Evolving Our Differentiated Model: Community Banking Commercial David Weaver President, Community Banking. Investor Day 2018

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1 Evolving Our Differentiated Model: Community Banking Commercial David Weaver President, Community Banking Investor Day 2018

2 Key Takeaways 1Operating a premier model for Commercial Banking with key differentiation Changing client expectations and competitive challenges require greater efficiency and higher quality, more insightful 2execution 3Leveraging data and digitizing processes is critical to an easy, simple, fast client experience 4Taking bold actions to evolve our business and ensure the Perfect Client Experience 2

3 Community Banking Commercial Structure We rely on being close to the client and our structure lets us bring everything the bank has to offer through our Relationship Managers The Community Banking structure supports our client-centric strategy Organized into 24 regions Each region is led by a Regional President the chief integrator who is empowered to do the right thing for the client The Regional President is primarily responsible for driving Commercial business Benefits of our structure Gives voice to the client Local, visible leadership Local decision making Builds partnerships across the bank Geographic diversification 3

4 Client Focus through Dedicated Segment Coverage Client Segments Branch Small Business Small Business Commercial CRE Regional Corporate Large Corporate Revenue < $1MM Revenue $1-5MM Revenue $5-75MM Revenue $15-500MM Revenue $75-500MM Revenue $500MM+ Managed by: Community Bank Commercial Market Leaders # of Households: Small Business Specialists Commercial Relationship Managers CRE Bankers Regional Corporate Bankers Capital Markets Corporate Bankers 57,500 83,000 8,800 7,500 As of 09/30/2018 4

5 Diversification Drives Revenue and Net Income Revenue Diversification by Segment Net Income Mix by Segment Financial Services & Commercial Finance 17% Insurance Holdings & Premium Finance 16% Community Banking Retail & Consumer Finance 44% Financial Services & Commercial Finance 17% Insurance Holdings & Premium Finance 7% Community Banking Retail & Consumer Finance 43% Community Banking Commercial 23% Community Banking Commercial 33% YTD as of 09/30/2018 *Total segments excluding Other, Treasury & Corporate 5

6 Provides BB&T With Diversified Balance Sheet and Noninterest Income Growth Loan Mix Segment Revenue Mix CRE C&I Tax Construction Free, ABL, and Dev Other 8.4% 19.9% CRE IPP 29.3% Deposit Mix C&I and Owner Occupied 39.0% Dealer Floor Plan 3.4% CRE Loans 15.1% Interestbearing deposits 14.2% Dealer Floor Plan 1.0% Noninterestbearing deposits 37.9% Money Market, Savings, Time 27.4% Interest Checking 14.5% Noninterest Bearing 58.1% Noninterest Income 15.6% C&I Loans 16.2% Based on Segment reporting for period ended 09/30/2018 Deposit revenue represents funds transfer pricing (FTP) credits; excludes FTP debits for nonearning assets 6

7 Community Banking Commercial Financial Results ($ in billions) $55.0 $50.0 $45.0 Average Total Loans 62% C&I / 38% CRE $49.0 $51.5 $52.5 Average Noninterest-bearing DDA 58% of total deposits $40.0 $30.0 $32.0 $34.4 $34.5 $ YTD 2018 $ YTD 2018 $20.00 $10.00 New Loan Production $18.69 $17.54 $15.70 Pre-Provision Net Revenues* $2.00 $1.65 $1.40 $1.14 $1.00 $ est $ est * PPNR represents pre-tax income on a fully taxable-equivalent basis before the provision for credit losses; reflects segment accounting change for loan origination costs implemented mid-year 2017 Balance sheet data is as of 09/30/ estimated is 09/30/2018 annualized 7

8 Community Banking Commercial Financial Results ($ in billions) Revenues (TE) Noninterest Income $3.00 $2.45 $2.60 $2.68 $0.50 $0.39 $0.42 $0.43 $2.00 $0.25 $1.00 $ est $ est $2.00 $1.50 $1.00 Pre-Tax Income $1.14 $1.28 $ % 40.0% Efficiency Ratio* 52.0% 45.1% 37.8% Reduced headcount by 225 (12%) in last 2 years** $ % $ est 0.0% YTD estimated is 09/30/2018 annualized *Reflects segment accounting change implemented mid-year 2017 **Headcount includes production and production support associates only 8

