Attached files
| file | filename |
|---|---|
| EX-99.2 - EXHIBIT 99.2 - TRUIST FINANCIAL CORP | ex992-earningstables_2q17.htm |
| EX-99.1 - EXHIBIT 99.1 - TRUIST FINANCIAL CORP | ex991-earningstext_2q17.htm |
| 8-K - 8-K - TRUIST FINANCIAL CORP | form8k-earnings_2q17.htm |
Kelly S. King
Chairman and Chief Executive Officer
Second Quarter 2017
Earnings Conference
Call
July 20, 2017
Daryl N. Bible
Chief Financial Officer
Forward-Looking Information
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 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, as well as the risks and uncertainties more fully discussed under Item 1A-Risk Factors in our Annual Report on Form 10-K for the year ended
December 31, 2016 and in any of BB&T’s subsequent filings with the Securities and Exchange Commission:
• 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 economic instability and recessionary conditions in Europe, the
potential exit of the United Kingdom from the European Union and the economic slowdown in China;
• changes in the interest rate environment, including interest rate changes made by the Federal Reserve, 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.
Non-GAAP Information
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 these non-GAAP measures provide a greater understanding of ongoing operations, enhance
comparability of results with prior periods and demonstrate the effects of significant items 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 find these non-GAAP financial measures useful. 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 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. 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 adjusted efficiency and operating leverage ratios are non-GAAP in that they exclude securities gains (losses), amortization of intangible assets, merger-related and restructuring charges 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 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 estimated 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.
• The adjusted diluted earnings per share is non-GAAP in that it excludes securities gains (losses), merger-related and restructuring charges, gains (losses) on the early extinguishment of debt 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.
A reconciliation of these non-GAAP measures to the most directly comparable GAAP measure is included in the attached Appendix and BB&T's Second Quarter 2017 Quarterly Performance Summary, which is available at BBT.com.
Capital ratios are preliminary.
3
2017 second quarter performance highlights1
▪ Record net income available to common shareholders totaled $631 million, up 16.6%
vs. 2Q16
▪ Diluted EPS totaled $0.77
▪ Adjusted diluted EPS totaled $0.78, up 9.9% vs. 2Q16
▪ ROA, ROCE and ROTCE were 1.22%, 9.30% and 15.60%, respectively
Record
Earnings
Credit Quality
▪ Credit quality continues to improve
▪ NPAs, performing TDRs, 90 days or more past due and net charge-offs all declined
vs. last quarter
Revenues
▪ Record taxable-equivalent revenues totaled $2.9 billion, up 3.9% vs. 2Q16 and
up 10.7% annualized vs. 1Q17
▪ Net interest margin increased 1 bp to 3.47% vs. 1Q17
▪ Core net interest margin increased 3 bps to 3.31% vs. 1Q17
▪ Fee income ratio increased to 42.7% from 42.1% in 1Q17
Efficiency ▪ GAAP efficiency ratio was 61.0%▪ Adjusted efficiency ratio was 58.6% vs. 58.0% in 1Q17
1 Includes non-GAAP measures; refer to non-GAAP reconciliation in the attached Appendix for adjusted measures
Capital
▪ Approved capital plan includes:
– 10% increase in quarterly dividend to $0.33
– Up to $1.88 billion in share repurchases; repurchase of $920 million in 3Q17
▪ Common equity tier 1 ratio remains strong at 10.3%
4
Selected items affecting earnings
Pre -Ta
x
After Tax Diluted EPS Impac
t
($ in millions, except per share impact) Pre-Tax After-Tax
Diluted EPS
Impact
Merger-related and restructuring charges $ (10) $ (6) $ (0.01)
5
Met or exceeded second quarter guidance in all categories
Category 2Q17 outlook Results Actuals
Loans
