BB&T reports 3rd quarter diluted EPS of $0.64; or $0.70 adjusted; Record assets exceed $200 billion

WINSTON-SALEM, N.C., Oct. 15, 2015 /CNW/ -- BB&T Corporation (NYSE: BBT) today reported quarterly earnings for the third quarter of 2015. Net income available to common shareholders was $492 million, compared to $512 million earned in the third quarter of 2014. Earnings per diluted common share totaled $0.64 for the quarter, compared to $0.70 for the third quarter of last year. Excluding merger-related and restructuring charges, net income available to common shareholders was $539 million, up 4.5% compared to $516 million earned in the third quarter of 2014. Adjusted earnings per diluted share was $0.70 compared to $0.71 in the earlier quarter.

"We are pleased to report strong results for the quarter, driven by healthy organic loan and deposit growth and the acquisition of Susquehanna Bancshares," said Chairman and Chief Executive Officer Kelly S. King. "We also announced an agreement to acquire National Penn, of Allentown, Pennsylvania. These acquisitions will significantly expand our presence in the mid-Atlantic region and vault us to #4 deposit market share in Pennsylvania.

"I am excited to share that the successful acquisition of Susquehanna, coupled with organic balance sheet growth, has pushed us above $200 billion in assets, which is a significant milestone.

"We had a strong overall quarter with higher revenues and improved net interest margin, continued excellent results in asset quality, and strong capital and liquidity," said King. "Revenues were $2.5 billion, up $155 million, or 6.6% compared to the third quarter of 2014. The Susquehanna acquisition contributed approximately $150 million in revenues since August 1, and we look forward to continued growth within our newly expanded footprint."

Third Quarter 2015 Performance Highlights

• Taxable equivalent revenues were $2.5 billion for the third quarter, up $122 million from the second quarter of 2015
  • Net interest income was up $153 million, driven by $130 million from Susquehanna for the two months it was included
  • Net interest margin was 3.35%, up eight basis points due to higher yields on Susquehanna loans
  • Noninterest income was down $31 million primarily due to insurance income
  • Fee income ratio was 42.1%, compared to 46.3% in the prior quarter, reflecting dilution from Susquehanna and lower insurance revenue

• Noninterest expense was $1.6 billion, down $59 million compared to the second quarter
  • The prior quarter included a $172 million loss on early extinguishment of debt
  • Susquehanna's operations added $74 million in costs, including $37 million in personnel expense and $10 million in occupancy and equipment expense
  • Merger-related and restructuring charges were $52 million higher as a result of increased activity related to Susquehanna
  • The adjusted efficiency ratio was 59.2%

• Average loans and leases held for investment increased $10.6 billion compared to the second quarter of 2015
  • Loans acquired in the Susquehanna transaction totaled $12.9 billion, with an $8.5 billion impact on average balances for the quarter
  • The Bank of Kentucky contributed $1.0 billion in average loan growth
  • Excluding these acquisitions
    • Total average loans increased $1.0 billion, or 3.2% annualized
    • Total average loans excluding residential mortgage increased 6.7%
    • Average C&I loans increased 6.7%
    • Average direct retail loans increased 11.9%
    • Average other lending subsidiaries loans increased 20.6%

• Average deposits increased $12.0 billion compared to the prior quarter
  • Deposits assumed in the Susquehanna acquisition totaled $14.1 billion, with a $9.4 billion impact on average balances for the quarter
  • The Bank of Kentucky added approximately $1.4 billion in average deposits
  • Excluding these acquisitions, average noninterest-bearing deposits increased $721 million
  • Average interest-bearing deposit costs were 0.24%, flat compared to the prior quarter
  • Deposit mix remained strong, with average noninterest-bearing deposits representing 30.7% of total deposits, compared to 31.5% in the prior quarter
  • The change in composition was driven by the mix of deposits acquired from Susquehanna and The Bank of Kentucky

• Asset quality remained strong
  • Nonperforming assets increased $15 million, or $5 million excluding Susquehanna, from June 30, 2015
  • Delinquent loans increased $227 million, or $4 million excluding Susquehanna loans
  • The allowance for loan and lease losses was 1.08% of loans held for investment, or 1.19% excluding Susquehanna loans that were initially recorded at fair value
  • The allowance for loan loss coverage ratio was 2.49 times nonperforming loans held for investment at September 30, 2015, versus 2.55 times at June 30, 2015

• Capital levels remained strong across the board
  • Common equity tier 1 to risk-weighted assets was 10.1%, or 9.8% on a fully phased-in basis
  • Tier 1 risk-based capital was 11.6%
  • Total capital was 14.1%
  • Leverage capital was 9.9%
  • Tangible common equity to tangible assets was 7.7%

Earnings presentation and Quarterly Performance Summary

To listen to BB&T's live third quarter 2015 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 third quarter 2015 Quarterly Performance Summary, which contains detailed financial schedules, is available on BB&T's website at www.bbt.com.

About BB&T

As of September 30, 2015, BB&T is one of the largest financial services holding companies in the U.S. with $208.8 billion in assets and market capitalization of $27.8 billion. Based in Winston-Salem, N.C., the company operates 2,150 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. Credit quality data excludes government guaranteed GNMA 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 and related ratios are non-GAAP measures. 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 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. 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 and purchased credit impaired ("PCI") loans acquired from Susquehanna. Core net interest margin is also adjusted to remove the purchase accounting marks and related amortization for non-PCI loans and deposits acquired from Susquehanna. 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.
• Ratio of the allowance for loan and lease losses as a percentage of loans held for investment excluding Susquehanna is a non-GAAP measure that removes the Susquehanna loans from the calculation of the ratio. BB&T's management believes that adjustments to the calculation provide investors with useful information because these loans were recorded at fair value and no allowance was recognized.

A reconciliation of these non-GAAP measures to the most directly comparable GAAP measure is included in BB&T's Third Quarter 2015 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 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;
• cyber-security risks, including "denial of service," "hacking" and "identity theft," could adversely affect BB&T's business, financial performance, or reputation;
• failure to implement part or all of the Company's new ERP system could result in impairment charges that adversely impact BB&T's financial condition and results of operations and could result in significant additional costs to BB&T; and
• failure to execute on the Company's strategic or operational plans, including the ability to successfully complete and/or integrate mergers and acquisitions, 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]; Tamera Gjesdal, Senior Vice President, Investor Relations, [phone]; MEDIA: Cynthia A. Williams, Senior Executive Vice President, Corporate Communications, [phone], http://www.bbt.com