UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
______________
Form 8-K
Current Report
______________
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
July 18, 2013
Date of Report (Date of earliest event reported)
BB&T Corporation
(Exact name of registrant as specified in its charter)
Commission file number : 1-10853
______________
North Carolina | 56-0939887 |
(State of incorporation) | (I.R.S. Employer Identification No.) |
200 West Second Street | |
Winston-Salem, North Carolina | 27101 |
(Address of principal executive offices) | (Zip Code) |
(336) 733-2000
(Registrant's telephone number, including area code)
______________
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
[ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
[ ] Pre-commencement communications pursuant to Rule
14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under
the Exchange Act (17 CFR 240.13e-4(c))
ITEM 2.02 | Results of Operations and Financial Condition |
On July 18, 2013, BB&T Corporation issued a press release reporting second quarter 2013 results and posted on its website its second quarter 2013 Earnings Release, Quarterly Performance Summary and Earnings Release Presentation. The release contains forward-looking statements regarding BB&T and includes a cautionary statement identifying important factors that could cause actual results to differ materially from those anticipated. The Earnings Release, Quarterly Performance Summary and Earnings Release Presentation are furnished as Exhibits 99.1, 99.2 and 99.3, respectively.
ITEM 9.01 | Financial Statements and Exhibits |
Exhibit No. | Description of Exhibit |
99.1 | BB&T Corporation's Earnings Release issued July 18, 2013. |
99.2 | BB&T Corporation's Quarterly Performance Summary issued July 18, 2013. |
99.3 | BB&T Corporation's Earnings Release Presentation issued July 18, 2013. |
S I G N A T U R E
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
BB&T CORPORATION | |
(Registrant) | |
By: /s/ Cynthia B. Powell | |
Cynthia B. Powell | |
Executive Vice President and Corporate Controller | |
(Principal Accounting Officer) |
Date: July 18, 2013
Exhibit 99.1
July 18, 2013
FOR IMMEDIATE RELEASE
Contacts: | ||||
ANALYSTS | MEDIA | |||
Alan Greer | Bruce MacPherson | Cynthia Williams | ||
Executive Vice President | Vice President | Senior Executive Vice President | ||
Investor Relations | Investor Relations | Corporate Communications | ||
(336) 733-3021 | (336) 733-3058 | (336) 733-1478 |
BB&T reports record earnings
EPS totals $0.77, up 6.9%
WINSTON-SALEM, N.C. -- BB&T Corporation (NYSE: BBT) today reported second quarter 2013 net income available to common shareholders of $547 million, a record for quarterly earnings. EPS totaled $0.77 per diluted share, an increase of 6.9% compared with the second quarter of 2012. Net income available to common shareholders increased 7.3% compared to the same period last year.
Second quarter earnings produced an annualized return on average assets of 1.27% and an annualized return on average common shareholders’ equity of 11.39%.
“We are pleased to report the strongest quarterly earnings in our history, supported by continued improvement in diversification strategies,” said Chairman and Chief Executive Officer Kelly S. King. “Our earnings were driven by 6% annualized growth in revenues compared with last quarter, including an 18% annualized increase in noninterest income. These results reflect record performances from our insurance, investment banking and brokerage, and trust and investment advisory businesses.
“Improvement in credit quality accelerated this quarter and resulted in our best credit quality levels in five years,” said King. “Nonperforming assets declined 10% and loan charge-offs decreased significantly to 0.75% of average loans and leases, down from 0.98% last quarter, excluding covered loans. This improvement led to a decrease in our loan loss provision and other credit-related costs this quarter.
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“Average loans grew 3.8% annualized compared with last quarter led by strong performances in sales finance automobile lending, up 35%; other lending subsidiaries, up 17%; and C&I and direct retail lending, which both reflected almost 5% growth.”
“Noninterest expense increased compared to last quarter; however much of this was driven by merger-related and restructuring charges following our community bank reorganization and other systems and project-related charges. As these costs fall in coming quarters, we expect noninterest expense to decline as well,” said King.
For the first six months of 2013, BB&T reported net income available to common shareholders of $757 million, including the impact of a $281 million adjustment related to a disputed tax liability announced last quarter. Earnings per diluted common share, including the tax adjustment, totaled $1.06 for the first six months of 2013.
Second Quarter 2013 Performance Highlights
· | Average total loans and leases held for investment increased 3.8% on an annualized basis compared to the first quarter of 2013 |
o | Average C&I loans increased 4.7% |
o | Average sales finance loans increased 34.9% |
o | Average loans in the other lending subsidiaries group increased 16.8% |
o | Average direct retail lending increased 4.6% |
· | Revenues were $2.5 billion for the second quarter, an annualized increase of 6.2% compared with the first quarter of 2013 |
o | Net interest income was $7 million lower primarily due to covered loan run-off |
o | Insurance income increased $61 million, driven by seasonally stronger performance |
o | Investment banking and brokerage produced a record performance, up $5 million compared with the first quarter of 2013 |
o | Mortgage banking income was down $12 million as margins declined to more normal levels, offsetting record originations |
· | Asset quality improvement accelerated |
o | Nonperforming assets decreased $137 million, or 9.7%, excluding covered assets |
o | Net charge-offs, excluding covered, totaled 0.75% of average loans for the quarter, down from 0.98% in the first quarter of 2013 and 1.22% in the second quarter of 2012 |
o | Allowance for loan losses (excluding covered loans) as a percentage of nonperforming loans HFI increased from 1.43% in the first quarter of 2013 to 1.55% in the second quarter of 2013 |
· | Noninterest expense was up $82 million or 23.3% annualized from the first quarter of 2013 |
o | Noninterest expense included $27 million in restructuring costs |
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o | Personnel expense was up $27 million primarily due to production-related compensation. Full-time equivalent employees and headcount were down slightly |
o | Professional services was up $11 million primarily due to project-related expenses |
o | Foreclosed property expense totaled $12 million, down $6 million |
· | Average noninterest-bearing deposits increased $1.1 billion, or 13.2% on an annualized linked quarter basis |
o | Average interest-bearing deposit costs fell to 0.32% this quarter compared to 0.36% in the first quarter |
· | Capital levels improved across the board |
o | Tier 1 common equity to tangible assets was 7.3% |
o | Tier 1 common equity to risk-weighted assets was 9.4% |
o | Tier 1 risk-based capital was 11.3% |
o | Leverage capital remained strong at 8.8% |
o | Total capital was 14.1% |
#-#-#
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EARNINGS HIGHLIGHTS | Change | Change | ||||||||||||||
(dollars in millions, except per share data) | Q2 | Q1 | Q2 | Q2 13 vs. | Q2 13 vs. | |||||||||||
2013 | 2013 | 2012 | Q1 13 | Q2 12 | ||||||||||||
Net income available to common shareholders | $ | 547 | $ | 210 | $ | 510 | $ | 337 | $ | 37 | ||||||
Diluted earnings per common share | 0.77 | 0.29 | 0.72 | 0.48 | 0.05 | |||||||||||
Net interest income - taxable equivalent | $ | 1,452 | $ | 1,459 | $ | 1,500 | $ | (7) | $ | (48) | ||||||
Noninterest income | 1,046 | 1,001 | 966 | 45 | 80 | |||||||||||
Total revenue | $ | 2,498 | $ | 2,460 | $ | 2,466 | $ | 38 | $ | 32 | ||||||
Return on average assets (%) | 1.27 | 0.57 | 1.22 | 0.70 | 0.05 | |||||||||||
Return on average risk-weighted assets (%) | 1.71 | 0.77 | 1.69 | 0.94 | 0.02 | |||||||||||
Return on average common shareholders' equity (%) | 11.39 | 4.44 | 11.21 | 6.95 | 0.18 | |||||||||||
Return on average tangible common shareholders' | ||||||||||||||||
equity (%) | 19.12 | 7.87 | 18.85 | 11.25 | 0.27 | |||||||||||
Net interest margin - taxable equivalent (%) | 3.70 | 3.76 | 3.95 | (0.06) | (0.25) | |||||||||||
Efficiency ratio (1) (%) | 57.6 | 56.4 | 53.9 | 1.2 | 3.7 |
(1) Excludes securities gains (losses), foreclosed property expense, amortization of intangible assets, merger-related and restructuring charges, the impact of FDIC loss share accounting, and other selected items. See non-GAAP reconciliations in the Quarterly Performance Summary.
Second Quarter 2013 compared to First Quarter 2013
Consolidated net income available to common shareholders for the second quarter of 2013 was $547 million, an increase of $337 million, compared to $210 million earned during the first quarter of 2013. Financial results for the first quarter of 2013 were negatively impacted by a $281 million adjustment to the provision for income taxes. This occurred following a February 11, 2013 opinion by the U.S. Tax Court with respect to a case between the Bank of New York Mellon and the IRS involving a transaction with a structure similar to a financing transaction entered into by BB&T in 2002. BB&T is currently in litigation with the IRS and no decision has been rendered by the court. Closing arguments in the trial are scheduled for later this month.
On a diluted per common share basis, earnings for the second quarter of 2013 were $0.77 compared to $0.29 ($0.69 excluding the tax adjustment) earned in the first quarter of 2013. BB&T’s results of operations for the second quarter of 2013 produced an annualized return on average assets of 1.27%, an annualized return on average risk-weighted assets of 1.71% and an annualized return on average common shareholders’ equity of 11.39% compared to prior quarter ratios of 0.57% (1.20% adjusted), 0.77% (1.62% adjusted) and 4.44% (10.34% adjusted), respectively. BB&T’s return on average tangible common shareholders’ equity was 19.12% for the second quarter of 2013 compared to 7.87% (17.48% adjusted) for the prior quarter.
On April 23, 2013, BB&T’s shareholders approved a plan that modified the record date and payment date of preferred stock dividends to align with the record and payment date practices associated with common stock dividends. This action was undertaken in order to achieve administrative and Board-level efficiencies and reduce the costs associated with multiple record dates and multiple payment dates. The implementation of this plan resulted in the declaration of
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dividends on all classes of preferred stock totaling $13 million, which represented dividend payments for the period from May 1 to May 31, 2013. Based on the number of shares of preferred stock outstanding at June 30, 2013, future quarterly preferred stock dividends are expected to total approximately $37 million if declared by the Board of Directors.
Total revenues were $2.5 billion for the second quarter of 2013, up $38 million compared to the first quarter of 2013. The increase in total revenues included a $45 million increase in noninterest income, partially offset by a $7 million decrease in taxable-equivalent net interest income. The increase in noninterest income was primarily driven by a $61 million increase in insurance income, and smaller increases in investment banking and brokerage commissions and fees, bankcard fees and merchant discounts, and checkcard fees, partially offset by decreases in FDIC loss share income and mortgage banking income. Net interest margin was 3.70% for the second quarter of 2013, down six basis points compared to the prior quarter. This decline is largely attributable to lower yields on new loans and covered loan run-off.
The provision for credit losses, excluding covered loans, for the second quarter of 2013 was $179 million, a decrease of $68 million compared to the first quarter of 2013, as a result of continued improvements in credit quality. Net charge-offs, excluding covered loans, for the second quarter of 2013 were $215 million, or $60 million lower than the first quarter of 2013. This resulted in a reserve release of $36 million for the second quarter of 2013 compared to $28 million in the first quarter.
Noninterest expense was $1.5 billion for the second quarter of 2013, an increase of $82 million compared to the first quarter of 2013. The increase in noninterest expense included increases in personnel expense, merger-related and restructuring charges and other expense totaling $27 million, $22 million and $24 million, respectively. The increase in personnel expense was largely attributable to higher production-related incentives and commissions, while the increase in merger-related and restructuring charges primarily related to optimization activities related to the Community Bank initiated during the second quarter. The increase in other expense was attributable to project-related expenses, higher operating charge-offs, franchise taxes and other various expenses.
The provision for income taxes was $221 million for the second quarter of 2013, compared to $481 million for the first quarter of 2013. This produced an effective tax rate for the second quarter of 2013 of 27.7% compared to 65.3% for the prior quarter. The decrease in the effective tax rate was due to the $281 million adjustment to the income tax provision described previously. Excluding the impact of this adjustment, the effective tax rate for the first quarter of 2013 was 27.1%.
Second Quarter 2013 compared to Second Quarter 2012
Consolidated net income available to common shareholders for the second quarter of 2013 was $547 million, up 7.3%, compared to $510 million earned during the same period in 2012. On a diluted per common share basis, earnings for the second quarter of 2013 were $0.77, up 6.9% compared to $0.72 for the same period in 2012. BB&T’s results of operations for the second quarter of 2013 produced an annualized return on average assets of 1.27%, an annualized return
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on average risk-weighted assets of 1.71% and an annualized return on average common shareholders’ equity of 11.39% compared to prior year ratios of 1.22%, 1.69% and 11.21%, respectively. BB&T’s return on average tangible common shareholders’ equity was 19.12% for the second quarter of 2013, compared to 18.85% for the same quarter of the prior year.
Total revenues were $2.5 billion for the second quarter of 2013, an increase of $32 million compared to the second quarter of 2012. The increase in total revenues included an $80 million increase in noninterest income and a $48 million decrease in taxable-equivalent net interest income. The decrease in taxable-equivalent net interest income reflects an $87 million decrease in interest income, primarily driven by lower yields on new loans and securities, which is reflective of the low interest rate environment, and covered loan run-off, partially offset by a $39 million decrease in funding costs compared to the same quarter of the prior year. Net interest margin was 3.70%, down 25 basis points compared to the second quarter of 2012.
