Attached files
| file | filename |
|---|---|
| EX-99.2 - EXHIBIT 99.2 - TRUIST FINANCIAL CORP | ex992-earningstables_1q18.htm |
| EX-99.1 - EXHIBIT 99.1 - TRUIST FINANCIAL CORP | ex991-earningstext_1q18.htm |
| 8-K - 8-K - TRUIST FINANCIAL CORP | form8k-earnings_1q18.htm |
First Quarter 2018
Earnings Conference
Call
April 19, 2018
Kelly S. King
Chairman and Chief Executive Officer
Daryl N. Bible
Chief Financial Officer
Forward-Looking Information
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, 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, 2017 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, slower deposit and/or asset growth, and 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 eventual exit of
the United Kingdom from the European Union;
= 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 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;
= 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;
= 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; 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 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, 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 presentation:
• 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.
• 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.
• Core net interest margin is a non-GAAP measure that adjusts net interest margin to exclude the impact of purchase accounting. The interest income and average balances for PCI loans are excluded in their entirety as the accounting for these
loans can result in significant and unusual trends in yields. The purchase accounting marks and related amortization for a) securities acquired from the FDIC in the Colonial acquisition and b) non-PCI loans, deposits and long-term debt
acquired from Susquehanna and National Penn are excluded to approximate their yields at the pre-acquisition rates. BB&T's management believes the adjustments to the calculation of net interest margin for certain assets and liabilities
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 merger-related and restructuring charges and other selected items, net of tax. 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.
• The adjusted operating leverage 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.
• The adjusted performance ratios are non-GAAP in that they exclude merger-related and restructuring charges and, in the case of return on average tangible common shareholders' equity, amortization of intangible assets. 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.
• The adjusted net interest margin is a non-GAAP measure in that it estimates the impact on taxable-equivalent net interest income as if the tax reform legislation had not been enacted. 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 tax reform.
A reconciliation of these non-GAAP measures to the most directly comparable GAAP measure is included in the Appendix.
Capital ratios are preliminary.
3
▪ NPAs increased 2 bps vs. 4Q17 and decreased 6 bps vs. 1Q17
▪ NCOs were 41 bps vs. 36 bps in 4Q17 and 42 bps vs. 1Q17
1 Includes non-GAAP measures; refer to non-GAAP reconciliation in the attached Appendix for adjusted measures
2 Adjusted noninterest expense excludes merger-related and restructuring charges, loss on early extinguishment of debt and selected items listed on page 16 of the Quarterly Performance Summary
2018 first quarter performance highlights1
Record
Earnings
Steady
Revenue
Momentum
Controlled
Expenses
Strong
Credit Quality
Strategic
Highlights
▪ Net income available to common shareholders was a record $745 million, up 97.1% vs.
1Q17; adjusted net income available was a record $767 million
▪ Diluted EPS was a record $0.94, up 104.3% vs. 1Q17; adjusted diluted EPS was also a
record $0.97, up 31.1% vs. 1Q17
▪ ROA, ROCE and ROTCE were 1.45%, 11.43% and 19.36%, respectively;
adjusted ROA, ROCE and ROTCE were 1.49%, 11.75% and 19.89%, respectively
▪ Achieved positive operating leverage vs. 4Q17 and 1Q17
