Attached files
| file | filename |
|---|---|
| 8-K - 8-K - TRUIST FINANCIAL CORP | earningsrelease8kbody2q16.htm |
| EX-99.2 - EXHIBIT 99.2 - TRUIST FINANCIAL CORP | exhibit992qps2q16.htm |
| EX-99.1 - EXHIBIT 99.1 - TRUIST FINANCIAL CORP | exhibit991text2q16.htm |
• 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 markets, including the impact of a downgrade of U.S. government obligations by one of the credit ratings agencies and the adverse effects of recessionary conditions in Europe
and the impact of recent market disruptions in China;
• changes in the interest rate environment, including interest rate changes made by the Federal Reserve, and cash flow reassessments may reduce NIM and/or the volumes and values of loans made or held as well as the value of
other financial assets held;
• competitive pressures among depository and other financial institutions may increase significantly;
• legislative, regulatory or accounting changes, including changes resulting from the adoption and implementation of the Dodd-Frank Act may adversely affect the businesses in which BB&T is engaged;
• local, state or federal taxing authorities may take tax positions that are adverse to BB&T;
• a reduction may occur in BB&T's credit ratings;
• adverse changes may occur in the securities markets;
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parties due to breaches of data shared between financial institutions;
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customers to access the financial services BB&T offers;
• costs related to the integration of the businesses of BB&T and its merger partners may be greater than expected;
• failure to execute on strategic or operational plans, including the ability to successfully complete and/or integrate mergers and acquisitions or fully achieve expected cost savings or revenue growth associated with mergers
and acquisitions within the expected time frames could adversely impact financial condition and results of operations;
• significant litigation could have a material adverse effect on BB&T;
• unfavorable resolution of legal proceedings or other claims and regulatory and other governmental investigations or other inquiries could result in negative publicity, protests, fines, penalties, restrictions on BB&T's
operations or ability to expand its business and other negative consequences, all of which could cause reputational damage and adversely impact BB&T's financial conditions and results of operations;
• deposit attrition, customer loss and/or revenue loss following completed mergers and acquisitions may be greater than expected;
• higher than expected costs related to information technology infrastructure or a failure to successfully implement future system enhancements could adversely impact BB&T's financial condition and results of operations and
could result in significant additional costs to BB&T; and
• widespread system outages, caused by the failure of critical internal systems or critical services provided by third parties, could adversely impact BB&T's financial condition and results of operations.
This news release contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, regarding the financial condition, results of operations, business plans and the future performance of BB&T.
Forward-looking statements are not based on historical facts but instead represent management’s expectations and assumptions regarding BB&T’s business, the economy and other future conditions. Because forward-looking statements relate to the
future, they are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict. BB&T’s actual results may differ materially from those contemplated by the forward-looking statements. Words such as "anticipates,
"believes," "estimates," "expects," "forecasts," "intends," "plans," "projects," "may," "will," “should," "could," and other similar expressions are intended to identify these forward-looking statements. Such statements are subject to factors that could
cause actual results to differ materially from anticipated results. While there is no assurance that any list of risks and uncertainties or risk factors is complete, important factors that could cause actual results to differ materially from those in the
forward-looking statements include the following, without limitation:
Forward-Looking Information
Capital ratios are preliminary.
This news release contains financial information and performance measures determined by methods other than in accordance with accounting principles generally accepted in the United States of America ("GAAP"). BB&T's management uses these
"non-GAAP" measures in their analysis of the Corporation's performance and the efficiency of its operations. Management believes that these non-GAAP measures provide a greater understanding of ongoing operations and enhance comparability of
results with prior periods as well as demonstrating the effects of significant gains and charges in the current period. The company believes that a meaningful analysis of its financial performance requires an understanding of the factors underlying
that performance. BB&T's management believes that investors may use these non-GAAP financial measures to analyze financial performance without the impact of unusual items that may obscure trends in the company's underlying performance.
These disclosures should not be viewed as a substitute for financial measures determined in accordance with GAAP, nor are they necessarily comparable to non-GAAP performance measures that may be presented by other companies. Below is a
listing of the types of non-GAAP measures used in this news release:
• Tangible common equity and related ratios are non-GAAP measures that exclude the impact of intangible assets and their related amortization. These measures are useful for evaluating the performance of a business
consistently, whether acquired or developed internally. The return on average risk-weighted assets is a non-GAAP measure. BB&T's management uses these measures to assess the quality of capital and returns relative to
balance sheet risk and believes that investors may find them useful in their analysis of the Corporation.
• The ratio of loans greater than 90 days and still accruing interest as a percentage of loans held for investment has been adjusted to remove the impact of loans that are or were covered by FDIC loss sharing agreements and
purchased credit impaired ("PCI") loans as well as government guaranteed loans. Management believes that their inclusion may result in distortion of these ratios such that they might not be comparable to other periods
presented or to other portfolios that were not impacted by purchase accounting or reflective of asset collectibility.
