Slide 1: BB&T Second Quarter 2015 Earnings Conference Call
BB&T Second Quarter 2015 Earnings Conference Call July 16, 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: 2015 Second Quarter Performance Highlights
3 3 2015 Second Quarter Performance Highlights 1 ▪ Net income totaled $454 million 2 in 2Q15 ▪ Diluted EPS totaled $0.62; or $0.69 excluding the non - cash loss on American Coastal and merger - related charges ▪ Fee income ratio improved to 46.3% vs. 45.8% in 1Q15 Earnings Loans ▪ Average loans grew
Slide 4: Selected Items Affecting Earnings
4 4 Pre - Tax After Tax Diluted EPS Impact Non - cash loss on sale of American Coastal 1 $ (26) $ (34) $ (0.05) Merger - related and restructuring charges $ (25) $ (16) $ (0.02) Loss on early extinguishment of debt $ (172) $ (107) $ (0.15) Income tax adjustment N/A $ 107 $ 0.15 Selected Items Affect
Slide 5: Seasonally Stronger Loan Growth
5 5 Seasonally Stronger Loan Growth 1 ▪ Excluding Residential mortgage, loans grew 7.8% annualized ▪ Experienced robust loan growth vs. 1Q15 in several categories: Sheffield, up 31.4% annualized Direct Retail, up 12.6% annualized C&I, up 10.6% annualized Regional Acceptance, up 5.2% annualiz
Slide 6: Improved Deposit Mix and Cost
6 6 Improved Deposit Mix and Cost $129.6 $130.6 $130.3 $129.5 $131.9 0.26% 0.26% 0.25% 0.25% 0.24% 0.20% 0.25% 0.30% 0.35% 0.40% $100.0 $110.0 $120.0 $130.0 $140.0 2Q14 3Q14 4Q14 1Q15 2Q15 Total Interest-Bearing Deposit Cost ▪ Overall noninterest - bearing DDA growth vs. 1Q15 was 18.2% annualized
Slide 7: Credit Quality Remains Excellent
7 7 Credit Quality Remains Excellent 1 ▪ NPAs declined 4.7% vs. 1Q15 ▪ Loans 90 days or more declined 7.9% vs. 1Q15 ▪ Loans 30 - 89 days or more increased 9.7% vs. 1Q15, primarily due to seasonality in our specialized lending businesses ▪ Including acquisitions, management expects 3Q15 net charge -
Slide 8: Allowance Coverage Ratios Remain Strong
8 8 Allowance Coverage Ratios Remain Strong 3.28x 2.67x 3.21x 3.60x 3.71x 1.89x 1.92x 2.39x 2.45x 2.55x 0.00 1.00 2.00 3.00 4.00 5.00 2Q14 3Q14 4Q14 1Q15 2Q15 ALLL to Net Charge-offs ALLL to NPLs HFI ▪ Coverage ratios remain strong at 3.71x and 2.55x for the allowance to net charge - offs and NPLs,
Slide 9: Net Interest Margin Declines
9 9 Net Interest Margin Declines 3.43% 3.38% 3.36% 3.33% 3.27% 3.22% 3.20% 3.20% 3.18% 3.16% 2.50% 3.00% 3.50% 4.00% 2Q14 3Q14 4Q14 1Q15 2Q15 Reported NIM Core NIM ▪ 2 Q15 NIM declined 6 bps vs. 1Q15 as a result of: Runoff of assets acquired from the FDIC (4 bps) Lower yields on new loans and ot
Slide 10: Strong Fee Income
10 10 Strong Fee Income ▪ Insurance income declined $18 million vs. 1Q15 largely due to seasonality in employee benefits ($34 million) and the sale of American Coastal ($11 million) ▪ Mortgage banking income increased $20 million vs. 1Q15 primarily reflecting higher net mortgage servicing rights inc
Slide 11: Noninterest Expense Reflects Acquisitions, Merit Increase
11 11 Noninterest Expense Reflects Acquisitions, Merit Increase 2Q15 2Q15 v. 1Q15 2 Increase (Decrease) 2Q15 v. 2Q14 Increase (Decrease) Personnel expense $ 864 16.4 % 6.8 % Occupancy and equipment expense 166 (2.4) (1.2) Loan - related expense 37 (10.6) (53.8) Software expense 46 18.2 9.5 Professio
Slide 12: Capital and Liquidity Strength
12 12 Capital and Liquidity Strength 10.2% 10.5% 10.6% 10.5% 10.4% 9.0% 10.0% 11.0% 2Q14 3Q14 4Q14 1Q15 2Q15 ▪ BB&T’s 2Q15 LCR was 118% vs. the minimum requirement of 90% by January 1, 2016 ▪ BB&T’s 2Q15 liquid asset buffer was 13.3% (high quality liquid assets as a percentage of total assets) ▪ The
Slide 13: Community Banking Segment
13 13 ($ in millions) Inc/(Dec) vs 1Q15 Inc/(Dec) vs 2Q14 2Q15 Comments 3 Net Interest Income Noninterest Income 1 Provision for Credit Losses Noninterest Expense 2 Income Tax Expense Segment Net Income Highlighted Metrics $ 736 329 11 685 135 $ 234 $ 26 28 (2) 17 15 $ 24 $ 8 - (24) 8 9 $ 15 ($ in b
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 1Q15 Inc/(Dec) vs 2Q
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 1Q15 Inc /(Dec) v
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 4 ($ in millions) Inc/(Dec) vs 1Q15 Inc/(Dec) 2Q14 2Q15 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 3 EBITDA Margin 6 2Q15 Like Provides propert
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 1Q15 Inc/(Dec) v s
Slide 19: Summary of Acquisition Impact
19 19 Summary of Acquisition Impact Earning Assets Net Interest M argin Noninterest Income Credit Noninterest Expense ▪ Excluding the loss on debt restructuring and merger - related charges, management expects 3Q15 expenses to increase 3% - 5 % and 4Q15 expenses to increase 6% - 8% vs. 2Q15 ▪ Merger
Slide 20: 20
20
Slide 21: Appendix
Appendix
Slide 22: Capital Measures
Capital Measures 1 (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 4 Tangible common equity and related ratios are non - GAAP measure
Slide 23: Non-GAAP Reconciliations
Non - GAAP Reconciliations 1 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
Slide 24: Non-GAAP Reconciliations
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
25 1 BB&T’s management believes investors use this measure to evaluate the return on average common shareholders’ equity without t h e impact of intangible assets and their related amortization. Non - GAAP Reconciliations 1 (Dollars in millions) Quarter Ended June 30 March 31 2015 Dec. 31 2014 Sept.
Slide 26: Non-GAAP Reconciliations
Non - GAAP Reconciliations 1 Quarter Ended Reported net interest margin vs. core net interest margin June 30 2015 March 31 2015 Dec. 31 2014 Sept. 30 2014 June 30 2014 Reported net interest margin - GAAP 3.27% 3.33% 3.36% 3.38% 3.43% Adjustments to interest income for assets acquired from FDIC: Effe
Slide 27: Non-GAAP Reconciliations
Non - GAAP Reconciliations 1 Quarter Ended June 30, 2015 Adjusted Effective Tax Rate GAAP Tax Adj. Adjusted Income before income taxes $ 581 $ 581 Provision for income taxes 80 $ 107 187 Effective tax rate 13.8% 32.2% 27 1 BB&T’s management uses these measures in their analysis of the Corporation’s