▪ Taxable-equivalent revenues totaled $2.8 billion, up 0.6% vs. 1Q17
▪ Net interest margin increased 1 bp to 3.44% vs. 4Q17
▪ Core net interest margin increased 4 bps to 3.32% vs. 4Q17
▪ Fee income ratio was 41.9%, compared to 42.7% in 4Q17
▪ GAAP efficiency ratio was 60.0%
▪ Adjusted efficiency ratio was 57.3% vs. 57.2% in 4Q17
▪ Adjusted noninterest expense2 totaled $1.658 billion, a decrease of 9.3% annualized
vs. 4Q17 and a decrease of 1.0% vs. 1Q17
▪ Announced plans to acquire Regions Insurance Group
▪ Increased the common dividend 13.6%
4
Pre -Ta
x
After Tax Diluted EPS Impac
t
($ in millions, except per share impact) Pre-Tax After-Tax
Diluted EPS
Impact
Merger-related and restructuring charges $ (28) $ (22) $ (0.03)
Selected items affecting earnings
5
Category 1Q18 outlook Results
Average total loans1,2 n Up 1% - 3% annualized vs. 4Q17 x 0.6%
Credit quality n NCOs expected to be 35 – 45 bps ü 41 bps
Net interest margin
n GAAP margin down 1 – 3 bps vs. 4Q17 ü+ 1 bps
n Core margin stable vs. 4Q17 ü+ 4 bps
Noninterest income3 n Up 1% - 3% vs. 1Q17 x 0.8%
Expenses4 n Flat vs. 1Q17 ü+ (1.0)%
x = missed guidance ü= achieved guidance ü+ = exceeded guidance
1 Loans held for investment
2 Excluding Mortgage Warehouse Lending, average loans increased 1.8% annualized vs. 4Q17
3 Excluding the estimated impact of the February system outage, noninterest income was up approximately 2% vs. 1Q17
4 Excludes merger-related and restructuring charges, loss on early extinguishment of debt and selected items listed on page 16 of the Quarterly Performance Summary
Review of 1Q18 guidance
6
1Q18 v. 4Q17
1Q18 Annualized
Average Increase
Balance (Decrease)
Commercial:
C&I $ 58,627 1.0%
CRE 21,398 7.7
Leasing 1,872 4.6
Subtotal-commercial 81,897 2.8
Retail:
Residential mortgage 28,824 3.8
Direct 11,791 (3.7)
Indirect 16,914 (11.9)
Subtotal-retail 57,529 (2.5)
Revolving credit 2,798 5.7
PCI 631 (34.1)
Total $ 142,855 0.6%
Average Loans Held for Investment
($ in millions)
$150.0
$140.0
$130.0
1Q17 2Q17 3Q17 4Q17 1Q18
$142.0 $143.1 $142.7 $142.7 $142.9
Average Loans Held for Investment
($ in billions)
Strong core commercial loan growth
▪ Loans grew 0.6% annualized vs. 4Q17
– Mortgage Warehouse Lending experienced a larger seasonal
decline than anticipated, resulting in C&I slowing to 1.0%
annualized growth
– Absent the impact of Mortgage Warehouse Lending, total
commercial grew 5.2% annualized
▪ Experienced solid loan growth vs. 4Q17 in several portfolios:
– Commercial real estate up 7.7% annualized
– Revolving credit up 5.7% annualized
– Commercial leasing up 4.6% annualized
– Residential mortgage up 3.8% annualized
– Governmental Finance and Grandbridge experienced double-
digit annualized growth rates vs. 4Q17
▪ Indirect loans declined 11.9% annualized vs. 4Q17
reflecting portfolio optimization and Sheffield
seasonality
7
▪ Total deposits averaged $157.1 billion, a decrease of 2.1% vs. 4Q17
– Personal, 49.2% of total
– Business, 38.2% of total
– Public Funds, 8.4% of total
– Other, 4.2% of total
▪ Average noninterest-bearing deposits decreased $892 million vs.
4Q17 primarily due to seasonal decreases in commercial, offset by
increases in personal and public
▪ The percentage of noninterest-bearing deposits to total deposits was
34.0% compared with 34.4% in 4Q17
▪ The cost of interest-bearing deposits was 0.46%, up 6 bps compared
to 4Q17 primarily due to higher market rates on indexed accounts
1Q18 v. 4Q17
1Q18 Annualized
Average Increase
Balance (Decrease)
Noninterest-bearing deposits $ 53,396 (6.7)%
Interest checking 27,270 7.9
Money market & savings 61,690 —
Subtotal $ 142,356 (1.1)%
Time deposits 13,847 3.0
Foreign office deposits – interest-bearing 935 (150.7)
Total deposits $ 157,138 (2.1)%
Average Deposits
($ in millions)
Total IBD Cost
$180.0
$165.0
$150.0
$135.0
$120.0
1.0%
0.8%
0.6%
0.4%
0.2%
0.0%
1Q17 2Q17 3Q17 4Q17 1Q18
$161.4 $160.3 $157.4 $158.0 $157.1
0.26% 0.30%
0.35%
0.40%
