Investor PresentationTravel+Presentation.pdf · Daryl N. Bible . Chief Financial Officer . Investor...
Transcript of Investor PresentationTravel+Presentation.pdf · Daryl N. Bible . Chief Financial Officer . Investor...
Daryl N. Bible Chief Financial Officer
Investor Presentation
First Quarter
2017
• 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
Agenda
BB&T’s vision and mission
BB&T overview
Revenue diversification – BB&T Insurance Holdings
First quarter outlook
2016 performance vs. peers
Digital strategies
Investing in our communities and environment
Strong corporate governance
Well-positioned for the future
5
Among Leaders in Key Performance Measures
1 See non-GAAP reconciliations included in the attached Appendix Peers include CFG, CMA, FITB, HBAN, KEY, MTB, PNC, RF, STI, USB, WFC and ZION; RWA excludes MTB and WFC Source: SNL and Company Reports
Most Recent Quarter Results BB&T Peer Rank
Return on average assets Return on average tangible common equity 1
1.16% 14.91%
2 nd
2 nd
Return on risk - weighted assets 1.45% 2 nd
Net interest margin 3.32% 2 nd
GAAP efficiency Adjusted efficiency 1
61.1% 59.5%
5 th
4 th
Dividend yield 2.55% 2 nd
Nonperforming assets as a % of loan-related assets 0.57% 1 st
6
BB&T is…
A values-driven highly profitable growth organization. While we have had a very successful merger history, our primary focus is on organic growth; nonetheless, we are well positioned for strategic opportunities.
Our fundamental strategy is to deliver the best value proposition in our markets. Recognizing value is a function of quality to price, our focus is on delivering high quality client service resulting in the Perfect Client Experience.
Our over-arching purpose is to achieve our vision and mission, consistent with our values, with the ultimate goal of maximizing shareholder returns.
7 1 Excludes home office deposits 2 Deposit Market Share data as of December 31, 2016 Source: FactSet, FDIC, SNL DataSource
State # of Branches Deposits2 State
Rank
North Carolina1 352 $ 28.7 bn
Virginia 344 $ 22.6 bn
Florida 318 $ 17.5 bn
Pennsylvania 262 $ 14.8 bn
Georgia 155 $ 12.4 bn
Maryland 165 $ 10.1 bn
South Carolina 111 $ 7.9 bn
Kentucky 110 $ 6.3 bn
Texas 124 $ 5.8 bn
West Virginia 73 $ 5.0 bn
Alabama 84 $ 4.0 bn
New Jersey 33 $ 2.5 bn
Tennessee 48 $ 2.4 bn
District of Columbia 13 $ 1.2 bn
Indiana 2 NM
Ohio 2 NM
Total # of Branches 2,196
BB&T Corporation: A Growing Franchise 8th Largest U.S. Financial Institution2
15 7
NM
4 2
7 4
2 15
3
5 1
5
NM
6
9
8
Premier Model for Community Banking…
26 Banking Regions
Local decision-making
Centralized support system
Foundation for our relationship management culture model
… and Diverse Non-Bank Businesses
9
Diversification Drives Revenue and Productivity
**Based on segment revenues, excluding other, treasury and corporate for period ending 12/31/2016
2.0% 1.7% 1.6%
Superior Performance…
BB&T National Peers
Largest 4 Banks
Revenue/average assets 10-year average 2007-2016
0.3% 0.4%
0.6%
Revenue/average assets 10-year standard deviation 2007-2016
BB&T National Peers
Largest 4 Banks
Data per S&P Global as of 12/31/2016 National peer group: CFG, CMA, FITB, HBAN, KEY, MTB, PNC, RF, STI, USB, WFC and ZION Largest 4 BHCs: BAC, C, JPM, WFC 1 Volatility measured as standard deviation of PPNR/Average Asset ratios
Community Banking 48%
Residential Mortgage
Banking 7%
Dealer Financial
Services 7%
Specialized Lending 7%
Financial Services
15%
Insurance Holdings
16%
Revenue Diversification by Segment**
…With Less Volatility1
10
Portfolio De-Risking and Re-positioning Largely Complete
Source: Y-9C via SNL, RMO Analytics and Business Intelligence. Excludes loans held for sale. Peers include: CFG, CMA, FITB, HBAN, KEY, MTB, PNC, RF, STI, USB, WFC, ZION
BB&T Loan Portfolio Mix Improvement Over Time Growing Risk/Return Advantaged Portfolios
- term
C&I
CRE – C&D
lending
credit
Other lending subsidiaries
Over the Long - term
C&I
CRE – IPP
CRE – C&D
Dealer floor plan
Direct retail lending
Sales finance
Revolving credit
Residential mortgage
Other lending subsidiaries
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Purchase Accounting Summary
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.
