BB&T reports strong first quarter earnings; Driven by record quarterly revenues and expense control

WINSTON-SALEM, N.C., April 20, 2017 /CNW/ -- BB&T Corporation (NYSE: BBT) today reported earnings for the first quarter of 2017. Net income available to common shareholders was $378 million, down 28.3 percent from the first quarter of 2016. Earnings per diluted common share were $0.46 for the first quarter of 2017. Excluding a loss on the early extinguishment of higher-cost FHLB advances of $392 million ($246 million after tax), pre-tax merger-related and restructuring charges of $36 million ($22 million after tax), and $35 million of excess tax benefits from equity-based compensation plans, net income available to common shareholders was $611 million, or $0.74 per diluted share.

Net income available to common shareholders was $592 million ($0.72 per diluted share) for the fourth quarter of 2016 and $527 million ($0.67 per diluted share) for the first quarter of 2016.

"We are pleased to report strong earnings for the first quarter," said Chairman and Chief Executive Officer Kelly S. King. "During the quarter, we terminated $2.9 billion of higher-cost FHLB advances, resulting in a pre-tax loss on early extinguishment of $392 million, or $0.30 per diluted share. This strategic action lowers our future borrowing costs and provides a boost to future margins and earnings.

"Taxable-equivalent revenues were a record $2.8 billion, up 9.1 percent compared to the first quarter of 2016," King said. "Net interest income was up $81 million and noninterest income was up $155 million from last year as we continue to capitalize on our acquisitions. In addition, revenues were up 7.6 percent, from the fourth quarter of 2016.

"Expenses were $2.1 billion and included over $400 million in debt extinguishment and merger-related and restructuring charges," King said. "Excluding these items, our adjusted efficiency ratio is at its lowest level since 2014, reflecting strong expense control, leverage from our acquisitions and excellent asset quality."

First Quarter 2017 Performance Highlights

• Taxable-equivalent revenues were $2.8 billion for the first quarter, up $52 million from the fourth quarter of 2016
• Net interest income on a taxable-equivalent basis was up $43 million
• Net interest margin was 3.46 percent, up 14 basis points; driven by rate increases and lower borrowing costs
• Noninterest income was up $9 million
• Fee income ratio was 42.1 percent, compared to 42.6 percent for the prior quarter

• Noninterest expense was $2.1 billion, up $434 million compared to the fourth quarter of 2016
• Increase includes $392 million loss on debt extinguishment
• Personnel expense increased $7 million
• Merger-related and restructuring charges increased $23 million
• GAAP efficiency ratio was 75.6 percent, compared to 61.1 percent for the prior quarter
• Adjusted efficiency ratio was 58.0 percent, compared to 59.5 percent for the prior quarter

• Average loans and leases held for investment were $142.0 billion compared to $142.3 billion for the fourth quarter of 2016
• Average sales finance loans increased $297 million, or 11.4 percent annualized, primarily due to a portfolio purchase in the fourth quarter of 2016
• Average residential mortgage loans decreased $343 million, or 4.6 percent annualized

• Average deposits were $161.4 billion compared to $160.1 billion for the prior quarter
• Average noninterest-bearing deposits decreased $326 million, or 2.6 percent annualized, primarily due to seasonality
• Average interest-bearing deposits were up $1.6 billion and costs were 0.26 percent, up four basis points compared to the prior quarter
• Deposit mix remained strong, with average noninterest-bearing deposits representing 31.7 percent of total deposits, compared to 32.1 percent in the prior quarter

• Asset quality remained strong
• Nonperforming loans decreased $13 million and represented 0.51 percent of loans held for investment
• Loans 90 days or more past due and still accruing were 0.38 percent of loans held for investment, compared to 0.44 percent in the prior quarter
• Loans 30-89 days past due and still accruing were 0.56 percent of loans held for investment, compared to 0.75 percent in the prior quarter
• The allowance for loan loss coverage ratio was 2.05 times nonperforming loans held for investment, versus 2.03 times in the prior quarter
• The allowance for loan and lease losses was 1.04 percent of loans held for investment, unchanged from the prior quarter

• Capital levels remained strong across the board
• Common equity tier 1 to risk-weighted assets was 10.3 percent, or 10.1 percent on a fully phased-in basis
• Tier 1 risk-based capital was 12.0 percent
• Total capital was 14.1 percent
• Leverage capital was 10.0 percent

Earnings presentation and Quarterly Performance Summary

To listen to BB&T's live first quarter 2017 earnings conference call at 8 a.m. ET today, please call 888-632-5009 and enter the participant code 9586536. 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 first quarter 2017 Quarterly Performance Summary, which contains detailed financial schedules, is available on BB&T's website at BBT.com.

About BB&T

BB&T is one of the largest financial services holding companies in the U.S. with $220.5 billion in assets and market capitalization of $36.3 billion as of March 31, 2017.  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 over 2,100 financial centers in 15 states and Washington, D.C. A Fortune 500 company, BB&T was recognized as one of Forbes' 2017 Best Banks in America 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 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 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:

• 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. 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 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 estimated 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 First Quarter 2017 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, 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, 2016 and in any of BB&T's subsequent filings with the Securities and Exchange Commission:

• 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.

SOURCE BB&T Corporation

ANALYSTS: Alan Greer, Executive Vice President, Investor Relations, [phone]; or Tamera Gjesdal, 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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