0.46%
$60.0
$50.0
$40.0
1Q17 2Q17 3Q17 4Q17 1Q18
$51.1
$52.6 $53.5
$54.3 $53.4
Average Noninterest-Bearing Deposits
($ in billions)
Average Total Deposits
($ in billions)
Noninterest-bearing deposits reflect seasonal decline
8
▪ Credit quality reflects expected seasonal
trends
– Net charge-offs totaled $145 million, up 5 bps as
a percent of average loans vs. 4Q17 and down 1
bp vs. 1Q17
– Loans 90 days or more past due and still
accruing as a percent of loans and leases
decreased 4 bps vs. both 4Q17 and 1Q17
– Loans 30-89 days past due and still accruing as
a percent of loans and leases decreased 16 bps
vs. 4Q17 and increased 1 bp vs. 1Q17
▪ NPAs remain historically low
– NPA ratio increased 2 bps vs. 4Q17 and
decreased 6 bps vs. 1Q17
– Driven by CRE, leasing and foreclosed
properties
0.60%
0.40%
0.20%
0.00%
1Q17 2Q17 3Q17 4Q17 1Q18
0.42%
0.37% 0.35% 0.36%
0.41%
Annualized Net Charge-offs / Average Loans
0.60%
0.40%
0.20%
0.00%
1Q17 2Q17 3Q17 4Q17 1Q18
0.36%
0.31% 0.31% 0.28% 0.30%
Total Nonperforming Assets / Total Assets
Asset quality remains excellent
9
▪ Coverage ratios remain strong at 2.55x and
2.49x for the allowance to net charge-offs
and NPLs, respectively
▪ The ALLL to loans ratio was 1.05%, up
slightly vs. 4Q17
– Excluding loans acquired in business
acquisitions, the ALLL to loans ratio was 1.12%,
up 1 bp vs. 4Q17
▪ The total provision for credit losses was
$150 million for 1Q18; net charge-offs were
$145 million
ALLL to Annualized NCOs
ALLL to NPLs HFI
3.50x
2.50x
1.50x
1Q17 2Q17 3Q17 4Q17 1Q18
2.49x
2.80x
2.93x 2.89x
2.55x
2.05x
2.43x 2.44x
2.62x
2.49x
ALLL Coverage Ratios
Allowance coverage ratios remain strong
10
▪ 1Q18 reported and core NIM increased 1 bp
and 4 bps, respectively, vs. 4Q17:
– Core margin increased due to asset-sensitivity to
the December rate hike and higher LIBOR rates
– Tax reform negatively impacted NIM 2 bps
– Deposit betas outperformed expectations
– Reported margin also reflects the continued
runoff of purchase accounting benefits
▪ Asset-sensitivity to rising interest rates
increased vs. 4Q17 due to net free funds
growth, funding mix and investment mix
changes from the prior quarter
1 See non-GAAP reconciliations included in the attached Appendix
Reported NIM Core NIM
4.00%
3.50%
3.00%
2.50%
1Q17 2Q17 3Q17 4Q17 1Q18
3.46% 3.47% 3.48% 3.43% 3.44%
3.28% 3.31% 3.32% 3.28% 3.32%
Net Interest Margin
at 3/31/18 at 12/31/17
8.00%
4.00%
0.00%
-4.00%
-8.00%
Down 100 Down 25 Up 100 Up 200
(5.77)%
(1.02)%
2.53%
3.96%
(6.62)%
(1.06)%
2.07% 3.09%
Change in Net Interest Income
1
Net interest margin exceeds expectations
11
1Q18
1Q18 v.
4Q17
Increase
(Decrease)
1Q18 v.
1Q17
Increase
(Decrease)
Insurance income $ 436 17.5 % (4.8)%
Service charges on deposits 165 (39.9) (1.8)
Mortgage banking income 99 (19.5) (3.9)
Investment banking and brokerage fees
and commissions 113 7.3 24.2
Trust and investment advisory revenues 72 — 5.9
Bankcard fees and merchant discounts 69 12.1 16.9
Checkcard fees 52 (22.1) 2.0
Operating lease income 37 — 2.8
Income from bank-owned life insurance 31 (24.6) 6.9
Securities gains (losses), net — NM —
Other income 106 (111.1 ) (1.9)
Total noninterest income $ 1,180 (14.9)% 0.8 %
Noninterest Income
($ in millions)1
1 Linked quarter percentages are annualized
45.0%
44.0%
43.0%
42.0%
41.0%
40.0%
1Q17 2Q17 3Q17 4Q17 1Q18
42.1%
42.7%
41.4%
42.7%
41.9%
Fee Income Ratio
Fee income fundamentals remain strong
▪ Investment banking increased vs. 4Q17 and 1Q17
primarily due to higher managed account fees and
transaction activity
▪ Insurance income increased $18 million vs. 4Q17
primarily due to seasonality
▪ Service charges on deposits decreased $18 million,
primarily due to the system outage in February
▪ Other income decreased $40 million primarily due to
a decline in income from SBIC private equity
investments and certain post-employment benefits,
which is primarily offset in other income/expense
categories
12
1Q18
1Q18 v.
4Q17
Increase
(Decrease)
1Q18 v.
