Attached files
| file | filename |
|---|---|
| EX-99.2 - EXHIBIT 99.2 - TRUIST FINANCIAL CORP | exhibit992qps4q16.htm |
| EX-99.1 - EXHIBIT 99.1 - TRUIST FINANCIAL CORP | exhibit991text4q16.htm |
| 8-K - 8-K - TRUIST FINANCIAL CORP | release8kbody-4q16.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, the adverse effects of economic instability and recessionary conditions or market
disruptions in Europe, China or other global markets, including, but not limited to the potential exit of the United Kingdom from the European Union;
• changes in the interest rate environment, including interest rate changes made by the Federal Reserve or the possibility of a negative interest rate scenario, as well as cash flow reassessments may reduce net interest margin 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;
• competitors of BB&T may have greater financial resources or develop products that enable them to compete more successfully than BB&T and may be subject to different regulatory standards than BB&T;
• cybersecurity risks, including "denial of service," "hacking" and "identity theft," could adversely affect BB&T's business and financial performance or reputation, and BB&T could be liable for financial losses incurred by third parties due to
breaches of data shared between financial institutions;
• natural or other disasters, including acts of terrorism, could have an adverse effect on BB&T, materially disrupting BB&T's operations or the ability or willingness of customers to access BB&T's products and services;
• 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 and regulatory proceedings 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;
• risks resulting from the extensive use of models;
• risk management measures may not be fully effective;
• deposit attrition, customer loss and/or revenue loss following completed mergers/acquisitions may exceed expectations;
• 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 presentation 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 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 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
• Tangible common equity and related measures 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 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 were covered by FDIC loss sharing agreements and purchased credit impaired
("PCI") loans as well as government guaranteed loans. Management believes their inclusion may result in distortion of these ratios such that they might not be comparable to other periods presented or to other portfolios not impacted by purchase
accounting or reflective of asset collectibility.
• The adjusted efficiency ratio is non-GAAP in that it excludes securities gains (losses), amortization of intangible assets, merger-related and restructuring charges and other selected items. BB&T's management uses this measure in their analysis of the
Corporation's performance. BB&T's management believes this measure provides a greater understanding of ongoing operations and enhances comparability of results with prior periods, as well as demonstrates 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 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 Fourth Quarter 2016 Quarterly Performance Summary, which is available at BBT.com.
Capital ratios are preliminary.
This presentation 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 these non-GAAP measures provide a greater understanding of ongoing operations and enhance comparability of results with prior periods as
well as demonstrate the effects of significant gains and charges in the current period. The company believes a meaningful analysis of its financial performance requires an understanding of the factors underlying that performance. BB&T's management believes
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:
3
2016 Fourth Quarter Performance Highlights1
Record annual net income totaled $2.3 billion2, up 16.7% vs. 2015
4Q16 net income totaled $592 million2, up 17.9% vs. 4Q15
Diluted EPS totaled $0.72, up 12.5% vs. 4Q15
Adjusted EPS totaled $0.73 excluding merger-related and restructuring charges
ROA, ROCE and ROTCE3 were 1.16%, 8.75% and 14.91%, respectively
Earnings
Loans &
Credit Quality
Average loans and leases held for investment totaled $142.3 billion in 4Q16, up 3.0%
compared with 3Q16
NPAs decreased 3.6% vs. 3Q16
Reserve build of $11 million (Adjusted net charge-offs were $122 million vs. provision for
loan losses of $133 million)
Strategic
Highlights
Repurchased 7.5 million shares in 4Q16
Increased total share repurchases by $200 million completed through an ASR
