EX-99.3 4 daryl_pres1.htm daryl_pres1.htm - BB&T

Exhibit 99.3

     BB&T Corporation
 Financial Management
Superior Relative Performance

Investor Conference

February 11, 2009


Total Assets and Market Value
 
 
Assets      Market Value     
 
U.S.        U.S.       
Rank  Company   $ Billions  Rank  Company    $ Billions 
 
1  J.P. Morgan  $  2,175  1  J.P. Morgan  $  95 
2  Citigroup    1,945  2  Wells Fargo    80 
3  Bank of America    1,818  3  Bank of America    42 
4  Wells Fargo    1,310  4  U.S. Bancorp    26 
5  PNC Financial    291  5  Citigroup    19 
6  U.S. Bancorp    266  6  PNC Financial    14 
7  SunTrust    189  7  BB&T    11 
8  Capital One    166  8  Capital One    6 
9  BB&T    152  9  SunTrust    4 
10  Regions    146  10  M&T Bank    4 

Assets as of December 31, 2008
Market Value as of January 31, 2009

2

2009 Peer Banks

3


Financial Management

Agenda

1.     

Profitability

2.     

Balance Sheet Strategy

3.     

Investment Portfolio

4.     

Funding and Liquidity

5.     

Interest Rate Sensitivity

6.     

Capital

7.     

Investing for the Future

8.     

Summary

 

4


Source: SNL and Company Reports

5

 
 

6

Profitability

Efficiency Ratio - Drivers

  • Integration of systems and processes

  • Corporate culture – everyone on same page

  • Disciplined integration of acquisitions

  • Mind set – treat company’s money as if it is your own

  • Positive operating leverage

7

Profitability

Operating Leverage

 

  Linked Period Basis
  1st Q    2nd Q    3rd Q   4th Q      Year  
  2008   2008   2008   2008   2008  
Revenue Growth  10.49 %  22.48 %  3.40 %  7.38 %  10.80 % 
Expense Growth  8.70 %  22.13 %  1.20 %  3.98 %  9.75 % 
 
Operating Leverage  1.79 %  0.35 %  2.20 %  3.40 %  1.05 % 

Based on operating earnings

8

 
Profitability
Operating Income1
Year-Over-Year Growth
(Dollars in Millions)
    2008    2007  Pct Change     Core2   
Net interest income  $  4,388  $  3,948  11.1   %  10.5  % 
Noninterest income    3,060    2,774  10.3     1.3   
Total revenue    7,448    6,722  10.8     6.6   
Noninterest expense    3,952    3,601  9.7     4.3   
Pre-tax pre provision operating income    3,496    3,121  12.0     9.2   
Net charge-offs    851    338  151.8        
Reserve build    594    110  440.0        
Operating earnings before income taxes    2,051    2,673  (23.3 )       
Taxes3    654    924  (29.2 )       
Operating earnings    1,397    1,749  (20.1 )       
 
Operating earnings available to common shareholders    1,376    1,749  (21.3 )       

1Based on operating earnings

2Excludes the impact of purchase acquisitions, the implementation of fair value accounting and the net impact of valuation adjustments for mortgage servicing rights and gains or losses on mortgage servicing rights-related derivatives.

3Includes $83 million and $68 million for 2008 and 2007, respectively for FTE adjusted income.

9

10

Balance Sheet Strategy
 Loan Growth

Versus the Same Period of the Prior Year

11


12


Balance Sheet Strategy

Capital Purchase Program

  • U.S. Treasury invested $3.1 billion of preferred stock (including warrants) in BB&T Corporation.

  • Viewed favorably by regulators and rating agencies.

  • Preferred stock has lower cost of capital than current marketplace.

  • Initial goal – neutralize the cost to shareholders
    – Invested in GSE mortgage-backed securities.

  • Increase lending activities to generate additional earnings and tangible common equity.

13

14

Investment Portfolio by Security Type

December 31, 2008


* Distribution is calculated based on quarter-end amortized cost.

15

Investment Portfolio Summary

December 31, 2008
(Dollars in millions)

16


Investment Portfolio
Strategy

  • Invest in high quality low risk securities.

  • Utilize cash flows to fund loan growth.

  • Pledge securities to bring in client public funds and repurchase agreements.

  • Securities are evaluated every quarter for impairment. In the past, we have had adequate offsetting transactions to neutralize the impact on earnings.

  • Emphasize liquidity first, then earnings.

17

Funding and Liquidity

Increase Funding Flexibility

  		•

    Restructured Bank and Holding Company Debt Programs

     

  • Focus on speed and access to marketplace

     

  • Added multi-currency capability

     

  • Added medium-term note capacity

     

  • Added commercial paper facility

     

  • Added broker CD program

  		•

    Increased borrowing capacity at both Federal Home Loan Bank and Federal Reserve Bank

     

  • Increased capacity by $20 billion

     

    18

     
    Funding and Liquidity
    Secured Borrowing Sources
    December 31, 2008
        Capacity    Usage 
        (Dollars in millions) 
    Fed Discount Window  $  15,760.2  $  - 
    Treasury Tax & Loan and Treasury Auctions    8,630.3    2,555.9 
    Dealer Repurchase Agreements    3,000.0    1,010.0 
    Federal Home Loan Bank    19,058.7    10,083.3 
    Available Investment Securities    10,969.3    - 
      $  57,418.6  $  13,649.2 

    Note: Excess secured funding capacity was 242% of one year National Markets funding maturities.