9 Community Banking Commercial Credit Quality 0.15% Past Due Loans / Total Loans 0.10% Net Charge-offs / Average Loans 0.10% 0.10% 0.06% 0.06% 0.05% 0.05% 0.03% 0.05% 0.04% 0.00% /30/ % YTD 2018 Nonperforming Loans / Total Loans 1.00% 0.85% 0.72% 0.57% 0.50% 0.00% /30/ net charge-offs annualized Past due and nonperforming loan percentages calculated based on quarterly average balances 9

10 Community Banking Commercial Model Focusing on our Clients Supporting our Associates Staying close to the client with local delivery and decision making Building relationships for the long-term based on fairness, transparency and respect Delivering financial advice and Intellectual Capital through Financial Insights Innovating to improve client solutions and operating efficiency Hiring and developing talented bankers to better serve our clients Empowering their efforts Offering great products Providing excellent tools and resources Enhancing compensation programs Improving our Communities Lighthouse Projects Financial Wellness and Knowledge Small Business Administration (SBA) BB&T Leadership Institute Driving Value for our Shareholders Upholding strong credit and risk management cultures Focusing on productivity and process improvement Delivering strong revenue and growth Unwavering expense discipline 10

11 It Starts With the Client How are we doing? We are client-service oriented We believe in relationships We do a great job serving our clients based on Greenwich results Received 24 Greenwich Excellence Awards for overall satisfaction and outstanding client service in 2017 BB&T has been awarded 181 Small Business and Middle Market Banking awards from Greenwich Associates since 2009 Through 2Q 2018, peer leading results for: Overall satisfaction Responsiveness and prompt follow up Providing advice Understanding your industry Flexible credit terms and conditions Willingness to extend credit Source: Greenwich Associates 11

12 Key Differentiator: Integrated Relationship Management (IRM) Focus on our clients needs Integrate with our internal and external partners (the experts) Execute with excellence to meet our clients needs Focus Integration Execution Trust Build relationships founded on trust 12

13 Key Differentiator: Financial Insights Leads a client or prospect through a customized discovery process enabling the banker to develop a deeper understanding of the business and the industry Ensures the banker is reviewing the financial position of the business and providing advice about how that business can improve performance Challenges the business owner to think more strategically about his/her company and generate ideas to grow or improve the business 13

14 Key Differentiator: BB&T Leadership Institute Leadership Institute Solutions Client Impact Develops dynamic leaders Increases employee retention Improves bottom line Supports communities through philanthropic activities 14

15 The World Has Changed We Must Change With It B a n k s t h a t t h r i v e w i l l : Rapidly evolve to meet ever increasing client expectations Streamline and simplify processes through digitization ease of doing business is key! Enable Relationship Manager productivity through process efficiency and automated insights Use data to sharpen focus on the markets and businesses to target with the most relevant offers Improve product access, functionality and flexibility 15

16 How Do We Do This? 16

17 Client Experience 17

18 Strengthening Financial Insights Automated creation of presentations in 2018, improving delivery from 400 per month to over 800 per month since initial rollout in 2016 Enhance Content News and social media External wallet data Deepen Financial Analysis Comparison to best in class Automated observations and advice What-If modeling Capture Knowledge Capture what the banker learns about the business in Salesforce Create Client Profile Aggregate client data from multiple sources Provide to banker for better preparation Automate Recommendations Automate product recommendations from client profile Benefits: More distinct client experience Positions banker as trusted advisor Support Follow-Up Generate follow-up reminders Prioritize future contacts Elevates banker quality Improves consistency 18