n Total up 1% – 3% annualized vs. 1Q17
n Core up 5% – 7% annualized vs. 1Q17
ü
ü+
3.0%
7.5%
Credit quality
n NCOs expected to be 35 – 45 bps
n NPA levels expected to remain in a similar range as
1Q17
ü
ü+
37 bps
0.31%
Net interest margin
n GAAP margin expected be flat vs. 1Q17
n Core margin expected to be up 2 – 4 bps vs. 1Q17
ü
ü
+1 bp
+3 bps
Net interest income1 n Up 2% – 4% annualized vs. 1Q17 ü+ 6.3%
Noninterest income n Up 6% – 8% vs. 2Q16 ü 8.0%
Expenses2 n Up 0% – 2% vs. 2Q16 ü 1.6%
(-) = missed guidance ü= achieved guidance ü+ = exceeded guidance
1 Taxable equivalent
2 Excludes merger-related and restructuring charges
6
▪ Average loans and leases held for investment increased
3.0% annualized in 2Q17 vs. 1Q17
▪ Experienced loan growth vs. 1Q17 in several portfolios:
– Sheffield, up 20.2% annualized
– Premium Finance, up 15.0% annualized
– CRE, up 7.0% annualized
– C&I, up 6.1% annualized
▪ Sales finance loans decreased $446 million, or 16.4%
annualized, primarily due to the portfolio optimization
strategy
▪ Community Bank experienced best quarterly commercial
production in history
1 Other lending subsidiaries consists primarily of AFCO/CAFO/Prime Rate, BB&T Equipment Finance, Grandbridge Real Estate Capital, Sheffield Financial and Regional Acceptance
2Q17 v. 1Q17
2Q17 Annualized
Average Increase
Balance (Decrease)
C&I $ 51,900 6.1%
CRE – IPP 14,864 7.2
CRE – C&D 3,905 6.4
Dealer floor plan 1,490 17.7
Direct retail lending 12,000 (0.5)
Sales finance 10,450 (16.4)
Revolving credit 2,612 0.8
Residential mortgage 29,392 (4.2)
Other lending subsidiaries1 15,636 19.3
PCI 825 (26.3)
Total $ 143,074 3.0%
Loans met targeted growth rates
Average Loans Held for Investment
($ in millions)
▪ 3Q17 management expectations
– Average loans are expected to increase 1% – 3%
annualized vs. 2Q17
$150.0
$140.0
$130.0
2Q16 3Q16 4Q16 1Q17 2Q17
$141.1 $141.3 $142.3 $142.0
$143.1
Average Loans Held for Investment
($ in billions)
7
2Q17 impact of seasonal / optimizing portfolios
▪ Loan growth strategies
– Growing more profitable loans with better risk
profile
– Continue to price prime auto loans at a level which
improves profitability and returns
– Continue to sell all conforming residential
mortgages while serving our clients
▪ Prime auto and residential mortgage
loans expected to stabilize in 2018
▪ 3Q17 management expectations
– Core loans expected to grow 5% – 7% annualized
in 3Q17 vs. 2Q17 excluding optimizing portfolios
2Q17 v. 1Q17
2Q17 Annualized
Average Increase
Balance (Decrease)
Core - nonseasonal
C&I, excluding MWL $ 50,467
CRE – IPP 14,864
CRE – C&D 3,905
Dealer floor plan 1,490
Direct retail lending 12,000
Revolving credit 2,612
Other lending subsidiaries1 8,926
Subtotal 94,264 6.0%
Core - seasonal
Mortgage warehouse lending 1,433
Other lending subsidiaries2 6,710
Subtotal 8,143 25.8
Core subtotal 102,407 7.5
Optimizing
Sales finance 10,450
Residential mortgage 29,392
PCI 825
Subtotal 40,667 (7.9)
Total 143,074 3.0%
Average Loans Held for Investment
($ in millions)
1 Other lending subsidiaries - core consists primarily of BB&T Equipment Finance, Grandbridge Real Estate Capital, and Regional Acceptance
2 Other lending subsidiaries - seasonal consists of AFCO/CAFO/Prime Rate and Sheffield Financial
8
Noninterest-bearing deposits reflect healthy growth
▪ Total deposits averaged $160.3 billion, a decrease of
$1.1 billion vs. 1Q17
– Personal, 48.8% of total, up 1.9% annualized
– Business, 39.1% of total, up 1.9% annualized
– Public Funds, 8.5% of total, down 15.9% annualized
▪ Average noninterest-bearing deposits increased $1.5
billion vs. 1Q17 due to an increase in commercial
balances
▪ The percentage of noninterest-bearing deposits to total
deposits was 32.8% compared with 31.7% in 1Q17
2Q17 v. 1Q17
2Q17 Annualized
Average Increase
Balance (Decrease)
Noninterest-bearing deposits $ 52,573 11.6 %
Interest checking 28,849 (9.9)
Money market & savings 64,294 (3.5)
Subtotal $ 145,716 0.5 %
Time deposits 14,088 (22.5)
Foreign office deposits – interest-bearing 459 NM
Total deposits $ 160,263 (2.8)%
Average Deposits
