BBT BB and T Corporation

WINSTON-SALEM, North Carolina, July 21, 2016 /PRNewswire/ -- BB&T Corporation (NYSE: BBT) today reported quarterly earnings for the second quarter of 2016. Net income available to common shareholders was $541 million, up 19.2% from the second quarter of 2015. Earnings per diluted common share were $0.66 for the second quarter of 2016. Excluding merger-related and restructuring charges of $58 million, net of tax, and a tax benefit related to specific tax-advantaged assets of $13 million, net income available to common shareholders was $586 million, or $0.71 per diluted share.

Net income available to common shareholders was $527 million ($0.67 per diluted share) for the first quarter of 2016 and $454 million ($0.62 per diluted share) for the second quarter of 2015.

"We are pleased to report record revenues and total assets for the second quarter," said Chairman and Chief Executive Officer Kelly S. King. "Our strategic acquisitions and strong organic growth have allowed us to expand our footprint and achieve record results. We look forward to further benefits from our recent transactions as we capture efficiencies and grow in these new markets.

"Total FTE revenues were $2.8 billion, up $420 million compared to the second quarter of 2015," said King. "While we remain well-positioned for rising interest rates, our diversified businesses allow us to maintain strong profitability even in a challenging environment.

"We were also pleased to receive the Federal Reserve's non-objection to our capital plan that includes a seven percent dividend increase and a share repurchase program," said King. "This will allow us to continue to provide one of the strongest dividend payouts in the industry.

"As previously announced, we completed the acquisitions of National Penn and Swett & Crawford on April 1st," continued King. "The National Penn systems conversion was completed in mid-July, and both of these acquisitions contributed to our strong second quarter results."

Second Quarter 2016 Performance Highlights

• Taxable equivalent revenues were $2.8 billion for the second quarter, up $203 million from the first quarter of 2016
  • Net interest income was up $89 million
  • Net interest margin was 3.41%, down two basis points
  • Adjusted fee income ratio was 42.8%, compared to 40.6% for the prior quarter

• Noninterest expense was $1.8 billion, up $252 million compared to the first quarter
  • Personnel expense increased $124 million partially due to the acquisitions, production-based incentives and employee benefits
  • Merger-related and restructuring charges were $69 million higher due to the acquisitions and certain restructuring activities
  • Adjusted efficiency ratio was 59.3%, compared to 58.3% in the prior quarter

• Average loans and leases held for investment were $141.1 billion compared to $134.4 billion for the first quarter of 2016
  • National Penn added $5.9 billion in average loans
  • Excluding National Penn, average loans and leases increased $860 million, or 2.6% annualized:
    • Average commercial and industrial loans increased $1.1 billion, or 9.4% annualized
    • Average other lending subsidiaries loans increased $522 million, or 15.6% annualized
    • Average sales finance loans declined $533 million and residential mortgage loans declined $360 million

• Average deposits were $160.3 billion compared to $149.9 billion for the prior quarter
  • National Penn added $6.6 billion in average deposits
  • Excluding National Penn, average deposits increased $3.9 billion, or 10.5% annualized:
    • Average noninterest-bearing deposits increased $1.4 billion, or 12.1% annualized
    • Average interest checking deposits increased $1.0 billion, or 15.8% annualized
  • Average interest-bearing deposit costs were 0.23%, down two basis points
  • Deposit mix remained strong, with average noninterest-bearing deposits representing 30.4% of total deposits, compared to 30.8% in the prior quarter

• Asset quality remained strong
  • Net charge-offs as a percentage of average loans and leases were 0.28% annualized
  • Loans 90 days or more past due and still accruing were 0.43% of loans held for investment, compared to 0.45% in the prior quarter
  • Loans 30-89 days past due and still accruing were 0.64% of loans held for investment, compared to 0.61% in the prior quarter
  • The allowance for loan and lease losses was 1.06% of loans held for investment, compared to 1.10% in the prior quarter
  • Nonperforming assets decreased $17 million driven by reductions in foreclosed properties
  • The allowance for loan loss coverage ratio was 1.90 times nonperforming loans held for investment, versus 1.89 times in the prior quarter

• Capital levels remained strong across the board
  • Common equity tier 1 to risk-weighted assets was 10.0%, or 9.8% on a fully phased-in basis
  • Tier 1 risk-based capital was 11.7%
  • Total capital was 13.9%
  • Leverage capital was 9.6%
  • Tangible common equity to tangible assets was 7.6%

Earnings presentation and Quarterly Performance Summary

To listen to BB&T's live second quarter 2016 earnings conference call at 8 a.m. (ET) today, please call 1-888-632-5009 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 for 30 days by dialing 888-203-1112 (access code 4313363).

The presentation, including an appendix reconciling non-GAAP disclosures, is available at www.bbt.com.

BB&T's second quarter 2016 Quarterly Performance Summary, which contains detailed financial schedules, is available on BB&T's website at www.bbt.com.

About BB&T

As of June 30, 2016, BB&T is one of the largest financial services holding companies in the U.S. with $221.9 billion in assets and market capitalization of $29.0 billion. Based in Winston-Salem, N.C., the company operates 2,249 financial centers in 15 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 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.