The increase in noninterest income includes a $33 million increase in insurance income, a $25 million increase in net securities gains, and a $17 million increase in other income, partially offset by a $14 million decrease in mortgage banking income. The increase in insurance income was primarily attributable to firming market conditions for insurance premiums. Net securities gains for the second quarter of 2013 totaled $23 million compared to a net securities loss of $2 million in the second quarter of the prior year. The increase in other income was primarily due to $20 million in higher income related to assets for certain post-employments benefits, which was offset in personnel costs. The $14 million decrease in mortgage banking income was the result of a decrease in gains on saleable residential mortgage loans, as record volume was more than offset by tighter margins, and a decrease in the net mortgage servicing rights valuation.
The provision for credit losses, excluding covered loans, declined $80 million, or 30.9%, compared to the second quarter of 2012, as improving credit quality resulted in lower provision expense. Net charge-offs, excluding covered loans, for the second quarter of 2013 were $110 million lower than the second quarter of 2012, a decline of 33.8%. The reserve release was $36 million for the second quarter of 2013 compared to $66 million in the earlier quarter.
Noninterest expense was $1.5 billion for the second quarter of 2013, an increase of $70 million, or 4.9%, compared to the second quarter of 2012. This increase was primarily attributable to a $69 million increase in personnel expense, a $25 million increase in merger-related and restructuring charges, and a $20 million increase in other expense, which were partially offset by decreased foreclosed property expense. The increase in personnel expense was driven by the BankAtlantic acquisition in the 3rd quarter of 2012, an increase in other post-employment benefits, which is offset in other income, and higher production-based incentives and commissions. The increase in merger-related and restructuring charges primarily related to optimization activities related to Community Banking that began during the second quarter, and the increase in other expense was attributable to project-related expenses, higher operating charge-offs, franchise taxes and other various expenses. Foreclosed property expense decreased $60 million, which was the result of lower write-downs, losses and carrying costs associated with foreclosed property.
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The provision for income taxes was $221 million for the second quarter of 2013, compared to $191 million for the second quarter of 2012. The effective tax rate for the second quarter of 2013 was 27.7%, compared to 26.2% for the prior year’s second quarter. This increase in the effective tax rate was the result of a $12 million income tax benefit recorded in the second quarter of 2012 related to the termination of a leveraged lease.
REVENUE, NET OF PROVISION, IMPACT | Change | Change | ||||||||||||||
FROM COVERED ASSETS (1) | Q2 | Q1 | Q2 | Q2 13 vs. | Q2 13 vs. | |||||||||||
(dollars in millions) | 2013 | 2013 | 2012 | Q1 13 | Q2 12 | |||||||||||
Interest income ― covered loans | $ | 121 | $ | 135 | $ | 200 | $ | (14) | $ | (79) | ||||||
Interest income ― covered securities | 34 | 37 | 46 | (3) | (12) | |||||||||||
Total interest income | 155 | 172 | 246 | (17) | (91) | |||||||||||
Provision for covered loans | 11 | (25) | (14) | 36 | 25 | |||||||||||
FDIC loss share income, net | (85) | (59) | (74) | (26) | (11) | |||||||||||
Net revenue after provision for covered loans | $ | 81 | $ | 88 | $ | 158 | $ | (7) | $ | (77) | ||||||
FDIC loss share income, net | ||||||||||||||||
Offset to provision for covered loans | $ | (9) | $ | 20 | $ | 11 | $ | (29) | $ | (20) | ||||||
Accretion due to credit loss improvement | (66) | (67) | (67) | 1 | 1 | |||||||||||
Accretion for securities | (10) | (12) | (18) | 2 | 8 | |||||||||||
$ | (85) | $ | (59) | $ | (74) | $ | (26) | $ | (11) |
(1) Presents amounts related to covered loans, covered securities and the FDIC loss sharing asset recognized in the Colonial acquisition. Excludes all amounts related to other assets acquired and liabilities assumed in the acquisition.
Second Quarter 2013 compared to First Quarter 2013
Interest income on covered loans and securities for the second quarter of 2013 was $17 million lower than the first quarter of 2013, primarily due to lower average covered loan balances. The yield on covered loans for the second quarter of 2013 was 16.95%, down slightly compared to 17.49% in the prior quarter. At June 30, 2013, the accretable yield balance on these loans was $663 million. Accretable yield represents the excess of expected future cash flows above the current net carrying amount of loans and will be recognized in income over the remaining life of the covered loans.
The provision for covered loans was a net recovery totaling $11 million in the second quarter of 2013, compared to a provision for covered loans of $25 million in the prior quarter. The improvement in the provision for covered loans was primarily the result of improvement in the cash flows from certain residential mortgage loan pools based on the quarterly reassessment process.
FDIC loss share income, net was a negative $85 million for the second quarter of 2013, $26 million worse than the first quarter of 2013, primarily due to the offset to the provision for covered loans recovery recorded in the second quarter.
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Second Quarter 2013 compared to Second Quarter 2012
Interest income on covered loans and securities for the second quarter of 2013 decreased $91 million compared to the second quarter of 2012, primarily due to decreased interest income on covered loans of $79 million. The decline in covered interest income primarily reflects lower average covered loan balances and a lower yield. The yield on covered loans for the second quarter of 2013 was 16.95% compared to 19.01% in 2012. The decline in yield is primarily the result of changes in loan mix. Interest income on covered securities in the current quarter was $12 million lower than the second quarter of 2012 primarily due to duration adjustments in each quarter.
The provision for covered loans was a net recovery totaling $11 million in the second quarter of 2013, an improvement of $25 million compared to the same quarter of the prior year. The improvement in the provision for covered loans was primarily the result of improvements in the cash flows from certain residential mortgage loan pools based on the quarterly reassessment process.
FDIC loss share income, net was a negative $85 million for the second quarter of 2013, $11 million worse than the second quarter of 2012, which reflects the offset to the provision for covered loans, partially offset by lower accretion due to the duration adjustments on covered securities.
NONINTEREST INCOME | % Change | % Change | ||||||||||||||
(dollars in millions) | Q2 | Q1 | Q2 | Q2 13 vs. | Q2 13 vs. | |||||||||||
2013 | 2013 | 2012 | Q1 13 | Q2 12 | ||||||||||||
(annualized) | ||||||||||||||||
Insurance income | $ | 426 | $ | 365 | $ | 393 | 67.0 | 8.4 | ||||||||
Mortgage banking income | 168 | 180 | 182 | (26.7) | (7.7) | |||||||||||
Service charges on deposits | 143 | 138 | 138 | 14.5 | 3.6 | |||||||||||
Investment banking and brokerage fees and | ||||||||||||||||
commissions | 99 | 94 | 88 | 21.3 | 12.5 | |||||||||||
Bankcard fees and merchant discounts | 65 | 59 | 59 | 40.8 | 10.2 | |||||||||||
Checkcard fees | 51 | 47 | 45 | 34.1 | 13.3 | |||||||||||
Trust and investment advisory revenues | 49 | 48 | 46 | 8.4 | 6.5 | |||||||||||
Income from bank-owned life insurance | 26 | 28 | 27 | (28.6) | (3.7) | |||||||||||
FDIC loss share income, net | (85) | (59) | (74) | 176.8 | 14.9 | |||||||||||
Securities gains (losses), net | 23 | 23 | (2) | ― | NM | |||||||||||
Other income | 81 | 78 | 64 | 15.4 | 26.6 | |||||||||||
Total noninterest income | $ | 1,046 | $ | 1,001 | $ | 966 | 18.0 | 8.3 | ||||||||
NM - not meaningful. |
Second Quarter 2013 compared to First Quarter 2013
Noninterest income for the second quarter of 2013 increased $45 million, or 18.0% annualized, compared to the first quarter of 2013. Insurance income was $61 million higher than the prior quarter, primarily the result of firming market conditions for insurance premiums and
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an experience-based refund of reinsurance premiums totaling $13 million. Investment banking and brokerage fees and commissions, bankcard fees and merchant discounts, checkcard fees and service charges on deposits also contributed to the increase in noninterest income, with these categories of noninterest income reflecting annualized growth rates of 21.3%, 40.8%, 34.1% and 14.5%, respectively. The increases in noninterest income described above were partially offset by a decline in mortgage banking income and FDIC loss share income totaling $12 million and $26 million, respectively. The decline in mortgage banking income was the result of a decrease in the gain on residential mortgage loan production and sales, as record production was more than offset by tightening margins.
Second Quarter 2013 compared to Second Quarter 2012
Noninterest income was $1.0 billion for the second quarter of 2013, an increase of $80 million, or 8.3%, compared to the second quarter of 2012. Insurance income was $33 million higher, primarily due to firming market conditions for insurance premiums and an experience-based refund of reinsurance premiums totaling $13 million. Net securities gains for the second quarter of 2013 totaled $23 million, compared to a net securities loss of $2 million in the same quarter of the prior year. Other income and investment banking and brokerage fees and commissions increased $17 million and $11 million, respectively, compared to the same quarter of the prior year. The increase in other income was primarily attributable to $20 million in higher income related to assets for certain post-employment benefits, which was offset by higher personnel expense, while the increase in investment banking and brokerage fees and commissions was primarily the result of higher retail investment commission income driven by an increase in assets under management. Mortgage banking income decreased $14 million due to a $7 million decrease in gains on residential mortgage loan production and sales due to tighter margins, and a $5 million decrease in the net mortgage servicing rights valuation.
NONINTEREST EXPENSE | % Change | % Change | ||||||||||||||
(dollars in millions) | Q2 | Q1 | Q2 | Q2 13 vs. | Q2 13 vs. | |||||||||||
2013 | 2013 | 2012 | Q1 13 | Q2 12 | ||||||||||||
(annualized) | ||||||||||||||||
Personnel expense | $ | 844 | $ | 817 | $ | 775 | 13.3 | 8.9 | ||||||||
Occupancy and equipment expense | 170 | 171 | 159 | (2.3) | 6.9 | |||||||||||
Loan-related expense | 63 | 58 | 62 | 34.6 | 1.6 | |||||||||||
Foreclosed property expense | 12 | 18 | 72 | (133.7) | (83.3) | |||||||||||
Regulatory charges | 35 | 35 | 43 | ― | (18.6) | |||||||||||
Professional services | 47 | 36 | 39 | 122.6 | 20.5 | |||||||||||
Software expense | 38 | 38 | 32 | ― | 18.8 | |||||||||||
Amortization of intangibles | 27 | 27 | 29 | ― | (6.9) | |||||||||||
Merger-related and restructuring charges, net | 27 | 5 | 2 | NM | NM | |||||||||||
Other expense | 233 | 209 | 213 | 46.1 | 9.4 | |||||||||||
Total noninterest expense | $ | 1,496 | $ | 1,414 | $ | 1,426 | 23.3 | 4.9 | ||||||||
NM - not meaningful. |
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Second Quarter 2013 compared to First Quarter 2013
Noninterest expense was $1.5 billion for the second quarter of 2013, an increase of $82 million compared to the first quarter of 2013. Personnel expense increased $27 million compared to the prior quarter, primarily the result of higher production-related incentives and commissions, seasonally higher equity-based compensation for retirement eligible employees and annual merit increases for officers. These increases were partially offset by lower fringe benefits expense as a result of certain employees meeting the annual thresholds on social security and unemployment taxes. Merger-related and restructuring charges were $22 million higher than the prior quarter, primarily the result of optimization activities related to the Community Bank that started in the second quarter. Other expense was $24 million higher than the first quarter of 2013, which primarily reflects higher project-related expenses, operating charge-offs and other similar expenses. Professional fees increased $11 million compared to the first quarter, driven by systems and process-related enhancements. Foreclosed property expense was $12 million, or $6 million lower compared to the first quarter of 2013, the lowest level in five years. The decrease in foreclosed property expense was the result of lower write-downs, losses and carrying costs associated with foreclosed property.
Second Quarter 2013 compared to Second Quarter 2012
Noninterest expense was $1.5 billion for the second quarter of 2013, an increase of $70 million, or 4.9%, compared to the second quarter of 2012. This increase was primarily attributable to a $69 million increase in personnel expense, a $25 million increase in merger-related and restructuring charges, and a $20 million increase in other expense, which were partially offset by decreased foreclosed property expense. The increase in personnel expense was primarily attributable to the BankAtlantic acquisition in the third quarter of 2012, an increase in other post-employment benefits, which is offset in other income, and higher production-based incentives and commissions. The increase in merger-related and restructuring charges primarily relates to optimization activities related to Community Banking that began during the second quarter, and the increase in other expense was attributable to higher project-related expenses, operating charge-offs and various other expenses. Foreclosed property expense decreased $60 million, which was the result of lower write-downs, losses and carrying costs associated with foreclosed property.