($ in millions)
Total IBD Cost
$180.0
$160.0
$140.0
$120.0
0.5%
0.4%
0.3%
0.2%
2Q16 3Q16 4Q16 1Q17 2Q17
$160.3 $159.5 $160.1 $161.4 $160.3
0.23% 0.23% 0.22%
0.26%
0.30%
$60.0
$50.0
$40.0
2Q16 3Q16 4Q16 1Q17 2Q17
$48.8
$50.6 $51.4 $51.1
$52.6
Average Noninterest-Bearing Deposits
($ in billions)
Average Total Deposits
($ in billions)
9
▪ Credit quality results reflect improved
charge-offs and nonperformers
– Net charge-offs totaled $132 million, down
10.8% vs. 1Q17
– Loans 90 days or more past due and still
accruing decreased 9.0% vs. 1Q17
– Loans 30-89 days past due increased 8.6%
vs. 1Q17, largely due to expected seasonal
increases in consumer portfolios
▪ NPAs decreased 13.9% vs. 1Q17,
primarily due to a decline in
nonperforming C&I loans and a
residential mortgage loan sale
▪ 3Q17 management expectations
– NCOs expected to be 35 – 45 bps
– NPAs expected to be in a similar range to
2Q17
Asset quality continues to improve
0.60%
0.40%
0.20%
0.00%
2Q16 3Q16 4Q16 1Q17 2Q17
0.28%
0.37%
0.42% 0.42%
0.37%
Annualized Net Charge-offs / Average Loans
0.60%
0.40%
0.20%
0.00%
2Q16 3Q16 4Q16 1Q17 2Q17
0.40% 0.38% 0.37% 0.36%
0.31%
Total Nonperforming Assets / Total Assets
10
Allowance coverage ratios remain strong
▪ Coverage ratios remain strong at 2.80x and
2.43x for the allowance to net charge-offs
and NPLs, respectively
▪ The ALLL to loans ratio was 1.03%, down
slightly vs. 1Q17
– Excluding loans acquired in business
acquisitions, the ALLL to loans ratio was 1.12%,
down 1 bp
▪ The total provision for credit losses was
$135 million for 2Q17; net charge-offs were
$132 million
▪ 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 to Annualized NCOs
ALLL to NPLs HFI
4.50x
3.50x
2.50x
1.50x
2Q16 3Q16 4Q16 1Q17 2Q17
3.88x
2.91x
2.47x 2.49x
2.80x
1.90x 2.00x 2.03x
2.05x
2.43x
ALLL Coverage Ratios
11
Industry leading net interest margin
▪ 2Q17 reported NIM increased 1 bp vs.
1Q17 due to:
– Short-term rate increases offset by runoff of
purchase accounting and funding rate
increases
▪ Core NIM increased 3 bps due to:
– Short-term rate increases partially offset by
funding rate increases
▪ Margin continues to outperform due to low
deposit beta and strong asset mix
▪ Asset sensitivity unchanged from prior
quarter
▪ 3Q17 management expectations
– GAAP margin down 1 – 3 bps vs. 2Q17
– Core margin stable compared with 2Q17
1 See non-GAAP reconciliations included in the attached Appendix
Reported NIM Core NIM
4.00%
3.50%
3.00%
2.50%
2Q16 3Q16 4Q16 1Q17 2Q17
3.41% 3.39% 3.32%
3.46% 3.47%
3.17% 3.18% 3.18% 3.28%
3.31%
Net Interest Margin
at 6/30/17 at 3/31/17
6.00%
4.00%
2.00%
0.00%
-2.00%
Down 25 Up 50 Up 100 Up 200
(1.14)%
1.44%
2.54%
3.95%
(1.26)%
1.47%
2.61%
3.85%
Rate Sensitivities
1
12
▪ Insurance income increased $23 million vs.
1Q17, primarily due to seasonality in P&C
commissions
▪ Bankcard fees and merchant discounts
increased $16 million due to a reduction in
accrual for rewards and an increase in volumes
▪ Investment banking and brokerage fees and
commissions increased $14 million as a result
of several large deals closed this quarter
▪ 3Q17 management expectations
– Total noninterest income expected to increase 1% –
3% vs. 3Q16
2Q17
2Q17 v.
1Q17
Increase
(Decrease)
2Q17 v.
2Q16
Increase
(Decrease)
Insurance income $ 481 20.1% 3.4%
Service charges on deposits 176 19.1 6.0
Mortgage banking income 94 (35.0) (15.3)
Investment banking and brokerage fees
and commissions 105 61.7 2.9
Trust and investment advisory revenues 70 11.8 4.5
Bankcard fees and merchant discounts 75 108.8 25.0
Checkcard fees 54 23.6 8.0
Operating lease income 37 11.1 5.7
Income from bank-owned life insurance 32 41.5 3.2
FDIC loss share income, net — — (100.0)
Securities gains (losses), net — — —
Other income 96 (44.6) (10.3)
Total noninterest income $ 1,220 16.8% 8.0%
Noninterest Income
($ in millions)1
1 Linked quarter percentages are annualized
Fee income reflects strong growth and improved fee income ratio
45.0%
44.0%
43.0%
42.0%
41.0%
40.0%
2Q16 3Q16 4Q16 1Q17 2Q17
41.2%
41.9%
42.6%
42.1%
42.7%
Fee Income Ratio
13
2Q17
2Q17 v.