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:

• Tangible common equity and related ratios are non-GAAP measures that exclude the impact of intangible assets and their related amortization. These measures are useful for evaluating the performance of a business consistently, whether acquired or developed internally. The return on average risk-weighted assets is a non-GAAP measure. BB&T's management uses these measures to assess the quality of capital and returns relative to balance sheet risk and believes that investors may find them useful in their analysis of the Corporation.
• The ratio of loans greater than 90 days and still accruing interest as a percentage of loans held for investment has been adjusted to remove the impact of loans that are or were covered by FDIC loss sharing agreements and purchased credit impaired ("PCI") loans as well as government guaranteed loans. 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 or reflective of asset collectibility.
• Adjusted fee income and adjusted 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 believes these measures provide a greater understanding of ongoing operations and enhance comparability of results with prior periods, as well as demonstrating the effects of significant gains and charges.
• Core net interest margin is a non-GAAP measure that adjusts net interest margin to exclude the impact of interest income and funding costs associated with loans and securities acquired in the Colonial acquisition and PCI loans acquired from Susquehanna and National Penn. Core net interest margin is also adjusted to remove the purchase accounting marks and related amortization for non-PCI loans, deposits and long-term debt acquired from Susquehanna and National Penn. BB&T's management believes that the adjustments to the calculation of net interest margin for certain assets and deposits acquired provide investors with useful information related to the performance of BB&T's earning assets.

A reconciliation of these non-GAAP measures to the most directly comparable GAAP measure is included in BB&T's Second Quarter 2016 Quarterly Performance Summary, which is available on BB&T's website at www.bbt.com.

This news release contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995, regarding the financial condition, results of operations, business plans and the future performance of BB&T. Forward-looking statements are not based on historical facts but instead represent management's expectations and assumptions regarding BB&T's business, the economy and other future conditions. Because forward-looking statements relate to the future, they are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict. BB&T's actual results may differ materially from those contemplated by the forward-looking statements. Words such as "anticipates, "believes," "estimates," "expects," "forecasts," "intends," "plans," "projects," "may," "will," "should," "could," and other similar expressions are intended to identify these forward-looking statements. Such statements are subject to factors that could cause actual results to differ materially from anticipated results. While there is no assurance that any list of risks and uncertainties or risk factors is complete, important factors that could cause actual results to differ materially from those in the forward-looking statements include the following, without limitation:

• general economic or business conditions, either nationally or regionally, may be less favorable than expected, resulting in, among other things, a deterioration in credit quality and/or a reduced demand for credit, insurance or other services;
• disruptions to the national or global financial markets, including the impact of a downgrade of U.S. government obligations by one of the credit ratings agencies and the adverse effects of recessionary conditions in Europe and the impact of recent market disruptions in China;
• changes in the interest rate environment, including interest rate changes made by the Federal Reserve, and cash flow reassessments may reduce NIM and/or the volumes and values of loans made or held as well as the value of other financial assets held;
• competitive pressures among depository and other financial institutions may increase significantly;
• legislative, regulatory or accounting changes, including changes resulting from the adoption and implementation of the Dodd-Frank Act may adversely affect the businesses in which BB&T is engaged;
• local, state or federal taxing authorities may take tax positions that are adverse to BB&T;
• a reduction may occur in BB&T's credit ratings;
• adverse changes may occur in the securities markets;
• competitors of BB&T may have greater financial resources or develop products that enable them to compete more successfully than BB&T and may be subject to different regulatory standards than BB&T;
• cyber-security risks, including "denial of service," "hacking" and "identity theft," could adversely affect our business and financial performance or our reputation, and we could be liable for financial losses incurred by third parties due to breaches of data shared between financial institutions;
• natural or other disasters, including acts of domestic or foreign terrorism, 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;
• costs related to the integration of the businesses of BB&T and its merger partners may be greater than expected;
• failure to execute on strategic or operational plans, including the ability to successfully complete and/or integrate mergers and acquisitions or fully achieve expected cost savings or revenue growth associated with mergers and acquisitions within the expected time frames could adversely impact financial condition and results of operations;
• significant litigation could have a material adverse effect on BB&T;
• unfavorable resolution of legal proceedings or other claims and regulatory and other governmental investigations or other inquiries could result in negative publicity, protests, fines, penalties, restrictions on BB&T's operations or ability to expand its business and other negative consequences, all of which could cause reputational damage and adversely impact BB&T's financial conditions and results of operations;
• deposit attrition, customer loss and/or revenue loss following completed mergers and acquisitions may be greater than expected;
• higher than expected costs related to information technology infrastructure or a failure to successfully implement future system enhancements could adversely impact BB&T's financial condition and results of operations and could result in significant additional costs to BB&T; and
• widespread system outages, caused by the failure of critical internal systems or critical services provided by third parties, could adversely impact BB&T's financial condition and results of operations.

Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this report. Actual results may differ materially from those expressed in or implied by any forward-looking statement. 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.