($ in millions) Acc.
Yield 1
PCI Loans
PA Mark 2
Non - PCI Loans
PA Mark 3
Liabilities PA Mark 4
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
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Retail
BB&T Insurance Services, Inc. BB&T Insurance Services of California, Inc. McGriff, Seibels and Williams, Inc. BB&T Assurance
Wholesale CRC Insurance Services Inc. Swett & Crawford AmRisc, LLP Crump Life Insurance Services, Inc.
5th largest broker in the US and 6th largest in the World
Provides revenue diversification and stability in down markets
1 Swett & Crawford was acquired April 1st, 2016
Based on segment revenues, excluding other, treasury and corporate for quarter ending 12/31/2016
Insurance Holdings
FTE count = 7,004
McGriff 15%
BB&T Insurance Services of California
5%
BB&T Insurance Services
26% CRC / SC1 35%
AmRisc 7%
Crump 11%
Assurance 1%
Delivery Channels & Subsidiaries 2016 Revenue Mix
47% Retail / 53% Wholesale
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Insurance Holdings - Diversification of BB&T’s Revenues
Revenues are not interest sensitive, providing stability to BB&T’s revenues Not subject to the dynamics of credit cycles – contributes to our strong CCAR stress scenarios Provides broader product offering to clients and improves the ability to increase “share of wallet” –
complementary financial product, valued risk management expertise Increases stability of BB&T’s revenues as insurance contribution has increased in recent years –
commercial/corporate client penetration; Wealth/Life partnership
30% 33% 35%
39% 43%
40% 39%
12% 12% 14% 16% 18% 17% 16%
0%
20%
40%
60%
2010 2011 2012 2013 2014 2015 2016
% of Core Non-Interest Income % of Core Revenue
Source: Wells Fargo Equity Research
Revenue Contribution 2010-2016
14
Insurance Holdings Performance – Peer Comparison
Note: Peers include AJ Gallagher, Aon, Brown & Brown, Marsh & McLennan and Willis. (1): EBITDA margin calculated as EBITDA as a percentage of total revenues. BB&T EBITDA margin excludes American Coastal, one time events which effected
2014 results, 2015 merger related charges, and includes 45.75% of Intercompany charges in FY2011 and FY2012 2016 through YTD 9/30/16 Source: SNL, Company filings,
18.6%
21.5%
19.3%
23.1%
20.4%
19.5%
17.3%
19.6% 20.2%
21.0% 21.4%
20.3%
15.0%
20.0%
25.0%
2011 2012 2013 2014 2015 2016
BB&T Peer Median
EBITDA margins1
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Strong Funding and Liquidity
Parent – Sources of Liquidity Cash on Deposit at Bank = $6.7 billion Annual Expected Dividends from Bank =
$1.4 billion
Parent – Uses of Liquidity Annual Debt Service and Retirements = $2.1 billion Annual Preferred Dividends = $174 million Annual Common Dividends = $971 million
$8.8 $7.8 $8.6 $8.6 $9.5
$1.2 $1.2 $1.2 $1.2 $1.2 $4.4
$4.3 $6.1 $5.3 $4.5
$3.1 $3.1
$3.1 $2.4 $2.4
$0
$5
$10
$15
$20
$25
4Q15 1Q16 2Q16 3Q16 4Q16