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LOANS AND LEASES - average balances | % Change | % Change | ||||||||||||
(dollars in millions) | Q2 | Q1 | Q2 | Q2 13 vs. | Q2 13 vs. | |||||||||
2013 | 2013 | 2012 | Q1 13 | Q2 12 | ||||||||||
(annualized) | ||||||||||||||
Commercial and industrial | $ | 38,359 | $ | 37,916 | $ | 36,293 | 4.7 | 5.7 | ||||||
Commercial real estate - other | 11,411 | 11,422 | 10,578 | (0.4) | 7.9 | |||||||||
Commercial real estate - residential ADC | 1,121 | 1,238 | 1,744 | (37.9) | (35.7) | |||||||||
Direct retail lending | 15,936 | 15,757 | 15,071 | 4.6 | 5.7 | |||||||||
Sales finance | 8,520 | 7,838 | 7,690 | 34.9 | 10.8 | |||||||||
Revolving credit | 2,268 | 2,279 | 2,178 | (1.9) | 4.1 | |||||||||
Residential mortgage | 23,391 | 23,618 | 22,114 | (3.9) | 5.8 | |||||||||
Other lending subsidiaries | 10,407 | 9,988 | 9,370 | 16.8 | 11.1 | |||||||||
Total, excluding covered loans | 111,413 | 110,056 | 105,038 | 4.9 | 6.1 | |||||||||
Covered | 2,858 | 3,133 | 4,211 | (35.2) | (32.1) | |||||||||
Total loans and leases held for investment | $ | 114,271 | $ | 113,189 | $ | 109,249 | 3.8 | 4.6 |
Average loans held for investment for the second quarter of 2013 increased $1.1 billion, or an annualized 3.8%, compared to the first quarter of 2013. The increase in average loans and leases was driven by strong growth in the sales finance and other lending subsidiary portfolios, which reflected annualized growth rates of 34.9% and 16.8%, respectively, along with steady growth in the commercial and industrial and direct retail lending portfolios of 4.7% and 4.6% on an annualized basis. This growth was partially offset by expected declines in the commercial real estate – residential ADC, residential mortgage and covered loan portfolios, which declined $117 million, $227 million and $275 million, respectively.
Growth in the average sales finance loan portfolio totaled $682 million based on the strength of demand in both the consumer and wholesale segments of the prime automobile lending market. Average loans in other lending subsidiaries increased $419 million primarily the result of continued growth in small ticket consumer finance and seasonal growth in the insurance premium financing loan portfolio. The commercial and industrial and direct retail lending portfolios increased $443 million and $179 million, respectively, compared to the first quarter. Growth in the commercial and industrial portfolio was driven by increased market penetration in certain geographical areas including Texas, Florida and Alabama, an increase in tax-exempt financing to hospitals and other non-profit entities, and continued growth in asset-based lending. The increase in the direct retail lending portfolio was driven by higher levels of first lien refinance transactions.
Average residential mortgage loans decreased $227 million, or an annualized 3.9%, compared to the prior quarter, as the majority of residential mortgage loan production is directed to the held for sale portfolio. Average commercial real estate – residential ADC and the covered loan portfolio declined 37.9% and 35.2% on an annualized basis, respectively, due to continued weakness in the ADC market and runoff of covered loans.
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DEPOSITS - average balances | % Change | % Change | ||||||||||||||
(dollars in millions) | Q2 | Q1 | Q2 | Q2 13 vs. | Q2 13 vs. | |||||||||||
2013 | 2013 | 2012 | Q1 13 | Q2 12 | ||||||||||||
(annualized) | ||||||||||||||||
Noninterest-bearing deposits | $ | 33,586 | $ | 32,518 | $ | 27,643 | 13.2 | 21.5 | ||||||||
Interest checking | 19,276 | 20,169 | 19,911 | (17.8) | (3.2) | |||||||||||
Money market and savings | 48,140 | 48,431 | 46,557 | (2.4) | 3.4 | |||||||||||
Certificates and other time deposits | 28,034 | 28,934 | 31,205 | (12.5) | (10.2) | |||||||||||
Foreign office deposits - interest-bearing | 947 | 385 | 32 | NM | NM | |||||||||||
Total deposits | $ | 129,983 | $ | 130,437 | $ | 125,348 | (1.4) | 3.7 | ||||||||
NM - not meaningful. |
Average deposits for the second quarter of 2013 decreased $454 million, or 1.4% on an annualized basis, compared to the first quarter of 2013. While total average deposits declined during the quarter, the mix of the portfolio has continued to improve as average noninterest-bearing deposits grew $1.1 billion while average certificates and other time deposits decreased $900 million during the quarter. Average noninterest-bearing deposits represented 25.8% of total average deposits for the second quarter of 2013, compared to 24.9% for the prior quarter.
Average noninterest-bearing deposits for commercial and retail accounts increased $1.2 billion, and were partially offset by public funds accounts that decreased $180 million. Average interest-checking and money market and savings accounts were down $1.2 billion compared to the prior quarter, which reflects a decrease in public funds and commercial accounts totaling $991 million and $406 million, respectively. These declines were partially offset by an increase of $212 million in retail accounts. Foreign office deposits increased $562 million compared to the first quarter, which partially offset the declines in interest checking, money market and savings, and certificates and other time deposits.
The cost of interest-bearing deposits was 0.32% for the second quarter of 2013, a decrease of four basis points compared to the prior quarter.
SEGMENT RESULTS | Change | Change | ||||||||||||||
(dollars in millions) | Q2 | Q1 | Q2 | Q2 13 vs. | Q2 13 vs. | |||||||||||
Segment Net Income | 2013 | 2013 | 2012 | Q1 13 | Q2 12 | |||||||||||
Community Banking | $ | 209 | $ | 229 | $ | 169 | $ | (20) | $ | 40 | ||||||
Residential Mortgage Banking | 78 | 103 | 70 | (25) | 8 | |||||||||||
Dealer Financial Services | 59 | 40 | 63 | 19 | (4) | |||||||||||
Specialized Lending | 68 | 53 | 67 | 15 | 1 | |||||||||||
Insurance Services | 66 | 30 | 66 | 36 | ― | |||||||||||
Financial Services | 71 | 70 | 65 | 1 | 6 | |||||||||||
Other, Treasury and Corporate | 25 | (269) | 38 | 294 | (13) | |||||||||||
Total net income | $ | 576 | $ | 256 | $ | 538 | $ | 320 | $ | 38 | ||||||
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Second Quarter 2013 compared to First Quarter 2013
Community Banking
Community Banking serves individual and business clients by offering a variety of loan and deposit products and other financial services. The segment is primarily responsible for acquiring and maintaining client relationships. The results for Community Banking have included the results of BankAtlantic since its systems conversion in October 2012.
Community Banking net income was $209 million in the second quarter of 2013, a $20 million decrease from the prior quarter. The allocated provision for loan and lease losses increased $28 million, primarily due to loan growth in the current quarter and favorable reserve rate adjustments in the prior quarter driven by improvements in loss frequency in the CRE portfolios and improved TDR loss factors in the direct retail portfolio. The $19 million increase in noninterest expense was primarily attributable to an $18 million restructuring charge related to regional restructuring and branch optimization. Segment net interest income decreased $5 million, primarily due to tighter funding spreads earned on deposits, partially offset by changes in deposit mix as a result of growth in noninterest-bearing and lower cost deposits, coupled with a reduction in certificates of deposits. Noninterest income increased $22 million, primarily due to higher bankcard fees, merchant discounts, service charges on deposits, and checkcard fees.
Residential Mortgage Banking
Residential Mortgage Banking retains and services mortgage loans originated by BB&T as well as those purchased from various correspondent originators. Mortgage loan products include fixed and adjustable-rate government guaranteed and conventional loans for the purpose of constructing, purchasing, or refinancing residential properties. Substantially all of the properties are owner-occupied.
Residential Mortgage Banking net income was $78 million in the second quarter of 2013, a decrease of $25 million from the prior quarter. Noninterest expense increased $18 million primarily due to higher expense associated with mortgage repurchase reserves and higher salary and incentive costs. The allocated provision for loan and lease losses increased $12 million driven by higher TDR loss factors. Noninterest income decreased $10 million, driven by lower gains on mortgage loan production and sales as pricing tightened due to competitive factors. This decrease was partially offset by an increase in the fair value of net mortgage servicing rights and higher net servicing income. The provision for income taxes decreased by $15 million primarily due to lower pre-tax income.
Dealer Financial Services
Dealer Financial Services primarily originates loans to consumers for the purchase of automobiles. These loans are originated on an indirect basis through approved franchised and independent automobile dealers throughout BB&T’s market area through BB&T Dealer Finance, and on a national basis through Regional Acceptance Corporation. Dealer Financial Services also
- 13 - |
originates loans for the purchase of recreational and marine vehicles and provides financing and servicing to dealers for their inventories.
Dealer Financial Services net income was $59 million in the second quarter of 2013, an increase of $19 million over the prior quarter. The allocated provision for loan and lease losses decreased $25 million, primarily the result of lower seasonal charge-offs related to the Regional Acceptance loan portfolio. Segment net interest income increased $9 million, primarily due to annualized loan growth of 22.9% compared to the prior quarter.
Specialized Lending
BB&T’s Specialized Lending segment consists of businesses that provide specialty finance alternatives to commercial and consumer clients including: commercial finance, mortgage warehouse lending, tax-exempt financing for local governments and special-purpose districts, equipment leasing, full-service commercial mortgage banking, commercial and retail insurance premium finance, dealer-based financing of equipment for consumers and small businesses, and direct consumer finance.
Specialized Lending net income was $68 million in the second quarter of 2013, an increase of $15 million over the prior quarter. The allocated provision for loan and lease losses decreased $24 million, primarily driven by lower charge-offs associated with the commercial finance portfolio. The provision for income taxes increased $12 million primarily due to higher pre-tax income.
Insurance Services
BB&T’s insurance agency / brokerage network is the sixth largest in the United States and in the world. Insurance Services provides property and casualty, life, and health insurance to business and individual clients. It also provides small business and corporate products, such as workers compensation and professional liability, as well as surety coverage and title insurance. In addition, Insurance Services underwrites a limited amount of property and casualty coverage.
Insurance Services net income was $66 million in the second quarter of 2013, a $36 million increase over the prior quarter. Insurance Service’s noninterest income was up $61 million primarily the result of firming market conditions for insurance premiums and an experience-based refund of reinsurance premiums totaling $13 million. The provision for income taxes was $22 million higher than the earlier quarter primarily due to higher pre-tax income.
Financial Services
Financial Services provides personal trust administration, estate planning, investment counseling, wealth management, asset management, employee benefits services, corporate banking and corporate trust services to individuals, corporations, institutions, foundations and government entities. In addition, Financial Services offers clients investment alternatives, including discount brokerage services, equities, fixed-rate and variable-rate annuities, mutual funds and governmental and municipal bonds through BB&T Investment Services, Inc. The
- 14 - |
segment also includes BB&T Securities, a full-service brokerage and investment banking firm, and the Corporate Banking Division, which originates and services large corporate relationships, syndicated lending relationships, and client derivatives.
Financial Services net income was $71 million, an increase of $1 million over the prior quarter. Noninterest income increased $7 million driven by higher investment banking and brokerage fees and commissions and trust and investment advisory fees. The allocated provision for loan and lease losses increased $5 million, primarily due to higher reserves related to the expansion of the large corporate loan portfolio. Financial Services continues to generate significant loan growth, with Corporate Banking’s average loan balances increasing $330 million or 19.1% on an annualized basis over the prior period, while BB&T Wealth’s average loan balances increased $96 million or 30.2% on an annualized basis.
Other, Treasury & Corporate
Net income in Other, Treasury & Corporate can vary due to changing needs of the Corporation, including the size of the investment portfolio, the need for wholesale funding, and income received from derivatives used to hedge the balance sheet. In the second quarter of 2013, Other, Treasury & Corporate generated net income of $25 million. Prior quarter results include the $281 million adjustment to the income tax provision related to an unresolved disputed tax liability previously discussed. Excluding this adjustment, net income for the first quarter of 2013 was $12 million. In the second quarter of 2013, the allocated provision for loan and lease losses decreased $100 million, primarily due to a reduction in the unallocated allowance for credit losses based on continued improvement in credit trends, and lower provision for covered loans primarily the result of improvement in estimated cash flows from certain residential mortgage loan pools. Noninterest income decreased $36 million, driven by lower FDIC loss share income. Noninterest expense increased $34 million, primarily due to higher personnel and project-related expenses. Segment net interest income decreased $17 million, primarily attributable to runoff in the covered loan portfolio.
Second Quarter 2013 compared to Second Quarter 2012
Community Banking
Community Banking net income was $209 million in the second quarter of 2013, an increase of $40 million over the second quarter of 2012. The allocated provision for loan and lease losses decreased $79 million. The decrease in provision expense was primarily attributable to lower business and consumer loan charge-offs, partially offset by loan growth during the quarter. Noninterest income increased $21 million, primarily due to higher bankcard fees, merchant discounts, checkcard fees and service charges on deposits. Net interest income decreased $33 million, primarily due to tighter funding spreads on deposits, partially offset by improvements in deposit mix as a result of growth in noninterest-bearing, money market, and savings deposits, coupled with a decrease in certificates of deposits. The provision for income taxes was $23 million higher for the second quarter of 2013 compared to the earlier quarter as a result of higher pre-tax income.
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Residential Mortgage Banking
Residential Mortgage Banking net income was $78 million in the second quarter of 2013, an increase of $8 million over the second quarter of 2012. Segment net interest income increased $15 million, which was driven by growth in average residential mortgage loans and higher credit spreads to funding costs when compared to the second quarter of 2012. The allocated provision for loan and lease losses decreased $9 million, primarily the result of lower charge-offs. Noninterest income decreased $11 million, driven by lower gains on mortgage loan production and sales as record production was offset by tighter spreads, and a decrease in the fair value of net mortgage servicing rights, partially offset by higher residential mortgage loan origination fee income.
