BBT BB and T Corporation

WINSTON-SALEM, North Carolina, Jan. 19, 2017 /PRNewswire/ -- BB&T Corporation (NYSE: BBT) today reported earnings for the fourth quarter of 2016. Net income available to common shareholders was $592 million, up 17.9% from the fourth quarter of 2015. Earnings per diluted common share were $0.72 for the fourth quarter of 2016. Excluding pre-tax merger-related and restructuring charges of $13 million ($8 million after tax), net income available to common shareholders was $600 million, or $0.73 per diluted share.

Net income available to common shareholders was $599 million ($0.73 per diluted share) for the third quarter of 2016 and $502 million ($0.64 per diluted share) for the fourth quarter of 2015.

For the full year, net income available to common shareholders was a record $2.3 billion, up 16.7% from 2015. Earnings per diluted share totaled $2.77 compared to $2.56 for 2015.

"We are pleased to report strong earnings for the fourth quarter," said Chairman and Chief Executive Officer Kelly S. King. "While higher interest rates created $34 million in pre-tax charges, revenue growth was strong, expense control was solid and we are well-positioned for future interest rate increases.

"Taxable-equivalent revenues were $2.8 billion, up 8.3% compared to the fourth quarter of 2015," King said. "Noninterest expense increased only 4.4% over the same period, reflecting strong leverage from acquisitions and excellent control of operating costs. Full year revenues were a record $11.0 billion, up 12.3% from 2015, and net income available to common shareholders of $2.3 billion was also a record.

"During the quarter, we repurchased 7.5 million shares through both open-market purchases and an accelerated share repurchase program. These transactions were approved by our board as part of our commitment to ensuring an optimal return for our shareholders.

"Earlier this month, we terminated $2.9 billion of higher-cost FHLB advances, resulting in a loss on early extinguishment of $392 million. This strategic action will lower our future borrowing costs and provide a boost to future margins and earnings."

Fourth Quarter 2016 Performance Highlights

• Taxable-equivalent revenues were $2.8 billion for the fourth quarter, down $46 million from the third quarter of 2016
  • Net interest income on a taxable-equivalent basis was down $44 million
  • Net interest margin was 3.32%, down seven basis points
  • Noninterest income was essentially flat
  • Fee income ratio was 42.6%, compared to 41.9% for the prior quarter

• Noninterest expense was $1.7 billion, down $43 million compared to the third quarter of 2016
  • Personnel expense was essentially flat
  • Loan-related expense included a $31 million release of mortgage repurchase reserves
  • Merger-related and restructuring charges decreased $30 million
  • GAAP efficiency ratio was 61.1%, compared to 61.7% for the prior quarter. Adjusted efficiency ratio was 59.5%, compared to 58.7% for the prior quarter
• Average loans and leases held for investment were $142.3 billion compared to $141.3 billion for the third quarter of 2016
  • Average sales finance loans increased $1.3 billion, or 53.7% annualized, primarily due to portfolio purchases in the third and fourth quarters
  • Average other lending subsidiaries loans increased $213 million, or 5.7% annualized
  • Average residential mortgage loans decreased $313 million, or 4.1% annualized
• Average deposits were $160.1 billion compared to $159.5 billion for the prior quarter
  • Average noninterest-bearing deposits increased $862 million, or 6.8% annualized
  • Average interest-checking deposits increased $880 million, or 12.6% annualized
  • Average interest-bearing deposit costs were 0.22%, down one basis point compared to the prior quarter
  • Deposit mix remained strong, with average noninterest-bearing deposits representing 32.1% of total deposits, compared to 31.7% in the prior quarter
• Asset quality remained strong
  • Nonperforming assets decreased $30 million, driven by reductions in commercial and industrial nonperforming loans
  • Loans 90 days or more past due and still accruing were 0.44% of loans held for investment, compared to 0.42% in the prior quarter
  • Loans 30-89 days past due and still accruing were 0.75% of loans held for investment, compared to 0.69% in the prior quarter
  • The allowance for loan loss coverage ratio was 2.03 times nonperforming loans held for investment, versus 2.00 times in the prior quarter
  • The allowance for loan and lease losses was 1.04% of loans held for investment, down two basis points from the prior quarter
• Capital levels remained strong across the board
  • Common equity tier 1 to risk-weighted assets was 10.2%, or 10.0% on a fully phased-in basis
  • Tier 1 risk-based capital was 12.0%
  • Total capital was 14.1%
  • Leverage capital was 10.0%

Earnings presentation and Quarterly Performance Summary

To listen to BB&T's live fourth 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 https://bbt.investorroom.com/webcasts-and-presentations. 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 https://bbt.investorroom.com/webcasts-and-presentations.

