Slide 1: The World Standard Analyst Conference
BB&T BB&T The World Standard Analyst Conference February 8, 2001 BB&T Outline 1. Current Situation Analysis (How are we doing?) 2. Our Culture – Vision – Mission – Core Values 3. The Future – The Economy – The Financial Services Industry 4. Long-Term Strategy 5. Financial Goals & Strategic Objective
Slide 2: Primary Market Segments and Market Coverage
Primary Market Segments BB&T • Small business (#1 market share-Best in America) • Trust ($15.2 billion) • Commercial middle market • Investment Services • Retail • Asset Management • Home equity (#1 market share) • Capital Markets • Sales finance • Consumer / Commercial Finance • Mortgage (#1 market
Slide 3: Deposit Market Share and Significant Accomplishments
[_] BankFirst Corporation [_] Century South Banks [_] F&M National Corp. [_] FCNB Corp. [_] FirstSpartan Financial Corp. [_] First Banking Co. of SE GA [_] Hardwick Holding Co. [_] VA Capital Bancshares Branches 339 in NC 283 in VA 133 in GA 101 in SC 98 in WV 97 in MD 35 in TN 10 in KY 8 in DC 2 in
Slide 4: Significant Accomplishments 2000
• Consumer Loans + 13.3% • Noninterest Bearing Deposits + 5.3% (excluding official checks program) • 5 Service Households: 26.9% Significant Accomplishments 2000 BB&T • 2000 Campaigns – Deposits: 207,826 accounts – Direct Retail Lending: $1.87 billion – Small Business: $1 billion – Investments: $573
Slide 5: Economic Challenges and Earnings Performance
• Agreed to sell interest in Star Systems for $60+ million profit Economic Challenges BB&T • Margin Squeeze from Rising Interest Rates – Bond Restructuring ($222.2 million - pretax losses) • Mortgage Revenues down $60.5 million Earnings Performance1 BB&T ($ in Millions Except for Per Share Informati
Slide 6: Financial Strength
[Graph depicting EPS growth trend from first quarter of 1995 at $.26 per share to fourth quarter of 2000 at $.58 per share, a 123 percent increase] Financial Strength 1,2 ($ in Billions Except for Per Share Information) 2000 2000 1997 1998 1999 Plan Actual (Average Balances): Total Loans $27.1 $30.5
Slide 7: Credit Quality and Total Assets
Credit Quality 2000 9/30/2000 1996 1997 1998 1999 Plan 2000 Industry* Net Charge-offs/ Average Loans 0.25% 0.36% 0.28% 0.27% 0.27% 0.25% 0.59% Nonperforming Assets/ Total Assets 0.37% 0.41% 0.33% 0.29% 0.36% 0.33% 0.70% BB&T Restated Source: FDIC Total Assets BB&T 10 Year Growth Trend ($ in Billions
Slide 8: Recurring Net Income and Relative Financial Performance
Recurring Net Income As Originally Reported BB&T [Graph indicating ten year growth trend of recurring net income as indicated below] 1990 $53.6 million 1991 $60.2 million 1992 $76.1 million 1993 $98.2 million 1994 $119.9 million 1995 $254.5 million 1996 $304.9 million 1997 $408.6 million 1998 $512.8
Slide 9: Shareholder Return
Shareholder Return BB&T [Graph depicting relative shareholder return from 1995 through 2000 of BB&T,Bank of America, First Union, Wachovia, Sun Trust and S&P Regional Banks with BB&T tending to trend higher.] Depicts $100 invested at 12/31/95 and held through 12/31/00 with dividends reinvested in th
Slide 10: BB&T Mission and Purpose
BB&T BB&T MISSION TO MAKE THE WORLD A BETTER PLACE TO LIVE BY: • Helping our C L I E N T S achieve economic success and financial security; • Creating a place where our E M P L O Y E E S can learn, grow and be fulfilled in their work; • Making the C O M M U N I T I E S in which we work better places
Slide 11: BB&T Values
• Values are practical habits that enable us as individuals to live, be successful, and achieve self-fulfillment. • For BB&T, our Values enable us to achieve our mission and corporate purpose. • Values must be consistent (non-contradictory). • Values are important!! BB&T Values BB&T (1) Reality: (fa
Slide 12: BB&T Values
(4) Productivity: – We are committed to be producers of wealth and well-being by taking the actions necessary to accomplish our mission. – The tangible evidence of our productivity is that we have allocated capital rationally through our lending and investment process and that we have provided neede
Slide 13: BB&T Values