HoldCo Sr HoldCo SubordinatedBank Sr Bank Subordinated
$17.5 $16.4
$19.0 $17.5
Long-term Funding
$17.6
$ in billions
16
Among the Lowest Debt Costs
$26.2 $30.5 $31.7 $31.8 $33.6
$25.5 $28.7 $28.5 $28.2 $24.4
$19.0 $18.4 $19.3 $19.4 $19.4
$0
$25
$50
$75
$100
4Q15 1Q16 2Q16 3Q16 4Q16
Borrowing Capacity at Discount Window
Securities Available and Eligible as Collateral
FHLB Borrowing Available Capacity
$70.7
$77.6 $79.5 $79.4 $77.4
24 25
23 22
19
15
20
25
30
4Q15 1Q16 2Q16 3Q16 4Q16
($ in billions)
Global Excess Liquidity Sources Parent Company Time to Required Funding (months)
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First Quarter 2017 Outlook
Loans
Average loans are expected to be flat to up slightly vs. 4Q16 due largely to seasonality
Credit Quality 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 Continue to expect the loan loss provision to approximate charge-offs in addition to providing for incremental loan growth
Margin
Core net interest margin expected to increase 8 – 10 bps GAAP net interest margin expected to increase 10 – 12 bps
Fee Income Total noninterest income expected to be relatively flat vs. 4Q16
Expenses Excluding merger-related and restructuring charges and the FHLB restructuring charge, expenses should be slightly below
$1.7 billion
Capital Continue share repurchase program with up to $160 million in share repurchases in the 1st quarter Management is currently targeting a meaningfully significant increase in total return to shareholders compared with CCAR 2016
2016 Performance vs. Peers
19
26.1%
21.4%
18.1%
10.9%
8.6% 7.5% 7.3% 6.9%
5.7% 4.7%
2.1% 1.7% 1.1% 0.8%
0.0%
6.0%
12.0%
18.0%
24.0%
30.0%
Peer 1 Peer 2 Peer 3 BBT PeerMedian
Peer 4 Peer 5 Peer 6 Peer 7 Peer 8 Peer 9 Peer 10 Peer 11 Peer 12
Source: S&P Global Includes the impact of acquisitions Peers include CFG, CMA, FITB, HBAN, KEY, MTB, PNC, RF, STI, USB, WFC and ZION
Average Loan Growth vs. Peers
2016 Key Performance Results vs. Peers
20
2016 Key Performance Results vs. Peers
16.5%
15.0%
10.4%
7.4%
6.1% 5.9% 5.2% 5.1% 4.9%
3.9% 3.1%
2.5% 2.2% 2.0%
0.0%
5.0%
10.0%
15.0%
20.0%
Peer 1 BBT Peer 2 Peer 3 Peer 4 Peer 5 PeerAverage
Peer 6 Peer 7 Peer 8 Peer 9 Peer 10 Peer 11 Peer 12
Source: S&P Global Includes the impact of acquisitions Peers include CFG, CMA, FITB, HBAN, KEY, MTB, PNC, RF, STI, USB, WFC and ZION
Average Noninterest-bearing Deposit Growth vs. Peers
21
2016 Key Performance Results vs. Peers
0.57% 0.58%
0.64%
0.72%
0.79% 0.81%
1.02%
1.12% 1.12% 1.15%
1.22%
1.34% 1.37%
0.50%
0.75%
1.00%
1.25%
1.50%
BBT Peer 1 Peer 2 Peer 3 Peer 4 Peer 5 Peer 6 Peer 7 Peer 8 Peer 9 Peer 10 Peer 11 Peer 12
Nonperforming Assets / (EOPL + ORE)
Source: S&P Global Peers include CFG, CMA, FITB, HBAN, KEY, MTB, PNC, RF, STI, USB, WFC and ZION
22
2016 Key Performance Results vs. Peers
3.39% 3.37%
3.16% 3.14% 3.11%
3.01% 3.00%
2.92% 2.88% 2.88% 2.86%
2.73% 2.70%