1Q17
Increase
(Decrease)
2Q17 v.
2Q16
Increase
(Decrease)
Personnel expense $ 1,042 12.3 % 0.3 %
Occupancy and equipment expense 198 10.4 2.1
Software expense 57 (6.9) 7.5
Outside IT services 39 (81.9) (11.4)
Amortization of intangibles 36 (21.1) (14.3)
Regulatory charges 36 (30.9) 12.5
Professional services 38 NM 46.2
Loan-related expense 36 80.2 —
Merger-related and restructuring
charges, net 10 NM (89.1)
Loss (gain) on early extinguishment of
debt — NM —
Other expense 250 27.4 4.6
Total noninterest expense $ 1,742 (68.7)% (3.1)%
Adjusted noninterest expense3 $ 1,732 13.9 % 1.6 %
1 Refer to the Appendix for appropriate reconciliations of non-GAAP financial measures
2 Linked quarter percentages are annualized
3 Excludes merger-related and restructuring charges, losses or gains on early extinguishment of debt and selected items listed on page 18 of the Quarterly Performance Summary
▪ Personnel expense increased $31 million vs. 1Q17
primarily driven by higher performance-based
incentives and merit salary increases
▪ Merger-related and restructuring charges decreased
$26 million, largely due to the prior quarter write-off of
software and writedown of real estate
▪ Professional services expense increased $16 million
compared to the prior quarter and outside IT expense
decreased $10 million; both of which were primarily
due to expenses related to BSA/AML efforts
▪ Other expense increased $16 million primarily due to
higher operating charge-offs, charitable donations and
employee travel
Top quartile adjusted efficiency ratio
▪ 3Q17 management expectations
– Excluding merger-related and restructuring charges, expenses
expected to increase 0% – 2% vs. 3Q16
GAAP Adjusted
80.0%
70.0%
60.0%
50.0%
2Q16 3Q16 4Q16 1Q17 2Q17
65.4%
61.7% 61.1%
75.6%
61.0%
59.6% 58.7% 59.5% 58.0% 58.6%
Efficiency Ratio Noninterest Expense
($ in millions) 2
1
14
Capital and liquidity remain strong across the board
▪ 2017 CCAR results confirm total payout ratio
in excess of 100%
– Dividend increase of 10% to $0.33
– Management expects to repurchase up to $920
million common shares in 3Q17
▪ The common equity tier 1 ratio was 10.2%
fully phased-in
▪ LCR was 122%
▪ Liquid asset buffer was 13.0%
▪ 2Q17 dividend payout ratio was 38.4%
▪ 2Q17 total payout ratio was 63.8%
Current quarter regulatory capital information is preliminary
10.5%
10.0%
9.5%
9.0%
2Q16 3Q16 4Q16 1Q17 2Q17
10.0%
10.1%
10.2%
10.3% 10.3%
Common Equity Tier 1
15
Comments5
1 Noninterest income includes intersegment net referral fees
2 Noninterest expense includes amortization of intangibles and allocated corporate expense
3 Linked quarter growth rates annualized except for production
4 Commercial production includes C&I, CRE and Dealer Floor Plan
5 National Penn results were included in this segment following the mid-July, 2016 conversion
Community Banking
▪ Commercial production4 in 2Q17 was the best
quarter production in our history:
Serves individual and business clients by offering a variety of loan and deposit products and other financial services
6 Balances reported and related growth metrics are based on average loans and deposits
7 Operating margin is calculated as net income before taxes and provision for credit losses divided by total
revenues
8 During the second quarter of 2017, a change was made in the method for allocation of capital to the
operating segments impacting both the allocated balances and funding credit. Results for prior periods have
been revised to reflect the new allocations.
Summarized Results Inc (Dec)
vs. 1Q17
Inc (Dec)
vs. 2Q16($ in millions) 2Q17
Net interest income8 $ 1,032 $ 32 $ 99
Noninterest income1 381 31 34
Provision for credit losses 63 38 40
Noninterest expense2 814 18 32
Income tax expense 191 2 18
Segment net income $ 345 $ 5 $ 43
Highlighted Metrics3,5,6 Inc (Dec)
vs. 1Q17
Inc (Dec)
vs. 2Q16($ in billions) 2Q17
Total commercial loans $ 51.2 3.6 % 8.6%
Direct retail lending $ 11.9 (0.8)% 7.5%
Money market & savings $ 50.7 2.3 % 8.6%
Noninterest-bearing deposits $ 47.6 9.5 % 11.5%
▪ Operating results increased vs. 2Q16 due to the
inclusion of National Penn results as well as
improved deposit margin overall
▪ Community Banking’s operating margin7 improved
9.0% to 42.4% in 2Q17 vs. 2Q16
2Q17
vs.