1Q17
Increase
(Decrease)
Personnel expense $ 1,039 (12.5)% 0.4 %
Occupancy and equipment expense 194 (2.1) 0.5
Software expense 65 — 12.1
Outside IT services 32 (64.0) (34.7)
Regulatory charges 40 21.3 2.6
Amortization of intangibles 33 (11.9) (13.2)
Loan-related expense 29 (38.0) (3.3)
Professional services 30 (67.6) 36.4
Merger-related and restructuring
charges, net 28 110.6 (22.2)
Loss (gain) on early extinguishment of
debt — — (100.0)
Other expense 196 (159.5) (6.7)
Total noninterest expense $ 1,686 (36.9)% (19.8)%
Adjusted noninterest expense3 $ 1,658 (9.3)% (1.0)%
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, loss on early extinguishment of debt and selected items listed on page 16 of the Quarterly Performance Summary
GAAP Adjusted
80.0%
70.0%
60.0%
50.0%
1Q17 2Q17 3Q17 4Q17 1Q18
75.6%
61.0% 62.0%
64.7%
60.0%
58.0% 58.6% 58.3% 57.2% 57.3%
Efficiency Ratio Noninterest Expense
($ in millions) 2
1
Expenses trending lower
▪ Personnel expense decreased $33 million vs. 4Q17
– Primarily due to a $40 million decrease in incentive
compensation and the 4Q17 $36 million tax reform-related
one-time bonus
– Partially offset by a $25 million increase due to the annual
reset of payroll taxes and equity-based compensation costs
associated with retirement eligible associates
– Average FTEs decreased 576 from 4Q17
▪ Other expense decreased $127 million, primarily due to
the 4Q17 $100 million tax reform-related charitable
contribution and higher expected return on pension plan
assets
▪ The increase in merger-related and restructuring charges
was primarily due to higher facilities optimization activities
13
▪ 1Q18 dividend payout ratio was 39.2%
▪ 1Q18 total payout ratio was 82.1%
▪ Completed $320 million in share repurchases,
leaving $320 million in share repurchase
authority in 2Q18 under CCAR 2017
▪ Liquidity ratios remain strong
– LCR was 144%
– Liquid asset buffer was 15.1%
▪ CCAR 2018
– Management is currently targeting a dividend
increase and share buyback while maintaining
capital ratios
– The proposed acquisition of Regions Insurance
will impact the share repurchase in 3Q18
Current quarter regulatory capital information is preliminary
10.5%
10.0%
9.5%
9.0%
1Q17 2Q17 3Q17 4Q17 1Q18
10.3% 10.3%
10.2% 10.2% 10.2%
Common Equity Tier 1
Capital, liquidity and payout ratio remain strong
14
Comments
1 Linked quarter growth rates annualized, except for originations and purchases
2 Production/origination amounts exclude portfolio acquisitions, unfunded commitments, and revolving credit
3 Purchases include portfolio acquisitions and mortgages acquired through correspondent channels
4 Operating margin is calculated as net income before taxes and provision for credit losses divided by total revenues
Community Banking Retail and Consumer Finance
▪ Community Banking continues to execute on branch
rationalization:
– Completed net 2 branch closures in 1Q18; continue to execute
on expense saves
– Branch network expected to decline by approximately 150
branches during 2018
Summarized Results Inc (Dec)
vs. 4Q17
Inc (Dec)
vs. 1Q17($ in millions) 1Q18
Net interest income $ 886 $ (9) $ 10
Noninterest income 339 (19) 8
Provision for credit losses 122 (16) (7)
Noninterest expense 673 (22) —
Income tax expense 106 (51) (45)
Segment net income $ 324 $ 61 $ 70
Highlighted Metrics1 Inc (Dec)
vs. 4Q17
Inc (Dec)
vs. 1Q17($ in billions) 1Q18
Mortgage originations2 $ 1.2 (20.5)% (25.4)%
Retail originations, excluding
mortgage2 $ 2.1 5.0 % (0.9)%
Purchases3 $ 2.6 (7.7)% (0.9)%
Loans serviced for others (EOP) $ 88.7 (1.7)% (2.3)%
Operating margin4 45.1% 0.5 % 0.8 %
Serves individual and business clients by offering a variety of loan and deposit products and other financial
services. Also, originates and sells mortgage loans and retains mortgage servicing rights.
▪ Noninterest income decreased vs. 4Q17 primarily due to a
decline in service charges on deposits largely resulting from the
1Q18 system outage
▪ Provision for credit losses decreased vs. 4Q17 due to a decline
in loss estimates and seasonal decline in bankcard loans
▪ Noninterest expense decreased vs. 4Q17 as a result of the one
time bonus following tax reform in 4Q17
$125 $128 $114
$99 $116 $102
$77 $75 $76
$38 $39 $39Other
Mortgage banking
income
Service charges on
deposits
Card-based fees
($ in millions) 1Q18 4Q17 1Q17
Total noninterest income $339 $358 $331
15
Community Banking Retail and Consumer Finance-continued
▪ Mortgage has stabilized and end of period balances
increased $66 million vs. 4Q17
▪ Auto portfolio balances are expected to stabilize in
mid-2018
▪ Asset quality remains strong
▪ Deposit interest costs have increased 2 bps due to
market promotions in response to rising interest rates
▪ Deposit mix between interest-bearing and noninterest
bearing remained stable compared to 4Q17