Total payout ratio4 was 101.9% in 4Q16
Restructured $2.9 billion in FHLB advances in 1Q17
Revenues
Taxable-equivalent revenues totaled $2.8 billion, up 8.3% vs. 4Q15
Net interest margin declined 7 bps to 3.32% vs. 3Q16
Core net interest margin was flat vs. 3Q16
Fee income ratio improved to 42.6% from 41.9% in 3Q16
Efficiency
GAAP efficiency improved to 61.1% vs. 61.7% in 3Q16
Adjusted efficiency3 was 59.5% vs. 58.7% in 3Q16
Noninterest expense was $1.7 billion, a decrease of 10.0% annualized vs. 3Q16
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 Total payout ratio is calculated by dividing the sum on common stock dividends and share repurchases (excluding repurchases in connection with equity awards) by net income available to common shareholders
4
Pre-Tax After Tax1 Diluted EPS Impact
Merger-related and restructuring charges $ (13) $ (8) $ (0.01)
Securities duration adjustments and hedge
ineffectiveness
(34) (21) (0.03)
Mortgage reserve adjustment 31 19 0.02
Selected Items Affecting Earnings ($ in millions, except per share impact)
1 Income taxes were estimated using the marginal tax rate
5
Loans Reflect Portfolio Purchases, Consumer Growth and
Targeted Runoff
Average loans and leases held for investment
increased 3.0% annualized in 4Q16 vs. 3Q16
Experienced loan growth vs. 3Q16 in several
portfolios:
Grandbridge, up 28.4% annualized
Equipment Finance, up 15.2% annualized
Regional Acceptance, up 10.5% annualized
Sales finance completed a $1.9 billion portfolio
acquisition in November and a $1.0 billion
portfolio acquisition in September
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
$134.8 $134.4
$141.1 $141.3 $142.3
$100.0
$110.0
$120.0
$130.0
$140.0
$150.0
4Q15 1Q16 2Q16 3Q16 4Q16
Average Loans Held for Investment
($ in billions)
C&I $ 51,306 (1.6)%
CRE – IPP 14,566 (2.7)
CRE – C&D 3,874 7.5
Dealer floor plan 1,367 31.1
Direct retail lending 12,046 1.7
Sales finance 10,599 53.7
Revolving credit 2,608 11.1
Residential mortgage 30,044 (4.1)
Other lending subsidiaries2 14,955 5.7
Acquired from FDIC and PCI 974 (29.5)
Total $ 142,339 3.0%
4Q16
Average
Balance
4Q16 v. 3Q16
Annualized
Increase
(Decrease)
Average Loans Held for Investment
($ in millions)
1Q17 management expectations
Average loans are expected to be flat to up
slightly vs. 4Q16 due largely to seasonality
6
Noninterest-Bearing Deposits Reflect Strong Growth
$148.5 $149.9
$160.3 $159.5 $160.1
0.24%
0.25%
0.23% 0.23% 0.22%
0.20%
0.25%
0.30%
0.35%
0.40%
$120.0
$130.0
$140.0
$150.0
$160.0
$170.0
4Q15 1Q16 2Q16 3Q16 4Q16
Total Interest-Bearing Deposit Cost
Total deposits averaged $160.1 billion, an increase
of $615 million vs. 3Q16
Personal, up 0.6% annualized
Business, up 4.2% annualized
Public Funds, up 10.4% annualized
Noninterest-bearing deposits increased $862 million,
or 6.8% annualized vs. 3Q16
The percentage of noninterest-bearing deposits to
total deposits improved to 32.1% compared with
31.7% in 3Q16
Average Total Deposits
($ in billions)
$45.8 $46.2
$48.8
$50.6 $51.4
$30.0
$35.0
$40.0
$45.0
$50.0
$55.0
4Q15 1Q16 2Q16 3Q16 4Q16
Average Noninterest-Bearing Deposits
($ in billions)
Noninterest-bearing deposits $ 51,421 6.8%
Interest checking 28,634 12.6
Money market & savings 63,884 (2.8)
Subtotal $ 143,939 3.6
Time deposits 15,693 (3.1)
Foreign office deposits – Interest-
bearing 486 NM
Total deposits $ 160,118 1.5%
4Q16
Average
Balance
Average Deposits
($ in millions) 4Q16 v. 3Q16
Annualized
Increase
(Decrease)
7
Credit Quality Reflects Seasonal Increase in Charge-offs;
Lower NPAs1
Credit quality results reflect expected seasonal
increase in consumer-related portfolios and
impact of loan sales
Net charge-offs totaled $151 million, up 5 bps
vs. 3Q16
- Includes $15 million related to PCI loans
- Includes $14 million related to loan sales
Loans 90 days or more past due2 increased 7.4%
vs. 3Q16
Loans 30-89 days past due2 increased 9.9%
vs. 3Q16
NPAs decreased 3.6% vs. 3Q16
Excluding energy-related loans, NPAs were
0.34% of total assets
1Q17 management expectations
Management expects 1Q17 net charge-offs to be in
the range of 35 to 45 bps
NPA levels expected to remain in a similar range in
1Q17
0.34%
0.42% 0.40% 0.38% 0.37%
0.00%
0.20%
0.40%
0.60%
4Q15 1Q16 2Q16 3Q16 4Q16
Total Nonperforming Assets as a Percentage
of Total Assets
Annualized Net Charge-offs / Average Loans
1 Includes acquired from FDIC and PCI; excludes loans held for sale
2 Excludes nonperforming loans and leases
0.38%
0.46%
0.28%
0.37%
0.42%
0.00%
0.20%
0.40%
0.60%
4Q15 1Q16 2Q16 3Q16 4Q16
8
Energy Portfolio – Stabilized in 4Q16
Outstanding balances declined 7.6% compared
with last quarter
Total commitments and nonaccruals decreased vs.