• Adjusted fee income and adjusted efficiency ratios are non-GAAP in that they exclude securities gains (losses), foreclosed property expense, amortization of intangible assets, merger-related and restructuring charges, the
impact of FDIC loss share accounting and other selected items. BB&T's management uses these measures in their analysis of the Corporation's performance. BB&T's management 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 significant gains and charges.
• Core net interest margin is a non-GAAP measure that adjusts net interest margin to exclude the impact of interest income and funding costs associated with loans and securities acquired in the Colonial acquisition and PCI
loans acquired from Susquehanna and National Penn. Core net interest margin is also adjusted to remove the purchase accounting marks and related amortization for non-PCI loans, deposits and long-term debt acquired
from Susquehanna and National Penn. BB&T's management believes that the adjustments to the calculation of net interest margin for certain assets and deposits acquired provide investors with useful information related to
the performance of BB&T's earning assets.
Non-GAAP Information
A reconciliation of these non-GAAP measures to the most directly comparable GAAP measure is included in BB&T's Second Quarter 2016 Quarterly Performance Summary, which is available on BB&T's website at www.bbt.com.
3
2016 Second Quarter Performance Highlights1
Net income totaled $541 million2, up 19.2% vs. 2Q15 and 10.7% vs. 1Q16
Diluted EPS totaled $0.66, up from $0.62 in 2Q15 and down from $0.67 in 1Q16
Adjusted diluted EPS totaled $0.71 excluding merger-related and restructuring
charges and benefits from specific tax-advantaged assets
GAAP ROA was 1.06% and ROTCE was 14.33%
Adjusted ROA3 was 1.16% and adjusted ROTCE3 was 15.76%
Earnings1
Loans
Credit Quality
Average loans and leases held for investment totaled $141.1 billion in 2Q16, an increase of
20.2% vs. 1Q16; excluding the impact of National Penn, growth was 2.6%
Excluding residential mortgage loans and National Penn, average loans held for investment
grew approximately 4.7% vs. 1Q16
Net charge-offs were 0.28%, the lowest charge-off rate since 2006
Strategic
Highlights
FRB did not object to CCAR plan
Proposed 7.1% increase in quarterly dividend
Proposed $640 million in share repurchases
Completed conversion of National Penn in mid-July
Record
Revenues4
Record FTE revenues totaled $2.8 billion, up 17.7% vs. 2Q15 and 31.6% vs. 1Q16
Record net interest income of $1.7 billion, up 22.9% vs. 2Q15 and 22.8% vs. 1Q16
Net interest margin declined 2 bps to 3.41%
Expenses3
Efficiency was 59.3% compared to 59.2% in 2Q15 and 58.3% in 1Q16
Noninterest expense increased $252 million vs. 1Q16 led by the impact of National
Penn, Swett & Crawford and merger-related and restructuring charges
1 Returns and linked quarter growth rates are annualized, except credit metrics
2 Available to common shareholders
3 Refer to the Appendix for appropriate reconciliations of non-GAAP financial measures
4 Revenues presented on a taxable equivalent basis
4
Pre-Tax After Tax Diluted EPS Impact
Merger-related and restructuring charges1 $ (92) $ (58) $ (0.07)
Benefits from specific tax-advantaged assets N/A $ 13 $ 0.02
Selected Items Affecting Earnings ($ in millions, except per share impact)
1 Includes $63 million in pretax merger-related charges and $29 million in pretax restructuring costs related to severance and real estate
5
Loans Reflect Seasonal Strength and Targeted Runoff1
Average loans and leases held for investment (excluding
National Penn) increased 2.6% in 2Q16 primarily due to
growth in C&I, CRE – IPP, and other lending subsidiaries
Excluding residential mortgage and National Penn,
average loans held for investment grew approximately
4.7% annualized vs. 1Q16
Experienced loan growth vs. 1Q16 in other portfolios3:
Sheffield, up 33.1%
Dealer floor plan, up 21.4%