Dealer Financial Services
Dealer Financial Services net income was $59 million in the second quarter of 2013, a decrease of $4 million from the second quarter of 2012. The allocated provision for loan and lease losses increased $15 million, primarily the result of an increase in the loss frequency estimates to a more normalized level. Segment net interest income increased $12 million, primarily due to wider credit spreads and loan growth in the Regional Acceptance Corporation portfolio. Dealer Financial Services grew average loans by 7.5% compared to the second quarter of 2012.
Specialized Lending
Specialized Lending net income was $68 million in the second quarter of 2013, an increase of $1 million over the second quarter of 2012.
Insurance Services
Insurance Services net income was $66 million in the second quarter of 2013, flat when compared to the second quarter of 2012. Noninterest income growth of $34 million was driven by organic growth in wholesale and retail property and casualty insurance operations as market conditions improved and insurance pricing continued to firm and an experience-based refund of reinsurance premiums totaling $13 million. Higher noninterest income growth was offset by a $32 million increase in noninterest expense, in part the result of higher salary and incentive costs, among other items.
Financial Services
Financial Services net income was $71 million, an increase of $6 million over the second quarter of 2012. Noninterest income increased $13 million, driven by higher investment banking fees and commissions and trust and investment advisory fees. Growth in these fees was attributable to improved financial market conditions and increased market volume of assets under management. Noninterest expense decreased $17 million, primarily due to an operating charge-off in the prior year. The allocated provision for loan and lease losses increased $22 million, primarily due to higher reserves related to the expansion of the large corporate loan
- 16 - |
portfolio. Financial Services continues to generate significant loan growth, with Corporate Banking’s average loan balances increasing $1.7 billion or 31.4% over the prior period, while BB&T Wealth’s average loan balances increased $232 million or 20.4%.
Other, Treasury & Corporate
The Other, Treasury & Corporate segment generated net income of $25 million in the second quarter of 2013, compared to net income of $38 million in the second quarter of 2012. Segment net interest income decreased $52 million, primarily attributable to continued runoff in the covered loan portfolio, while the $48 million increase in noninterest expense was driven by higher personnel expense, project-related costs, and restructuring expense. The allocated provision for loan and lease losses decreased $58 million, primarily due to a reduction in the unallocated allowance for credit losses based on continued improvement in credit trends. Noninterest income increased $20 million, driven by securities gains on the investment portfolio.
CAPITAL RATIOS (1) | ||||||||||
Q2 | Q1 | Q4 | Q3 | Q2 | ||||||
2013 | 2013 | 2012 | 2012 | 2012 | ||||||
Risk-based | ||||||||||
Tier 1 (%) | 11.3 | 10.8 | 10.7 | 10.2 | 9.6 | |||||
Total (%) | 14.1 | 13.7 | 13.6 | 13.2 | 12.7 | |||||
Leverage (%) | 8.8 | 8.3 | 8.2 | 7.9 | 7.3 | |||||
Tier 1 common equity to tangible assets (%) (2) | 7.3 | 7.1 | 6.9 | 6.8 | 6.9 | |||||
Tier 1 common equity to risk-weighted assets (%) (2) | 9.4 | 9.2 | 9.1 | 8.9 | 9.1 |
(1) Regulatory capital ratios are preliminary.
(2) Tier 1 common equity and related ratios are non-GAAP measures. BB&T uses the Tier 1 common equity definition used in the SCAP assessment to calculate these ratios. See the calculations and management's reasons for using these measures in the Capital Information – Five Quarter Trend of the Quarterly Performance Summary.
BB&T’s capital levels remained strong at June 30, 2013. BB&T declared total common dividends of $0.23 during the second quarter of 2013, which resulted in a dividend payout ratio of 29%. The increases in the regulatory risk-based capital and leverage ratios were primarily due to the issuance of $500 million of Tier 1 qualifying non-cumulative perpetual preferred stock during the second quarter of 2013.
On March 14, 2013, the Board of Governors of the Federal Reserve System informed BB&T that it objected to certain elements of its capital plan. However, based on the quantitative results of the stress test, BB&T does not believe these objections were related to the Company’s capital strength, earnings power or financial condition. The CCAR resubmission was submitted on June 11, 2013 and the regulators have up to 75 days to review.
BB&T’s common equity Tier 1 ratio under Basel III was approximately 9.0% at June 30, 2013, based on management’s interpretation of the final rules adopted July 2, 2013, by the Federal Reserve Board that established a new comprehensive capital framework for U.S. banking organizations. The minimum required common equity Tier 1 ratio, including the capital
- 17 - |
conservation buffer, will gradually increase from 4.5% on January 1, 2015 to 7.0% on January 1, 2019.
ASSET QUALITY (1) | Change | Change | |||||||||||||
(dollars in millions) | Q2 | Q1 | Q2 | Q2 13 vs. | Q2 13 vs. | ||||||||||
2013 | 2013 | 2012 | Q1 13 | Q2 12 | |||||||||||
Total nonperforming assets | $ | 1,276 | $ | 1,413 | $ | 1,897 | $ | (137) | $ | (621) | |||||
Total loans 90 days past due and still accruing | 123 | 138 | 147 | (15) | (24) | ||||||||||
Total loans 30-89 days past due | 940 | 956 | 907 | (16) | 33 | ||||||||||
Allowance for loan and lease losses | 1,775 | 1,836 | 1,987 | (61) | (212) | ||||||||||
Total performing TDRs | 1,313 | 1,289 | 1,052 | 24 | 261 | ||||||||||
Nonperforming loans and leases as a percentage of total | |||||||||||||||
loans and leases (%) | 0.99 | 1.12 | 1.50 | (0.13) | (0.51) | ||||||||||
Nonperforming assets as a percentage of total assets (%) | 0.71 | 0.80 | 1.09 | (0.09) | (0.38) | ||||||||||
Allowance for loan and lease losses as a percentage of | |||||||||||||||
loans and leases held for investment (%) | 1.57 | 1.65 | 1.86 | (0.08) | (0.29) | ||||||||||
Net charge-offs as a percentage of average loans and | |||||||||||||||
leases (%) annualized | 0.75 | 0.98 | 1.22 | (0.23) | (0.47) | ||||||||||
Ratio of allowance for loan and lease losses to net | |||||||||||||||
charge-offs (times) annualized | 2.07 | 1.65 | 1.52 | 0.42 | 0.55 | ||||||||||
Ratio of allowance for loan and lease losses to | |||||||||||||||
nonperforming loans and leases held for | |||||||||||||||
investment (times) | 1.55 | 1.43 | 1.21 | 0.12 | 0.34 |
(1) Excludes amounts related to covered assets and government guaranteed loans. See footnotes on the Credit Quality pages of the Quarterly Performance Summary for additional information.
Nonperforming assets, excluding covered foreclosed real estate, decreased $137 million compared to March 31, 2013. This decrease was primarily driven by a $134 million reduction in nonperforming loans and leases. At June 30, 2013, nonperforming loans and leases represented 0.99% of total loans and leases, excluding covered assets, which is at its lowest level since the first quarter of 2008.
Loan delinquencies continued to improve during the second quarter of 2013. Loans 30-89 days past due and still accruing, excluding loans guaranteed by the government, totaled $940 million at June 30, 2013, a decrease of $16 million compared to March 31, 2013, while loans 90 days past due and still accruing, excluding loans guaranteed by the government, totaled $123 million at June 30, 2013, a decrease of $15 million compared to March 31, 2013.
Total performing troubled debt restructurings (“TDRs”), excluding loans guaranteed by the government, were $1.3 billion at June 30, 2013, an increase of $24 million compared to March 31, 2013.
Excluding covered loans, net charge-offs during the second quarter of 2013 totaled $215 million and were an annualized 0.75% of average loans and leases, compared to $275 million
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and 0.98%, respectively, during the first quarter of 2013. Net charge-offs, excluding covered loans, were at the lowest level since the second quarter of 2008.
As of June 30, 2013, the allowance for loan and lease losses was 1.57% of total loans and leases held for investment, excluding covered loans, compared to 1.65% at March 31, 2013, and 1.86% at June 30, 2012. The decline in the allowance as a percentage of total loans reflects improvement in the overall quality of the loan portfolio. The allowance for loan and lease losses was 155% of nonperforming loans and leases held for investment, excluding covered loans, compared to 143% at March 31, 2013 and 121% at June 30, 2012.
Earnings presentation and Quarterly Performance Summary
To listen to BB&T’s live second quarter 2013 earnings conference call at 8 a.m. (ET) today, please call 888-632-5009 and enter the participant code 5184622. A presentation will be used during the earnings conference call and is available on our website at www.bbt.com. Replays of the conference call will be available by dialing 888-203-1112 (access code 4313363) until August 18, 2013.
To access the presentation, including an appendix reconciling non-GAAP disclosures, go to www.bbt.com, click on “About” and proceed to “Investor Relations.” The presentation can be found under “View Recent Presentations.”
BB&T’s second quarter 2013 Quarterly Performance Summary, which contains detailed financial schedules, is available on BB&T’s website at www.bbt.com/financials.html.
About BB&T
As of June 30, 2013, BB&T is one of the largest financial services holding companies in the U.S. with $182.7 billion in assets and market capitalization of $23.8 billion. Based in Winston-Salem, N.C., the company operates 1,851 financial centers in 12 states and Washington, D.C., and offers a full range of consumer and commercial banking, securities brokerage, asset management, mortgage and insurance products and services. A Fortune 500 company, BB&T is consistently recognized for outstanding client satisfaction by J.D. Power and Associates, the U.S. Small Business Administration, Greenwich Associates and others. More information about BB&T and its full line of products and services is available at www.bbt.com.
#-#-#
Capital ratios are preliminary. Credit quality data excludes covered and government guaranteed loans where applicable.
This news release contains financial information and performance measures determined by methods other than in accordance with accounting principles generally accepted in the United States of America (“GAAP”). BB&T’s management uses these “non-GAAP” measures in their analysis of the Corporation’s performance and the efficiency of its operations. Management believes that these non-GAAP 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 in the current period. The company believes that a meaningful analysis of its financial performance requires an understanding of the factors underlying that performance. BB&T’s management believes that 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:
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· | Tier 1 common equity and related ratios are non-GAAP measures. BB&T uses the Tier 1 common equity definition used in the SCAP assessment to calculate these ratios. The Basel III common equity Tier I ratio reflects management’s interpretation of the regulatory requirements, which is subject to change. BB&T's management uses these measures to assess the quality of capital and believes that investors may find them useful in their analysis of the Corporation. |
· | Asset quality ratios have been adjusted to remove the impact of acquired loans and foreclosed property covered by FDIC loss sharing agreements from the numerator and denominator of these ratios. Management believes that their inclusion may result in distortion of these ratios, such that they might not be comparable to other periods presented or to other portfolios that were not impacted by purchase accounting. |
· | Fee income and efficiency ratios are non-GAAP in that they exclude securities gains (losses), foreclosed property expense, amortization of intangible assets, merger-related and restructuring charges, the impact of FDIC loss share accounting and other selected items. BB&T’s management uses these measures in their analysis of the Corporation’s performance. BB&T’s management believe 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. |
· | Return on average tangible common shareholders’ equity is a non-GAAP measure that calculates the return on average common shareholders’ equity without the impact of intangible assets and their related amortization. This measure is useful for evaluating the performance of a business consistently, whether acquired or developed internally. |
· | 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. BB&T’s management believes that the exclusion of the generally higher yielding assets acquired in the Colonial acquisition from the calculation of net interest margin provides investors with useful information related to the relative performance of the remainder of BB&T’s earning assets. |
· | Net income available to common shareholders and diluted EPS have been adjusted to exclude the impact of the $281 million tax adjustment that was recorded in the first quarter of 2013. BB&T management believes these adjustments increase comparability of period-to-period results and uses these measures to assess performance and believes investors may find them useful in their analysis of the Corporation. |
A reconciliation of these non-GAAP measures to the most directly comparable GAAP measure is included on the Investor Relations section of BB&T’s website and in BB&T’s Second Quarter 2013 Quarterly Performance Summary, which is available on BB&T’s website at www.bbt.com/financials.html.
This news release contains certain forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. These statements may address issues that involve significant risks, uncertainties, estimates and assumptions made by management. Actual results may differ materially from current projections. Please refer to BB&T’s filings with the Securities and Exchange Commission for a summary of important factors that may affect BB&T’s forward-looking statements. BB&T undertakes no obligation to revise these statements following the date of this news release.
