Truist Financial Corporation · NYSE:TFC
Truist Financial — BB&T — Investor Presentation (February 2006)
51 slides from Truist Financial's investor presentation, Feb 15, 2006
Slide 1: Balance Sheet Management
BB&T Balance Sheet Management CHRIS HENSON Chief Financial Officer February 14. 2006
Slide 2: Agenda
Balance Sheet Management Agenda e Balance Sheet Composition ° Investment Portfolio * Deposit Services * Corporate Funding * Interest Rate Risk Management * Capital Management e Ownership
Slide 3: Balance Sheet Composition
Balance Sheet Management Balance Sheet Composition as of 12/31/05 Assets Liabilities & Equity
Slide 4: Balance Sheet Composition - Average Assets
Balance Sheet Management Balance Sheet Composition - Average Assets year ending 12/31/05 BB&T Peers* ‘Other Eaming Otel Esra Non-Earning Assets Nen-Eaming Securities Assets 1% Securities 1% Assets 20% 11% 17% 11% Loans & Loans & tees Leases ie 68% “National Peer Group composed of AmSouth, Comarca, F
Slide 5: Investment Portfolio
Investment Portfolio
Slide 6: Investment Portfolio Strategy
Investment Portfolio Strategy To obtain the best overall total rate of return while taking into account the bank’s need for * — liquidity * pledging * — interest rate risk management
Slide 7: Investment Portfolio Profile
Investment Portfolio Profile * A $20 billion asset which contributed 15% of BB&T’s interest income in 2005 ¢ Short duration with reasonable interest rate risk and very limited credit risk * During the past 18 months the portfolio has been appreciably realigned to include a significant increase in mo
Slide 8: 2005 Initiatives
Investment Portfolio 2005 Initiatives * The portfolio was used to partially offset slower loan growth during early 2005 * Cash flow was reinvested into agency CMOs. ARMs and other structured mortgage paper to enhance cash flow and yield
Slide 9: Portfolio Composition
Investment Portfolio Portfolio Composition as of 9/30/0! BB&T Peers Equities i Other Municipals Agencies Municipals ss 2% ae Agencies = 7% 56% 5% Treasuries 2%
Slide 10: Portfolio Composition Change 12/31/04 to 12/31/05
Investment Portfolio Portfolio Composition change 12/31/04 to 12/31/05 12/31/04 12/31/05 Treasuries Equities ‘Treagunies \ IU Equities cMo's "1% Other 1% Municipals Munjeipals Agencies 3% ‘57% 68% ‘Agencies
Slide 11: Yields (FTE)
Investment Portfolio % Yields (FTE) September 30, 2005 SO a0 45) 498 481493 420 391 aap 7 Source: 100s
Slide 12: 2006 Initiatives
Investment Portfolio 2006 Initiatives Continue to increase proportion of CMO holdings: — to obtain better cash flow — to produce higher yields Manage the investment portfolio on a total return basis Evaluate strategies that will continue to enhance the return of BB&T’s portfolio while maintaining re
Slide 13: Deposit Services
Deposit Services
Slide 14: Deposit Services Strategy
Deposit Services Strategy To drive core deposit growth while balancing * interest costs * revenue generation * overall quality of the deposit base
Slide 15: Balanced Performance
Deposit Services Balanced Performance
Slide 16: Deposit Composition
Deposit Services Deposit Composition at September 30, 2005 BB&T Corporation Peers BNon-Interest Bearing Deposits 1D Total Time Deposits Money Market, Interest Checking, and Savings Includes brokered nagetitle CDs Souree: FRY-AC SS Quality ——
Slide 17: Deposit Composition Change
Deposit Services Deposit Ci ‘omposition Change (S in Millions) At September 30,2004 At September 30,2005 _2004 to 2005 Change BB&T Peers BB&l__ Peers BB&l Peers Non-InterestBearing Deposits $12,217 $13,381 $13,499 $13,844 +10.5% = +3.5% Total Domestic Deposits 63.610 49,865 67,749 53,373 +6.5% — +7.