Premium Finance, up 12.9%
Regional Acceptance, up 11.2%
1 Excludes loans held for sale
2 Other lending subsidiaries consist primarily of AFCO/CAFO/Prime Rate, BB&T Equipment Finance, Grandbridge Real Estate Capital, Sheffield Financial and Regional Acceptance
3 Growth rates exclude the impact of National Penn. See non-GAAP reconciliations included in the attached Appendix
$120.0
$130.5
$134.8 $134.4
$141.1
$100.0
$110.0
$120.0
$130.0
$140.0
$150.0
2Q15 3Q15 4Q15 1Q16 2Q16
Average Loans Held for Investment
($ in billions)
C&I $ 51,646 30.4% 9.4%
CRE – IPP 14,786 38.6 4.3
CRE – C&D 3,669 5.6 (8.8)
Dealer floor plan 1,305 21.4 21.4
Direct retail lending 12,031 33.5 1.3
Sales finance 9,670 (15.2) (21.3)
Revolving credit 2,477 2.3 1.0
Residential mortgage 30,471 8.2 (4.8)
Other lending subsidiaries2 13,961 15.6 15.6
Acquired from FDIC and PCI 1,130 11.7 (25.6)
Total $ 141,146 20.2% 2.6%
2Q16
Average
Balance
2Q16 v. 1Q16
Annualized
Increase
(Decrease)
Average Loans Held for Investment
($ in millions)
3Q16 management expectations
Average loan growth of approximately 1% – 3%
Organic
2Q16 v. 1Q16
Annualized
Increase
(Decrease)3
6
Noninterest-Bearing Deposits Reflect Strong Growth
$131.9
$143.8
$148.5 $149.9
$160.3
0.24% 0.24% 0.24%
0.25%
0.23%
0.20%
0.25%
0.30%
0.35%
0.40%
$115.0
$125.0
$135.0
$145.0
$155.0
$165.0
2Q15 3Q15 4Q15 1Q16 2Q16
Total Interest-Bearing Deposit Cost
Total deposits averaged $160.3 billion, an increase of $10.5
billion vs. 1Q16
Excluding acquisitions, total deposits increased $3.9 billion,
or 10.5% annualized vs. 1Q16
Personal, up 1.2%
Business, up 16.9%
Public Funds, down 29.4%
Excluding acquisitions, noninterest-bearing deposits
increased $1.4 billion, or 12.1% annualized vs. 1Q16
Average Total Deposits
($ in billions)
$41.5
$44.2
$45.8 $46.2
$48.8
$30.0
$34.0
$38.0
$42.0
$46.0
$50.0
2Q15 3Q15 4Q15 1Q16 2Q16
Average Noninterest-Bearing Deposits
($ in billions)
Noninterest-bearing deposits $ 48,801 22.6% 12.1%
Interest checking 28,376 43.5 15.8
Money market & savings 63,195 18.4 2.2
Subtotal $ 140,372 24.8% 8.3%
Time deposits 18,101 29.0 1.9
Foreign office deposits –
Interest-bearing 1,865 NM NM
Total deposits $ 160,338 28.1% 10.5%
2Q16
Average
Balance
Organic
2Q16 v. 1Q16
Annualized
Increase
(Decrease)1
Average Deposits
($ in millions) 2Q16 v. 1Q16
Annualized
Increase
(Decrease)
1 Growth rates exclude the impact of National Penn. See non-GAAP reconciliations included in the attached Appendix
7
Credit Quality Reflects Lower Charge-offs1
Net charge-offs totaled $97 million, down
37.0% vs. 1Q16
Net charge-offs as a percentage of average loans
were 0.28%, the lowest percentage since 2006
Loans 90 days or more past due and still
accruing were essentially flat vs. 1Q16
Loans 30-89 days past due increased 10.8%
vs. 1Q16
Led by seasonal increase in consumer-related
portfolios
NPAs decreased 1.9% vs. 1Q16
Excluding energy-related loans, NPAs
improved to 0.32% of total assets
3Q16 management expectations
Management expects 3Q16 net charge-offs to be
in the range of 35 to 45 bps
NPA levels expected to remain in a similar range
in 3Q16
0.38% 0.36% 0.34%
0.33%
0.40% 0.42%
0.32%
0.00%
0.20%
0.40%
0.60%
2Q15 3Q15 4Q15 1Q16 2Q16
Total Nonperforming Assets as a Percentage
of Total Assets
Total NPAs Energy-related nonperformers
Annualized Net Charge-offs / Average Loans
1 Includes acquired from FDIC and PCI; excludes loans held for sale
0.33%
0.32%
0.38%
0.46%
0.28%
0.00%
0.20%
0.40%
0.60%
2Q15 3Q15 4Q15 1Q16 2Q16
8
Energy Portfolio – Stabilized in 2Q16
Total commitments, outstanding balances,
nonaccruals and losses decreased vs. 1Q16
41% Utilization rate
42% of the portfolio is Criticized & Classified
Allocated reserves = 9.3%
92% of nonperforming Oil and Gas borrowers are
paying as agreed
Completed spring redeterminations, commitments
reduced; collateral and credit agreements enhanced
Coal portfolio = $210 million outstanding, 51%
utilization with 18% Criticized & Classified