    19

     

    Funding and Liquidity
    Liquidity Position

     

    20


    Funding and Liquidity
    Funding Strategies

  		•

    Fund as much as possible from clients (deposits and borrowings)

  		•

    Diversity of funding sources – secured and unsecured

     

  • Bank notes / medium-term notes

     

  • Broker deposits

     

  • Fed funds

     

  • Dealer repurchase agreements

     

  • Commercial paper

     

  • Eurodollars

  		•

    Stagger maturities to avoid excessive funding pressure

  		•

    Utilize government programs on an as needed basis

     

  • Temporary liquidity guarantee program

  		•

    Maintain strong liquidity first, then minimize funding costs

     

    21

         Funding and Liquidity
     Structured Transactions

  		•

    IRS Issue

     

  • BB&T has received notification of proposed IRS adjustments related to foreign tax credits claimed.

     

  • Although the amount and timing of the resolution of this issue cannot currently be determined, BB&T believes its reserves are adequate to cover the expected liability.

     

  • BB&T will attempt to settle the issue during 2009 and will pursue litigation if required.

     

  • We may need to fund a payment to stop the accrual of interest on the proposed adjustment.

     

    22

    Funding and Liquidity
    Ratings
      S&P  Moody’s  Fitch  DBRS 
    BB&T CORPORATION         
                 - Common stock/issuer  A+  Aa3  AA-  AA (low) 
    SUBSIDIARY BANK - Branch Banking & Trust Company       
                 - Long term deposits  AA-  Aa2  AA  AA 
    Ratings Outlook  Stable  Negative  Stable  Stable 

     

    23


    Funding and Liquidity
     
     
    Bank Holding Company Ratings
     
    as of February 2, 2009
    Sorted based on S&P Rating  Sorted based on Moody's Rating  Sorted based on Fitch's Rating
     
    Company  S&P  Outlook  Company  Moody'sOutlook  Company  Fitch  Outlook 
     
       1 U.S. Bancorp  AA  Stable  1 U.S. Bancorp  Aa2  Stable   1 Wells Fargo & Company  AA  Stable 
       2 Wells Fargo & Company  AA  Negative  2 Bank of NY Mellon Corporation  Aa2  Stable   2 U.S. Bancorp  AA-  Positive 
       3 Bank of NY Mellon Corporation  AA-  Stable  3 JPMorgan Chase & Co.  Aa3  Stable   3 BB&T Corporation  AA-  Stable 
       4 Northern Trust Corporation  AA-  Stable  4 BB&T Corporation  Aa3  Negative   4 Bank of NY Mellon Corporation  AA-  Stable 
       5 BB&T Corporation  A+  Stable  5 Wells Fargo & Company  Aa3  Negative   5 JPMorgan Chase & Co.  AA-  Stable 
       6 State Street Corporation  A+  Negative  6 Northern Trust Corporation  A1  Stable   6 Northern Trust Corporation  AA-  Down 
       7 Bank of America Corporation  A+  Negative  7 SunTrust Banks, Inc.  A1  Stable   7 Bank of America Corporation  A+  Stable 
       8 JPMorgan Chase & Co.  A+  Negative  8 State Street Corporation  A1  Negative   8 Citigroup Inc. *  A+  Stable 
       9 Citigroup Inc. *  A  Stable  9 Bank of America Corporation  A1  Negative   9 PNC Financial Services Group, Inc.  A+ Stable 
     10 PNC Financial Services Group, Inc.  A Stable  10 PNC Financial Services Group, Inc.  A1 Negative  10 Comerica Incorporated  A+  Stable 
     11 SunTrust Banks, Inc.  A  Negative  11 Marshall & Ilsley Corporation *  A1  Down  11 Regions Financial Corporation  A+  Negative 
     12 Regions Financial Corporation  A  Negative  12 Comerica Incorporated  A2  Stable  12 State Street Corporation  A+  Down 
     13 Comerica Incorporated  A  Negative  13 Keycorp  A2  Stable  13 SunTrust Banks, Inc.  A+  Down 
     14 M&T Bank Corporation  A-  Stable  14 M&T Bank Corporation  A2  Negative  14 Keycorp  A  Stable 
     15 Fifth Third Bancorp  A-  Negative  15 Citigroup Inc. *  A2  Down  15 Fifth Third Bancorp  A   
     16 Keycorp  A-  Negative  16 Fifth Third Bancorp  A2  Down  16 M&T Bank Corporation  A-  Stable 
     17 Synovus Financial Corp.  BBB+  Negative  17 Regions Financial Corporation  A3  Negative  17 Zions Bancorporation *  A-  Stable 
     18 Capital One Financial Corporation  BBB+ Negative  18 Capital One Financial Corporation  A3 Negative  18 Capital One Financial Corporation  A- Stable 
     19 Marshall & Ilsley Corporation *  BBB+  Negative  19 Zions Bancorporation *  A3  Negative  19 Huntington Bancshares Inc. *  A-  Stable 
     20 Zions Bancorporation *  BBB+  Negative  20 Huntington Bancshares Inc. *  A3  Down  20 Synovus Financial Corp.  A-  Negative 
     21 First Horizon National Corporation  BBB Stable  21 Popular, Inc. *  Baa1  Negative  21 First Horizon National Corporation  BBB+ Negative 
     22 Huntington Bancshares Inc. *  BBB  Negative  22 First Horizon National Corporation  Baa1 Negative  22 Popular, Inc. *  BBB  Negative 
     23 Popular, Inc. *  BBB-  Stable  23 Colonial Bancgroup, Inc.  B2  Down  23 Colonial Bancgroup, Inc.  BB  Down 
     24 Colonial Bancgroup, Inc.  BB-  Down  24 Synovus Financial Corp.  N/A    24 Marshall & Ilsley Corporation *  N/A   
     25 Associated Banc-Corp  N/A    25 Associated Banc-Corp  N/A    25 Associated Banc-Corp  N/A   
     