(8) Pride: – Pride is the psychological reward we earn from living our values, i.e. from being just, honest, having integrity, being an independent thinker, etc. – We must perform our work in such a manner as to be able to be justly proud of what we have accomplished. BB&T Values BB&T (9) Self-Estee
Slide 14: Concepts that Describe BB&T
– We try to create win/win relationships (2) Quality-Oriented – Quality must be built into the process (3) Efficient – “Waste not, want not” – Design efficiency into the system Concepts that Describe BB&T BB&T (4) Growing, Both Our Business and Our People – Grow or die (5) Continuous Improvement – E
Slide 15: Rational Optimism and Obligations to Employees
The BB&T Positive Attitude BB&T Given the facts of reality and our ability to reason, we are capable of achieving both success and happiness. Rational Optimism BB&T’s Obligations to its Employees BB&T We Will Do Our Best To: • Compensate employees fairly in relation to internal equity and market-com
Slide 16: Credit Culture and The Future
Virtues of an Outstanding Credit Culture BB&T (1) Provides Fundamental Insight to Help Clients Achieve Their Economic Goals and Solve Their Financial Problems (2) Responsive (3) Flexible (Creative) (4) Reliable (5) Manages Risk Within Agreed Upon Limits (6) Ensures the Appropriate Economic Return fo
Slide 17: Most Likely Scenario and Financial Services Industry
BB&T 5 Year Forecast (2001 — 2005) Most Likely Scenario (51% probability) • Moderate/steady growth — real GDP 2% to 3% per annum • Moderate inflation — 2% to 3% CPI annual increase • Total annual growth 4% to 6% • Relatively stable moderate interest rates — prime rate 7% to 10% (average 8.5%) • Desp
Slide 18: Financial Services Is a World-Wide, Integrated, Growth Industry
BB&T (3) Non-Bank Competition – Linear, efficient, technology-driven, national distributors – Low-cost providers (4) Regulation – Nationwide banking (yes) – Product diversification (yes) – Financial services integration – Regulatory cost disadvantage (5) Credit, Interest Rate, and Operational Risk –
Slide 19: Long-Term Strategy: Our Goal
BB&T Will Be A Winner! BB&T BB&T’s Long-Term Strategy Our Goal BB&T • Create a high-performance financial services organization that can survive and prosper in a rapidly changing, highly competitive, globally integrated environment • CREATE THE BEST FINANCIAL INSTITUTION POSSIBLE Achieving Our Goal
Slide 20: BB&T Long-Term Strategy
BB&T Long-Term Strategy BB&T Superior-Balanced Performance (1) Client-driven — Have a passion for consistently providing the client with better value through rational innovation and productivity improvement (2) Rational risk taking and exceptional risk management (3) Superior earnings growth (4) Tar
Slide 21: Client-Driven and Risk Management
BB&T Long-Term Strategy BB&T Client-Driven “Community Bank” concept is the foundation for local decision-making and the basis for responsive, reliable, and empathetic client service. BB&T Long-Term Strategy BB&T (2) Rational risk taking and exceptional risk management – Conservative risk taking phil
Slide 22: Achieve Superior Revenue Growth
Achieve superior revenue growth • Grow net interest income at 10% to 12% rate – Grow loans (10% to 12%) • Grow “core” deposits (6% to 8%) • Grow noninterest income at 25%+ • Increase services owned per client – 50% of clients with 5 or more services within 5 years • 90% of households at target profi
Slide 23: Book Value and Dividend Growth Goals
• Book value per share growth rate 10%+ • Dividend per share growth rate 10%+ While all goals are significant and interrelated, these objectives are listed in order of importance. The ultimate objective is to optimize long-term total return to shareholders. BB&T Long-Term Strategy BB&T (4) Targeted
Slide 24: Acquisition Strategy
BB&T Long-Term Strategy BB&T – Make acquisitions to achieve business purposes • During the next 2 to 3 years we will focus on Bank and Thrift acquisitions to enhance our market share in our existing footprint (NC, SC, GA, VA, MD, DC, TN, KY and W V.) • Subsequently, we will look for opportunities to
Slide 25: 2001 Financial Goals and Profit Plan
