) $ (17) $ (0.02) Selected Items Affecting Earnings ($ in millions, except per share impact)
Slide 5: Loans Balances Reflect Targeted Runoff
5 Loans Balances Reflect Targeted Runoff1 Average loans were down slightly in 1Q16 primarily due to runoff in Residential mortgage, Sales finance and seasonal factors Excluding Residential mortgage and Sales finance, average loans held for investment grew approximately 2.2% annualized vs. 4Q15
Slide 6: Noninterest-Bearing Deposits Reflect Strong Growth
6 Noninterest-Bearing Deposits Reflect Strong Growth $129.5 $131.9 $143.8 $148.5 $149.9 0.25% 0.24% 0.24% 0.24% 0.25% 0.20% 0.25% 0.30% 0.35% 0.40% $110.0 $120.0 $130.0 $140.0 $150.0 $160.0 1Q15 2Q15 3Q15 4Q15 1Q16 Total Interest-Bearing Deposit Cost Average total deposits grew $1.4 billion, or 3.
Slide 7: Credit Quality Reflects Energy-Related Actions
7 Credit Quality Reflects Energy-Related Actions1 Energy-related credit actions reflect implementation of new industry regulatory guidance and SNC exam results Net charge-offs of $154 million include $30 million in energy-related losses Excluding energy-related losses, net charge-offs were 0.3
Slide 8: Energy Portfolio – Manageable Size and Risk Position
8 Energy Portfolio – Manageable Size and Risk Position No offshore, second lien, mezzanine or equity loans Utilization rate 51% reserve based lending 43% upstream 42% total portfolio 44% of portfolio is Criticized & Classified 66% of Upstream Allocated reserves = 8.5% All nonperfor
Slide 9: Allowance Coverage Ratios Remain Strong
9 Allowance Coverage Ratios Remain Strong 3.60x 3.71x 3.44x 2.83x 2.40x 2.45x 2.55x 2.49x 2.53x 1.89x 1.00 2.00 3.00 4.00 1Q15 2Q15 3Q15 4Q15 1Q16 ALLL to Net Charge-offs ALLL to NPLs HFI Coverage ratios remain strong at 2.40x and 1.89x for the allowance to net charge-offs and NPLs, respectively
Slide 10: Net Interest Margin Increases to 3.43%
10 Net Interest Margin Increases to 3.43% 3.33% 3.27% 3.35% 3.35% 3.43% 3.18% 3.16% 3.15% 3.12% 3.18% 2.50% 3.00% 3.50% 4.00% 1Q15 2Q15 3Q15 4Q15 1Q16 Reported NIM Core NIM 1Q16 NIM increased 8 bps: Driven by the increase in interest rates, seasonal factors and stable deposit costs (6 bps) Dur
Slide 11: Fee Income Stable vs. 4Q15
11 Fee Income Stable vs. 4Q15 Insurance income increased $39 million vs. 4Q15 due to seasonality as higher employee benefits and P&C commissions were partially offset by lower life insurance commissions Excluding acquisitions and dispositions, insurance income increased 1.9% vs. 1Q15 Mortgage
Slide 12: Noninterest Expense Declines 13.1%
12 Noninterest Expense Declines 13.1% 1Q16 1Q16 v. 4Q152 Increase (Decrease) 1Q16 v. 1Q15 Increase (Decrease) Personnel expense $ 915 9.9 % 10.2 % Occupancy and equipment expense 191 (2.1) 14.4 Software expense 51 (7.7) 15.9 Loan-related expense 32 (54.4) (15.8) Outside IT services 41 - 36.7 Profess
Slide 13: Capital and Liquidity Remain Strong
13 Capital and Liquidity Remain Strong 10.5% 10.4% 10.1% 10.3% 10.4% 9.0% 9.5% 10.0% 10.5% 11.0% 1Q15 2Q15 3Q15 4Q15 1Q16 The common equity tier 1 ratio was 10.2% fully phased-in BB&T’s 1Q16 LCR was 135% BB&T’s 1Q16 liquid asset buffer was 14.5% (high quality liquid assets as a percentage of t
Slide 14: Community Banking Segment
14 ($ in millions) Inc/(Dec) vs 4Q15 Inc/(Dec) vs 1Q15 1Q16 Comments6 Net Interest Income Noninterest Income1 Provision for Credit Losses Noninterest Expense2 Income Tax Expense Segment Net Income Highlighted Metrics6 $ 919 318 (10) 759 178 $ 310 $ 64 (13) (49) 41 21 $ 38 $ 210 16 (23) 90 58 $ 101 (
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 4Q15 Inc/(Dec) vs 1Q15 1Q1
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 4Q15 Inc/(Dec) vs 1Q15 1
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 4Q
Slide 18: Insurance Holdings Segment
18 Comments4 ($ in millions) Inc/(Dec) vs 4Q15 Inc/(Dec) 1Q15 1Q16 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 1Q16 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 4Q15 Inc/(Dec) vs 1Q15
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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 March 31 Dec. 31 Sept. 30 June 30 March 31 20
Slide 26: Non-GAAP Reconciliations
Non-GAAP Reconciliations1 Quarter Ended Reported net interest margin vs. core net interest margin March 31 2016 Dec. 31 2015 Sept. 30 2015 June 30 2015 March 31 2015 Reported net interest margin - GAAP 3.43% 3.35% 3.35% 3.27% 3.33% Adjustments to interest income for assets acquired: Effect of securi
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