- 20 -
Exhibit 99.2
BB&T Corporation
Quarterly Performance Summary
Second Quarter 2013
1 |
2 |
3 |
4 |
Net interest income (expense) | $ | 532 | $ | 516 | 3.1 | % | $ | 294 | $ | 286 | 2.8 | % | $ | 210 | $ | 210 | ― | % | $ | 178 | $ | 174 | 2.3 | % | |||||||||||||||
Net intersegment interest income | |||||||||||||||||||||||||||||||||||||||
(expense) | 277 | 326 | (15.0) | (185) | (192) | (3.6) | (38) | (50) | (24.0) | (31) | (37) | (16.2) | |||||||||||||||||||||||||||
Segment net interest income | 809 | 842 | (3.9) | 109 | 94 | 16.0 | 172 | 160 | 7.5 | 147 | 137 | 7.3 | |||||||||||||||||||||||||||
Allocated provision for loan | |||||||||||||||||||||||||||||||||||||||
and lease losses | 110 | 189 | (41.8) | 29 | 38 | (23.7) | 42 | 27 | 55.6 | 27 | 23 | 17.4 | |||||||||||||||||||||||||||
Noninterest income | 300 | 279 | 7.5 | 151 | 162 | (6.8) | 1 | 2 | (50.0) | 56 | 52 | 7.7 | |||||||||||||||||||||||||||
Intersegment net referral fees | |||||||||||||||||||||||||||||||||||||||
(expense) | 45 | 45 | ― | ― | ― | ― | ― | ― | ― | ― | ― | ― | |||||||||||||||||||||||||||
Noninterest expense | 448 | 446 | 0.4 | 88 | 92 | (4.3) | 28 | 24 | 16.7 | 65 | 58 | 12.1 | |||||||||||||||||||||||||||
Amortization of intangibles | 9 | 10 | (10.0) | ― | ― | ― | ― | ― | ― | 2 | 2 | ― | |||||||||||||||||||||||||||
Allocated corporate expenses | 258 | 255 | 1.2 | 17 | 13 | 30.8 | 8 | 10 | (20.0) | 16 | 19 | (15.8) | |||||||||||||||||||||||||||
Income (loss) before income taxes | 329 | 266 | 23.7 | 126 | 113 | 11.5 | 95 | 101 | (5.9) | 93 | 87 | 6.9 | |||||||||||||||||||||||||||
Provision (benefit) for income | |||||||||||||||||||||||||||||||||||||||
taxes | 120 | 97 | 23.7 | 48 | 43 | 11.6 | 36 | 38 | (5.3) | 25 | 20 | 25.0 | |||||||||||||||||||||||||||
Segment net income (loss) | $ | 209 | $ | 169 | 23.7 | $ | 78 | $ | 70 | 11.4 | $ | 59 | $ | 63 | (6.3) | $ | 68 | $ | 67 | 1.5 | |||||||||||||||||||
Identifiable segment assets | |||||||||||||||||||||||||||||||||||||||
(period end) | $ | 62,998 | $ | 60,961 | 3.3 | $ | 28,345 | $ | 27,318 | 3.8 | $ | 11,188 | $ | 10,303 | 8.6 | $ | 18,892 | $ | 18,140 | 4.1 | |||||||||||||||||||
Other, Treasury | Total BB&T | ||||||||||||||||||||||||||||||||||||||
Insurance Services | Financial Services | & Corporate (2) | Corporation | ||||||||||||||||||||||||||||||||||||
June 30 | June 30 | Percent | June 30 | June 30 | Percent | June 30 | June 30 | Percent | June 30 | June 30 | Percent | ||||||||||||||||||||||||||||
2013 | 2012 | Change | 2013 | 2012 | Change | 2013 | 2012 | Change | 2013 | 2012 | Change | ||||||||||||||||||||||||||||
Net interest income (expense) | $ | 1 | $ | ― | NM | % | $ | 40 | $ | 33 | 21.2 | % | $ | 160 | $ | 243 | (34.2) | % | $ | 1,415 | $ | 1,462 | (3.2) | % | |||||||||||||||
Net intersegment interest income | |||||||||||||||||||||||||||||||||||||||
(expense) | 2 | 1 | 100.0 | 74 | 82 | (9.8) | (99) | (130) | (23.8) | ― | ― | ― | |||||||||||||||||||||||||||
Segment net interest income | 3 | 1 | 200.0 | 114 | 115 | (0.9) | 61 | 113 | (46.0) | 1,415 | 1,462 | (3.2) | |||||||||||||||||||||||||||
Allocated provision for loan | |||||||||||||||||||||||||||||||||||||||
and lease losses | ― | ― | ― | 14 | (8) | NM | (54) | 4 | NM | 168 | 273 | (38.5) | |||||||||||||||||||||||||||
Noninterest income | 427 | 393 | 8.7 | 183 | 170 | 7.6 | (72) | (92) | (21.7) | 1,046 | 966 | 8.3 | |||||||||||||||||||||||||||
Intersegment net referral fees | |||||||||||||||||||||||||||||||||||||||
(expense) | ― | ― | ― | 11 | 6 | 83.3 | (56) | (51) | 9.8 | ― | ― | ― | |||||||||||||||||||||||||||
Noninterest expense | 292 | 260 | 12.3 | 155 | 172 | (9.9) | 393 | 345 | 13.9 | 1,469 | 1,397 | 5.2 | |||||||||||||||||||||||||||
Amortization of intangibles | 16 | 17 | (5.9) | ― | 1 | (100.0) | ― | (1) | (100.0) | 27 | 29 | (6.9) | |||||||||||||||||||||||||||
Allocated corporate expenses | 22 | 20 | 10.0 | 26 | 23 | 13.0 | (347) | (340) | 2.1 | ― | ― | ― | |||||||||||||||||||||||||||
Income (loss) before income taxes | 100 | 97 | 3.1 | 113 | 103 | 9.7 | (59) | (38) | 55.3 | 797 | 729 | 9.3 | |||||||||||||||||||||||||||
Provision (benefit) for income | |||||||||||||||||||||||||||||||||||||||
taxes | 34 | 31 | 9.7 | 42 | 38 | 10.5 | (84) | (76) | 10.5 | 221 | 191 | 15.7 | |||||||||||||||||||||||||||
Segment net income (loss) | $ | 66 | $ | 66 | ― | $ | 71 | $ | 65 | 9.2 | $ | 25 | $ | 38 | (34.2) | $ | 576 | $ | 538 | 7.1 | |||||||||||||||||||
Identifiable segment assets | |||||||||||||||||||||||||||||||||||||||
(period end) | $ | 3,164 | $ | 3,299 | (4.1) | $ | 10,425 | $ | 8,312 | 25.4 | $ | 47,723 | $ | 50,196 | (4.9) | $ | 182,735 | $ | 178,529 | 2.4 | |||||||||||||||||||
(1) | Lines of business results are preliminary. | ||||||||||||||||||||||||||||||||||||||
(2) | Includes financial data from subsidiaries below the quantitative and qualitative thresholds requiring disclosure. | ||||||||||||||||||||||||||||||||||||||
NM | - not meaningful. |
5 |
Net interest income (expense) | $ | 1,056 | $ | 1,022 | 3.3 | % | $ | 593 | $ | 564 | 5.1 | % | $ | 415 | $ | 420 | (1.2) | % | $ | 352 | $ | 341 | 3.2 | % | |||||||||||||||
Net intersegment interest income | |||||||||||||||||||||||||||||||||||||||
(expense) | 567 | 666 | (14.9) | (376) | (381) | (1.3) | (80) | (104) | (23.1) | (62) | (75) | (17.3) | |||||||||||||||||||||||||||
Segment net interest income | 1,623 | 1,688 | (3.9) | 217 | 183 | 18.6 | 335 | 316 | 6.0 | 290 | 266 | 9.0 | |||||||||||||||||||||||||||
Allocated provision for loan | |||||||||||||||||||||||||||||||||||||||
and lease losses | 192 | 443 | (56.7) | 46 | 16 | 187.5 | 109 | 54 | 101.9 | 78 | 49 | 59.2 | |||||||||||||||||||||||||||
Noninterest income | 578 | 547 | 5.7 | 312 | 357 | (12.6) | 3 | 4 | (25.0) | 110 | 105 | 4.8 | |||||||||||||||||||||||||||
Intersegment net referral fees | |||||||||||||||||||||||||||||||||||||||
(expense) | 94 | 85 | 10.6 | ― | (1) | (100.0) | ― | ― | ― | ― | ― | ― | |||||||||||||||||||||||||||
Noninterest expense | 877 | 932 | (5.9) | 158 | 177 | (10.7) | 54 | 50 | 8.0 | 128 | 123 | 4.1 | |||||||||||||||||||||||||||
Amortization of intangibles | 19 | 19 | ― | ― | ― | ― | ― | ― | ― | 3 | 3 | ― | |||||||||||||||||||||||||||
Allocated corporate expenses | 516 | 512 | 0.8 | 33 | 27 | 22.2 | 15 | 19 | (21.1) | 32 | 38 | (15.8) | |||||||||||||||||||||||||||
Income (loss) before income taxes | 691 | 414 | 66.9 | 292 | 319 | (8.5) | 160 | 197 | (18.8) | 159 | 158 | 0.6 | |||||||||||||||||||||||||||
Provision (benefit) for income | |||||||||||||||||||||||||||||||||||||||
taxes | 253 | 149 | 69.8 | 111 | 121 | (8.3) | 61 | 75 | (18.7) | 38 | 34 | 11.8 | |||||||||||||||||||||||||||
Segment net income (loss) | $ | 438 | $ | 265 | 65.3 | $ | 181 | $ | 198 | (8.6) | $ | 99 | $ | 122 | (18.9) | $ | 121 | $ | 124 | (2.4) | |||||||||||||||||||
Identifiable segment assets | |||||||||||||||||||||||||||||||||||||||
(period end) | $ | 62,998 | $ | 60,961 | 3.3 | $ | 28,345 | $ | 27,318 | 3.8 | $ | 11,188 | $ | 10,303 | 8.6 | $ | 18,892 | $ | 18,140 | 4.1 | |||||||||||||||||||
Other, Treasury | Total BB&T | ||||||||||||||||||||||||||||||||||||||
Insurance Services | Financial Services | & Corporate (2) | Corporation | ||||||||||||||||||||||||||||||||||||
June 30 | June 30 | Percent | June 30 | June 30 | Percent | June 30 | June 30 | Percent | June 30 | June 30 | Percent | ||||||||||||||||||||||||||||
2013 | 2012 | Change | 2013 | 2012 | Change | 2013 | 2012 | Change | 2013 | 2012 | Change | ||||||||||||||||||||||||||||
Net interest income (expense) | $ | 2 | $ | 1 | 100.0 | % | $ | 74 | $ | 63 | 17.5 | % | $ | 345 | $ | 487 | (29.2) | % | $ | 2,837 | $ | 2,898 | (2.1) | % | |||||||||||||||
Net intersegment interest income | |||||||||||||||||||||||||||||||||||||||
(expense) | 3 | 2 | 50.0 | 154 | 164 | (6.1) | (206) | (272) | (24.3) | ― | ― | ― | |||||||||||||||||||||||||||
Segment net interest income | 5 | 3 | 66.7 | 228 | 227 | 0.4 | 139 | 215 | (35.3) | 2,837 | 2,898 | (2.1) | |||||||||||||||||||||||||||
Allocated provision for loan | |||||||||||||||||||||||||||||||||||||||
and lease losses | ― | ― | ― | 23 | 8 | 187.5 | (8) | (9) | (11.1) | 440 | 561 | (21.6) | |||||||||||||||||||||||||||
Noninterest income | 793 | 663 | 19.6 | 359 | 348 | 3.2 | (108) | (187) | (42.2) | 2,047 | 1,837 | 11.4 | |||||||||||||||||||||||||||
Intersegment net referral fees | |||||||||||||||||||||||||||||||||||||||
(expense) | ― | ― | ― | 19 | 12 | 58.3 | (113) | (96) | 17.7 | ― | ― | ― | |||||||||||||||||||||||||||
Noninterest expense | 580 | 472 | 22.9 | 307 | 326 | (5.8) | 752 | 680 | 10.6 | 2,856 | 2,760 | 3.5 | |||||||||||||||||||||||||||
Amortization of intangibles | 31 | 27 | 14.8 | 1 | 2 | (50.0) | ― | ― | ― | 54 | 51 | 5.9 | |||||||||||||||||||||||||||
Allocated corporate expenses | 45 | 39 | 15.4 | 50 | 45 | 11.1 | (691) | (680) | 1.6 | ― | ― | ― | |||||||||||||||||||||||||||
Income (loss) before income taxes | 142 | 128 | 10.9 | 225 | 206 | 9.2 | (135) | (59) | 128.8 | 1,534 | 1,363 | 12.5 | |||||||||||||||||||||||||||
Provision (benefit) for income | |||||||||||||||||||||||||||||||||||||||
taxes | 46 | 39 | 17.9 | 84 | 77 | 9.1 | 109 | (115) | (194.8) | 702 | 380 | 84.7 | |||||||||||||||||||||||||||
Segment net income (loss) | $ | 96 | $ | 89 | 7.9 | $ | 141 | $ | 129 | 9.3 | $ | (244) | $ | 56 | NM | $ | 832 | $ | 983 | (15.4) | |||||||||||||||||||
Identifiable segment assets | |||||||||||||||||||||||||||||||||||||||
(period end) | $ | 3,164 | $ | 3,299 | (4.1) | $ | 10,425 | $ | 8,312 | 25.4 | $ | 47,723 | $ | 50,196 | (4.9) | $ | 182,735 | $ | 178,529 | 2.4 | |||||||||||||||||||
(1) | Lines of business results are preliminary. | ||||||||||||||||||||||||||||||||||||||
(2) | Includes financial data from subsidiaries below the quantitative and qualitative thresholds requiring disclosure. | ||||||||||||||||||||||||||||||||||||||
NM | - not meaningful. |
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Exhibit 99.3
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 that these non - GAAP 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 in the current period . The company believes that a meaningful analysis of its financial performance requires an understanding of the factors underlying that performance . BB&T’s management believes that 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 . In this presentation, these measures are generally marked as “non - GAAP” and are accompanied with disclosure regarding why BB&T’s management believes such measures are useful to investors . Below is a listing of the types of non - GAAP measures used in this presentation : □ Tier 1 common equity and related ratios are non - GAAP measures. BB&T uses the Tier 1 common equity definition used in the SCAP as sessment to calculate these ratios. The Basel III common equity Tier I capital ratio reflects management’s interpretation of the regulatory requirements. BB&T’s management us es these measures to assess the quality of capital and believes that investors may find them useful in their analysis of the Corporation. □ Asset quality ratios have been adjusted to remove the impact of acquired loans and foreclosed property covered by FDIC loss s har ing agreements from the numerator and denominator of these ratios. Management believes that their inclusion may result in distortion of these ratios, such that they may not b e c omparable to other periods presented or to other portfolios that were not impacted by purchase accounting. □ Fee income and efficiency ratios are non - GAAP in that they exclude securities gains (losses), foreclosed property expense, amort ization of intangible assets, merger - related and restructuring charges, the impact of FDIC loss share accounting and other selected items. BB&T’s management uses these measu res in their analysis of the Corporation’s performance. BB&T’s management believes these measures provide a greater understanding of ongoing operations and enhance comparability of res ults with prior periods, as well as demonstrating the effects of significant gains and charges. □ Return on average tangible common shareholders’ equity is a non - GAAP measure that calculates the return on average common shareh olders’ equity without the impact of intangible assets and their related amortization. This measure is useful for evaluating the performance of a business consistently, whe the r acquired or