BB&T's first quarter EPS totals $0.69; Earnings total $501 million

WINSTON-SALEM, North Carolina, April 17, 2014 /PRNewswire/ -- BB&T Corporation (NYSE: BBT) today reported first quarter 2014 net income available to common shareholders of $501 million, an increase of 139% compared to $210 million earned in the first quarter of 2013. Earnings per diluted common share totaled $0.69, an increase of 138% compared with the first quarter last year. The prior year's results were reduced by a tax-related adjustment totaling $281 million.

First quarter earnings produced an annualized return on average assets of 1.29% and an annualized return on average common shareholders' equity of 9.87%. The return on average tangible common equity for the first quarter was 15.81%.

"Our results for the first quarter were solid in light of normal seasonality. Insurance revenues were very strong for the quarter, credit results continued to improve and expenses were down $53 million compared with last quarter, reflecting improving expense control," said Chairman and Chief Executive Officer Kelly S. King. "Commercial loan growth was strong, particularly commercial real estate lending for income producing properties. Consistent with industry trends, mortgage banking income declined as originations were down from last year's record levels.

"Noninterest expenses decreased an annualized 15% from last quarter," said King. "The reduction was driven by substantially lower personnel costs and professional services expenses. These declines created improvement in our efficiency ratio and helped generate positive operating leverage in the quarter. We continue to expect improvement in the efficiency ratio as revenue growth is expected to outpace expense growth.

"Average loans grew modestly at 0.9% on an annualized basis this quarter, impacted by seasonality and a substantial decline in mortgage activity," said King. "We experienced improvement in commercial lending, with commercial real estate loans for income producing properties increasing 10.6% and average construction and development loans up 3.5%. Sales finance, largely prime automobile lending, grew an annualized 7.3%, while mortgage and direct retail were flat on a combined basis. We expect improving growth in the second quarter with more seasonal strength driving our portfolios.

"Credit quality continued to improve in the first quarter," said King. "Nonperforming assets, excluding covered assets, declined 6%. Net loan charge-offs remained low at 0.55% of average loans and leases, excluding covered loans. Excluding the impact of an acceleration of charge-offs in the nonprime automobile lending portfolio, charge-offs were 0.47% for the quarter, demonstrating continued improvement from last quarter, and driving our provision expense and other credit costs lower.

"We are also pleased that our regulators did not object to our capital plan and, as a result, we will recommend an increase to our quarterly dividend from $0.23 to $0.24 per share to our Board later this month," said King. "We continue to have one of the highest dividend yields and payout ratios in the industry."

First Quarter 2014 Performance Highlights

• Average total loans and leases held for investment increased 0.9% on an annualized basis compared to the fourth quarter of 2013
  • Average CRE - income producing properties loans increased 10.6%
  • Average sales finance loans increased 7.3%
  • Average loans in the other lending subsidiaries group decreased 8.2%
  • Average C&I loans increased 3.6%
  • Average mortgage loans and direct retail lending were flat on a combined basis
  • End of period loans held for investment increased 2.1% on an annualized basis

• Taxable equivalent revenues were $2.3 billion for the first quarter, down from the prior quarter
  • Net interest margin was 3.52%, down four basis points compared with last quarter due to an increase in the investment portfolio to comply with new liquidity rules
  • Insurance income increased $56 million, or 61.3% annualized, driven by improved market conditions for insurance, higher performance-based commissions, and a change in process related to estimating certain commission income.
  • Mortgage banking income was down $26 million driven by lower residential and commercial loan production

• Asset quality continued to improve
  • Nonperforming assets decreased $67 million, or 6.4%, excluding covered assets
  • Net charge-offs, excluding covered, were 0.55% of average loans for the quarter; core net charge-offs, excluding the impact of an acceleration of charge-offs in the nonprime automobile lending portfolio, were 0.47% in the quarter, compared to 0.49% in the fourth quarter of 2013
  • Delinquent loans improved across the board
  • Allowance for loan loss coverage ratio, excluding covered loans, decreased slightly from 1.73x of nonperforming loans held for investment in the fourth quarter to 1.70x in the first quarter of 2014

• Noninterest expense decreased an annualized 14.8% compared with the fourth quarter of 2013
  • Personnel expense declined 22.1% due to lower incentive compensation and lower pension expense
  • Professional services decreased $13 million due to declining legal and project-related expenses

• Average noninterest-bearing deposits increased $45 million, or 0.5% on an annualized linked quarter basis
  • Average interest-bearing deposit costs fell one basis point to 0.27% this quarter
  • Average noninterest-bearing deposits increased $2.9 billion, or 8.8% compared to the first quarter of 2013

• Capital levels improved across the board
  • Tier 1 common equity to risk-weighted assets was 10.2%
  • Tier 1 risk-based capital was 12.1%
  • Total capital was 14.6%
  • Basel III common equity tier 1 was 10.0%
  • Leverage capital remained strong at 9.5%
  • Tangible common equity to tangible assets was 7.6%

Earnings presentation and Quarterly Performance Summary

To listen to BB&T's live first quarter 2014 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 by dialing 888-203-1112 (access code 4313363) until May 17, 2014.

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

BB&T's first quarter 2014 Quarterly Performance Summary, which contains detailed financial schedules, is available on BB&T's website at www.bbt.com.

About BB&T

As of March 31, 2014, BB&T is one of the largest financial services holding companies in the U.S. with $184.7 billion in assets and market capitalization of $28.9 billion. Based in Winston-Salem, N.C., the company operates 1,824 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:

• Tangible common equity, Tier 1 common equity and related ratios are non-GAAP measures. The return on average risk-weighted assets is a non-GAAP measure. 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 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.
• 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, diluted EPS, return on average assets, return on average risk-weighted assets, return on average common shareholders' equity and return on average tangible common shareholders' equity have been adjusted to exclude the impact of certain tax adjustments. BB&T's 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.
• Adjusted net charge-offs and the adjusted ratio of net charge-offs to average loans are non-GAAP measures that adjust net charge-offs to exclude the impact of a process change that resulted in accelerated recognition of charge-offs in the non-prime automobile lending portfolio during the quarter ended March 31, 2014. BB&T's management believes these adjustments increase comparability of period-to-period results and believes that 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 in BB&T's First Quarter 2014 Quarterly Performance Summary, which is available on BB&T's website at www.bbt.com/financials.html.

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 that are based on the beliefs and assumptions of the management of BB&T and the information available to management at the time that these disclosures were prepared. 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. Such factors include, but are not limited to, the following:

• 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 credit and financial markets, either nationally or globally, 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;
• changes in the interest rate environment 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 and develop products that enable them to compete more successfully than BB&T and may be subject to different regulatory standards than BB&T;
• 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;
• costs or difficulties related to the integration of the businesses of BB&T and its merger partners may be greater than expected;
• expected cost savings or revenue growth associated with completed mergers and acquisitions may not be fully realized or realized within the expected time frames;
• significant litigation could have a material adverse effect on BB&T;
• deposit attrition, customer loss and/or revenue loss following completed mergers and acquisitions may be greater than expected; and
• cyber-security risks, including "denial of service," "hacking" and "identity theft," could adversely affect our business and financial performance, or our reputation.

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.