3Q16
35% Utilization rate
37% of portfolio is Criticized & Classified
Allocated reserves = 11.7%
All nonperforming borrowers are paying as agreed
Coal portfolio = $136 million outstanding, 42%
utilization with 21% Criticized & Classified
Allocated reserves = 7.2%
Support
Services
$108
9%
Oil and Gas Portfolio
$ in millions
Midstream
$492
40%
Upstream
$626
51%
Total $1.2 billion
(Less than 1% of total loans)
9
Allowance Coverage Ratios Remain Strong
2.83x
2.40x
3.88x
2.91x
2.47x 2.53x
1.89x 1.90x
2.00x 2.03x
1.00
2.00
3.00
4.00
4Q15 1Q16 2Q16 3Q16 4Q16
ALLL to Net Charge-offs ALLL to NPLs HFI
Coverage ratios remain strong at 2.47x and
2.03x for the allowance to net charge-offs and
NPLs, respectively
The ALLL to loans ratio was 1.04%, relatively
flat compared to last quarter
Excluding loans acquired from FDIC and PCI, the
provision for credit losses was $133 million vs.
adjusted net charge-offs of $122 million1
Excluding loans acquired in business acquisitions,
the ALLL to loans ratio was 1.13%, compared to
1.15% last quarter
Going forward, we continue to expect the loan
loss provision to approximate charge-offs in
addition to providing for incurred losses on
incremental loan growth
ALLL Coverage Ratios
1 Excludes $14 million of net charge-offs related to loans sold
10
Net Interest Margin Decreases to 3.32%
3.35%
3.43% 3.41% 3.39%
3.32%
3.13% 3.19% 3.17% 3.18% 3.18%
2.50%
3.00%
3.50%
4.00%
4Q15 1Q16 2Q16 3Q16 4Q16
Reported NIM Core NIM
4Q16 NIM decreased 7 bps vs. 3Q16 due to:
Securities duration adjustments, primarily
acquired securities (5 bps)
Decline in purchase accounting accretion (2 bps)
Restructured $2.9 billion of FHLB advances
in 1Q17
Recorded a pretax loss of $392 million
The debt’s average cost was 4.58%
The weighted average duration was 59 months
1Q17 management expectations
Core net interest margin expected to increase
8 – 10 bps
- Impact of FHLB restructure
- December 2016 rate increase
- Favorable asset mix changes
- Favorable funding cost and mix changes
GAAP net interest margin expected to increase
10-12 bps
Asset sensitivity decreased driven mostly
due to:
FHLB restructuring
Slower prepayment speeds in mortgage assets
Net Interest Margin
1
-0.93%
1.13%
2.14%
3.13%
-1.89%
1.96%
3.26%
4.62%
-2.00%
0.00%
2.00%
4.00%
6.00%
Down 25 Up 50 Up 100 Up 200
Sensitivities as of 12/31/16 Sensitivities as of 09/30/16
Rate Sensitivities
1 See non-GAAP reconciliations included in the attached Appendix
11
Fee Income Reflects Stronger Insurance and
Investment Banking Income
Insurance income increased $9 million, primarily due
to seasonally higher commissions
Mortgage banking income decreased $47 million
due to net mortgage servicing rights valuation
adjustments and lower production volumes
Other income increased $19 million, primarily due to
higher income from partnerships and other
investments
40.3% 39.9%
41.2% 41.9%
42.6%
35.0%
40.0%
45.0%
50.0%
4Q15 1Q16 2Q16 3Q16 4Q16
Fee Income Ratio
4Q16
4Q16 v.