Slide 18: Checking Accounts
Deposit Services Checking Accounts 2004 Categories Opened Closed 2005 Opened Closed Retail 367,544 384,827 Commercial 67,209 65,975 443,095 358,489 70,281 65,395 Total 434,753 seoan2 too 513,476 423,884 Quality
Slide 19: Interest Cost of Deposits and Deposit Composition
Deposit Service Interest Cost of Deposits aa Deposit Composition Interest Cost Deposit Composition BBaT Peers BBaT Peers Non-interest Bearing Deposits - - 19.9% 25.9% NOW/MMDA/Savings 1.14% 127% 41.5% 46.2% CDs Less Than $100,000 273% 3.02% 21.8% 14.2% Core Deposits 1.29% 117% 83.2% 86.3% CDs Greate
Slide 20: Cost of Interest Bearing Deposits
Deposit Services Cost of Interest Bearing Deposits 2.25 % 175 1.25 3rd Qtr 4th Qtr ist Qtr 2nd Qtr 3rd ctr 94 tr 2004 vs. 2004 2004 2005 2005 2005 pase Peers 128 147 172 198 227 0.99 BET 1.36 1.53 178 1.99 2.33 0.35 National Pear Average Soures: The Quarter 9 interest Bearing Deposits include Intere
Slide 21: Service Charges on Deposits
Deposit Services Service Charges on Deposits ($ in 000’s) Categories 2004 2005 $Change __% Change Total Retail $338,433 © $364,151 «$25,718 7.6% Total Commercial 184,887 178,505 (6,382) 3.5% Total Service Charges $523,320 $542,858 «$19,336 3.7% Discretionary Waives and Refunds as % of Collectible Se
Slide 22: Ratio of Annualized Service Charges to Domestic Deposits Less CDs
Deposit Services Ratio of Annualized Service Charges to Domestic Deposits Less CDs for Period Ending September 30, 2005 Profitability
Slide 23: Percent Change in Period End Balances
Deposit Service Percent Change in Period End Balances from September 30, 2004 to September 30, 2005 BB8T Peers Non-Interest Bearing Deposits f 10.49% is ! NOW/MMDA/Savings 3.49% % Time Deposits Less Than $100,000 1.04% 10.39% Core Deposits t 4 AN% se 2.83% — $ Time Deposits Greater Than $100,000" 18
Slide 24: Average Deposit Balances
Deposit Services Average Deposit Balances ($ in Millions) 2004 2005 $ Change % Change Non-Interest Bearing DDA $11,730.4 $12,878.1 $1,147.7 9.8% Interest Checking 9,716.6 10,139.7 423.1 44% Money Rate Savings 5,126.7 5,110.1 -16.6 -0.3% Savings 3,200.9 3,097.7 ~103.2 -3.2% Investors Account 8,843.6
Slide 25: Non-Interest Bearing Deposits
Deposit Services Non-Interest Bearing Deposits from Periods Ending September 30, 2004 to September 30, 2005 Adjusted for Purchase Acquisitions 9130/2004 9130/2005 SChange __% Change AmSouth $6,999,039 $8,067,964 $1,068,922 15.27% Regions 11,322,011 12,606,368 1,284,357 11.34% BB&T 12,217,201 13,499,
Slide 26: Domestic Deposits Monthly Average Balance
Deposit Services Domestic Deposits Monthly Average Balance for The Period December 2004 to December 2005 (S in Millions) Time Fon cam ae 6000 mm 65,000 0 an = * | | _ ae | = 2000 om 100 “0 soon = _ e000 ia 3000 DEC WAN FEB MAR APR MAY WN WL AUG SEP OCT NOV EC (Satan FT Bae] ‘Dapost amounts exclude b
Slide 27: Deposit Competitive Assessment
Deposit Services Deposit Competitive Assessment September 30, 2005 out Prorabity Sent Pose fame change ae Poser ey rntrton ators xy
Slide 28: 2005 Major Accomplishments
Deposit Service 2005 Major Accomplishments ¢ Significant deposit composition improvements relative to peers — Strong non-interest bearing deposit growth — Strong net new transaction growth * Strong core deposit growth ¢ Improved cost differential relative to peers
Slide 29: 2006 Initiatives
Deposit Service 2006 Initiatives * Increase growth of commercial transaction accounts * Use new deposit portfolio administration staff to enhance support for the banking network + Ramp up on-line account opening and BB&T @ Work efforts * Capitalize on emerging market (hispanic) initiative * Increase
Slide 30: Corporate Funding
Corporate Funding
Slide 31: Corporate Funding Strategy
Corporate Funding Strategy To maintain the lowest overall cost of wholesale funding while taking into account our needs for * — liquidity * — duration * — interest rate risk management
Slide 32: Corporate Funding Profile
Corporate Funding Profile spaalions) 12/31/05 Available + A $29 billion funding portfolio comprised of: Balance Funding — Fed Funds, Eurodollar, and TT&L $ 85 $ 35.0 — Dealer Repurchase Agreements 3 2.0 — Negotiable Certificates of Deposit 2.7 10.4 — Master Note and Repo Sweep 3.5 wa — Federal Home
Slide 33: 2005 Accomplishments
Corporate Funding 2005 Accomplishments * Continued to reduce reliance on wholesale funding * Issued $1.25 billion of bank notes to take advantage of the low interest rate environment * Issued $900 million in corporate long-term debt — First trust preferred issue