Allocated Reserves = 9.7%
Support
Services
$132
9%
Oil and Gas Portfolio
$ in millions
Midstream
$493
33%
Upstream
$870
58%
Total $1.5 billion
(Approximately 1% of total loans)
9
Allowance Coverage Ratios Remain Strong
3.71x
3.44x
2.83x
2.40x
3.88x
2.55x 2.49x 2.53x
1.89x 1.90x
1.00
2.00
3.00
4.00
2Q15 3Q15 4Q15 1Q16 2Q16
ALLL to Net Charge-offs ALLL to NPLs HFI
Coverage ratios remain strong at 3.88x and
1.90x for the allowance to net charge-offs and
NPLs, respectively
The ALLL to loans ratio was 1.06%, compared
to 1.10% last quarter
Decline in ratio due to the acquisition of National
Penn’s marked loan balances
Provision for credit losses was $111 million vs. net
charge-offs of $97 million
Excluding loans acquired in business acquisitions,
the ALLL to loans ratio was 1.16%, compared to
1.17% last quarter
Going forward, we expect the loan loss
provision to match charge-offs in addition to
providing for incremental loan growth
ALLL Coverage Ratios
10
Net Interest Margin Decreases Slightly to 3.41%
3.27%
3.35% 3.35%
3.43% 3.41%
3.16% 3.15% 3.12% 3.18% 3.16%
2.50%
3.00%
3.50%
4.00%
2Q15 3Q15 4Q15 1Q16 2Q16
Reported NIM Core NIM
2Q16 NIM decreased 2 bps due to:
Lower interest rate environment
Higher securities balances acquired from National
Penn
3Q16 management expectations
GAAP net interest margin expected to decline a few
bps due to lower interest rates, a flatter yield curve
and a reduction in purchase accounting accretion
Core net interest margin expected to remain
essentially flat as lower interest rates are offset by:
- favorable asset mix changes
- favorable funding cost and mix changes
Asset sensitivity increased due to:
Changes in net free funds and investment and deposit
mix changes
Net Interest Margin
1
-1.42%
1.44%
2.42%
3.18%
-0.85%
0.89%
1.64%
2.09%
-2.00%
0.00%
2.00%
4.00%
Down 25 Up 50 Up 100 Up 200
Sensitivities as of 06/30/16 Sensitivities as of 03/31/16
Rate Sensitivities
1 See non-GAAP reconciliations included in the attached Appendix
11
Fee Income Reflects Strong Growth From Acquisitions
Insurance income increased $46 million driven by
$57 million from Swett & Crawford, a $34 million
seasonal increase in P&C commissions and a $13
million increase in other insurance revenues
Partially offset by:
A $36 million seasonal decline in employee benefit
commissions and a decrease of $23 million, primarily
due to lower bonus commissions
Mortgage banking income increased $20 million due
to higher gains on sales, increased saleable
residential loan volume and seasonally stronger
commercial mortgage fee income
Other income increased $65 million, primarily due to
a $55 million increase in income related to assets for
certain post-employment benefits
46.3%
42.1% 41.8%
40.6%
42.8%
35.0%
40.0%
45.0%
50.0%
2Q15 3Q15 4Q15 1Q16 2Q16
Fee Income Ratio1
2Q16
2Q16 v.
1Q162
Increase
(Decrease)
2Q16 v.
2Q15
Increase
(Decrease)
Insurance income $ 465 44.2 % 10.2 %
Service charges on deposits 166 31.3 7.8
Mortgage banking income 111 88.4 (14.6)
Investment banking and brokerage
fees and commissions 102 20.7 (5.6)
Trust and investment advisory
revenues 67 32.4 17.5
Bankcard fees and merchant
discounts 60 28.7 9.1
Checkcard fees 50 44.7 16.3
Operating lease income 35 11.8 16.7
Income from bank-owned life
insurance 31 - 14.8
FDIC loss share income, net (64) 26.8 -
Securities gains (losses), net - NM (100)
Other income 107 NM 84.5
Total noninterest income $ 1,130 45.1 % 10.9 %
Noninterest Income
($ in millions)
1 Excludes securities gains (losses), the impact of FDIC loss share accounting and other selected items. See non-GAAP reconciliations included in the attached Appendix
2 Linked quarter percentages are annualized
3Q16 management expectations
Total noninterest income expected to be relatively flat due to
seasonal decrease in insurance revenues
12
Noninterest Expense Driven by Acquisitions and Restructuring
2Q16
2Q16 v.
1Q162
Increase
(Decrease)
2Q16 v.