3Q161
Increase
(Decrease)
4Q16 v.
4Q15
Increase
(Decrease)
Insurance income $ 419 8.7 % 10.3 %
Service charges on deposits 172 - 4.2
Mortgage banking income 107 (121.4) 2.9
Investment banking and brokerage
fees and commissions 108 27.6 18.7
Trust and investment advisory
revenues 69 5.9 7.8
Bankcard fees and merchant
discounts 60 (6.5) 7.1
Checkcard fees 50 - 6.4
Operating lease income 34 - 3.0
Income from bank-owned life
insurance 26 (102.3) (3.7)
FDIC loss share income, net - NM (100.0)
Securities gains (losses), net 1 NM NM
Other income 116 77.9 16.0
Total noninterest income $ 1,162 (0.7) % 14.5 %
Noninterest Income
($ in millions)
1 Linked quarter percentages are annualized
1Q17 management expectations
Total noninterest income expected to be relatively flat vs. 4Q16
12
Noninterest Expense Reflects Lower Loan-Related Expenses
and Merger-Related Charges
4Q16
4Q16 v.
3Q162
Increase
(Decrease)
4Q16 v.
4Q15
Increase
(Decrease)
Personnel expense $ 1,004 (0.8) % 12.4 %
Occupancy and equipment
expense 198 (9.8) 3.1
Software expense 57 (37.9) 9.6
Loan-related expense (6) NM (116.2)
Outside IT services 50 (7.8) 22.0
Professional services 27 - (6.9)
Amortization of intangibles 38 - 18.8
Regulatory charges 42 9.7 50.0
Foreclosed property expense 9 - (18.2)
Merger-related and restructuring
charges, net 13 NM (74.0)
Other expense 236 78.8 1.7
Total noninterest expense $ 1,668 (10.0) % 4.4 %
Noninterest Expense
($ in millions)
1 Refer to the Appendix for appropriate reconciliations of non-GAAP financial measures
2 Linked quarter percentages are annualized
63.4%
60.7%
65.4%
61.7% 61.1%
59.2% 58.8% 59.6% 58.7% 59.5%
50.0%
55.0%
60.0%
65.0%
70.0%
4Q15 1Q16 2Q16 3Q16 4Q16
Efficiency Ratio
GAAP Efficiency Adjusted Efficiency
Personnel expense reflects a $12 million decline in
equity-based compensation primarily due to a
decrease for retirement eligible employees
Loan-related expense decreased $39 million
compared to the prior quarter largely due to a release
of $31 million of mortgage repurchase reserves,
which is primarily driven by lower anticipated loan
repurchase requests
Other expense increased $39 million primarily due to
a net benefit of $73 million in the prior quarter related
to the settlement of certain legacy mortgage matters
involving the origination of mortgage loans insured by
the FHA
1Q17 management expectations
Excluding merger-related and restructuring charges and
the FHLB restructuring charge, expenses should be slightly
below $1.7 billion, even with seasonal headwinds in
personnel costs
1
13
Capital and Liquidity Remain Strong
10.3%
10.4%
10.0%
10.1%
10.2%
9.0%
9.5%
10.0%
10.5%
11.0%
4Q15 1Q16 2Q16 3Q16 4Q16
The common equity tier 1 ratio was 10.0% fully
phased-in
BB&T’s 12/31/16 LCR was 121%
BB&T’s 4Q16 liquid asset buffer was 12.6%
Option exercises added 0.1% to the Common
Equity Tier 1 capital ratio
4Q16 dividend payout ratio was 41.0%
4Q16 total payout ratio was 101.9%
1Q17 capital actions:
Continue share repurchase program with up to
$160 million in share repurchases in the 1st quarter
CCAR 2017
Management is currently targeting a meaningfully
significant increase in total return to shareholders
compared with CCAR 2016
1 Current quarter regulatory capital information is preliminary
Common Equity Tier 11
14
($ in millions)
Inc/(Dec)
vs 3Q16
Inc/(Dec)
vs 4Q15
4Q16 Comments5
Net Interest Income
Noninterest Income1
Provision for Credit Losses
Noninterest Expense2
Income Tax Expense
Segment Net Income
Highlighted Metrics5,6
$ 984
359
26
792
191
$ 334
$ 12
1
29
(8)
(4)
$ (4)
($ 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
4Q16 Like
Total Commercial Loans
Direct Retail Lending
Money Market & Savings
Noninterest Bearing Deposits
Link3
4.9%
8.6%
2.5%
15.2%
Change
Community Banking Segment
Commercial production4 in 4Q16 was the highest
since 2011