1Q17
2Q17
vs.
2Q16
22.0%
25.5%
▪ Direct Retail Lending production in 2Q17 was
strong:
2Q17
vs.
1Q17
2Q17
vs.
2Q16
16.2%
14.4%
16
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. Also includes Mortgage Warehouse
Lending which provides short-term lending solutions to finance first-lien residential mortgages held-for-sale by independent mortgage companies.
Comments
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
Residential Mortgage Banking
▪ Noninterest income decreased vs. 1Q17
primarily due to decline in net mortgage servicing
income, partially offset by increase in retail
production income
▪ Noninterest expense increased vs. 1Q17
primarily driven by higher variable personnel
expense on higher retail loan production and
higher loan processing expense
▪ Net decline in production and loan sales vs.
1Q17 driven by increased competition in
correspondent channel
▪ Production mix was 68% purchase / 32%
refinance in 2Q17 vs. 52% purchase / 48%
refinance in 1Q17
▪ Credit quality3
– 30+ days and still accruing delinquency of 2.72%
– Nonaccruals of 0.45%
– Net charge-offs of 0.28%, annualized
Summarized Results Inc (Dec)
vs. 1Q17
Inc (Dec)
vs. 2Q16($ in millions) 2Q17
Net interest income5 $ 120 $ — $ (11)
Noninterest income1 72 (4) (12)
Provision for credit losses 10 5 (2)
Noninterest expense2 109 4 (6)
Income tax expense 27 (5) (6)
Segment net income $ 46 $ (8) $ (9)
Highlighted Metrics4 Inc (Dec)
vs. 1Q17
Inc (Dec)
vs. 2Q16($ in billions) 2Q17
Retail originations $ 1.7 5.3 % (20.5)%
Correspondent purchases $ 1.8 (23.6)% (47.6)%
Total production $ 3.5 (11.7)% (37.1)%
Loan sales $ 2.5 (29.2)% (31.6)%
Loans serviced for others (EOP) $ 90.1 (3.3)% 0.2 %
5 During the second quarter of 2017, a change was made in the method for allocation of capital to the operating
segments impacting both the allocated balances and funding credit. Results for prior periods have been
revised to reflect the new allocations.
17
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
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
5 Retail loan production includes portfolio acquisitions
Dealer Financial Services
▪ Portfolio balances and mix continue to reflect execution of
management’s optimization strategy
– Segment average loans declined 2.9% vs. 1Q17
– Prime auto average loans declined 17.6% vs. 1Q17 driven by
continued runoff
– Recreational lending average loans increased 15.6% vs. 1Q17
due to continued strong production
– RAC average loans increased $267 million vs. 1Q17 driven by
a portfolio acquisition in late 1Q17
– No additional portfolio purchases planned in 2017
▪ Segment returns and asset quality continues to remain
within management expectations
– Segment risk adjusted yield6 totaled 4.75% in 2Q17, which
included RAC risk adjusted yields of 10.0%
– 2Q17 prime auto losses as a percent of average loans was
0.10% vs. 0.16% in 1Q17
– RAC 2Q17 net charge-offs as a percent of average loans was
6.5% compared to 8.6% in 1Q17 due to seasonality
– RAC nonperforming asset rates declined in 2Q17 compared to
1Q17, flat with 2Q16
– RAC loans 30-89 days past due were 6.6% compared to 4.7%
at 1Q17 due to seasonality, and up slightly from 6.4% at 2Q16
6 Risk adjusted yield is calculated as loan yield less charge-off rate
7 During the second quarter of 2017, a change was made in the method for allocation of capital to the operating
segments impacting both the allocated balances and funding credit. Results for prior periods have been revised
to reflect the new allocations.
Summarized Results Inc (Dec)
vs. 1Q17
Inc (Dec)
vs. 2Q16($ in millions) 2Q17
Net interest income7 $ 198 $ 2 $ 11
Noninterest income1 — — —
Provision for credit losses 81 (14) 23
Noninterest expense2 57 2 10
Income tax expense 22 5 (9)
Segment net income $ 38 $ 9 $ (13)
Highlighted Metrics4 Inc (Dec)
vs. 1Q17
Inc (Dec)
vs. 2Q16($ in billions) 2Q17
Retail loan production5 $ 1.1 (8.3)% (8.9)%
Loan yield 6.43% 0.07 % (0.12)%
Operating margin3 71.2% (0.7)% (3.7)%
Net charge-offs 1.68% (0.41)% 0.18 %
18
Provides specialty lending including: commercial finance, tax-exempt governmental finance, equipment leasing,
commercial mortgage banking, insurance premium finance, dealer-based equipment financing, and direct consumer finance
Comments4
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
Specialized Lending
5 During the first quarter of 2017, the Mortgage Warehouse Lending Group was moved to the Mortgage
Lending segment. Prior period amounts have been retrospectively adjusted for this transfer.