▪ The implied deposit beta vs. 4Q17 was approximately
10%
▪ Since the beginning of this rate hike cycle in 4Q15,
interest-bearing deposit costs were down, implying a
negative beta
$10.8 $10.9 $12.1
$35.2 $35.0 $35.3
$16.0 $16.0 $16.5
$16.3 $16.0 $14.8
$29.9 $30.1 $30.9
$13.1 $13.4 $14.5
$11.7 $11.8 $12.0
Total loans $62.8 $63.6 $65.1
Loan yield 5.43% 5.35% 5.16%
Net charge-offs 0.82% 0.80% 0.80%
Nonaccrual loans 0.43% 0.42% 0.48%
Bank Card
Indirect Sheffield & CEC
Direct Retail Lending
Indirect Dealer Retail Services
Mortgage & Mortgage Warehouse
Lending
Noninterest-bearing deposits
Interest checking
Money market & savings
Time deposits
Total deposits $78.3 $77.9 $78.7
Cost of deposits:
Interest-bearing 0.23% 0.21% 0.21%
Total 0.19% 0.17% 0.17%
Average Loans1,2
($ in billions) 1Q18 4Q17 1Q17
1 Excludes loans held for sale
2 Applicable ratios are annualized
Average Deposits2
($ in billions) 1Q18 4Q17 1Q17
16
Comments
1 Linked quarter growth rates annualized
2 Operating margin is calculated as net income before taxes and provision for credit losses divided by total revenues
Community Banking Commercial
▪ Total commercial pipeline improved vs. 4Q17
▪ Decrease in linked quarter loan production reflects
normal seasonality and record 4Q17 tax-exempt loan
production:
Summarized Results Inc (Dec)
vs. 4Q17
Inc (Dec)
vs. 1Q17($ in millions) 1Q18
Net interest income $ 534 $ (12) $ 27
Noninterest income 105 — 3
Provision for credit losses 37 18 33
Noninterest expense 254 (19) (53)
Income tax expense 78 (47) (25)
Segment net income $ 270 $ 36 $ 75
Highlighted Metrics1 Inc (Dec)
vs. 4Q17
Inc (Dec)
vs. 1Q17($ in billions) 1Q18
C&I loans $ 32.3 6.0 % 0.2 %
CRE loans $ 19.7 4.1 % 6.7 %
Noninterest-bearing deposits $ 34.5 (10.5)% 3.0 %
Interest-bearing deposits $ 24.8 3.0 % (4.5)%
Operating margin2 60.3% 2.2 % 10.7 %
Serves large, medium and small business clients by offering a variety of loan and deposit products and
connecting the client with the combined organization’s broad array of financial services.
▪ Operating margin improvement on both like and linked
quarters
– Like quarter comparison driven by multiple positive
factors
– Growth in CRE loans and noninterest-bearing deposits
– Increasing spreads on deposits
C&I
CRE
Total
1Q18 vs. 4Q17 1Q18 vs. 1Q17
(18.5)%
12.4%
(45.4)%
(11.8)%
(27.9)%
4.8%
17
Community Banking Commercial-continued
▪ Improving loan yields on linked and like quarters due to
the rise in short-term rates and the CRE portfolio
growth
▪ Dealer Floor Plan portfolio grew 4.3% annualized and
18.1% vs. 4Q17 and 1Q17 with continued focus on
expanding dealer relationships throughout the banking
footprint
▪ Record small business first quarter production and
record March monthly production since tracking these
numbers from 2014
▪ Total deposit costs rate increases have been
tempered by the favorable mix shift
▪ Average deposits declined on a linked quarter basis
due to seasonal decline in noninterest-bearing
deposits
▪ The implied deposit beta vs. 4Q17 was approximately
45%
▪ Since the beginning of this rate hike cycle in 4Q15,
interest-bearing deposit costs were up approximately
30 bps, implying a deposit beta of approximately 25%
$14.9 $15.0 $15.1
$9.1 $8.7 $9.8
$34.5 $35.4 $33.5
$30.6 $30.1 $30.8
$1.7 $1.7 $1.4
$19.7 $19.5 $18.5
Total loans $52.3 $51.6 $51.1
Loan yield 4.08% 4.00% 3.72%
Net charge-offs 0.11% 0.03% 0.04%
Nonaccrual loans 0.65% 0.72% 0.92%
Other
CRE
Dealer floor plan
C&I
Noninterest-bearing deposits
Interest checking
Money market & savings
Time deposits
Total deposits $59.3 $60.0 $59.4
Cost of deposits:
Interest-bearing 0.52% 0.43% 0.31%
Total 0.22% 0.18% 0.14%
1 Excludes loans held for sale
2 Applicable ratios are annualized
Average Loans1,2
($ in billions) 1Q18 4Q17 1Q17
Average Deposits2
($ in billions) 1Q18 4Q17 1Q17
18
Comments
1 Linked quarter growth rates annualized, except for production and sales
2 Operating margin is calculated as net income before taxes and provision for credit losses divided by total revenues
Financial Services and Commercial Finance
Summarized Results Inc (Dec)
vs. 4Q17
Inc (Dec)
vs. 1Q17($ in millions) 1Q18
Net interest income $ 177 $ (2) $ 7
Noninterest income 301 (14) 21
Provision for credit losses (5) 8 (11)
Noninterest expense 301 (6) 14
Income tax expense 38 (26) (10)
Segment net income $ 144 $ 8 $ 35
Highlighted Metrics1 Inc (Dec)
vs. 4Q17
Inc (Dec)
vs. 1Q17($ in billions) 1Q18
Total invested assets $161.7 3.5 % 9.4 %
Invested assets noninterest
income ($ in millions) $ 160 9.8 % 10.8 %
Operating margin2 37.0% (0.8)% 0.8 %
Provides trust services, wealth management, investment counseling, asset management, estate planning, corporate retirement services,
specialty finance, corporate banking, and capital market services to individuals, corporations, governments, and other organizations
1Q18 vs.