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

About BB&T

As of December 31, 2016, BB&T is one of the largest financial services holding companies in the U.S. with $219.3 billion in assets and market capitalization of $38.1 billion. Based in Winston-Salem, N.C., the company operates 2,196 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. BB&T also has been named one of the World's Strongest Banks by Bloomberg Markets Magazine, one of the top three in the U.S. and in the top 15 globally. More information about BB&T and its full line of products and services is available at 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 these non-GAAP measures provide a greater understanding of ongoing operations and enhance comparability of results with prior periods as well as demonstrate the effects of significant gains and charges in the current period. The company believes a meaningful analysis of its financial performance requires an understanding of the factors underlying that performance. BB&T's management believes investors may use these non-GAAP financial measures to analyze financial performance without the impact of unusual items that may obscure trends in the company's underlying performance. These disclosures should not be viewed as a substitute for financial measures determined in accordance with GAAP, nor are they necessarily comparable to non-GAAP performance measures that may be presented by other companies. Below is a listing of the types of non-GAAP measures used in this news release:

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

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

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 difficult to predict. BB&T's actual results may differ materially from those contemplated by the forward-looking statements. Words such as "anticipates," "believes," "estimates," "expects," "forecasts," "intends," "plans," "projects," "may," "will," "should," "could," and other similar expressions are intended to identify these forward-looking statements. Such statements are subject to factors that could cause actual results to differ materially from anticipated results. While there is no assurance any list of risks and uncertainties or risk factors is complete, important factors that could cause actual results to differ materially from those in the forward-looking statements include the following, without limitation:

• 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 or market disruptions in Europe, China or other global markets, including, but not limited to, the potential exit of the United Kingdom from the European Union;
• changes in the interest rate environment, including interest rate changes made by the Federal Reserve or the possibility of a negative interest rate scenario, as well as cash flow reassessments may reduce net interest margin and/or the volumes and values of loans made or held as well as the value of other financial assets held;
• competitive pressures among depository and other financial institutions may increase significantly;
• legislative, regulatory or accounting changes, including changes resulting from the adoption and implementation of the Dodd-Frank Act may adversely affect the businesses in which BB&T is engaged;
• local, state or federal taxing authorities may take tax positions that are adverse to BB&T;
• a reduction may occur in BB&T's credit ratings;
• adverse changes may occur in the securities markets;
• competitors of BB&T may have greater financial resources or develop products that enable them to compete more successfully than BB&T and may be subject to different regulatory standards than BB&T;
• cybersecurity risks, including "denial of service," "hacking" and "identity theft," could adversely affect BB&T's business and financial performance or reputation, and BB&T could be liable for financial losses incurred by third parties due to breaches of data shared between financial institutions;
• natural or other disasters, including acts of terrorism, could have an adverse effect on BB&T, materially disrupting BB&T's operations or the ability or willingness of customers to access BB&T's products and services;
• costs related to the integration of the businesses of BB&T and its merger partners may be greater than expected;
• failure to execute on strategic or operational plans, including the ability to successfully complete and/or integrate mergers and acquisitions or fully achieve expected cost savings or revenue growth associated with mergers and acquisitions within the expected time frames could adversely impact financial condition and results of operations;
• significant litigation and regulatory proceedings could have a material adverse effect on BB&T;
• unfavorable resolution of legal proceedings or other claims and regulatory and other governmental investigations or other inquiries could result in negative publicity, protests, fines, penalties, restrictions on BB&T's operations or ability to expand its business and other negative consequences, all of which could cause reputational damage and adversely impact BB&T's financial conditions and results of operations;
• risks resulting from the extensive use of models;
• risk management measures may not be fully effective;
• deposit attrition, customer loss and/or revenue loss following completed mergers/acquisitions may exceed expectations;
• higher-than-expected costs related to information technology infrastructure or a failure to successfully implement future system enhancements could adversely impact BB&T's financial condition and results of operations and could result in significant additional costs to BB&T; and
• widespread system outages, caused by the failure of critical internal systems or critical services provided by third parties, could adversely impact BB&T's financial condition and results of operations.

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.