6 During the second quarter of 2017, a change was made in the method for allocation of capital to the
operating segments impacting both the allocated balances and funding credit. Results for prior periods have
been revised to reflect the new allocations.
▪ Loan production has grown 22.7% vs. 1Q17 due to
continued seasonal trend, down 6.7% from 2Q16:
Summarized Results Inc (Dec)
vs. 1Q17
Inc (Dec)
vs. 2Q16($ in millions) 2Q17
Net interest income6 $ 104 $ 1 $ (1)
Noninterest income1 69 (1) (1)
Provision for credit losses 12 (4) (2)
Noninterest expense2 92 — 5
Income tax expense 15 1 (2)
Segment net income $ 54 $ 3 $ (3)
Highlighted Metrics4,5 Inc (Dec)
vs. 1Q17
Inc (Dec)
vs. 2Q16($ in billions) 2Q17
Loan originations $ 5.2 22.7 % (6.7)%
Loan yield 4.74% (0.03)% (0.25)%
Operating margin3 46.8% — % (3.5)%
Net charge-offs 0.24% (0.05)% (0.03)%
▪ Solid loan growth in each lending channel; in total up
15.7% vs. 1Q17 and 10.8% vs. 2Q16:
2Q17 vs. 1Q17 2Q17 vs. 2Q16
Total Premium Finance Sheffield Equip Finance Govt Finance Grandbridge
15.7% 15.0%
20.2%
8.5%
14.9%
25.0%
10.8%
17.2%
6.6%
15.3%
10.4%
23.2%
Total Premium Finance Sheffield Equip Finance Govt Finance Grandbridge
22.7% 22.7%
97.0%
(3.9)%
41.0%
1.4%
(6.7)%
14.0%
4.0%
(4.3)%
21.7%
(14.6)%
19
Comments
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
Insurance Holdings
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
6 Based on Business Insurance July 2017 Broker Ranking
7 During the second quarter of 2017, a change was made in the method for allocation of capital to the operating
segments impacting both the allocated balances and funding credit. Results for prior periods have been
revised to reflect the new allocations.
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
4 Linked quarter growth rates annualized except for production and sales
▪ Commission and fee revenue growth of 3.6% vs.
2Q16:
– 2.7% for retail segment
– 4.4% for wholesale segment
▪ Organic commission and fee revenue
increased 3.4% vs. 2Q16
– Higher noninterest income vs. 2Q16 was primarily
driven by timing of wholesale commission payments
▪ Improving new business production with YoY
growth across most lines of business
▪ BB&T Insurance Holdings moved from 6th
largest to 5th largest insurance broker in the
world6
Summarized Results Inc (Dec)
vs. 1Q17
Inc (Dec)
vs. 2Q16($ in millions) 2Q17
Net interest income7 $ 1 $ — $ 2
Noninterest income1 483 21 18
Provision for credit losses — — —
Noninterest expense2 396 7 —
Income tax expense 33 5 7
Segment net income $ 55 $ 9 $ 13
Highlighted Metrics4 Inc (Dec)
vs. 1Q17
Inc (Dec)
vs. 2Q16($ in millions) 2Q17
Noninterest income $ 483 18.2% 3.9%
Total agencies3 214 (2) (4)
EBITDA margin5 22.5% 1.9% 2.4%
20
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
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
Financial Services
▪ Increase in net interest income vs. 1Q17 driven by
improved funding spreads on deposits and loan volume
▪ Strong growth in Corporate Banking and Wealth loans:
Summarized Results Inc (Dec)
vs. 1Q17
Inc (Dec)
vs. 2Q16($ in millions) 2Q17
Net interest income6 $ 168 $ 12 $ 16
Noninterest income1 239 18 22
Provision for credit losses (17) (18) (23)
Noninterest expense2 242 12 15
Income tax expense 67 13 16
Segment net income $ 115 $ 23 $ 30
Highlighted Metrics4,5 Inc (Dec)
vs. 1Q17
Inc (Dec)
vs. 2Q16($ in billions) 2Q17
Average loan balances $ 16.5 10.2 % 3.0%
Average deposit balances $ 30.4 (7.9)% 5.9%
Total invested assets $151.4 9.8 % 14.0%
Invested assets noninterest
income ($ in millions) $ 150 14.7 % 11.1%
Operating margin3 40.5% 15.9 % 5.3%
Comments
5 Effective January 2017 certain client relationships with $218 million of loans and $2.0 billion of deposits were
no longer included in Financial Services and are only reported in Community Banking as the result of client
segmentation
6 During the second quarter of 2017, a change was made in the method for allocation of capital to the operating
segments impacting both the allocated balances and funding credit. Results for prior periods have been
revised to reflect the new allocations
2Q17
vs.