Increased $114 million, or 2.6%, compared to 4Q15
Increased $454 million, or 11.2%, compared to 3Q16
Direct Retail Lending production increased $156
million, or 14.9%, compared to 4Q15; increased $5
million, or 0.4%, compared with 3Q16
Operating results increased vs. 4Q15 primarily due
to the inclusion of National Penn and
Susquehanna results
Community Bank continues to execute on its
branch rationalization program
25 branch location closures completed in 4Q16
Community Bank continues to focus on improving
efficiency
Operating margin7 improved 6.3% to 41.0% in 4Q16
vs. 4Q15
Operating margin7 improved 7.8% to 39.2% for 2016
vs. 2015
Serves individual and business clients by offering a variety of loan and deposit products and other financial services
$ 50.4
$ 12.0
$ 50.1
$ 46.4
5 National Penn and Susquehanna results were included in this segment following the mid-July, 2016 conversion and the early
November, 2015 conversions, respectively
6 Balances reported and related growth metrics are based on average YTD loans and deposits
7 Operating margin is calculated as net income before taxes and provision for credit losses divided by total revenues
12.8%
18.7%
12.7%
15.2%
$ 131
28
(13)
65
35
$ 72
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 3Q16
Inc/(Dec)
vs 4Q15
4Q16 Comments
4
Net Interest Income
Noninterest Income1
Provision for Credit Losses
Noninterest Expense2
Income Tax Expense
Segment Net Income
Highlighted Metrics
$ 109
75
15
66
39
$ 64
($ 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
$ (10)
(41)
6
28
(32)
$ (53)
Net interest income decreased vs. 3Q16 primarily
due to lower average balances and lower credit
spreads on loans
Noninterest income decreased vs. 3Q16 due to
lower net mortgage servicing rights valuation
adjustments and lower saleable loan volume and
margins
Noninterest expense increased vs. 3Q16 driven by
settlement of certain FHA-insured loan matters in
the prior quarter, partially offset by a 4Q16
decrease in repurchase reserves that reflects
lower anticipated repurchase requests
Production mix was 47% purchase / 53%
refinance in 4Q16 vs. 57% / 43% in 3Q16
Credit quality3
30+ days and still accruing delinquency of 3.51%
Nonaccruals of 0.57%
Net charge-offs of 0.13%
$ (2)
(4)
7
(37)
9
$ 15
4Q16 Link4 Like
Retail Originations $ 2.2 (8.1%) 38.8%
Correspondent Purchases $ 3.0 (22.5%) 53.8%
Total Production $ 5.2 (17.0%) 47.1%
Loan Sales $ 4.6 (6.9%) 48.5%
Loans Serviced for others (EOP) $ 90.3 0.7% (0.9%)
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)
Comments ($ in millions)
Inc/(Dec)
vs 3Q16
Inc/(Dec)
vs 4Q15
4Q16
Net Interest Income
Noninterest Income1
Provision for Credit Losses
Noninterest Expense2
Income Tax Expense
Segment Net Income
Highlighted Metrics
4Q16 Like
$ 203
-
86
51
25
$ 41
Retail Loan Production5
Loan Yield
Operating Margin3
Net Charge-offs
$ 2.8
6.49%
74.9%
2.01%
167.9%
(0.08)%
0.4%
0.00%
1 Noninterest Income includes intersegment net referral fees
2 Noninterest Expense includes amortization of intangibles and allocated corporate expense
3 Operating margin is calculated as net income before taxes and provision for credit losses divided by total revenues
($ in billions)
Link4
29.3%
(0.14)%
1.1%
0.07%
Change
Dealer Financial Services Segment
Prime auto retail production in dealer network
increased $73 million or 14.9% over 3Q16
Prime auto enhanced by $1.9 billion portfolio
acquisition in November
Regional Acceptance generated solid loan growth
10.5% loan growth vs. 3Q164 and 10.1% vs. 4Q15
Origination terms stable, maximum term of 72 months
Program changes over last two years steadily reduced
the maximum permitted origination LTV
Regional Acceptance’s credit results continue to be
within our credit risk appetite
Default, delinquency and nonaccrual rates all declined
from 4Q15
4Q16 net charge-off rate increased due to normal