2Q15
Increase
(Decrease)
Personnel expense $ 1,039 54.5 % 20.3 %
Occupancy and equipment
expense 194 6.3 16.9
Software expense 53 15.8 15.2
Loan-related expense 36 50.3 (2.7)
Outside IT services 44 29.4 51.7
Professional services 26 73.1 (25.7)
Amortization of intangibles 42 125.7 82.6
Regulatory charges 32 26.8 28.0
Foreclosed property expense 8 (109.7) (42.9)
Merger-related and restructuring
charges, net 92 NM NM
Loss (gain) on early
extinguishment of debt - NM (100.0)
Other expense 231 67.0 6.5
Total noninterest expense $ 1,797 65.6 % 8.7 %
Noninterest Expense
($ in millions)
1 Excludes certain items as detailed in non-GAAP reconciliation section
2 Linked quarter percentages are annualized
59.2% 59.2% 58.8% 58.3%
59.3%
50.0%
55.0%
60.0%
65.0%
2Q15 3Q15 4Q15 1Q16 2Q16
Efficiency Ratio1
Personnel expense increased $124 million driven by:
$44 million increase in salary expense, which reflects an
increase in FTE employees of 1,896 from recent
acquisitions
- Excluding acquisitions, FTEs were lower by approximately 276
$40 million increase in certain post-employment benefits
expense
$36 million increase in incentives due to the Swett &
Crawford acquisition and higher overall volume
Merger-related and restructuring charges include a
$69 million increase due to acquisitions and $29
million in restructuring charges related to severance
and real estate
Other expense increased $33 million primarily due to
operating charge-offs, charitable contributions, travel
expense, certain checkcard expenses and taxes and
licenses
3Q16 management expectations
Future quarterly expenses will include approximately $11 million in
increased FDIC expenses
Excluding merger-related and restructuring charges, expenses are
expected to decline 1% - 2% due to cost savings from acquisitions
13
Capital and Liquidity Remain Strong
10.4%
10.1%
10.3%
10.4%
10.0%
9.0%
9.5%
10.0%
10.5%
11.0%
2Q15 3Q15 4Q15 1Q16 2Q16
The common equity tier 1 ratio was 9.8% fully
phased-in
BB&T’s 2Q16 LCR was 135%
BB&T’s 2Q16 liquid asset buffer was 13.7%
(high quality liquid assets as a percentage of
total assets)
3Q16 management expectation, subject to
Board of Directors approval:
Quarterly dividend increase of $0.02, or 7.1% to
$0.30 per quarter
Initiate a share repurchase program up to $160
million in the 3rd quarter
1 Current quarter regulatory capital information is preliminary
Common Equity Tier 11
14
($ in millions)
Inc/(Dec)
vs 1Q16
Inc/(Dec)
vs 2Q15
2Q16 Comments5
Net Interest Income
Noninterest Income1
Provision for Credit Losses
Noninterest Expense2
Income Tax Expense
Segment Net Income
Highlighted Metrics5
$ 923
345
23
783
168
$ 294
$ 5
27
33
10
(4)
$ (7)
($ in billions)
1 Noninterest Income includes intersegment net referral fees
2 Noninterest Expense includes amortization of intangibles and allocated corporate expense
3 Linked quarter growth rates annualized except for production
4 Commercial production includes C&I, CRE and Dealer Floor Plan
2Q16 Like
Total Commercial Loans
Direct Retail Lending
Money Market & Savings
Noninterest Bearing Deposits
Link3
(1.3%)
0.9%
2.3%
7.9%
Change
Community Banking Segment
Commercial production4 increased $318 million, or
8.9%, compared to 2Q15
More than half of the net interest income increase
compared to 2Q15 attributable to the Susquehanna
acquisition
Noninterest expense increased vs. 2Q15 primarily
due to the Susquehanna acquisition
National Penn acquisition completed on April 1,
2016. Systems conversion completed weekend of
July 15th
Added approximately $7 billion in deposits and $10
billion in assets
Added 126 financial centers in Pennsylvania, New
Jersey and Maryland
Serves individual and business clients by offering a variety of loan and deposit products and other financial services
$47.1
$11.1
$46.7
$42.7
5 National Penn results will not be included in this segment until after mid-July conversion
.
20.0%
33.2%
15.9%
16.2%
$ 188
16
12
94
35
$ 63
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 1Q16
Inc/(Dec)
vs 2Q15
2Q16 Comments
4
Net Interest Income
Noninterest Income1
Provision for Credit Losses
Noninterest Expense2
Income Tax Expense
Segment Net Income
Highlighted Metrics
$ 110
83
10
112
27
$ 44
($ in billions)
1 Noninterest Income includes intersegment net referral fees
2 Noninterest Expense includes amortization of intangibles and allocated corporate expense
3 Credit quality metrics are based on Loans Held for Investment
4 Linked quarter growth rates annualized except for production and sales
Change
Residential Mortgage Banking Segment
$ 5
12
(1)
10
3
$ 5
Production mix was 57% purchase / 43% refinance
in 2Q16 vs. 55% / 45% in 1Q16
Noninterest income increased vs. 1Q16 due to
higher gains on residential mortgage loan
production and sales
Net interest income increased vs. 1Q16 due
primarily to growth in loans held for sale
Increase in noninterest expense vs. 1Q16 driven by
higher personnel expense associated with
increased production volumes
Credit quality3
30+ days and still accruing delinquency of 3.64%
Nonaccruals of 0.58%
Net charge-offs of 0.11%
2Q16 Link4 Like
Retail Originations $ 2.2 58.2% (2.6%)
Correspondent Purchases $ 3.4 54.0% 5.0%
Total Production $ 5.6 55.6% 1.9%
Loan Sales $ 3.7 48.3% (8.0%)
Loans Serviced for others (EOP) $ 90.0 (2.6%) 0.8%
$ (6)
(16)
7
11
(15)
$ (25)
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 1Q16
Inc/(Dec)
vs 2Q15
2Q16
Net Interest Income
Noninterest Income1
Provision for Credit Losses
Noninterest Expense2
Income Tax Expense
Segment Net Income
Highlighted Metrics
2Q16 Like
$ 187
-
58
47
31
$ 51
Retail Loan Production
Loan Yield
Operating Margin3
Net Charge-offs
$ 1.2
6.55%
74.9%
1.5%
(3.3%)
0.08%
3.5%
0.24%