1Q17
2Q17
vs.
2Q16
Total Corp Banking Wealth
10.2% 9.1%
18.2%
3.0% 2.0%
12.4%
▪ Allocated provision decrease vs. 1Q17 driven by lower net
charge-offs and decreased reserves primarily related to
the energy portfolio
▪ Strong growth in invested assets:
2Q17
vs.
1Q17
2Q17
vs.
2Q16Total Institutional Retail
9.8%
13.4%
6.9%
14.0%
8.1%
17.3%
▪ Increase in noninterest income vs. 1Q17 driven by higher
investment banking income and brokerage fees and commissions
21
3Q17 Outlook
Category Guidance
Loans
n Total up 1% – 3% annualized vs. 2Q17
n Core up 5% – 7% annualized vs. 2Q17
Credit quality
n NCOs expected to be 35 – 45 bps
n NPAs expected to be in a similar range vs. 2Q17
Net interest margin
n GAAP margin down 1 – 3 bps vs. 2Q17
n Core margin stable compared with 2Q17
Net interest income1 n Stable compared with 2Q17
Noninterest income n Up 1% – 3% vs. 3Q16
Expenses2 n Up 0% – 2% vs. 3Q16
1 Taxable-equivalent
2 Excludes merger-related and restructuring charges
Appendix
A-1
Acc. Yield PA Mark
Acquired Loans1 Non-PCI Loans2 Liabilities3 Securities4
Balance, March 31, 2017 $ (350) $ (260) $ (43) $ (408)
Net interest income:
Normal accretion 30 18 6 12
Cash recoveries / early payoffs 7 7 — 4
Total net interest income 37 25 6 16
Other (58) — — —
Balance, June 30, 2017 $ (371) $ (235) $ (37) $ (392)
NBV/amortized cost of related assets (liabilities) at June 30, 2017 $ 780 $ 11,694 $ (1,585) $ 418
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). Includes all PCI loans and other loans acquired from Colonial that are accounted for under ASC 310-30.
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.
Supplemental information
Purchase accounting summary
(Dollars in millions)
A-2
Quarter Ended
June 30 March 31 Dec. 31 Sept. 30 June 30
2017 2017 2016 2016 2016
Net interest income - GAAP $ 1,635 $ 1,609 $ 1,565 $ 1,610 $ 1,617
Taxable-equivalent adjustment 40 40 41 40 40
Net interest income - taxable-equivalent 1,675 1,649 1,606 1,650 1,657
Interest income - PCI loans (37) (42) (49) (52) (48)
Accretion of mark on Susquehanna and National Penn non-PCI loans (25) (25) (33) (40) (42)
Accretion of mark on Susquehanna and National Penn liabilities (6) (5) (6) (7) (9)
Accretion of mark on securities acquired from FDIC (16) (10) 14 (8) (21)
Net interest income - core1 $ 1,591 $ 1,567 $ 1,532 $ 1,543 $ 1,537
Average earning assets - GAAP $ 193,386 $ 192,564 $ 192,574 $ 193,909 $ 194,822
Average balance - PCI loans (825) (883) (974) (1,052) (1,130)
Average balance - mark on Susquehanna and National Penn non-PCI loans 248 272 300 335 345
Average balance - mark on securities acquired from FDIC 403 414 402 408 424
Average earning assets - core1 $ 193,212 $ 192,367 $ 192,302 $ 193,600 $ 194,461
Annualized net interest margin:
Reported - taxable-equivalent 3.47% 3.46% 3.32% 3.39% 3.41%
Core1 3.31 3.28 3.18 3.18 3.17
Core NIM
(Dollars in millions)
1 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 reconciliations
A-3
Non-GAAP reconciliations
Calculations of tangible common equity and related measures
(Dollars in millions, except per share data, shares in thousands)
As of / Quarter Ended
June 30 March 31 Dec. 31 Sept. 30 June 30
2017 2017 2016 2016 2016
Total shareholders' equity $ 30,349 $ 30,025 $ 29,926 $ 30,091 $ 29,743
Less:
Preferred stock 3,053 3,053 3,053 3,053 3,053
Noncontrolling interests 42 44 45 39 39
Common equity 27,254 26,928 26,828 26,999 26,651
Intangible assets 10,400 10,436 10,492 10,519 10,567
Tangible common equity1 $ 16,854 $ 16,492 $ 16,336 $ 16,480 $ 16,084
Outstanding shares at end of period 808,093 811,370 809,475 811,424 814,500
Common equity per common share $ 33.73 $ 33.19 $ 33.14 $ 33.27 $ 32.72
Tangible common equity per common share1 20.86 20.33 20.18 20.31 19.75
Net income available to common shareholders $ 631 $ 378 $ 592 $ 599 $ 541
Plus amortization of intangibles, net of tax 22 24 24 24 26
Tangible net income available to common shareholders $ 653 $ 402 $ 616 $ 623 $ 567