seasonality
$ 13
(1)
10
1
-
$ 1
$ 11
-
9
2
-
$ -
4 Linked quarter growth rates annualized except for production, sales and credit metrics
5 Retail loan production includes portfolio acquisitions
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
Comments ($ in millions)
Inc/(Dec)
vs 3Q16
Inc/(Dec)
vs 4Q15
4Q16
Net Interest Income
Noninterest Income1
Provision for Credit Losses
Noninterest Expense2
Income Tax Expense
Segment Net Income
Highlighted Metrics
4Q16 Like
$ 120
76
12
113
16
$ 55
$ (2)
(7)
(11)
16
(5)
$ (9)
$ 7
5
-
25
(5)
$ (8)
($ in billions)
Loan Originations
Loan Yield
Operating Margin3
Net Charge-offs
$ 4.8
4.53%
42.4%
0.33%
2.9%
(0.32%)
(9.8%)
0.03%
1 Noninterest Income includes intersegment net referral fees
2 Noninterest Expense includes amortization of intangibles and allocated corporate expense
3 Operating margin is calculated as net income before taxes and provision for credit losses divided by total revenues
4 Linked quarter growth rates annualized except for production, sales and credit metrics
(8.7%)
(0.07%)
(10.3%)
(0.10%)
Link4
Change5
Specialized Lending Segment
5 During the first quarter of 2016, the Asset-Based Lending Group was moved to Community Banking, and Supply-Chain
Lending was moved to the Financial Services segment. Prior period amounts have been retrospectively adjusted for
these transfers
Specialized Lending continues to benefit from
strong seasonal loan growth and production.
Average loans up 5.4% compared to 3Q164 and
up 16.1% compared to 4Q15
Premium Finance
- 10.8% loan growth vs. 4Q15
- 13.4% production growth vs. 4Q15
Sheffield
- 12.1% loan growth vs. 4Q15
- 5.4% production growth vs. 4Q15
Equipment Finance
- 12.7% loan growth vs. 4Q15
- 10.4% production growth vs. 4Q15
Noninterest expense increase over Q316 driven
primarily by asset write downs in the Equipment
Finance operating lease portfolio
Grandbridge realized strong mortgage banking
income
4Q16 up 21.5% compared to 4Q15
18
Comments ($ in millions)
Inc/(Dec)
vs 3Q16
Inc/(Dec)
4Q15
4Q16
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
4Q16 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
428
-
374
22
$ 34
$ -
16
-
(1)
6
$11
$ -
40
-
43
(1)
$ (2)
$ 428
224
17.7%
10.3%
27
(1.5%)
Change
15.4%
-
3.7%
Link4
($ in millions)
Insurance Holdings Segment
4 Linked quarter growth rates annualized except for production and sales
5 EBITDA margin is a measurement of operating profitability calculated by dividing pre-tax
net income adjusted to add back interest, depreciation, intangible amortization and merger-related
charges by total revenue
Commission and fee revenue growth of 10.9% vs.
4Q15:
1.2% for Retail Segment
21.2% for Wholesale Segment
Higher noninterest income and noninterest expense
vs. 4Q15 was primarily due to the addition of Swett
& Crawford
Higher noninterest income vs. 3Q16 primarily
reflects seasonality in commercial property and
casualty insurance
Year-to-date organic growth in commission and fee
revenue of 0.6% vs prior year
Experienced strong quarter over quarter and year-
to-date growth in Employee Benefits sales.
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 3Q16
Inc/(Dec)
vs 4Q15
4Q16
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
4Q16 Like
$ 161
263
(2)
231
73
$ 122
$ -
30
(34)
1
24
$ 39
$ 16
42
1
28
11
$ 18
$16.0
$31.8
$ 143.7
$ 144
45.5%
1 Noninterest Income includes intersegment net referral fees
2 Noninterest Expense includes amortization of intangibles and allocated corporate expense
3 Operating margin is calculated as net income before taxes and provision for credit losses divided by total revenues
4 Linked quarter growth rates annualized except for production and sales
($ in billions)
Link4
(2.9%)
(1.6%)
6.4%
1.8%
3.9%
Change
7.4%
6.1%
10.0%
7.0%
1.0%
Financial Services Segment
Modest decline in Corporate Banking’s loans vs.