2.50%
2.75%
3.00%
3.25%
3.50%
BBT Peer 1 Peer 2 Peer 3 Peer 4 Peer 5 Peer 6 Peer 7 Peer 8 Peer 9 Peer 10 Peer 11 Peer 12
Net Interest Margin
Source: S&P Global Peers include CFG, CMA, FITB, HBAN, KEY, MTB, PNC, RF, STI, USB, WFC and ZION
23
2016 Key Performance Results vs. Peers
44.9% 44.7% 44.3%
42.5% 41.4% 41.3%
38.9% 38.0%
37.1%
33.9% 32.7%
27.4%
21.4%
20.0%
30.0%
40.0%
50.0%
Peer 1 Peer 2 Peer 3 Peer 4 BBT Peer 5 Peer 6 Peer 7 Peer 8 Peer 9 Peer 10 Peer 11 Peer 12
Fee Income
Source: S&P Global Peers include CFG, CMA, FITB, HBAN, KEY, MTB, PNC, RF, STI, USB, WFC and ZION
24
2016 Key Performance Results vs. Peers
54.5%
56.1%
59.2% 60.0%
60.7% 61.0% 61.7%
62.8% 63.8%
64.4% 64.5% 65.2% 65.6%
50.0%
55.0%
60.0%
65.0%
70.0%
Peer 1 Peer 2 BBT Peer 3 Peer 4 Peer 5 Peer 6 Peer 7 Peer 8 Peer 9 Peer 10 Peer 11 Peer 12
Efficiency Ratio
Source: S&P Global Peers include CFG, CMA, FITB, HBAN, KEY, MTB, PNC, RF, STI, USB, WFC and ZION
25
2016 Key Performance Results vs. Peers
1.69%
1.41% 1.34%
1.29%
1.11% 1.11%
1.02% 0.97%
0.88%
0.78%
0.69%
0.50%
1.00%
1.50%
2.00%
Peer 1 BBT Peer 2 Peer 3 Peer 4 Peer 5 Peer 6 Peer 7 Peer 8 Peer 9 Peer 10
Return on Risk-Weighted Assets
Source: S&P Global Peers include CFG, CMA, FITB, HBAN, KEY, PNC, RF, STI, USB and ZION
26
2016 Key Performance Results vs. Peers
18.00%
14.59% 13.85%
12.25% 11.56% 11.49%
10.91% 10.36%
9.69%
8.05% 7.39% 7.07% 6.77%
5.00%
10.00%
15.00%
20.00%
Peer 1 BBT Peer 2 Peer 3 Peer 4 Peer 5 Peer 6 Peer 7 Peer 8 Peer 9 Peer 10 Peer 11 Peer 12
Return on Average Tangible Common Equity
Source: S&P Global Peers include CFG, CMA, FITB, HBAN, KEY, MTB, PNC, RF, STI, USB, WFC and ZION
27
2016 Key Performance Results vs. Peers
12.1%
11.2% 11.2% 11.1% 11.1%
10.7% 10.6%
10.4% 10.2%
9.6% 9.6% 9.5% 9.4%
9.0%
10.0%
11.0%
12.0%
13.0%
Peer 1 Peer 2 Peer 3 Peer 4 Peer 5 Peer 6 Peer 7 Peer 8 BBT Peer 9 Peer 10 Peer 11 Peer 12
Common Equity Tier 1
Source: S&P Global Peers include CFG, CMA, FITB, HBAN, KEY, MTB, PNC, RF, STI, USB, WFC and ZION
28
2016 Key Performance Results vs. Peers
13.5%
12.8%
12.0% 12.0% 12.0% 11.9%
11.5% 11.4%
11.1% 11.0%
10.9% 10.9%
10.3%
10.0%
11.0%
12.0%
13.0%
14.0%
Peer 1 Peer 2 Peer 3 Peer 4 BBT Peer 5 Peer 6 Peer 7 Peer 8 Peer 9 Peer 10 Peer 11 Peer 12
Tier 1 Ratio
Source: S&P Global Peers include CFG, CMA, FITB, HBAN, KEY, MTB, PNC, RF, STI, USB, WFC and ZION
29
2016 Key Performance Results vs. Peers
2.76%
2.55% 2.42%
2.18% 2.08%
1.90% 1.88% 1.86% 1.81% 1.79%
1.35% 1.35%
0.74%
0.00%
0.60%
1.20%
1.80%
2.40%
3.00%
Peer 1 BBT Peer 2 Peer 3 Peer 4 Peer 5 Peer 6 Peer 7 Peer 8 Peer 9 Peer 10 Peer 11 Peer 12
Source: S&P Global Peers include CFG, CMA, FITB, HBAN, KEY, MTB, PNC, RF, STI, USB, WFC and ZION
Dividend Yield
30
Total Shareholder Return
1 YEAR 10 YEAR
0%
1%
2%
3%
4%
5%
15 YEAR
0%
2%
4%
6%
0%
3%
6%
9%
20 YEAR
Peers include CFG, CMA, FITB, HBAN, KEY, MTB, PNC, RF, STI, USB, WFC and ZION For periods ended December 31, 2016 Source: Bloomberg