4Q17
1Q18 vs.
1Q17
Brokerage CMBI Trust
6.3%
(48.6)%
3.4%
24.2%
2.2% 6.2%
▪ The increase in noninterest income vs. 1Q17 was driven
primarily by higher investment banking and brokerage
fees and trust and investment advisory fees
▪ The decrease in noninterest income vs. 4Q17 was driven
by lower gains on sale of trading securities and finance
leases and lower commercial mortgage banking income
19
Financial Services and Commercial Finance-continued
▪ Average loan balances of $26.9 billion were 7.6%
higher than 4Q17 and 9.5% higher than 1Q17
▪ Average deposit balances of $28.1 billion were 1.3%
lower than 4Q17 and 11.5% lower than 1Q17 due to
an initiative to reduce non-core deposits that were
indexed to LIBOR
▪ Total deposit costs have risen 28 bps to 0.71% since
1Q17 due to more market sensitive clients
▪ Loan yields rose 30 bps to 3.30% due to the increase
in short term interest rates
▪ The implied deposit beta vs. 4Q17 was
approximately 65%
▪ Since the beginning of this rate hike cycle in 4Q15,
interest bearing deposit costs were up approximately
50 bps, implying a deposit beta of approximately 40%
$1.4 $1.4 $1.5
$18.8 $19.0 $21.5
$5.2 $5.1
$6.1$2.6 $2.8
$2.7
$21.7 $21.4 $20.1
$1.7 $1.6
$1.5
$1.5 $1.5
$1.3
$1.9 $1.8
$1.6
Total loans $26.9 $26.4 $24.6
Loan yield 3.30% 3.23% 3.00%
Net charge-offs 0.03% —% 0.22%
Nonaccrual loans 0.24% 0.06% 0.26%
Other
Retail
Comm Lease
CRE
C&I
Noninterest-bearing deposits
Interest checking
Money market & savings
Time deposits
Total deposits $28.1 $28.2 $31.7
Cost of deposits:
Interest-bearing 0.79% 0.66% 0.47%
Total 0.71% 0.59% 0.43%
Growth by LOB2 1Q18 vs.4Q17
1Q18 vs.
1Q17
Corporate Banking 0.5% 6.2%
Wealth 13.7% 17.1%
Equipment Finance 7.6% 14.5%
Governmental Finance 14.8% 13.0%
Grandbridge 49.6% 14.0%
1 Excludes loans held for sale
2 Applicable ratios are annualized
Average Loans1,2
($ in billions) 1Q18 4Q17 1Q17
Average Deposits2
($ in billions) 1Q18 4Q17 1Q17
20
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, title insurance and premium finance.
Comments
1 U.S. locations; count includes shared locations
2 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
3 Organic commission and fee revenue excludes performance-based commissions and revenue from acquisitions within the previous 12 months
Insurance Holdings and Premium Finance
Summarized Results Inc (Dec)
vs. 4Q17
Inc (Dec)
vs. 1Q17($ in millions) 1Q18
Net interest income $ 20 $ 1 $ 1
Noninterest income 439 11 (24)
Provision for credit losses 1 1 (1)
Noninterest expense 375 (18) (25)
Income tax expense 21 — (9)
Segment net income $ 62 $ 29 $ 12
▪ Lower noninterest income vs. 1Q17 was primarily
driven by lower performance based commissions
▪ Insurance Holdings organic commission and fee
revenue3 increased 3.0% vs. 1Q17
▪ Organic revenue growth driven by an 11.8% like quarter
increase in new business
▪ Insurance Holdings EBITDA margin2:
1Q18
1Q17
21.7% 20.6%
Highlighted Metrics Inc (Dec)
vs. 4Q17
Inc (Dec)
vs. 1Q17($ in millions) 1Q18
Total agencies1 211 (2) (5)
Insurance Holdings EBITDA
margin2 21.7% 6.1% 1.1%
▪ BB&T Insurance Holdings reached an agreement to
acquire Regions Insurance Group, a leading insurance
broker serving more than 60,000 clients across the
Southeast, Texas and Indiana
21
2Q18 and full-year 2018 outlook
Category 2Q18
Average total loans Up 1% - 3% annualized vs. 1Q18
Credit quality NCOs expected to be 35 - 45 bps
Net interest margin
GAAP margin stable vs. 1Q18
Core margin up slightly vs. 1Q18
Noninterest income Up 2% - 4% vs. 2Q17
Expenses1 Down 1% - 3% vs. 2Q17
Effective tax rate 21%
Category Full-year 2018
Average total loans Up 1% - 3% vs. 2017
Revenue2,3 Up 2% - 4% vs. 2017
Expenses1,3 Flat to down 1% vs. 2017
Effective tax rate 20% - 21%
1 Excludes merger-related and restructuring charges and selected items listed on page 16 of the Quarterly Performance Summary
2 Taxable-equivalent
3 Includes Regions Insurance Group
Appendix
A-1
Acc. Yield PA Mark
Acquired Loans1 Non-PCI Loans2 Liabilities3 Securities4
Balance, December 31, 2017 $ (337) $ (174) $ (27) $ (377)
Net interest income:
Normal accretion/amortization 22 14 5 14
Cash recoveries / early payoffs / duration adjustments 8 8 — (14)
Total net interest income 30 22 5 —
Other (24) — — —
Balance, March 31, 2018 $ (331) $ (152) $ (22) $ (377)
NBV/amortized cost of related assets (liabilities) at March 31, 2018 $ 589 $ 9,332 $ (753) $ 329