1 Noninterest Income includes intersegment net referral fees
2 Noninterest Expense includes amortization of intangibles and allocated corporate expense
3 Operating Margin excludes Provision for Credit Losses
4 Linked quarter growth rates annualized except for production and sales
($ in billions)
Link4
18.0%
0.07%
(0.9%)
(0.45%)
Change
Dealer Financial Services Segment
Asset quality remains in line with management’s
seasonal expectations and risk appetite
Regional Acceptance 2Q16 net charge-offs decreased
to 6.0% vs. 8.0% last quarter
Prime auto net charge-offs of 0.15%
Prime auto portfolio yield improved by 13 basis
points over 2Q15
Production trends are positive for 2Q16
Regional Acceptance point of sale production growth
of $23 million vs. 1Q16
Excluding Regional Acceptance, loan production grew
$100 million, led by Recreational Lending
Regional Acceptance generated stable loan growth
11.2% loan growth vs. 1Q16 and 6.1% vs. 2Q15
Origination terms stable, maximum term of 72 months
Program changes over last two years steadily
reduced the maximum permitted origination LTV
$ (2)
(1)
(18)
1
5
$ 9
$ 9
-
10
(4)
1
$ 2
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 1Q16
Inc/(Dec)
vs 2Q15
2Q16
Net Interest Income
Noninterest Income1
Provision for Credit Losses
Noninterest Expense2
Income Tax Expense
Segment Net Income
Highlighted Metrics
2Q16 Like
$ 117
73
17
92
20
$ 61
$ 7
8
(1)
8
3
$ 5
$ 20
2
6
12
1
$ 3
($ in billions)
Loan Originations
Loan Yield
Operating Margin3
Net Charge-offs
$ 5.8
4.77%
51.6%
0.24%
9.2%
0.24%
(0.8%)
0.05%
1 Noninterest Income includes intersegment net referral fees
2 Noninterest Expense includes amortization of intangibles and allocated corporate expense
3 Operating Margin excludes Provision for Credit Losses
4 Linked quarter growth rates annualized except for production and sales
66.8%
(0.12%)
(0.4%)
(0.13%)
Link4
Change5
Specialized Lending Segment
Specialized Lending continues to enjoy strong loan
growth and production
Sheffield Financial
14.8% loan growth vs. 2Q15
5.7% production growth vs. 2Q15
Grandbridge
Strong production in 2Q16 of $1.9 billion, led by June
closings of $919 million. Management expects strong
production in subsequent quarters
Equipment Finance
12.9% loan growth vs. 2Q15
15.5% production growth vs. 2Q15
5 During the first quarter of 2016, the asset-based lending group was moved to Community Banking, and the supply-chain
lending was moved to the Financial Services segment. Prior period amounts have been retrospectively adjusted for
these transfers
18
Comments4 ($ in millions)
Inc/(Dec)
vs 1Q16
Inc/(Dec)
2Q15
2Q16
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
2Q16 Like
Provides property and casualty, life, and health insurance to business and individual clients. It also provides workers compensation
and professional liability, as well as surety coverage and title insurance
$ 2
465
-
396
27
$ 44
$ 1
44
-
58
(4)
$ (9)
$ 1
40
-
50
-
$ (9)
$ 465
236
20.1%
9.4%
39
(2.3%)
Change
42.0%
37
(4.2%)
Link4
($ in millions)
Insurance Holdings Segment
4 Linked quarter growth rates annualized except for production and sales
5 Excludes American Coastal and merger related and restructuring charges
Insurance Holdings commission and fee revenue
growth vs. 2Q15
1.1% for Retail
17.2% for Wholesale
9.6% for total Segment; 0.9% organic growth excluding
Swett & Crawford
Higher year over year noninterest income was
primarily a result of the addition of Swett & Crawford,
a wholesale commercial insurance broker, on April
1st
Higher noninterest expense vs. 1Q16 and 2Q15 was
primarily due to the addition of Swett & Crawford
Continue to focus towards achieving synergies
presented by the Swett acquisition
1 Noninterest Income includes intersegment net referral fees
2 Noninterest Expense includes amortization of intangibles, allocated corporate expense, and merger related charges
3 U.S. Locations; count includes shared locations
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 1Q16
Inc/(Dec)
vs 2Q15
2Q16
Net Interest Income
Noninterest Income1
Provision for Credit Losses
Noninterest Expense2
Income Tax Expense
Segment Net Income
Highlighted Metrics
Average Loan Balances
Average Deposits
Total Invested Assets
Invested Assets Noninterest
Income ($ in millions)
Operating Margin3
2Q16 Like
$ 159
215
6
228
53
$ 87
$ 8
15
(84)
9
38
$ 60
$ 29
(1)
(17)
17
11
$ 17
$ 16.2
$30.8
$ 132.8
$ 135.5
39.0%
1 Noninterest Income includes intersegment net referral fees
2 Noninterest Expense includes amortization of intangibles and allocated corporate expense
3 Operating Margin excludes Provision for Credit Losses
4 Linked quarter growth rates annualized except for production and sales
($ in billions)
Link4
22.8%
22.1%
2.7%
12.9%
1.4%
Change
24.1%
9.0%
3.6%
6.7%
0.0%
Financial Services Segment
Corporate Banking’s loan growth continued to be
strong
24.0% loan growth vs. 1Q16
25.3% loan growth vs. 2Q15
BB&T Wealth generated strong loan and deposit
growth
13.4% loan growth and 16.4% transaction deposit
growth vs. 1Q16
16.7% loan growth and 17.2% transaction deposit
growth vs. 2Q15
Increase in noninterest income vs. 1Q16 driven by
client derivative income and investment commission
and brokerage fees
Provision decrease primarily attributable to higher net
charge-offs and increased reserves in the prior quarter
related to energy lending exposure
20
21
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's management uses these measures to assess the quality of capital and believes that investors may find them useful in their analysis of the
Corporation. These capital measures are not necessarily comparable to similar capital measures that may be presented by other companies.