3Q16 driven by higher than usual pay downs and
the sale of energy loans
4.2% decline in loans vs. 3Q16
7.2% loan growth vs. 4Q15
BB&T Wealth generated strong loan and deposit
growth
8.0% loan growth and 31.3% transaction deposit growth
vs. 3Q16
9.4% loan growth and 24.5% transaction deposit growth
vs. 4Q15
Increase in noninterest income vs. 3Q16 driven by
higher client derivative, investment banking and
SBIC private equity investments income
Allocated provision decrease vs. 3Q16 driven by
the sale of energy loans
BB&T Retirement and Institutional Services
received top rankings and 36 Best-in-Class awards
in the 2016 national PlanSponsor survey
20
21
Purchase Accounting Summary
Acc. Yield1
PCI Loans
PA Mark2
Non-PCI
Loans
PA Mark3
Liabilities
PA Mark4
Securities
Balance, Sept. 30, 2016 $ (421) $ (318) $ (54) $ (404)
Interest income:
Normal accretion 33 18 6 9
Cash recoveries/early payoffs/ duration adjustments 16
15
-
(23)
Total interest income 49 33 6 (14)
Other (36) - - -
Balance, Dec. 31, 2016 $ (408) $ (285) $ (48) $ (418)
NBV/amortized cost of related assets/liabilities at
Dec. 31, 2016 $ 910 $ 13,866 $ 2,938 $ 593
1 Accretable yield represents the difference between total expected cash flows and the carrying value of the related loan pools. It is recognized using level-yield method over the remaining expected life of the
pools (subject to future cash-flow reassessments).
2 Purchase accounting loan marks on Susquehanna and National Penn non-PCI loans represents the total mark, including credit and interest, and are recognized using level-yield method over the remaining
life of the individual loans or recognized in full in the event of prepayment. Not subject to future cash flow reassessments.
3 Purchase accounting marks on liabilities represents interest rate marks on Susquehanna and National Penn time deposits and long-term debt and are recognized using level-yield method over the term of the
liability.
4 Purchase accounting securities marks represents securities acquired in the Colonial acquisition and are recognized using level-yield method over the expected maturity of the underlying securities. Subject to
reassessment of prepayments, as applicable. The mark is also used for payment shortfalls and credit losses.
Purchase Accounting Summary
(Dollars in millions)
22
Capital Measures1
(Dollars in millions, except per share data)
1 Current quarter regulatory capital is preliminary
23
As of / Quarter Ended
Dec. 31 Sept. 30 June 30 March 31 Dec. 31
2016 2016 2016 2016 2015
Selected Capital Information
Risk-based capital:
Common equity tier 1 $ 18,050 $ 17,824 $ 17,568 $ 17,320 $ 17,081
Tier 1 21,102 20,876 20,620 20,373 19,682
Total 24,873 24,793 24,525 24,355 23,753
Risk-weighted assets 176,217 176,739 176,021 166,781 166,611
Average quarterly tangible assets 211,392 212,816 214,235 202,200 201,541
Risk-based capital ratios:
Common equity tier 1 10.2% 10.1% 10.0% 10.4% 10.3%
Tier 1 12.0 11.8 11.7 12.2 11.8
Total 14.1 14.0 13.9 14.6 14.3
Leverage capital ratio 10.0 9.8 9.6 10.1 9.8
Equity as a percentage of total assets 13.6 13.5 13.4 13.3 13.0
Common equity per common share $ 33.14 $ 33.27 $ 32.72 $ 32.14 $ 31.66
Non-GAAP Reconciliations
24
(Dollars in millions, except per share data)
1
Tangible common equity is a non-GAAP measure. 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 and related measures1:
Total shareholders' equity $ 29,926 $ 30,091 $ 29,743 $ 28,239 $ 27,340
Less:
Preferred stock 3,053 3,053 3,053 3,054 2,603
Noncontrolling interests 45 39 39 39 34
Intangible assets 10,492 10,519 10,567 9,215 9,234
Tangible common equity $ 16,336 $ 16,480 $ 16,084 $ 15,931 $ 15,469
Outstanding shares at end of period (in thousands) 809,475 811,424 814,500 782,379 780,337
Tangible common equity per common share $ 20.18 $ 20.31 $ 19.75 $ 20.36 $ 19.82
As of / Quarter Ended
Dec. 31 Sept. 30 June 30 March 31 Dec. 31
2016 2016 2016 2016 2015
Non-GAAP Reconciliations1
25
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.