developed internally. □ Core net interest margin is a non - GAAP measure that adjusts net interest margin to exclude the estimated impact of interest inco me and funding costs associated with loans and securities acquired in the Colonial acquisition. BB&T’s management believes that the exclusion of the generally higher yielding assets acquired in the Colonial transaction from the calculation of net interest margin provides investors with useful information related to the relative performance of the rema ind er of BB&T’s earning assets. □ Net income available to common shareholders and diluted EPS have been adjusted to exclude the impact of the $281 million tax adj ustment that was recorded in the first quarter of 2013. BB&T management believes these adjustments increase comparability of period to period results and uses these measures t o a ssess performance and believes investors may find them useful in their analysis of the corporation. A reconciliation of these non - GAAP measures to the most directly comparable GAAP measure is included on the Investor Relations s ection of BB&T’s website and as an appendix to this presentation. Forward - Looking Information This presentation contains forward - looking statements with respect to the financial condition, results of operations and businesses of BB&T . Statements that are not historical or current facts or statements about beliefs and expectations are forward - looking statements . Words such as “anticipates,” “believes,” “estimates,” “expects,” “forecasts,” “intends,” “plans,” “projects,” “may,” “will,” “should,” and other similar expressions are intended to identify these forward - looking statements . Forward - looking statements involve certain risks and uncertainties and are based on the beliefs and assumptions of the management of BB&T, and the information available to management at the time that this presentation was prepared . Factors that may cause actual results to differ materially from those contemplated by such forward - looking statements include, among others, the following : ( 1 ) 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 or other services ; ( 2 ) disruptions to the credit and financial markets, either nationally or globally, including the impact of a downgrade of U . S . government obligations by one of the credit rating agencies and the adverse effects of the ongoing sovereign debt crisis in Europe ; ( 3 ) changes in the interest rate environment may reduce net interest margins and / or the volumes and values of loans made or held as well as the value of other financial assets held ; ( 4 ) competitive pressures among depository and other financial institutions may increase significantly ; ( 5 ) legislative, regulatory, or accounting changes, including changes resulting from the adoption and implementation of the Dodd - Frank Wall Street Reform and Consumer Protection Act of 2010 , and changes in accounting standards, may adversely affect the businesses in which BB&T is engaged ; ( 6 ) local, state or federal taxing authorities may take tax positions that are adverse to BB&T ; ( 7 ) reduction in BB&T’s credit ratings ; ( 8 ) adverse changes may occur in the securities markets ; ( 9 ) competitors of BB&T may have greater financial resources and develop products that enable them to compete more successfully than BB&T and may be subject to different regulatory standards than BB&T ; ( 10 ) costs or difficulties related to the integration of the businesses of BB&T and its merger partners may be greater than expected ; ( 11 ) unpredictable natural or other disasters could have an adverse effect on BB&T in that such events could materially disrupt BB&T’s operations or the ability or willingness of BB&T’s customers to access the financial services BB&T offers ; ( 12 ) expected cost savings associated with completed mergers and acquisitions may not be fully realized or realized within the expected time frames ; ( 13 ) deposit attrition, customer loss and/or revenue loss following completed mergers and acquisitions, may be greater than expected ; and ( 14 ) BB&T faces system failures and cyber - security risks that could adversely affect BB&T’s business and financial performance . These and other risk factors are more fully described in BB&T’s Annual Report on Form 10 - K for the year ended December 31 , 2012 under the section entitled Item 1 A . “Risk Factors” and from time to time, in other filings with the Securities and Exchange Commission . You are cautioned not to place undue reliance on these forward - looking statements, which speak only as of the date of this presentation . Actual results may differ materially from those expressed in or implied by any forward - looking statements . Except to the extent required by applicable law or regulation, BB&T undertakes no obligation to revise or update publicly any forward - looking statements for any reason . 2
2013 Second Quarter Performance Highlights 1 1 Linked quarter growth rates are annualized, except for credit metrics 2 Available to common shareholders. See the reconciliation included in the attached Appendix 3 Fully taxable equivalent . 4 Excludes securities gains (losses), the impact of FDIC loss share accounting and other selected items. See non - GAAP reconciliat ions included in the attached Appendix 5 Excludes covered assets » Record net income 2 of $547 million , up $37 million or 7.3% vs. 2Q12 » Diluted EPS totaled $0.77, up 6.9% vs. 2Q12 » Average loans HFI increased 3.8% vs. 1Q13 » Sales Finance up 34.9% vs. 1Q13; C&I up 4.7% vs. 1Q13 » Other Lending Subsidiaries grew 16.8% vs. 1Q13 » Direct Retail Lending was up 4.6% vs. 1Q13 » Average deposits decreased 1.4 % vs. 1Q13 » Noninterest - bearing deposits increased 13.2 % or $1.1 billion vs. 1Q13 » Deposit mix improved and interest - bearing cost declined to 32 bps 5 » Charge - offs declined to 0.75% of average loans and leases, the lowest in 5 years » NPAs decreased $ 137 million, or 9.7 % vs. 1Q13, the lowest in 5 years » ALLL coverage ratio improved to 1.55 x NPLs from 1.43x at 1Q13 » Total revenues 3 were $2.5 billion, up 1.3% vs. 2Q12 and up 6.2% annualized vs. 1Q13 » Results driven by record insurance, investment banking and brokerage, and trust and investment advisory revenues » Fee income ratio increased to 44.6% 4 vs. 42.4% in 2Q12 and 42.9% in 1Q13 » Excluding merger - related and restructuring charges, NIE increased 17.1% vs. 1Q13 » Expense increase driven by higher production - related personnel costs and systems and process - related enhancements » Systems and process - related costs expected to decline in coming quarters driving total expenses lower 3
Improved Loan Growth 1 $109.2 $112.7 $113.6 $113.2 $114.3 $100 $105 $110 $115 2Q12 3Q12 4Q12 1Q13 2Q13 Average Loans Held for Investment ($ in billions) » EOP loans HFI were higher than the 2Q13 average balance » Other lending subsidiaries produced seasonally strong results with Sheffield up 41.1%, and AFCO/CAFO up 22.7% vs. 1Q13 annualized » Average total loan growth is expected to be in the 2% to 4% range annualized for 3Q13, contingent on the economy □ Auto demand remains strong; double - digit growth expected in 3Q13 □ Other Lending Subsidiaries expected to grow double - digits in 3Q13 □ Commercial loans and Direct Retail loans are expected to grow at rates similar to 2Q13 1 Excludes loans held for sale. 2 Other lending subsidiaries consist of AFCO/CAFO/Prime Rate, Lendmark, BB&T Equipment Finance, Grandbridge Real Estate Capital , Sheffield Financial and Regional Acceptance. C&I $38,359 $443 4.7 % CRE - Other 11,411 (11) (0.4) CRE - ADC 1,121 (117) (37.9) Direct Retail 15,936 179 4.6 Sales Finance 8,520 682 34.9 Revolving Credit 2,268 (11) (1.9) Residential Mortgage 23,391 (227) (3.9) Other Lending Subsidiaries 2 10,407 419 16.8 Subtotal $111,413 $1,357 4.9 % Covered loans 2,858 (275) (35.2) Total $114,271 $1,082 3.8 % 2Q13 v. 1Q13 Annualized % Increase (Decrease) Average Loans ($ in millions) 2Q13 v. 1Q13 $ Increase (Decrease) 2Q13 Average Balance 4
Improved Deposit Mix and Cost » Strong organic growth in noninterest - bearing deposits, up 13.2% vs. 1Q13 » Grew net new retail accounts in 2Q13 » Successfully reduced interest - bearing deposit cost to 32 bps during 2Q13 and management expects deposit cost to move below 30 bps by year end » Management currently expects continued strong growth in noninterest - bearing deposit balances during 3Q13 Noninterest - bearing deposits $33,586 $1,068 13.2% Interest checking 19,276 (893) (17.8) Money market & savings 48,140 (291) (2.4) Subtotal $101,002 ($116) (0.5)% Certificates and other time deposits 28,034 (900) (12.5) Foreign office deposits – Interest - bearing 947 562 NM Total deposits $129,983 ($454) (1.4)% Average Deposits ($ in millions) 2Q13 vs. 1Q13 Annualized % Increase (Decrease) 2Q13 vs. 1Q13 $ Increase (Decrease) 2Q13 Average Balance $125.3 $128.7 $131.8 $130.4 $130.0 0.44% 0.42% 0.38% 0.36% 0.32% 0.20% 0.30% 0.40% 0.50% 0.60% 0.70% $90.0 $100.0 $110.0 $120.0 $130.0 $140.0 2Q12 3Q12 4Q12 1Q13 2Q13 Average Deposits ($ in billions) Total Interest - Bearing Deposit Cost 5
Update on 2013 Initiatives » Expand corporate banking in key national markets with continued expansion of vertical lending teams □ Added corporate banking teams in larger markets (e.g., Dallas, Chicago, Cincinnati, San Francisco) □ Common quarter loan growth up 31% » Expand advisor capacity of wealth management and the broker - dealer in targeted markets □ Opened Dallas wealth management office and added multiple advisors in TX, FL and NC. Opened broker dealer offices in Maryland and Florida and added multiple advisors in NC, SC, VA, MD and FL □ Total wealth fee income up 19%; outstanding loans up 20% compared to 2Q12 » Fully realize Crump life insurance opportunities through Institutional sales initiative and BB&T Life Sales Strategy □ Quarterly revenue growth of 11% in 2Q13 vs. 2Q12 » Expand the mortgage correspondent lending network □ YTD production up 14% □ Mandatory delivery expansion will partially offset slower originations » Invest in retail mortgage lending in targeted geographies □ Focus on selectively adding staff in Texas, Florida and Alabama » Execute commercial expansion in Texas □ 25 of 30 locations now open □ Loans up 45% compared to 2Q12; revenue up 38% 1 » Realize substantial revenue opportunities in legacy Colonial markets 1 □ Common quarter loan growth in TX/AL/FL up 27% □ Revenues up 9% compared with 2Q12 » Target expansion of dealer floor plan lending relationships □ Committed lines up 61% common quarter to approximately $850 million □ Outstandings up 75% common quarter to approximately $630 million 1 Includes corporate lending 6
1.09% 0.97% 0.85% 0.80% 0.71% 0.60% 0.70% 0.80% 0.90% 1.00% 1.10% 1.20% 2Q12 3Q12 4Q12 1Q13 2Q13 Total Nonperforming Assets as a Percentage of Total Assets Credit Improvement Accelerates 1 » 2Q13 net charge - offs were $215 million, down 21.8% vs. 1Q13 » Lowest charge - off rate in 5 years » Expect charge - offs to trend modestly lower in coming quarters » Moved into the upper end of normalized charge - off range of 55 - 75 bps » 9.7% reduction in NPAs vs. 1Q13 □ Commercial NPLs down 13.7% □ Lowest NPAs in five years » Management expects NPAs to improve at a modest pace in 3Q13 assuming no significant economic deterioration 1 Excludes covered assets. 1.22% 1.08% 1.04% 0.98% 0.75% 0.50% 0.60% 0.70% 0.80% 0.90% 1.00% 1.10% 1.20% 1.30% 2Q12 3Q12 4Q12 1Q13 2Q13 Annualized Net Charge - offs / Average Loans 7
» Delinquencies improved across the board with 30 - 89 days at 0.81% and 90 days and greater at 0.11% of total loans and leases » NPA inflows decreased significantly in 2Q13, driving loan loss improvement and a lower provision Credit Improvement Accelerates 1 1 Excludes covered assets. $365 $330 $274 $271 $194 $100 $150 $200 $250 $300 $350 $400 2Q12 3Q12 4Q12 1Q13 2Q13 Commercial NPA Inflows ($ in millions) » ALLL coverage ratios have consistently increased as credit trends have improved » The reserve release was $36 million for 2Q13 vs. $28 million last quarter » The provision includes a net recovery of $11 million related to covered loans 1.52x 1.59x 1.60x 1.65x 2.07x 1.21x 1.24x 1.37x 1.43x 1.55x 1.00 1.25 1.50 1.75 2.00 2.25 2Q12 3Q12 4Q12 1Q13 2Q13 ALLL Coverage Ratios ALLL to Net Chargeoffs ALLL to NPLs HFI x x x x x x 8