     
    * Moody's issuer credit rating was not available on Reuters for these companies. Table reflects long-term debt rating.       
    N/AInformation not available on Reuters.               

     

    24


    Interest Rate Sensitivity
    Interest Rate Risk Management

    Net Interest Margin

    25


    Interest Rate Sensitivity

    26


    Interest Rate Sensitivity

    Economic Value of Equity Sensitivity Report

    as of December 31, 2008


    Policy Limit is + / - 30%

    27

         Interest Rate Sensitivity
    Interest     Rate Risk Strategy

  		•

    Net Interest Income represents approximately 60% of total revenues

  		•

    Produce a stable net interest margin (3.60% area for the full year)

  		•

    Tools used to achieve results include derivatives, investment portfolio and pricing assets and liabilities

  		•

    Primary drivers of net interest margin:

     

  • Loan growth (mix change)

     

  • Deposit pricing competition

     

  • Prepayment speeds on mortgages and MBS

     

    28

     

    Capital

     

    *Including trade date accounting balances, this ratio would be 5.3% .

    29

       

    30


         Capital
     Industry Leading Capital Generation

    Cash Basis Return on Tangible Common Equity

    31


         Capital
    Capital     Management Strategies

    • Provide adequate capital in relation to BB&T’s overall risk profile

    • Preserve a sufficient base to support future growth

    • Provide a competitive return to shareholders

    • Comply with regulatory standards

    • Achieve optimal credit ratings

    32

    Investing for the Future
         Investing for Growth

    • Disciplined decision making for both organic investments and acquisitions

    • Strong financial analysis on both an economic and accounting basis

    • Centrally managed review process

    • Thorough due diligence performed

    • Strategic and cultural fit

    • Executive management gives final approval

    33

         Investing for the Future Organic Capital Investments


    Highlights

    •Opening de novo branches (106 from 2006 through 2009)
    •Purchasing land for future branch consolidation
    •Upgrading     data and voice network – IT Transformation project
    •Expanded 2 mission critical operations centers’ capacity and upgraded redundancy
    •Moved     into signature building in Atlanta

    34

    Acquisition Investments

    Invested $1.8 billion since 2006

    2006    2007    2008 
    • Wyman, Green & Blalock  •  Coastal Financial  •  Ott & Company 
     
    • Bergen Capital  •  AFCO/CAFO  •  Ramsey Title Group 
     
    • FSB Financial  •  Collateral Real Estate  •  Burkey Risk Services 
        Capital     
     
    • Main Street Banks      •  Savannah Reinsurance 
      •  Reese Insurance    Underwriting Management 
    • First Citizens Bancorp   Associates
        •  Premier Benefits Group 
     
      •  Carswell Insurance  •  UnionBanc Insurance Services 
     
      •  Sidney O. Smith  •  Puckett, Sheetz & Hogan 
     
      •  Heritage Title  •  Southern Risk Holdings, Inc. 
     
      •  Established American  •  Commercial Title Group 
        Coastal     
          •  J. Rolfe Davis Insurance 
            Agency 
     
          •  TapCo Underwriters, Inc. 
     
          •  Haven Trust Bank 
     
          •  Live Oak Capital Ltd. 

     

    35


    Financial Management Summary

    • Industry leading profitability statistics

    • Strong core operating earnings

    • Excellent cost control

    • Strong liquidity and capital positions

    • Conservative risk management

    • Investing for the future

    • Low risk providing a more predictable earnings stream

    • High return of earnings to shareholders

    36

    Superior Relative Performance

         BB&T Versus Peers
         Annualized Total Return to Shareholders

    For the Period 1-1-08 through 1-31-09

     

    37