BB&T reports record earnings of $842 million, or $1.09 per diluted share

WINSTON-SALEM, N.C., July 18, 2019 /CNW/ -- BB&T Corporation (NYSE: BBT) today reported record earnings for the second quarter of 2019. Net income available to common shareholders was $842 million, up 8.6 percent, compared with the second quarter last year. Earnings per diluted common share were $1.09 for the second quarter of 2019, an increase of 10.1 percent compared with the same period last year. Results for the second quarter produced an annualized return on average assets of 1.55 percent and an annualized return on average common shareholders' equity of 11.98 percent.

Excluding merger-related and restructuring charges of $23 million ($19 million after-tax) and incremental operating expenses related to the merger of $9 million ($7 million after-tax), net income available to common shareholders was a record $868 million, or $1.12 per diluted share. Adjusted diluted earnings per common share increased $0.07 compared to the first quarter of 2019. Adjusted annualized return on average assets and annualized return on average tangible common shareholders' equity were 1.59 percent and 20.00 percent, respectively.

"We are very pleased to report strong overall results for the second quarter, with record earnings of $842 million, or $1.09 per diluted common share," said Chairman and Chief Executive Officer Kelly S. King. "These results were driven by strong loan growth, improved revenues led by record insurance income and a strong performance in investment banking and brokerage fees and commissions, as well as continued healthy asset quality.

"This has been an exciting quarter as we made significant progress building our new company, Truist, with our SunTrust partners," said King. "One day Truist will be a name that reflects the rich heritage of both companies and is synonymous with our goal to provide a better future for our clients, communities and associates, which will drive strong performance for our shareholders."

"This quarter, both BB&T and SunTrust made significant new commitments to the communities in which we are headquartered, including the $60 billion community benefit plan with the National Community Reinvestment Coalition that was announced earlier this week," King said. "Looking to the future, we also named a location in Charlotte for the Truist headquarters and named the next layer of talent for the combined company."

Second Quarter 2019 Performance Highlights

• Earnings per diluted common share were $1.09, an increase of $0.12 per diluted common share from the first quarter of this year
• Diluted earnings per share were $1.12, excluding merger-related and restructuring charges and incremental operating expenses related to the merger
• Return on average assets was 1.55 percent
• Return on average common shareholders' equity was 11.98 percent
• Return on average tangible common shareholders' equity was 19.45 percent

• Taxable-equivalent revenues were $3.1 billion, up $144 million from the first quarter of 2019
• Net interest margin was 3.42 percent, down nine basis points
• Noninterest income was up $150 million
• Insurance income was a record $566 million, up $56 million
• Fee income ratio was 44.4 percent, compared to 41.5 percent for the prior quarter

• Noninterest expense was $1.8 billion, down $17 million compared to the first quarter of 2019
• Noninterest expense includes $23 million of merger-related and restructuring charges and $9 million of incremental operating expenses related to the merger
• GAAP efficiency ratio was 57.6 percent, compared to 61.0 percent for the prior quarter
• Adjusted efficiency ratio was 55.1 percent, compared to 56.6 percent for the prior quarter

• Average loans and leases held for investment were $150.5 billion, up $2.4 billion, or 6.5 percent annualized compared to the first quarter of 2019
• Average commercial and industrial loans increased $1.2 billion, or 7.8 percent annualized
• Average CRE loans decreased $157 million, or 3.0 percent annualized
• Average residential mortgage loans increased $696 million, or 8.9 percent annualized
• Average indirect loans increased $542 million, or 12.5 percent annualized

• Average deposits were relatively flat compared to the first quarter of 2019
• Average noninterest-bearing deposits increased $397 million, or 3.0 percent annualized
• Average noninterest-bearing deposits represent 32.9 percent of total deposits, compared to 32.7 percent in the prior quarter
• Cost of average interest-bearing deposits was 1.02 percent annualized, up seven basis points
• Cost of average total deposits was 0.68 percent annualized, up four basis points