Slide 34: 2006 Initiatives
Corporate Funding 2006 Initiatives * Explore alternative bank funding products — Analyze securitization as a way to manage both funding needs and capital utilization — Evaluate corporate funding vehicles to maximize regulatory capital and ratings agency equity credit while minimizing cost of capital
Slide 35: Interest Rate Risk Management
Interest Rate Risk Management
Slide 36: Net Interest Margin: Superior Relative Performance
Net Interest Margin Superior Relative Performance (for quarter ended) 44 43 42 41 4044 % 394t 38 a 37 3.6 +4 35 Mar- Jum Sep- Dac- Mar- Tune Sep- Dec- Mar- Jum Sep- Dec- Mar- Sime Sep- Dec- Mar- Jum Sep- Dec oo of of Gf @ oO @ © OF 0 Os oS OF oF OF SOs os Souroe: Earings Releases
Slide 37: Simulation Modeling & Forecasting
Simulation Modeling & Forecasting Robust Models For Short-Term and Long-Term Forecasting * Short-term Forecasting — Deterministic Model (Single Path Forecasts) = Monthly runs of most likely plus rate shocks * Quarterly runs of non-parallel ramps and twists — Stochastic Model (250 Random Paths) * Lon
Slide 38: Interest Rate Forecast
Interest Rate Forecast Prime Rate Forecast as of 12/31/05 7.75%
Slide 39: Sensitivity to Interest Rate Changes
Sensitivity to Interest Rate Changes Bringing It All Together (% change from flat scenario, as of 12/31/05) Policy % Change Limit First 12 Months SS Up 300 basis points / 12 months 1.20% — (6.00)% Up 150 basis points / 6 months 76 (3.00) Down 150 basis points / 6 months (1.13) (3.00) Down 300 basis
Slide 40: Derivatives Portfolio Strategy
Derivatives Portfolio Strategy To optimize BB&T’s risk adjusted return from the balance sheet by aligning or maintaining our interest rate risk profile with our economic forecast given the profile of BB&T’s balance sheet
Slide 41: Derivatives Portfolio Profile and Objectives
Derivatives Portfolio Profile and Objectives A $24 billion portfolio of off-balance sheet interest rate management contracts — Balance Sheet $ 9.4 — Total Mortgage 11.2 — Client 2.6 Used to hedge the balance sheet against adverse movement in interest rates Can be used to “tilt” the balance sheet to
Slide 42: Summary of Derivative Financial Instruments
Derivatives Portfolio Summary of Derivative Financial Instruments as of December 31, 2005 Notional Weighted Average Rate Estimated (Sintrousands) ‘Amount Receive! Pay Matuityin Years FairValue Cost ‘Total Client Derivative: my 420 <- s- Balance Sheet Derivative Received Fixed Swaps - (Caps, Floors &
Slide 43: Interest Rate Risk Management Summary
Interest Rate Risk Management Summary * BB&T has historically produced a higher margin than our peers and continues to maintain a premium margin * 2006 margin is projected to remain relatively flat * Asset sensitivity has been decreased — Probability of further rate increases has lessened — Current
Slide 44: Capital Management
Capital Management
Slide 45: Capital Management
Capital Management * The policy of BB&T Corporation is to pay cash dividends to its shareholders that are generally in the range of 40-50% of its annual cash basis operating earnings — BB&T has paid a cash dividend every year since 1903 — The Corporation has increased its annual cash dividend for 34
Slide 46: Capital Management: Share Repurchases
Capital Management * Since the Merger-of-Equals, BB&T has repurchased 127.7 million shares of stock at a cost of $4.3 billion * The average price paid since the Merger-of-Equals is $33.99 per share * During 2005. BB&T repurchased 12 million shares at a cost of $486.5 million. The average price paid
Slide 47: Debt Ratings
Debt Ratings Holding Company and Subsidiary Banks BB&T CORPORATION ~ Common stock/issuer - Commercial paper ~ Senior debt ~ Subordinated debt SUBSIDIARY BANKS - Bank financial strength - Long term deposits - LT/Senior unsecured bank notes - Other long tem senior obligations - Other short term senior
Slide 48: Ownership
Ownership
Slide 49: Common Stock Ownership
Investor Relations Common Stock Ownership December 31, 2005 Directors, Executive Management & Employees a 8.6% Institutional Investors 29.7% Other Individuals 61.7%
Slide 50: Owners as Beneficiaries of Corporate Strategy
Investor Relations ee Owners as Beneficiaries of Corporate Strategy * BB&T’s 10-year compound annual dividend growth rate is 13.0% as compared to 4.9% for S&P 500 * Over the last five years. BB&T’s total compound annual return to shareholders is 5.7% compared to 0.6% for the S&P 500 ¢ BB&T’s 10-year
Slide 51: Balance Sheet Management
Balance Sheet Management