(percent) (percent) (percent) (percent)
0%
6%
12%
18%
24%
5 YEAR (percent)
0.0%
8.0%
16.0%
24.0%
32.0%
40.0%
28.4 16.6
21.5
19.4
4.4
0.6
-0.4
5.4
3.6
2.8
8.4
5.9 5.6
BBT Peer Average S&P Financials Index
36.3
22.7
31
Sorted by % of All-Time High2/23/2017 % of All-
All-Time High Current Time HighName Ticker Date Price ($) Price ($) (%)BB&T BBT 2/23/2017 48.53 48.53 100%
Proxy PeersM&T Bank MTB 2/23/2017 169.78 169.78 100%PNC Financial PNC 2/23/2017 128.14 128.14 100%U.S. Bancorp USB 2/23/2017 55.40 55.40 100%Wells Fargo WFC 2/15/2017 58.55 58.49 100%Comerica CMA 2/15/2017 73.24 71.95 98%Citizens CFG 2/15/2017 38.37 37.25 97%SunTrust STI 5/22/2007 90.61 59.80 66%Zions ZION 2/20/2007 88.28 44.82 51%Huntington HBAN 6/17/1999 30.58 14.18 46%KeyCorp KEY 4/14/1998 43.13 19.06 44%Fifth Third FITB 3/19/2002 69.40 27.47 40%Regions RF 10/13/2006 38.87 15.34 39%Median - Proxy Peers 82%
Other Banks in BKXCapital One COF 2/23/2017 93.41 93.41 100%JPMorgan JPM 2/23/2017 91.13 91.13 100%SVB Financial SIVB 2/23/2017 189.13 189.13 100%First Republic FRC 2/15/2017 96.78 95.78 99%Northern Trust NTRS 1/4/2017 90.49 87.69 97%State Street STT 1/3/2008 85.37 79.82 93%People's United PBCT 2/21/2007 21.80 19.26 88%Bank of New York Mellon BK 11/7/2000 59.25 47.34 80%Bank of America BAC 11/20/2006 54.90 24.58 45%New York Community NYCB 2/27/2004 35.12 15.47 44%Citigroup C 8/28/2000 588.75 60.62 10%Median - Other Banks in BKX 93%
Overall Median 93%
Price Performance Comparison
Performance Comparison Relative to All-Time High Share Prices
BB&T is currently trading at its all-time highs 6 of its 12 proxy
peers are trading at or near their all-time highs
Source: Morgan Stanley and S&P Global; market data as of 02/23/2017
32
Sorted by Beta / Cost of Equity10-Year Market Risk Cost of
UST Rate Beta Premium EquityName Ticker (%) (x) (%) (%)BB&T BBT 2.38 1.15 6.0 9.3
Proxy PeersRegions RF 2.38 1.52 6.0 11.5 Comerica CMA 2.38 1.50 6.0 11.4 Zions ZION 2.38 1.49 6.0 11.3 Citizens CFG 2.38 1.45 6.0 11.1 Huntington HBAN 2.38 1.41 6.0 10.8 Fifth Third FITB 2.38 1.37 6.0 10.6 SunTrust STI 2.38 1.33 6.0 10.3 KeyCorp KEY 2.38 1.32 6.0 10.3 Wells Fargo WFC 2.38 1.23 6.0 9.7 PNC Financial PNC 2.38 1.17 6.0 9.4 M&T Bank MTB 2.38 1.10 6.0 9.0 U.S. Bancorp USB 2.38 1.00 6.0 8.4 Median - Proxy Peers 1.35 10.5
Other Banks in BKXSVB Financial SIVB 2.38 1.68 6.0 12.4 Bank of America BAC 2.38 1.52 6.0 11.5 Citigroup C 2.38 1.52 6.0 11.5 Capital One COF 2.38 1.36 6.0 10.6 State Street STT 2.38 1.28 6.0 10.1 Bank of New York Mellon BK 2.38 1.21 6.0 9.6 First Republic FRC 2.38 1.20 6.0 9.6 Northern Trust NTRS 2.38 1.20 6.0 9.6 JPMorgan JPM 2.38 1.19 6.0 9.5 People's United PBCT 2.38 1.15 6.0 9.3 New York Community NYCB 2.38 1.03 6.0 8.6 Median - Other Banks in BKX 1.21 9.6
Overall Median 1.32 10.3
Cost of Equity Comparison
Cost of Equity Comparison