22
As of / Quarter Ended
June 30 March 31 Dec. 31 Sept. 30 June 30
2016 2016 2015 2015 2015
Selected Capital Information
Risk-based capital:
Common equity tier 1 $ 17,568 $ 17,320 $ 17,081 $ 16,822 $ 16,031
Tier 1 20,620 20,373 19,682 19,422 18,633
Total 24,527 24,355 23,753 23,612 21,896
Risk-weighted assets2 176,232 166,781 166,611 165,990 154,493
Average quarterly tangible assets 214,226 202,200 201,541 195,623 182,444
Risk-based capital ratios:
Common equity tier 1 10.0% 10.4% 10.3% 10.1% 10.4%
Tier 1 11.7 12.2 11.8 11.7 12.1
Total 13.9 14.6 14.3 14.2 14.2
Leverage capital ratio 9.6 10.1 9.8 9.9 10.2
Equity as a percentage of total assets 13.4 13.3 13.0 13.1 13.2
Common equity per common share $ 32.72 $ 32.14 $ 31.66 $ 31.56 $ 30.64
Selected non-GAAP Capital Information3
Tangible common equity as a percentage of tangible assets 7.6% 7.8% 7.7% 7.7% 8.1%
Tangible common equity per common share $ 19.75 $ 20.36 $ 19.82 $ 19.77 $ 20.21
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 them useful in their analysis of
the Corporation. These capital measures are not necessarily comparable to similar capital measures that may be presented by other companies.
Calculations of tangible common equity, tangible assets and related measures2:
Total shareholders' equity $ 29,743 $ 28,239 $ 27,340 $ 27,264 $ 25,132
Less:
Preferred stock 3,053 3,054 2,603 2,603 2,603
Noncontrolling interests 39 39 34 40 52
Intangible assets 10,567 9,215 9,234 9,198 7,655
Tangible common equity $ 16,084 $ 15,931 $ 15,469 $ 15,423 $ 14,822
Total assets $ 221,859 $ 212,405 $ 209,947 $ 208,809 $ 191,017
Less:
Intangible assets 10,567 9,215 9,234 9,198 7,655
Tangible assets $ 211,292 $ 203,190 $ 200,713 $ 199,611 $ 183,362
Tangible common equity as a percentage of tangible assets 7.6% 7.8% 7.7% 7.7% 8.1%
Tangible common equity $ 16,084 $ 15,931 $ 15,469 $ 15,423 $ 14,822
Outstanding shares at end of period (in thousands) 814,500 782,379 780,337 780,150 733,481
Tangible common equity per common share $ 19.75 $ 20.36 $ 19.82 $ 19.77 $ 20.21
As of / Quarter Ended
June 30 March 31 Dec. 31 Sept. 30 June 30
2016 2016 2015 2015 2015
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 significant gains and charges.