2 Revenue is defined as net interest income plus noninterest income
Quarter Ended
Dec. 31 Sept. 30 June 30 March 31 Dec. 31
Efficiency Ratio (1) 2016 2016 2016 2016 2015
Efficiency Ratio Numerator - Noninterest Expense - GAAP $ 1,668 $ 1,711
$ 1,797 $ 1,545 $ 1,597
Amortization of intangibles (38) (38) (42) (32) (32)
Merger-related and restructuring charges, net (13) (43) (92) (23) (50)
Gain (loss) on early extinguishment of debt - -
- 1 -
Mortgage reserve adjustments 31 - - - -
Charitable contribution - (50) - - -
Settlement of FHA-insured loan matters and related recovery - 73
- - -
Efficiency Ratio Numerator - Adjusted $ 1,648 $ 1,653
$ 1,663 $ 1,491 $ 1,515
Efficiency Ratio Denominator – Revenue2 – GAAP $ 2,727 $ 2,774
$ 2,747 $ 2,545 $ 2,519
Taxable equivalent adjustment 41 40
40 39 38
Securities (gains) losses, net (1) -
- (45) -
Efficiency Ratio Denominator - Adjusted $ 2,767 $ 2,814
$ 2,787
$ 2,539
$ 2,557
Efficiency Ratio - GAAP 61.1 % 61.7 % 65.4 % 60.7 % 63.4 %
Efficiency Ratio - Adjusted 59.5 58.7 59.6 58.8 59.2
(Dollars in millions)
26
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
Dec. 31 Sept. 30 June 30 March 31 Dec. 31
Return on Average Tangible Common Shareholders' Equity 2016 2016 2016 2016 2015
Net income available to common shareholders $ 592 $ 599 $ 541 $ 527 $ 502
Plus:
Amortization of intangibles, net of tax 24 24 26 20 21
Tangible net income available to common shareholders $ 616 $ 623 $ 567 $ 547 $ 523
Average common shareholders' equity $ 26,962 $ 26,824 $ 26,519 $ 25,076 $ 24,736
Less:
Average intangible assets 10,508 10,545 10,574 9,226 9,224
Average tangible common shareholders' equity $ 16,454 $ 16,279 $ 15,945 $ 15,850 $ 15,512
Return on Average Tangible Common Shareholders' Equity 14.91% 15.20% 14.33% 13.87% 13.37%
Dec. 31 Sept. 31 June 30 March 31 Dec. 31
2016 2016 2016 2016 2015
Net interest income - GAAP $ 1,565 $ 1,610 $ 1,617 $ 1,529 $ 1,504
Taxable-equivalent adjustment
41
40
40
39
38
Net interest income - taxable-equivalent $ 1,606 $ 1,650 $ 1,657 $ 1,568 $ 1,542
Interest income - PCI loans (49) (52) (48) (59) (56)
Accretion of mark on Susquehanna and National Penn non-PCI loans (33) (40) (42) (28) (30)
Accretion of mark on Susquehanna and National Penn liabilities (6) (7) (9) (8) (9)
Accretion of mark on securities acquired from FDIC 14 (8) (21) (18) (7)
Net interest income - Core $ 1,532 $ 1,543 $ 1,538 $ 1,455 $ 1,439
Earning assets - GAAP 192,574 193,909 194,822 183,612 183,151
Average balance - PCI loans (974) (1,052) (1,130) (1,098) (1,070)
Average balance of mark on Susquehanna and National Penn non-PCI loans 300 335 345 274 437
Average balance of mark on securities acquired from FDIC 402 408 424 441 448
Earning assets - Core $ 192,302 $ 193,601 $ 94,461 $183,230 $ 182,967
Annualized net interest margin
Reported 3.32% 3.39% 3.41% 3.43% 3.35%
Core 3.18 3.18 3.17 3.19 3.13
Non-GAAP Reconciliations1,2
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.
Amounts may not sum due to rounding
1
Quarter Ended
27
(Dollars in millions)
2