• Asset quality remains excellent
• Nonperforming assets were 0.23 percent of total assets; lower than levels in 2006
• Loans 90 days or more past due and still accruing were 0.27 percent of loans held for investment, compared to 0.29 percent in the prior quarter
• Net charge-offs were 0.38 percent of average loans and leases, down two basis points compared to the prior quarter
• The allowance for loan loss coverage ratio was 3.46 times nonperforming loans and leases held for investment, versus 2.97 times in the prior quarter
• The allowance for loan and lease losses was 1.05 percent of loans and leases held for investment, unchanged compared to the prior quarter

• Capital levels remained strong across the board
• Common equity tier 1 to risk-weighted assets was 10.3 percent
• Tier 1 risk-based capital was 12.0 percent
• Total capital was 14.2 percent
• Leverage capital was 10.2 percent

Earnings Presentation and Quarterly Performance Summary

To listen to BB&T's live second quarter 2019 earnings conference call at 8 a.m. ET today, please call 866-519-2796 and enter the participant code 892418. 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 6759252).

The presentation, including an appendix reconciling non-GAAP disclosures, is available at https://bbt.investorroom.com/webcasts-and-presentations. BB&T's Second Quarter 2019 Quarterly Performance Summary, which contains detailed financial schedules, is available on BB&T's website at https://bbt.investorroom.com/quarterly-earnings.

About BB&T

BB&T is one of the largest financial services holding companies in the U.S. with $230.9 billion in assets and market capitalization of approximately $37.6 billion as of June 30, 2019. Building on a long tradition of excellence in community banking, BB&T offers a wide range of financial services including retail and commercial banking, investments, insurance, wealth management, asset management, mortgage, corporate banking, capital markets and specialized lending. Based in Winston-Salem, N.C., BB&T operates more than 1,700 financial centers in 15 states and Washington, D.C. and is consistently recognized for outstanding client service by Greenwich Associates for small business and middle market banking. 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, enhance comparability of results with prior periods and demonstrate the effects of significant items in the current period. The Corporation believes a meaningful analysis of its financial performance requires an understanding of the factors underlying that performance. BB&T's management believes investors may find these non-GAAP financial measures useful. These disclosures should not be viewed as a substitute for financial measures determined in accordance with GAAP, nor are they necessarily comparable to non-GAAP performance measures that may be presented by other companies. Below is a listing of the types of non-GAAP measures used in this news release:

• The adjusted efficiency ratio is non-GAAP in that it excludes securities gains (losses), amortization of intangible assets, merger-related and restructuring charges and other selected items. BB&T's management uses this measure in their analysis of the Corporation's performance. BB&T's management believes this measure provides a greater understanding of ongoing operations and enhances comparability of results with prior periods, as well as demonstrates the effects of significant gains and charges.
• Tangible common equity and related measures are non-GAAP measures that exclude the impact of intangible assets, net of deferred taxes, and their related amortization. These measures are useful for evaluating the performance of a business consistently, whether acquired or developed internally. BB&T's management uses these measures to assess the quality of capital and returns relative to balance sheet risk and believes investors may find them useful in their analysis of the Corporation.
• Core net interest margin is a non-GAAP measure that adjusts net interest margin to exclude the impact of purchase accounting. The interest income and average balances for PCI loans are excluded in their entirety as the accounting for these loans can result in significant and unusual trends in yields. The purchase accounting marks and related amortization for a) securities acquired from the FDIC in the Colonial Bank acquisition and b) non-PCI loans, deposits and long-term debt acquired from Susquehanna and National Penn are excluded to approximate their yields at the pre-acquisition rates. BB&T's management believes the adjustments to the calculation of net interest margin for certain assets and liabilities acquired provide investors with useful information related to the performance of BB&T's earning assets.
• The adjusted diluted earnings per share is non-GAAP in that it excludes merger-related and restructuring charges and other selected items, net of tax. BB&T's management uses this measure in their analysis of the Corporation's performance. BB&T's management believes this measure provides a greater understanding of ongoing operations and enhances comparability of results with prior periods, as well as demonstrates the effects of significant gains and charges.
• The adjusted operating leverage ratio is non-GAAP in that it excludes securities gains (losses), amortization of intangible assets, merger-related and restructuring charges and other selected items. BB&T's management uses this measure in their analysis of the Corporation's performance. BB&T's management believes this measure provides a greater understanding of ongoing operations and enhances comparability of results with prior periods, as well as demonstrates the effects of significant gains and charges.
• The adjusted performance ratios are non-GAAP in that they exclude merger-related and restructuring charges, selected items and, in the case of return on average tangible common shareholders' equity, amortization of intangible assets. BB&T's management uses these measures in their analysis of the Corporation's performance. BB&T's management believes these measures provide a greater understanding of ongoing operations and enhances comparability of results with prior periods, as well as demonstrates the effects of significant gains and charges.