BB&T trades with a lower beta (1.15x) than its peers Proxy peer
median of 1.35x Overall median
of 1.32x
Source: Morgan Stanley and S&P Global, CapIQ; market data as of 02/23/2017. Beta based on Barra predicted beta per CapIQ
33
Among the Highest Rated Banks
BB&T has a strong risk profile A track record of forgoing excessive growth in
overheated markets BB&T has not been active in the leveraged loan
market BB&T performs very well in forward-looking stress
tests BB&T’s capital position is resilient under stress
- Even during the crisis, BB&T grew capital, largely organically
BB&T has the second most granular loan portfolio of the 67 banks surveyed by Moody’s
Average Peer Group Debt Ratings Sources: Bloomberg, SNL
As of 02/24/17
Averages reflect ratings by Moody’s, S&P, Fitch, and DBRS
Moody's S&P Fitch DBRS S&P/Fitch Equivalent
USB A1 A+ AA AA AA- WFC A2 A AA- AA A+ BBT A2 A- A+ AH A PNC A3 A- A+ AH A CMA A3 BBB+ A A A- MTB A3 A- A AL A- FITB Baa1 BBB+ A AL A- STI Baa1 BBB+ A- AL A- KEY Baa1 BBB+ A- BBBH BBB+
HBAN Baa1 BBB A- BBBH BBB+ CFG N/A BBB+ BBB+ BBBH BBB+ RF Baa2 BBB BBB BBBH BBB
ZION Baa3 BBB- BBB- BBB BBB-
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A Digital Strategy and Mindset For the Future
Invested in differentiated digital capabilities Introduced a new digital banking platform “U by BB&T” in 2015 to offer a differentiated digital banking experience
and provide a foundation for future innovation Established the role of Chief Client Experience Officer
To provide the Perfect Client Experience by delivering the BB&T Value Promise, to include being empathetic and passionate with clients enterprise-wide; thereby creating client delight
Established objective to accelerate BB&T’s digital transformation program Demonstrated a commitment to accelerating BB&T’s digital transformation program by establishing it is as a
corporate objective Created a structure to provide focus and alignment for digital strategy, client experience, and delivery
Created Chief Digital Officer and Chief Client Experience Officer roles and aligned Digital, Data, and Technology under the leadership of the CIO
Dontá Wilson Chief Client
Experience Officer
Bennett Bradley Chief Digital
Officer
Barbara Duck Chief Information
Officer
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U Summary – Through December 31st
1.92MM active U clients* 25% of these are new Retail digital clients since U launch 74% of Active Retail Digital Banking Clients are active U clients Our goal is to transition all existing Retail Digital clients to the U platform as soon as the platform has had its internal and external assessments completed and appropriate remediation completed. As a new date is set for migration to restart, we will communicate with the teams.
* Includes approximately 93k SBO clients who have used U Mobile App
41%
39%
20%
How are Clients using U?