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
Non-GAAP reconciliations
Efficiency ratio
(Dollars in millions)
Quarter Ended
March 31 Dec. 31 Sept. 30 June 30 March 31
2018 2017 2017 2017 2017
Efficiency ratio numerator - noninterest expense - GAAP $ 1,686 $ 1,855 $ 1,745 $ 1,742 $ 2,102
Amortization of intangibles (33) (34) (34) (36) (38)
Merger-related and restructuring charges, net (28) (22) (47) (10) (36)
Gain (loss) on early extinguishment of debt — — — — (392)
Charitable contribution — (100) — — —
One-time bonus — (36) — — —
Efficiency ratio numerator - adjusted $ 1,625 $ 1,663 $ 1,664 $ 1,696 $ 1,636
Efficiency ratio denominator - revenue1 - GAAP $ 2,813 $ 2,869 $ 2,813 $ 2,855 $ 2,780
Taxable equivalent adjustment 23 38 41 40 40
Securities (gains) losses, net — 1 — — —
Efficiency ratio denominator - adjusted $ 2,836 $ 2,908 $ 2,854 $ 2,895 $ 2,820
Efficiency ratio - GAAP 60.0% 64.7% 62.0% 61.0% 75.6%
Efficiency ratio - adjusted2 57.3 57.2 58.3 58.6 58.0
1 Revenue is defined as net interest income plus noninterest income.
2 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.
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
March 31 Dec. 31 Sept. 30 June 30 March 31
2018 2017 2017 2017 2017
Common shareholders' equity $ 26,559 $ 26,595 $ 26,757 $ 27,254 $ 26,928
Less: Intangible assets 10,296 10,329 10,363 10,400 10,436
Tangible common shareholders' equity1 $ 16,263 $ 16,266 $ 16,394 $ 16,854 $ 16,492
Outstanding shares at end of period 779,752 782,006 788,921 808,093 811,370
Common shareholders' equity per common share $ 34.06 $ 34.01 $ 33.92 $ 33.73 $ 33.19
Tangible common shareholders' equity per common share1 20.86 20.80 20.78 20.86 20.33
Net income available to common shareholders $ 745 $ 614 $ 597 $ 631 $ 378
Plus amortization of intangibles, net of tax 24 21 22 22 24
Tangible net income available to common shareholders1 $ 769 $ 635 $ 619 $ 653 $ 402
Average common shareholders' equity $ 26,428 $ 26,759 $ 26,857 $ 27,208 $ 26,807
Less: Average intangible assets 10,312 10,346 10,382 10,418 10,464
Average tangible common shareholders' equity1 $ 16,116 $ 16,413 $ 16,475 $ 16,790 $ 16,343
Return on average common shareholders' equity 11.43% 9.10% 8.82% 9.30% 5.72%
Return on average tangible common shareholders' equity1 19.36 15.35 14.89 15.60 9.98
1 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.
A-4
Quarter Ended
March 31 Dec. 31 Sept. 30 June 30 March 31
2018 2017 2017 2017 2017
Net interest income - GAAP $ 1,633 $ 1,644 $ 1,647 $ 1,635 $ 1,609
Taxable-equivalent adjustment 23 38 41 40 40
Net interest income - taxable-equivalent 1,656 1,682 1,688 1,675 1,649
Interest income - PCI loans (30) (36) (32) (37) (42)
Accretion of mark on Susquehanna and National Penn non-PCI loans (22) (29) (32) (25) (25)
Accretion of mark on Susquehanna and National Penn liabilities (5) (5) (5) (6) (5)
Accretion of mark on securities acquired from FDIC — (5) (10) (16) (10)
Net interest income - core1 $ 1,599 $ 1,607 $ 1,609 $ 1,591 $ 1,567
Average earning assets - GAAP $ 194,530 $ 195,305 $ 193,073 $ 193,386 $ 192,564
Average balance - PCI loans (632) (689) (742) (825) (883)
Average balance - mark on Susquehanna and National Penn non-PCI loans 163 188 219 248 272
Average balance - mark on securities acquired from FDIC 372 377 387 403 414
Average earning assets - core1 $ 194,433 $ 195,181 $ 192,937 $ 193,212 $ 192,367
Annualized net interest margin:
Reported - taxable-equivalent 3.44% 3.43% 3.48% 3.47% 3.46%
Core1 3.32 3.28 3.32 3.31 3.28
Core NIM
(Dollars in millions)
Non-GAAP reconciliations
1 Core net interest margin is a non-GAAP measure that adjusts net interest margin to exclude the impact of purchase accounting. The interest income and average balances for PCI loans are excluded in their entirety as the accounting for
these loans can result in significant and unusual trends in yields. The purchase accounting marks and related amortization for a) securities acquired from the FDIC in the Colonial acquisition and b) non-PCI loans, deposits and long-term debt
acquired from Susquehanna and National Penn are excluded to approximate their yields at the pre-acquisition rates. BB&T's management believes the adjustments to the calculation of net interest margin for certain assets and liabilities
acquired provide investors with useful information related to the performance of BB&T's earning assets.