A reconciliation of these non-GAAP measures to the most directly comparable GAAP measure is included in BB&T's Second Quarter 2019 Quarterly Performance Summary, which is available at https://bbt.investorroom.com/quarterly-earnings.

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, as well as the risks and uncertainties more fully discussed under Item 1A-Risk Factors in our Annual Report on Form 10-K for the year ended December 31, 2018 and in any of BB&T's subsequent filings with the Securities and Exchange Commission:

• risks, uncertainties and other factors relating to the merger of SunTrust with and into BB&T, including the ability to obtain regulatory approvals and meet other closing conditions to the merger, including approval of the merger by BB&T shareholders and SunTrust shareholders and delay in closing the merger;
• general economic or business conditions, either nationally or regionally, may be less favorable than expected, resulting in, among other things, slower deposit and/or asset growth, and a deterioration in credit quality and/or a reduced demand for credit, insurance or other services;
• disruptions to the national or global financial markets, including the impact of a downgrade of U.S. government obligations by one of the credit ratings agencies, the economic instability and recessionary conditions in Europe;
• changes in the interest rate environment, including interest rate changes made by the Federal Reserve, the discontinuation of LIBOR as an interest rate benchmark, as well as cash flow reassessments may reduce net interest margin and/or the volumes and values of loans and deposits as well as the value of other financial assets and liabilities;
• 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 could adversely affect BB&T's business and financial performance or reputation, and BB&T could be liable for financial losses incurred by third parties due to breaches of data shared between financial institutions;
• higher-than-expected costs related to information technology infrastructure or a failure to successfully implement future system enhancements could adversely impact BB&T's financial condition and results of operations and could result in significant additional costs to BB&T;
• natural or other disasters, including acts of terrorism, could have an adverse effect on BB&T, materially disrupting BB&T's operations or the ability or willingness of customers to access BB&T's products and services;
• costs related to the integration of the businesses of BB&T and its merger partners may be greater than expected;
• failure to execute on strategic or operational plans, including the ability to successfully complete and/or integrate mergers and acquisitions or fully achieve expected cost savings or revenue growth associated with mergers and acquisitions within the expected time frames could adversely impact financial condition and results of operations;
• significant litigation and regulatory proceedings could have a material adverse effect on BB&T;
• unfavorable resolution of legal proceedings or other claims and regulatory and other governmental investigations or other inquiries could result in negative publicity, protests, fines, penalties, restrictions on BB&T's operations or ability to expand its business and other negative consequences, all of which could cause reputational damage and adversely impact BB&T's financial conditions and results of operations;
• risks resulting from the extensive use of models;
• risk management measures may not be fully effective;
• deposit attrition, customer loss and/or revenue loss following completed mergers/acquisitions may exceed expectations; and
• widespread system outages, caused by the failure of critical internal systems or critical services provided by third parties, could adversely impact BB&T's financial condition and results of operations.

Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this news release. 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.

SOURCE BB&T Corporation

ANALYSTS, Richard Baytosh, Executive Vice President, Investor Relations, [phone] or ANALYSTS, Aaron Reeves, Senior Vice President, Investor Relations, [phone] or MEDIA, Brian Davis, Senior Vice President, Corporate Communications, [email protected], http://www.bbt.com

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