U Mobile App only U Browser only Both
0
500
1,000
1,500
2,000
2,500
Oct
-15
Nov
-15
Dec
-15
Jan-
16
Feb-
16
Mar
-16
Apr
-16
May
-16
Jun-
16
Jul-1
6
Aug
-16
Sep
-16
Oct
-16
Nov
-16
Dec
-16
Total Active U Active New U
Susquehanna / Legacy Mobile App Upgrade messaging
All Associates begin using U
Legacy App sunset completed
National Penn
U by BB&T Active Client Growth (in thousands)
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Committed To Our Communities – Lighthouse Project
The BB&T Lighthouse Project provides associates with an opportunity to make a difference in their communities through company supported and funded service projects.
The purpose of the Lighthouse Project is to be involved in positive change. It’s about seeing a need and then working with a local nonprofit to address the need. It’s about living out our mission to make the communities we serve a better place to live and work.
Since we began the BB&T Lighthouse Project in 2009, we have completed more than 9,000 community service projects, provided more than 475,000 volunteer hours, and helped change the lives of more than 13 million people!
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Committed To Our Communities – BB&T Financial Foundations
Since 2010, BB&T has underwritten the cost of the EverFi - Financial LiteracyTM platform, which provides an interactive, web-based financial management program to high school students throughout our footprint at no cost to the schools or taxpayers. Length of program: 6 – 8 hours The ten module course covers 600 financial
literacy concepts on savings, banking, credit cards and interest rates, credit score, financing higher education, renting versus owning, taxes and insurance, consumer fraud, and investing.
Course curriculum aligns with both state and national financial literacy standards and Common Core State Math Standards.
Students experienced an 86% increase in financial knowledge after completing the BB&T curriculum1
314,749 students in 15 states and the District of
Columbia certified on the BB&T platform as of 12/1/16
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Environmental Sustainability
Bank-wide facilities initiatives Corporate paper shredding and recycling Commercial print (achieved 14% reduction in the volume of paper) Purchase of copy paper recycled using sustainable forestry practices Environmentally-friendly janitorial cleaning products Eliminated routine carpet cleaning to conserve resources Drive thru concrete cleaning
BB&T is proud to share our efforts to reduce our environmental footprint. From the way we construct our workplaces to choices we make in their operation, we closely consider our affect on the neighborhoods and communities where we live alongside our clients and associates.
39
Environmental Sustainability
Bank-wide building construction initiatives Maximizing the use of natural light – reducing electricity consumption Use of native plants to reduce irrigation requirements Specification of construction materials with recycled content Specification of low-VOC content materials New flooring and new furniture contains recycled content Use of white building roof system to reduce “heat island” effect Energy-efficient appliances and lighting High-performance low-e glazing on windows and doors Use of high-efficiency HVAC units
In building construction, BB&T is an advocate for the environment and sustainable design. We promote the incorporation of sustainable design strategies where applicable, practical, economically feasible and consistent with the function and operations of the facility.
40
Strong Corporate Governance
Proxy access
Shareholder engagement
Active, independent board of directors
Strong independent lead director
Strategic direction and planning
Stock ownership guidelines – for CEO/Board
Board oversight of risk management
Compensation clawbacks and executive risk scorecard
Restrictions on pledging/hedging of shares
Statement of political activity
Corporate Social Responsibility Report
Majority voting for director elections
41
Well-Positioned For the Future
Diversification drives long-term stability / less volatility Maintaining long-term performance advantages Most diversified insurance brokerage platform in the industry
Achieving targeted cost savings / intense focus on expenses
Accelerating digital transformation U by BB&T
Strong dividend Among the highest dividend payout ratios Management is currently targeting a meaningfully significant
increase in total return to shareholders compared with CCAR 2016
Focus on improving loan and revenue growth Unique and non-negotiable culture
42
Value System
Revenues
Superior Shareholder Long-term Returns
Value System
Attract / Train and Retain the Right People
Perfect Client Experience
Culture Matters – Values Are Consistent and Important
Appendix
Non-GAAP Reconciliations1
45
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)
46
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
47
(Dollars in millions)
2