3.95% 3.94% 3.84% 3.76% 3.70% 3.45% 3.51% 3.42% 3.43% 3.40% 3.00% 3.50% 4.00% 4.50% 2Q12 3Q12 4Q12 1Q13 2Q13 Net Interest Margin Reported NIM Core NIM 1 Margin Remains Strong » Margin expected to decline approximately 5 - 10 bps in 3Q13 driven by: □ Lower rates on new earning assets □ Runoff of covered assets □ Tighter retail credit spreads Offset by: □ Lower funding cost □ Favorable funding and asset mix changes » Steeper yield curve alleviates core margin pressure over time » Well positioned for rising rates » Deposit mix changes (higher DDA) since 2Q12 have contributed to asset sensitivity, slightly offset by an increase in fixed rate loans and slower prepayments on mortgages 1 Excludes covered assets. See non - GAAP reconciliations included in the attached Appendix. - 0.11% 1.19% 2.47% 3.94% - 0.18% 1.12% 2.27% 3.55% - 1.00% 0.00% 1.00% 2.00% 3.00% 4.00% 5.00% Down 25 Up 50 Up 100 Up 200 Rate Sensitivities Sensitivities as of 6/30/13 Sensitivities as of 3/31/13 9
Fee Income Growth 42.4% 42.4% 44.1% 42.9% 44.6% 36.0% 40.0% 44.0% 48.0% 2Q12 3Q12 4Q12 1Q13 2Q13 Fee Income Ratio 1 1 Excludes securities gains (losses), the impact of FDIC loss share accounting and other selected items. See non - GAAP reconciliat ions included in the attached Appendix. 2 Linked quarter percentages are annualized. 2Q13 2Q13 v. 1Q13 2 Increase (Decrease) 2Q13 v. 2Q12 Increase (Decrease) Insurance income $ 426 67.0% 8.4% Mortgage banking income 168 (26.7) (7.7) Service charges on deposits 143 14.5 3.6 Investment banking and brokerage fees and commissions 99 21.3 12.5 Bankcard fees and merchant discounts 65 40.8 10.2 Checkcard fees 51 34.1 13.3 Trust and investment advisory revenues 49 8.4 6.5 Income from bank - owned life insurance 26 (28.6) (3.7) FDIC loss share income, net (85) 176.8 14.9 Securities gains (losses), net 23 - NM Other income 81 15.4 26.6 Total noninterest income $ 1,046 18.0% 8.3% » Total fee income increased 18.0% annualized vs. 1Q13 » Insurance produced record performance driven by firming market conditions and a $13 million experience - based reinsurance premium refund » Investment banking and brokerage and trust and investment advisory produced record quarterly revenue » The decline in mortgage banking income was the result of a decrease in the gain on residential mortgage production and sales, as record production was offset by tightening margins » FDIC loss share income worsened primarily due to the offset to the provision for covered loans Noninterest Income ($ in millions) 10
Noninterest Expense and Efficiency 2Q13 2Q13 v. 1Q13 2 Increase (Decrease) 2Q13 v. 2Q12 Increase (Decrease) Personnel expense $ 844 13.3% 8.9% Occupancy and equipment expense 170 (2.3) 6.9 Loan - related expense 63 34.6 1.6 Foreclosed property expense 12 (133.7) (83.3) Regulatory charges 35 - (18.6) Professional services 47 122.6 20.5 Software expense 38 - 18.8 Amortization of intangibles 27 - (6.9) Merger - related and restructuring charges, net 27 NM NM Other expense 233 46.1 9.4 Total noninterest expense $ 1,496 23.3% 4.9% 1 Excludes securities gains (losses), foreclosed property expense, amortization of intangible assets, merger - related and restructu ring charges, the impact of FDIC loss share accounting, and other selected items. See non - GAAP reconciliations included in the attached Appendix. 2 Linked quarter percentages are annualized. 53.9% 55.2% 55.3% 56.4% 57.6% 50.0% 52.0% 54.0% 56.0% 58.0% 60.0% 2Q12 3Q12 4Q12 1Q13 2Q13 Efficiency Ratio 1 Noninterest Expense ($ in millions) » Personnel expense increased vs. 1Q13 due to higher production - related incentives and commissions and a seasonal increase in equity based compensation, annual officer merit increases, offset by lower social security and unemployment » 2Q13 FTEs/headcount down modestly from 1Q13 » Foreclosed property expense down $6 million from 1Q13 due to lower balances » Professional services increased $11 million driven by costs associated with systems and process enhancements » Merger - related and restructuring charges increased $22 million compared with last quarter, primarily due to Community Bank optimization, which will provide a similar annual cost savings beginning in 4Q13 » Other expenses increased $24 million primarily due to higher project - related expenses, operational charge - offs and other expenses » 2Q13 tax rate was 27.7%; expecting similar rate in 3Q13 » Elevated systems and process costs in Professional services and Other expense expected to decline in coming quarters driving total noninterest expense lower 11
Capital Strength 1 9.1% 8.9% 9.1% 9.2% 9.4% 8.0% 9.0% 10.0% 2Q12 3Q12 4Q12 1Q13 2Q13 Basel I Tier 1 Common Ratio 1 Regulatory capital information is preliminary. Risk - weighted assets are determined based on regulatory capital requirements. Un der the regulatory framework for determining risk - weighted assets each asset class is assigned a risk - weighting of 0%, 20%, 50% or 100% based on the underlying risk of the specific asset class. In additio n, off balance sheet exposures are first converted to a balance sheet equivalent amount and subsequently assigned to one of the four risk - weightings. Tier 1 common equity ratio is a non - GAAP measure. BB&T use s the Tier 1 common equity definition used in the SCAP assessment to calculate these ratios. BB&T's management uses these measures to assess the quality of capital and believes that investors m ay find them useful in their analysis of the Corporation. These capital measures are not necessarily comparable to similar capital measures that may be presented by other companies. 2 The Basel III common equity Tier I ratio reflects management’s interpretation of the regulatory requirements. » Basel III final rule: □ Mortgage risk weighting will be favorable for BB&T □ AOCI opt - out provides more stability in capital planning » Common equity Tier 1 ratio under Basel III is approximately 9.0% at June 30, 2013 2 » 2013 CCAR resubmission: □ Filed resubmission June 11th □ Fed has 75 days to review and respond □ Expect very conservative approach to capital distributions for remainder of 2013 15% dividend increase in 1Q13 Five common dividend payments during 2013 Release of final Basel III rules 12
Community Banking Segment Comments 4 Highlighted Metrics 2Q13 2Q12 ($ in millions) Inc/(Dec) 1Q13 Inc/(Dec) 2Q12 2Q13 ($ in billions) Net Interest Income Noninterest Income 1 Loan Loss Provision Noninterest Expense 2 Income Tax Expense Segment Net Income $ (5) 18 28 18 (13) $ (20) $ (33) 21 (79) 4 23 $ 40 Noninterest - bearing Deposit Growth 3 Noninterest - bearing / Total Deposits C&I Portfolio / Total Commercial Loans Direct Retail Loan Growth 3 Commercial Loan Production » The commercial loan pipeline increased approximately 53.6% compared with 1Q13 » Average direct retail loans increased $910 million, or 6.1%, compared with 2Q12 and grew 4.6% compared with 1Q13 » Average dealer floor plan loans increased by $230 million, or 63.5%, compared with 2Q12 and grew 116.3% compared with 1Q13 » Average deposit balances (excluding time deposits) increased $6.7 billion, or 8.5%, compared with 2Q12 and were flat compared to 1Q13 » Common quarter net income drivers include: □ Revenue: □ Higher mortgage banking referral fees □ Higher bankcard and merchant fees □ Higher net checkcard income □ Higher service charges on deposits □ Expense: □ Reduced loan charge - offs and provision expense □ Reduced foreclosed property costs □ Reduced regulatory costs due to improved credit metrics 18.3% 27.7% 67.5% 6.1% $ 3.6 23.9% 24.6% 67.6% 10.2% $ 3.7 1 Noninterest Income includes intersegment net referral fees 2 Noninterest Expense includes amortization of intangibles and allocated corporate expense 3 Current quarter over common quarter of prior year 4 Linked quarter growth rates annualized $ 809 345 110 715 120 $ 209 13
Net Interest Income Noninterest Income 1 Loan Loss Provision Noninterest Expense 2 Income Tax Expense Segment Net Income Retail Originations Correspondent Purchases Total Production Loan Sales Loans Serviced for others (EOP) 30+ Days Delinquent (HFI only) % Non - Accrual (HFI only) Net Charge - Offs (HFI only) Residential Mortgage Banking Segment Retains and services mortgage loans originated by the Residential Mortgage Lending Division and through its referral relation shi p with the Community Bank and referral partners as well as those purchased from various correspondent originators Comments Highlighted Metrics Inc/(Dec) 3Q12 Inc/(Dec) 4Q11 1Q13 1 Noninterest Income includes intersegment net referral fees 2 Noninterest Expense includes amortization of intangibles and allocated corporate expense ($ in billions) 2Q13 2Q12 ($ in millions) Inc/(Dec) 1Q13 Inc/(Dec) 2Q12 2Q13 $ 3.2 6.1 $ 9.3 $ 8.6 $ 80.8 3.31% 1.07% 0.26% » Record quarterly residential mortgage loan production of $9.3 billion, up 15.1% vs. 2Q12 □ Retail mortgage originated $3.2 billion in loans, up 1.8% vs. 2Q12 □ Correspondent loan production increased 23.7% compared with 2Q12, due to expansion of mandatory lending program » The 2Q13 production mix was 56% refinance / 44% purchase vs. 59% / 41% in 2Q12 » Record quarterly loan sales increased $3.5 billion or 69.3% vs. 2Q12 » Gain on sale margins declined 43.0% in 2Q13 vs. 2Q12, due to increased competition and changes in channel mix » Total loans serviced exceed $107 billion » Credit metrics improved vs. 2Q12 $ 109 151 29 105 48 $ 78 $ 1 (10) 12 19 (15) $ (25) $ 15 (11) (9) - 5 $ 8 $ 3.1 4.9 $ 8.0 $ 5.1 $ 71.4 3.30% 1.14% 0.53% 14
Highlighted Metrics Net Interest Income Noninterest Income 1 Loan Loss Provision Noninterest Expense 2 Income Tax Expense Segment Net Income Primarily originates indirect to consumers on a prime and nonprime basis for the purchase of automobiles and other vehicles through approved dealers both in BB&T’s market and nationally (through Regional Acceptance Corporation) Dealer Financial Services Segment Comments 3 2Q13 2Q12 1 Noninterest Income includes intersegment net referral fees 2 Noninterest Expense includes amortization of intangibles and allocated corporate expense 3 Linked quarter growth rates annualized ($ in billions) Loan Originations Loan Yield Operating Margin Net Charge - offs ($ in millions) Inc/(Dec) 1Q13 Inc/(Dec) 2Q12 2Q13 $ 1.8 7.89% 54.9% 1.29% $ 172 1 42 36 36 $ 59 $ 1.4 8.55% 62.3% 1.15% $ 9 (1) (25) 3 11 $ 19 $ 12 (1) 15 2 (2) $ (4) » Dealer Finance generated record retail production in the quarter □ Retail originations in 2Q13 were $1.8 billion, up 28.5% vs. 2Q12 and up 87.6% vs. 1Q13 » The increase in provision over 2Q12 was primarily due to normalization of credit performance in the Dealer Finance portfolio » Growing in new markets – Texas, Alabama and Florida, with additional expansion planned 15
Highlighted Metrics Specialized Lending Segment Provides specialty lending including: commercial finance, mortgage warehouse lending, tax - exempt governmental finance, equipment leasing, commercial mortgage banking, insurance premium finance, dealer - based equipment financing, and direct consumer finance Net Interest Income Noninterest Income 1 Loan Loss Provision Noninterest Expense 2 Income Tax Expense Segment Net Income Loan Originations Loan Yield Operating Margin Net Charge - offs Comments 3 1 Noninterest Income includes intersegment net referral fees 2 Noninterest Expense includes amortization of intangibles and allocated corporate expense 3 Linked quarter rates annualized ($ in billions) ($ in millions) Inc/(Dec) 1Q13 Inc/(Dec) 2Q12 2Q13 2Q13 2Q12 $ 147 56 27 83 25 $ 68 $ 4 2 (24) 3 12 $15 $ 10 4 4 4 5 $ 1 » Average loans grew 8.7% compared with 2Q12, driven by Sheffield Financial, Commercial Finance, and Premium Finance » Average commercial property and casualty premium financings grew 9.0% when compared to 2Q12. This growth was primarily due to a hardening in the property and casualty insurance market » Grandbridge loans held for investment increased 33.7% vs. 1Q13. The lending pipeline shows favorable growth prospects for 3Q13 » 2Q13 Domestic Factoring volume increased 18.9% compared to 2Q12 due to new business initiatives resulting from new leadership and sales officers » Equipment Finance’s new business volume for the second quarter was up 46.4% compared to 2Q12. The increase is mainly attributed to the National Large Corporate business unit $ 6.0 5.38% 46.0% 0.61% $ 4.4 4.96% 45.8% 0.47% 16