Return on average common equity 9.30% 5.72% 8.75% 8.87% 8.21%
Return on average common tangible equity1 15.60 9.98 14.91 15.20 14.33
1 Tangible common equity and related measures 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.
A-4
Non-GAAP reconciliations
Efficiency ratio
(Dollars in millions)
Quarter Ended
June 30 March 31 Dec. 31 Sept. 30 June 30
2017 2017 2016 2016 2016
Efficiency ratio numerator - noninterest expense - GAAP $ 1,742 $ 2,102 $ 1,668 $ 1,711 $ 1,797
Amortization of intangibles (36) (38) (38) (38) (42)
Merger-related and restructuring charges, net (10) (36) (13) (43) (92)
Gain (loss) on early extinguishment of debt — (392) — — —
Mortgage reserve adjustments — — 31 — —
Charitable contribution — — — (50) —
Settlement of FHA-insured loan matters and related recovery — — — 73 —
Efficiency ratio numerator - adjusted $ 1,696 $ 1,636 $ 1,648 $ 1,653 $ 1,663
Efficiency ratio denominator - revenue1 - GAAP $ 2,855 $ 2,780 $ 2,727 $ 2,774 $ 2,747
Taxable equivalent adjustment 40 40 41 40 40
Securities (gains) losses, net — — (1) — —
Efficiency ratio denominator - adjusted $ 2,895 $ 2,820 $ 2,767 $ 2,814 $ 2,787
Efficiency ratio - GAAP 61.0% 75.6% 61.1% 61.7% 65.4%
Efficiency ratio - adjusted2 58.6 58.0 59.5 58.7 59.6
1 Revenue is defined as net interest income plus noninterest income.
2 BB&T's management uses this measure in their analysis of the Corporation's performance and believes it provides a greater understanding of ongoing operations and enhances comparability of results with prior periods, as well as
demonstrating the effects of significant gains and charges.
A-5
Non-GAAP reconciliations
Operating leverage1
(Dollars in millions)
Quarter Ended
June 30 March 31 Annualized
2017 2017 Growth
Revenue2 - GAAP $ 2,855 $ 2,780 10.8%
Taxable equivalent adjustment 40 40
Securities (gains) losses, net — —
Revenue2 - adjusted $ 2,895 $ 2,820 10.7%
Noninterest expense - GAAP $ 1,742 $ 2,102 (68.7)%
Amortization of intangibles (36) (38)
Merger-related and restructuring charges, net (10) (36)
Gain (loss) on early extinguishment of debt — (392)
Noninterest expense - adjusted $ 1,696 $ 1,636 14.7%
Operating leverage - GAAP 79.5%
Operating leverage - adjusted3 (4.0)
1 Operating leverage is defined as annualized revenue growth less annualized noninterest expense growth.
2 Revenue is defined as net interest income plus noninterest income.
3 BB&T's management uses the adjusted measure in the analysis of the Corporation’s performance and believes this measure provides a greater understanding of ongoing operations and enhances comparability of results with prior
periods, as well as demonstrating the effects of significant gains and charges.
A-6
Non-GAAP reconciliations
Diluted EPS
(Dollars in millions, except per share data, shares in thousands)
Quarter Ended
June 30
2017 2016 Increase
Net income available to common shareholders - GAAP $ 631 $ 541
Merger-related and restructuring charges, net after tax 6 58
Tax benefit related to specific tax-advantaged assets — (13)
Net income available to common shareholders - adjusted1 $ 637 $ 586
Weighted average shares outstanding - diluted 819,389 823,682
Diluted EPS - GAAP $ 0.77 $ 0.66 16.7%
Diluted EPS - adjusted1 0.78 0.71 9.9
1 BB&T's management uses the adjusted measure in the analysis of the Corporation’s performance and believes this measure provides a greater understanding of ongoing operations and enhances comparability of results with prior
periods, as well as demonstrating the effects of significant gains and charges.