A-5
Non-GAAP reconciliations
Diluted EPS
(Dollars in millions, except per share data, shares in thousands)
Quarter Ended
March 31 Dec. 31 Sept. 30 June 30 March 31
2018 2017 2017 2017 2017
Net income available to common shareholders - GAAP $ 745 $ 614 $ 597 $ 631 $ 378
Merger-related and restructuring charges 22 14 29 6 22
Loss on early extinguishment of debt — — — — 246
Charitable contribution — 63 — — —
One time bonus — 23 — — —
Excess tax benefit on equity-based awards — — — — (35)
Impact of tax reform — (43) — — —
Net income available to common shareholders - adjusted1 $ 767 $ 671 $ 626 $ 637 $ 611
Weighted average shares outstanding - diluted 791,005 795,867 806,124 819,389 822,719
Diluted EPS - GAAP $ 0.94 $ 0.77 $ 0.74 $ 0.77 $ 0.46
Diluted EPS - adjusted1 0.97 0.84 0.78 0.78 0.74
1 The adjusted diluted earnings per share is non-GAAP in that it excludes merger-related and restructuring charges and other selected items, net of tax. 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-6
Non-GAAP reconciliations
Operating leverage1
(Dollars in millions)
Quarter Ended
March 31 Dec. 31 March 31 % Growth 1Q18 vs.
2018 2017 2017 4Q17 1Q17
(annualized)
Revenue2 - GAAP $ 2,813 $ 2,869 $ 2,780 (7.9)% 1.2%
Taxable equivalent adjustment 23 38 40
Securities (gains) losses, net — 1 —
Revenue2 - adjusted $ 2,836 $ 2,908 $ 2,820 (10.0)% 0.6%
Noninterest expense - GAAP $ 1,686 $ 1,855 $ 2,102 (36.9)% (19.8)%
Amortization of intangibles (33) (34) (38)
Merger-related and restructuring charges, net (28) (22) (36)
Charitable contribution — (100) —
One-time bonus — (36) —
Gain (loss) on early extinguishment of debt — — (392)
Noninterest expense - adjusted $ 1,625 $ 1,663 $ 1,636 (9.3)% (0.7)%
Operating leverage - GAAP 29.0% 21.0%
Operating leverage - adjusted3 (0.7) 1.3 %
1 Operating leverage is defined as percentage growth in revenue growth less percentage growth in noninterest expense.
2 Revenue is defined as net interest income plus noninterest income.
3 The adjusted operating leverage 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.
A-7
Non-GAAP reconciliations
Performance ratios
(Dollars in millions, except per share data, shares in thousands)
Quarter Ended March 31, 2018
Common Tangible
Assets Equity Common Equity2
Net income - GAAP $ 791
Net income available to common shareholders - GAAP $ 745 $ 745
Merger-related and restructuring charges 22 22 22
Amortization of intangibles, net of tax — — 24
Numerator - adjusted1 $ 813 $ 767 $ 791
Average assets $ 221,419
Average common shareholders' equity $ 26,428 $ 26,428
Plus: Estimated impact of adjustments on denominator 11 11
Less: Average intangible assets (10,312)
Denominator - adjusted1 $ 221,419 $ 26,439 $ 16,127
Reported ratio 1.45% 11.43% 19.36%
Adjusted ratio 1.49 11.75 19.89
1 The adjusted performance ratios are non-GAAP in that they exclude merger-related and restructuring charges and, in the case of return on average tangible common shareholders' equity, amortization of intangible assets. 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.
2 Tangible common equity - reported ratio is a non-GAAP measure. See the non-GAAP reconciliation on page A-5
A-8
Non-GAAP reconciliations
Adjusted net interest margin
(Dollars in millions, except per share data, shares in thousands)
(1) The adjusted net interest margin is a non-GAAP measure in that it estimates the impact on taxable-equivalent net interest income as if the tax reform legislation had not been enacted. 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 tax reform.
Quarter Ended
March 31
Net Interest Margin (1) 2018
Net Interest Income - taxable-equivalent $ 1,656
Estimated impact of tax reform 10
Net Interest Income - adjusted $ 1,666
Average earning assets $ 194,530
Net interest margin - taxable equivalent 3.44%
Net interest margin - adjusted 3.46