1 Noninterest Income includes intersegment net referral fees. 2 Noninterest Expense includes amortization of intangibles and allocated corporate expense. 3 Six months of current year over six months of prior year 4 2Q13 excludes experience - based return of premium. Insurance Segment Comments Net Interest Income Noninterest Income 1 Loan Loss Provision Noninterest Expense 2 Income Tax Expense Segment Net Income YTD Same Store Sales Growth 3,4 YTD Noninterest Income Growth 3 Number of Stores Operating Margin Provides property and casualty, life, and health insurance to business and individual clients. It also provides workers compensation and professional liability, as well as surety coverage and title insurance Highlighted Metrics ($ in millions) Inc/(Dec) 1Q13 Inc/(Dec) 2Q12 2Q13 2Q13 2Q12 5.0% 19.7% 199 23.3% $ 3 427 - 330 34 $ 66 3.9% 21.4% 212 24.6% $ 1 61 - 4 22 $ 36 $ 2 34 - 33 3 $ - » BB&T Insurance generated common quarter insurance revenue growth of 5.2% in Retail, 11.4% in Wholesale, and 8.5% for Total Insurance » Higher year - over - year noninterest income was driven by strong new business sales and improving market pricing » Higher noninterest expense versus 2Q12 was impacted primarily by increased salary and incentive costs among other items » Continue to focus on the successful execution of synergies presented by Crump Insurance acquisition » Strong strategic emphasis is being placed on preparation for healthcare reform and the impending impact on the Employee Benefits business » 6 th largest insurance brokerage in the U.S. and the world 17
Highlighted Metrics Financial Services Segment Comments Average Loan Balances Average Deposits Total Assets Invested Operating Margin Provides trust services, wealth management, investment counseling, asset management, estate planning, employee benefits, corporate banking, and capital market services to individuals, corporations, governments, and other organizations 1 Noninterest Income includes intersegment net referral fees. 2 Noninterest Expense includes amortization of intangibles and allocated corporate expense. Net Interest Income Noninterest Income 1 Loan Loss Provision Noninterest Expense 2 Income Tax Expense Segment Net Income ($ in millions) Inc/(Dec) 1Q13 Inc/(Dec) 2Q12 2Q13 2Q13 2Q12 » Despite narrowing margins, net interest income increased driven by: □ Corporate Banking generated 31.4% growth in loans vs. 2Q12 □ BB&T Wealth generated 20.4% loan growth and 16.6% transaction deposit growth vs. 2Q12 » Total assets invested increased to $103.7 billion, or 11.6%, vs. 2Q12 » Increase in noninterest income was driven by increased investment banking & brokerage income and trust & investment advisory fee income » Industry Recognition: □ Two BB&T Scott & Stringfellow financial advisors named to the Financial Times Top 400 Financial Advisors □ Two BB&T Capital Markets equity research analysts named to the Wall Street Journal Best on the Street □ Sterling Capital South Carolina Intermediate Tax - Free Fund (Class I shares) won the 2013 Lipper Award as the Best Other States Intermediate Municipal Debt Fund $ 8.7 30.5 103.7 36.7% $ 114 194 14 181 42 $ 71 $ 6.8 29.8 92.9 35.4% $ - 10 5 4 - $ 1 $ (1) 18 22 (15) 4 $ 6 ($ in billions) 18
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Capital Measures 1 (Dollars in millions, except per share data) As of / Quarter Ended June 30 2013 March 31 2013 Dec 31 2012 Sept 30 2012 June 30 2012 Selected Capital Information Risk - based capital Tier 1 $ 15,397 $ 14,432 $ 14,373 $ 13,593 $ 12,383 Total 19,237 18,296 18,243 17,638 16,527 Risk - weighted assets 2 136,202 133,944 134,451 133,545 129,661 Average quarterly tangible assets 174,865 174,214 175,015 172,100 170,042 Risk - based capital ratios Tier 1 11.3% 10.8% 10.7% 10.2 % 9.6 % Total 14.1 13.7 13.6 13.2 12.7 Leverage capital ratio 8.8 8.3 8.2 7.9 7.3 Equity as a percentage of total assets 12.0 11.7 11.5 11.3 10.6 Book value per common share $27.51 $27.15 $ 27.21 $ 26.88 $ 26.19 Selected non - GAAP Capital Information Tangible common equity as a percentage of tangible assets 7.3% 7.1% 6.9 % 6.8 % 6.9 % Tier 1 common equity as a percentage of risk - weighted assets 9.4 9.2 9.1 8.9 9.1 Tangible book value per common share $18.20 $17.56 $ 17.52 $ 17.02 $ 16.92 1 Regulatory capital information is preliminary. 2 Risk - weighted assets are determined based on regulatory capital requirements. Under the regulatory framework for determining ri sk - weighted assets each asset class is assigned a risk - weighting of 0%, 20%, 50% or 100% based on the underlying risk of the specific asset class. In addition, off - balance sheet exposures are first converted to a balance sheet equivalent amount and subsequently assigned to one of the four risk - weightings. 21
Basel III Common Equity Tier 1 Ratio 1 (Dollars in millions) June 30, 2013 Tier 1 common equity under Basel I definition $ 12,794 Adjustments: Other comprehensive income related to AFS securities, defined benefit pension and other postretirement employee benefit plans - Other adjustments 62 Common equity Tier I under Basel III definition $ 12,856 Estimated risk - weighted assets under Basel III definition $ 143,541 Basel III common equity Tier 1 ratio 9.0% 1 Regulatory capital information is preliminary. The Basel III common equity Tier 1 ratio reflects management’s interpretation of the regulatory requirements and is subject to change. 22
Non - GAAP Reconciliations (Dollars in millions, except per share data) As of / Quarter Ended June 30 2013 March 31 2013 Dec 31 2012 Sept 30 2012 June 30 2012 Calculations of Tier 1 common equity and tangible assets and related measures: Tier 1 equity $15,397 $14,432 $ 14,373 $ 13,593 $ 12,383 Less: Preferred Stock 2,603 2,116 2,116 1,679 559 Qualifying restricted core capital elements - - - 5 - Tier 1 common equity $12,794 $12,316 $ 12,257 $ 11,909 $ 11,824 Total assets $182,735 $180,837 $ 183,872 $ 182,021 $ 178,529 Less: Intangible assets, net of deferred taxes 7,234 7,264 7,273 7,239 6,950 Plus: Regulatory adjustments, net of deferred taxes 600 275 212 81 239 Tangible assets $176,101 $173,848 $ 176,811 $ 174,863 $ 171,818 Total risk - weighted assets 1, 2 $136,202 $133,944 $ 134,451 $ 133,545 $ 129,661 Tangible common equity as a percentage of tangible assets 7.3% 7.1% 6.9 % 6.8 % 6.9% Tier 1 common equity as a percentage of risk - weighted assets 2 9.4 9.2 9.1 8.9 9.1 Tier 1 common equity $12,794 $12,316 $ 12,257 $ 11,909 $ 11,824 Outstanding shares at end of period (in thousands) 702,995 701,440 699,728 699,541 698,795 Tangible book value per common share $18.20 $17.56 $ 17.52 $ 17.02 $ 16.92 1 Risk - weighted assets are determined based on regulatory capital requirements. Under the regulatory framework for determining ri sk - weighted assets each asset class is assigned a risk - weighting of 0%, 20%, 50% or 100% based on the underlying risk of the specific asset class. In addition, off - balance sheet exposures are first converted to a balance sheet equivalent amount and subsequently assigned to one of the four risk - weightings. 2 Regulatory capital information is preliminary. 23
Non - GAAP Reconciliations Applicable ratios are annualized. 1 Excludes mortgage loans guaranteed by GNMA that BB&T does not have the obligation to repurchase. 2 Excludes mortgage loans guaranteed by the government. As of / Quarter Ended June 30 2013 March 31 2013 Dec 31 2012 Sept 30 2012 June 30 2012 Asset Quality Ratios (including amounts related to covered loans and covered foreclosed property) Loans 30 - 89 days past due and still accruing as a percentage of total loans and leases 1,2 0.88 % 0.91 % 1.02 % 1.02 % 0.97 % Loans 90 days or more past due and still accruing as a percentage of total loans and leases 1,2 0.44 0.43 0.52 0.53 0.67 Nonperforming loans and leases as a percentage of total loans and leases 0.97 1.09 1.17 1.31 1.45 Nonperforming assets as a percentage of: Total assets 0.80 0.91 0.97 1.10 1.24 Loans and leases plus foreclosed property 1.23 1.39 1.51 1.70 1.93 Net charge - offs as a percentage of average loans and leases 0.74 1.00 1.02 1.05 1.21 Allowance for loan and lease losses as a percentage of loans and leases held for investment 1.64 1.73 1.76 1.80 1.91 Ratio of allowance for loan and lease losses to: Net charge - offs 2.18 X 1.69 X 1.69 X 1.69 X 1.57 X Nonperforming loans and leases held for investment 1.66 1.54 1.46 1.33 1.29 24
Non - GAAP Reconciliations Applicable ratios are annualized. 1 Excludes mortgage loans guaranteed by GNMA that BB&T does not have the obligation to repurchase. 2 Excludes mortgage loans guaranteed by the government. As of / Quarter Ended June 30 2013 March 31 2013 Dec 31 2012 Sept 30 2012 June 30 2012 Asset Quality Ratios (excluding amounts related to covered loans and covered foreclosed property) Loans 30 - 89 days past due and still accruing as a percentage of total loans and leases 1,2 0.81 % 0.83 % 0.93 % 0.90 % 0.83 % Loans 90 days or more past due and still accruing as a percentage of total loans and leases 1,2 0.11 0.12 0.15 0.13 0.13 Nonperforming loans and leases as a percentage of total loans and leases 0.99 1.12 1.20 1.35 1.50 Nonperforming assets as a percentage of: Total assets 0.71 0.80 0.85 0.97 1.09 Loans and leases plus foreclosed property 1.10 1.23 1.33 1.51 1.72 Net charge - offs as a percentage of average loans and leases 0.75 0.98 1.04 1.08 1.22 Allowance for loan and lease losses as a percentage of loans and leases held for investment 1.57 1.65 1.70 1.73 1.86 Ratio of allowance for loan and lease losses to: Net charge - offs 2.07 X 1.65 X 1.60 X 1.59 X 1.52 X Nonperforming loans and leases held for investment 1.55 1.43 1.37 1.24 1.21 25
Non - GAAP Reconciliations Quarter Ended Efficiency and Fee Income Ratios June 30 2013 March 31 2013 Dec 31 2012 Sept 30 2012 June 30 2012 Efficiency ratio – GAAP 59.9 % 57.5% 58.8 % 61.6 % 57.9 % Effect of securities gains (losses), net 0.5 0.5 - - - Effect of merger - related and restructuring charges, net (1.1) (0.2) (0.5) (1.7) (0.1) Effect of mortgage repurchase expense adjustments - - - (1.1) - Effect of FDIC loss share accounting (0.2) 0.5 (0.1) - 0.2 Effect of foreclosed property expense (0.5) (0.8) (1.9) (2.2) (2.9) Effect of amortization of intangibles (1.0) (1.1) (1.0) (1.4) (1.2) Efficiency ratio – reported 57.6 56.4 55.3 55.2 53.9 Fee income ratio – GAAP 41.9 % 40.7 % 40.3 % 38.8 % 39.2 % Effect of securities gains (losses), net (0.5) (0.5) - - - Effect of FDIC loss share accounting 3.2 2.7 3.8 3.6 3.2 Fee income ratio – reported 44.6 42.9 44.1 42.4 42.4 26
Non - GAAP Reconciliations (Dollars in millions) Quarter Ended June 30 March 31 Dec 31 Sept 30 June 30 Return on Average Tangible Common Shareholders' Equity 2013 2013 2012 2012 2012 Net income available to common shareholders $ 547 $ 210 $ 506 $ 469 $ 510 Plus: Amortization of intangibles, net of tax 17 17 17 19 18 Tangible net income available to common shareholders $ 564 $ 227 $ 523 $ 488 $ 528 Average common shareholders' equity $ 19,293 $ 19,138 $ 19,160 $ 18,757 $ 18,302 Less: Average intangible assets 7,456 7,464 7,463 7,341 7,031 Average tangible common shareholders' equity $ 11,837 $ 11,674 $ 11,697 $ 11,416 $ 11,271 Return on average tangible common shareholders' equity 19.12 % 7.87 % 17.80 % 17.01 % 18.85 % 27
Non - GAAP Reconciliations Quarter Ended Reported net interest margin vs. core net interest margin June 30 2013 March 31 2013 Dec 31 2012 Sept 30 2012 June 30 2012 Reported net interest margin - GAAP 3.70% 3.76 % 3.84 % 3.94 % 3.95 % Adjustments to interest income for covered assets: Effect of covered securities (0.06) (0.07) (0.09) (0.09) (0.09) Effect of covered loans (0.26) (0.28) (0.36) (0.37) (0.45) Adjustments to interest expense: Effect of interest expense on covered assets 0.02 0.02 0.03 0.03 0.04 Core net interest margin 3.40% 3.43% 3.42 % 3.51 % 3.45 % 28
Non - GAAP Reconciliations (Dollars in millions, except per share data) Net Income Available to Common Shareholders Quarter Ended March 31, 2013 Net income available to common shareholders - GAAP $ 210 Effect of tax adjustment 281 Net income available to common shareholders – adjusted $ 491 Diluted EPS Diluted EPS – GAAP $ 0.29 Effect of tax adjustment 0.40 Diluted EPS – adjusted $ 0.69 29
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