BB&T BB&T 2001 Financial Goals 2001 Profit Plan BB&T 2001 1999 2000 % Inc Plan % Inc Net Interest Income: Interest Income (T/E) $3,977,000 $4,586,632 15.3 $5,118,624 11.6 Interest Expense 1,896,475 2,388,539 25.9 2,699,328 13.0 Net Interest Income (T/E) 2,080,525 2,198,093 5.7 2,419,296 10.1 Tax Equ
Slide 26: 2001 Profit Plan: Noninterest Expense and Net Income
2001 Profit Plan BB&T ($ In Thousands) 2001 1999 2000 % Inc Plan % Inc Noninterest Expense: Personnel $846,841 $917,854 8.4 $1,045,099 13.9 Net Occupancy 105,747 112,714 6.6 134,865 19.7 Furniture and Equipment 143,897 142,871 (0.7) 158,517 11.0 Amortization of Intangibles/ Mortgage Servicing Rights
Slide 27: 2001 Profit Plan: Loans and Assets
Consumer Loans 9,348,289 10,578,534 13.2 11,724,833 10.8 Mortgage Loans 7,889,300 7,784,622 (1.3) 7,943,639 2.0 Total Loans 1 $34,756,400 $38,534,526 10.9 $43,059,668 11.7 Investment Securities 13,659,529 13,855,776 1.4 14,641,017 5.7 Other Assets 3,878,415 4,126,088 6.4 4,427,396 7.3 Total Assets $
Slide 28: 2001 Profit Plan and Capital Expenditures
Noninterest Income / Total Net Revenues 30.18% 31.48% 34.14% Efficiency Ratio 54.28% 52.00% 51.65% Cash Basis: ROA 1.61% 1.70% 1.76% ROE 23.64% 25.72% 26.10% Efficiency Ratio 51.76% 50.08% 49.80% Equity/Assets (EOP) 7.62% 8.00% 7.95% Leverage Capital Ratio (EOP) 7.09% 7.10% 7.15% BV Per Share (EOP)
Slide 29: Investments in Future and Key Strategic Objectives
Investments in Future Selected 2001 Expenses BB&T ($ In Millions) Expense Growth as a result of: Cost of Adding Revenue Producers $7.9 Increase from Major Projects 12.7 Purchase Acquisitions 88.3 Increase from New Capital Expenditures 19.3 Increase in number of Management Development Associates 4.3
Slide 30: Key Strategic Objectives: Sales Execution
• DAC/MAC/BAC/SAM • Insurance • Capital Markets • Other Fee Based Businesses – Focus on selling/service/retention based on demographic segmentation – Target profitable relationships – Continue brand identity advertising campaign 2001 Key Strategic Objectives BB&T • Execute BB&T Decathlon – Execute c
Slide 31: Key Strategic Objectives: New Markets and Client Service
• Achieve superior growth rates in new markets (Virginia, Maryland, DC, Georgia, West Virginia, Kentucky and Tennessee) – Extra focus and support from home office and product managers – Loan growth – Core deposit growth • Demand deposit growth – Fee based revenue growth 2001 Key Strategic Objectives
Slide 32: Key Strategic Objectives: Superior Performance
• Maintain better service quality than our primary competitors 2001 Key Strategic Objectives BB&T (3) Achieve Superior Performance and Profitability - Top 5% • Achieve a superior P/E ratio by superior cash basis earnings per share growth, superior cash basis ROE, superior revenue growth while mainta
Slide 33: Key Strategic Objectives: Branch Automation and Internet
2001 Key Strategic Objectives BB&T (4) Execute Branch Automation and Internet strategy, increase scale of selected fee based businesses and optimize products, business lines and delivery systems • Have a passion for profitable innovation • Implement creativity process and transfer best practices • C
Slide 34: Key Strategic Objectives: Fee Businesses and Acquisitions
– Accelerate marginal investment in Internet – Prioritize additional product offerings – Insure integrated Internet strategy 2001 Key Strategic Objectives BB&T • Increase/scale up selected fee-based businesses – Insurance – Asset Management – Capital Markets / Brokerage (consider) • Continue integra
Slide 35: Summary and Challenges
BB&T • Pursue integration or roll up non-bank acquisitions — Asset Management / Brokerage / Investment Banking — Life Insurance / PC Insurance underwriting — Consumer / Commercial Finance — Other • Consider technology or process based acquisitions/start-ups • Evaluate results of previous non-bank ac
Slide 36: Opportunity: The World Standard
• Having a passion for consistently providing the client with better value through rational innovation and productivity improvement • Working together with clarity towards common goals • Maintaining an aggressive sales/revenue momentum • Making objective decisions in a highly “charged” environment •