Quarter Ended
June 30 March 31 Dec. 31 Sept. 30 June 30
Efficiency and Fee Income Ratios 2016 2016 2015 2015 2015
Efficiency ratio - GAAP 64.5% 59.8% 62.4% 64.1% 69.8%
Effect of merger-related and restructuring charges, net (3.4) (0.9) (1.9) (3.1) (1.1)
Effect of loss on early extinguishment of debt - - - - (7.1)
Effect of foreclosed property expense (0.3) (0.4) (0.4) (0.6) (0.6)
Effect of amortization of intangibles (1.5) (1.3) (1.3) (1.2) (0.9)
Effect of securities gains (losses), net - 1.1 - - -
Effect of FDIC loss share accounting - - - - (0.1)
Effect of loss on sale of American Coastal - - - - (0.8)
Efficiency ratio - reported 59.3% 58.3% 58.8% 59.2% 59.2%
Fee Income ratio - GAAP 40.6% 39.3% 39.7% 39.7% 43.0%
Effect of securities gains (losses), net - (1.1) - - -
Effect of FDIC loss share accounting 2.2 2.4 2.1 2.4 2.7
Effect of loss on sale of American Coastal - - - - 0.6
Fee Income ratio - reported 42.8% 40.6% 41.8% 42.1% 46.3%
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
June 30 March 31 Dec. 31 Sept. 30 June 30
Return on Average Tangible Common Shareholders' Equity 2016 2016 2015 2015 2015
Net income available to common shareholders $ 541 $ 527 $ 502 $ 492 $ 454
Plus:
Amortization of intangibles, net of tax 26 20 21 18 14
Tangible net income available to common shareholders $ 567 $ 547 $ 523 $ 510 $ 468
Average common shareholders' equity $ 26,519 $ 25,076 $ 24,736 $ 23,957 $ 22,210
Less:
Average intangible assets 10,574 9,226 9,224 8,666 7,496
Average tangible common shareholders' equity $ 15,945 $ 15,850 $ 15,512 $ 15,291 $ 14,714
Return on Average Tangible Common Shareholders' Equity 14.33% 13.87% 13.37% 13.23% 12.76%
Non-GAAP Reconciliations1
Quarter Ended
Reported net interest margin vs. core net interest margin
June 30
2016
March 31
2016
Dec. 31
2015
Sept. 30
2015
June 30
2015
Reported net interest margin - GAAP 3.41% 3.43% 3.35% 3.35% 3.27%
Adjustments to interest income for assets acquired:
Effect of securities acquired from FDIC (0.06) (0.06) (0.03) (0.04) (0.04)
Effect of loans acquired from FDIC and PCI (0.08) (0.11) (0.11) (0.07) (0.08)
Effect of purchase accounting marks on non-PCI loans acquired from
Susquehanna and National Penn
(0.09) (0.06) (0.07) (0.08) -
Adjustments to interest expense:
Effect of purchase accounting marks on deposits and long-term debt
assumed from Susquehanna and National Penn
(0.02) (0.02) (0.02) (0.01) -
Effect of interest expense related to acquired assets - - - 0.01
Core net interest margin 3.16% 3.18% 3.12% 3.15% 3.16%
26
Core net interest margin is a non-GAAP measure that adjusts net interest margin to exclude the impact of interest income and funding costs associated with loans and securities acquired in the Colonial acquisition and
PCI loans acquired from Susquehanna and National Penn. Core net interest margin is also adjusted to remove the purchase accounting marks and related amortization for non-PCI loans, deposits and long-term debt
acquired from Susquehanna and National Penn. BB&T's management believes that the adjustments to the calculation of net interest margin for certain assets and deposits acquired provide investors with useful
information related to the performance of BB&T's earning assets.
1
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 significant gains and charges.
(Dollars in millions)
Adjusted return on average assets
Net income $587
Plus: merger-related and restructuring charges, net of tax 58
Adjusted net income $645
Average assets $223,399
Plus: impact of merger-related and restructuring charges, net of tax 29
Adjusted average assets $223,428
Return on average assets (excluding merger-related and restructuring charges), as adjusted 1.16%
For the Quarter Ended
June 30
2016
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 demonstrating the effects of significant gains and charges.
Adjusted return on average tangible common shareholders’ equity
Net Income Available to Common Shareholders $541
Plus:
Amortization of intangibles, net of tax 26
Merger-related and restructuring charges, net of tax 58
Adjusted tangible net income available to common shareholders $625
Average common shareholders' equity $26,519
LESS:
Average intangible assets 10,574
PLUS:
Average merger-related and restructuring charges, net of tax 29
Adjusted average tangible shareholders' equity $15,974
Adjusted return on average tangible common shareholders' equity 15.76%
For the quarter ended
June 30
2016
29
Non-GAAP Reconciliations1
(Dollars in millions)
Link Quarter Average Balance Growth Adjusted for Acquisitions
June 30, 2016 Link Qtr.
Loans and Leases: Reported Acquired Adjusted Adj. Growth Ann.%
Commercial and industrial $51,646 $(2,505) $49,141 $1,128 9.4%
CRE-income producing properties 14,786 (1,151) 13,635 145 4.3%
CRE-construction and development 3,669 (129) 3,540 (79) (8.8%)
Dealer floor plan 1,305 - 1,305 66 21.4%
Direct retail lending 12,031 (889) 11,142 35 1.3%
Sales finance 9,670 (154) 9,516 (533) (21.3%)
Revolving credit 2,477 (8) 2,469 6 1.0%
Residential mortgage 30,471 (967) 29,504 (360) (4.8%)
Other lending subsidiaries 13,961 - 13,961 522 15.6%
Acquired from FDIC and PCI 1,130 (102) 1,028 (70) (25.6%)
Total loans and leases held for investment $141,146 $(5,905) $135,241 $860 2.6%
June 30, 2016 Link Qtr.
Deposits: Reported Acquired Adjusted Adj. Growth Ann.%
Noninterest-bearing deposits $48,801 $(1,210) $47,591 $1,388 12.1%
Interest checking 28,376 (1,765) 26,611 1,007 15.8%
Money market and savings 63,195 (2,445) 60,750 326 2.2%
Time deposits 18,101 (1,136) 16,965 81 1.9%
Foreign office deposits - interest-bearing 1,865 - 1,865 1,113 NM
Total deposits $160,338 $(6,556) $153,782 $3,915 10.5%