19 Improving Ease of Doing Business Implemented improvements to reduce time to fulfill small loan requests from 28 days to 3 days! Ease of doing business remains a critical factor in driving satisfaction and loyalty What does ease of doing business mean to our customers? Enhancements in Process: Reconceptualizing the business lending process including origination, servicing, structure, roles and responsibilities Commercial Optimization Council Collaborative Laboratory (CoLab) End-to-end process redesign Digitizing new client onboarding Streamlining deposit account opening Simplifying Treasury onboarding process and access to data Benefits: Increases client satisfaction Improves associate morale Creates efficiency Source: Greenwich Associates 19

20 Productivity 20

21 Optimizing Productivity Executing the BB&T Leadership Model and inspecting what we expect Associates Developing improved recruiting & onboarding Optimizing delivery of Financial Insights & Leadership Institute 800 Activity 1,250 Sales Process Adhering to segmentation Delivered per month Enhancing sales & credit training Driving increased calling activity Leveraging new incentive program to drive profitable productivity per RM per day Benefits: Efficiency Effectiveness Reduced variability Improving support resources Prospecting to grow households per RM per day Driving deeper penetration of core commercial products 21

22 Sales & Service Model Evolution 22

23 Optimizing Our Structure Optimizing Market Structure Reconceptualizing the Small Business Delivery Model Revise Segmentation Build out centralized sales team Provide more centralized credit support Align resources to support new delivery model Determine span-of-control for managers Outline use of player/coach positions Realign resources in support of endto-end credit process redesign Identify additional functions that could be performed more efficiently by a dedicated, centralized group Benefits: Better client experience Greater efficiency Deeper penetration Household growth Increased accountability More face-to-face time with client Improved productivity Less administrative burden Specialization of responsibilities 23

24 Differentiating Markets Based on Opportunity Categorizing our markets G R OW M AINTAIN E XIT E NTER Aligning guidance based on market opportunity related to: Performance Expectations Banker Portfolio Size Staffing Levels and Locations Benefits: Enhance growth in high opportunity markets Focus resources in growth markets Maximize profitability in maintain markets 24

25 Technology 25

26 Building an End-to-End Online Platform Learn & Refine Loop in Feedback to inform the System over time Complete Sales and Servicing online or in person Use Data to Automate Recommendations & Advice Benefits: Client experience Efficiency Consistency Banker confidence Augment data by collecting information directly from clients through online channels Deliver prioritized contact prompts to bankers Learn & Refine Learn & Refine Present Recommendations & Advice across channels Learn & Refine 26

27 Enhancing Salesforce to Drive Results Prioritize client and prospect outreach based on past activity, history, potential needs, value Increase collaboration with product partners Integrate Financial Insights Deliver more relevant content to better inform bankers Benefits: Enhances the client experience Drives revenue Improves banker efficiency Creates more accountability 27

28 Product Enhancements 28

29 Improving Products Our overarching goal is to enhance the Client Experience through improved functionality, value, account opening processes, and account access Loans +59% Streamlined Working Capital operating model Launched Dealer Commercial Services growth plan including focus on large segment Expanding SBA lending program Better leverage Single Family Residential Construction platform Deposits Creating more comprehensive commercial deposit product sets to support cash flow management Fee Based Revenue Institutionalize IRM using data and CRM capabilities Enhance Treasury offerings +15% +33% Creating customized product suites by industry based on common usage Line of Credit Remote Deposit/ Treasury Equipment Operating DDA Veterinarian Practices Merchant Services Owner Occupied Real Estate Small Business Online/Cash Manager Online Year-over-year New Production growth through 09/30/2018 for Working Capital and Dealer Commercial Services; SBA increase reflects 7(a) loans approved by SBA 29

30 Focused on: Evolve to Drive Performance Maintaining and building strong client relationships Adding value through a differentiated client experience Investing in and evolving our business to drive improved financial results Improving processes and streamlining structure to drive greater efficiency People Process Product 30

31 Key Takeaways 1Operating a premier model for Commercial Banking with key differentiation Changing client expectations and competitive challenges require greater efficiency and higher quality, more insightful 2execution 3Leveraging data and digitizing processes is critical to an easy, simple, fast client experience 4Taking bold actions to evolve our business and ensure the Perfect Client Experience 31