Enhancing BB&T’s Risk / Return Advantage
in a ‘Disrupt or Die’ EnvironmentClarke R. Starnes, IIIChief Risk Officer
Investor Day 2018
2
Key Takeaways
1Consistent best in
class risk adjusted returns
New risks are
resulting fromindustry
innovations23
Adapting risk and
control programs
while taking
advantage of current and future
opportunities 4BB&T will maintain
its conservativethrough-the-
cycle approachto credit risk, with
a focus on
diversification
and granularity
3
BB&T’s Fundamental Approach to Risk
Management
4
BB&T’s Consistent, Disciplined View of Risk Appetite...
Through-the-Cycle
Perspective: Attractive returns generated by a
business unit should not be
entirely dependent on a
growing economy
Low Variability and High
Resiliency: Favor business activities that do not have
large swings in profitability
and can bounce back
quickly from a recession
or stress period
Diversification and
Granularity: Cannot be overly dependent on a
particular sector, loan
type, business unit, or
geography to generate
revenues and earnings
...consistently yields best in class risk adjusted returns
5
0.00%
0.50%
1.00%
1.50%
2.00%
2.50%
3.00%
3.50%
4.00%
BB&T Peers
$0
$50
$100
$150
$200
$250
$300
$350
$400
Net Loss Total - BB&T
Net Loss Total - Average
(Participating Banks*)
Consistently Lower Nonaccrual Loans and
Operational Losses
Nonaccrual Loans / Loans
Source: S&P Global, regulatory reportsPeers include BAC, CFG, COF, FITB, WFC, HBAN, KEY, MTB, PNC, RF, STI and USBABA Loss Data Sharing Consortium: BBT, BMO, BOKF, BPOP, CFG, CMA, DFS, FHN, FITB, FRC, HBAN, HWC, KEY, MS, MUFG, RF, SAN, STI, SYF, TCF, USAA, USB, ZION; BBT joined 2008
Net Operational Losses per $1 Million in Assets
6
DFAST Results Support BB&T’s Best-in-Class
Risk / Return Positioning
BB&T Risk / Return Positioning vs Peers (2018 DFAST)
Only bank in higher return / lower risk quadrant for each DFAST cycle (2014-2018)
CCAR Peers: CFG, FITB, HBAN, KEY, MTB, PNC, RF, STI, USB and WFC
Source: S&P Global, Dodd-Frank Act Stress Test 2018: Supervisory Stress Test Methodology and Results
Average Return
Ave
rag
e R
isk
(Higher Return, Lower Risk)
(Lower Return, Lower Risk)
(Higher Return,
Higher Risk)
(Lower Return,
Higher Risk)0.50%
0.75%
1.00%
1.25%
1.50%
1.75%
2.00%
2.25%
1.0% 1.5% 2.0% 2.5% 3.0%
% R
etu
rn2
01
7 A
ctu
al P
PN
R L
ess
20
17
Act
ual
Lo
ss R
ate
% Risk(Difference between FRB Severely Adverse Stress Loss Rate and 2017Actual Loss Rate)
7
Structural Innovation Requires Risk
Management Programs To Adapt and Evolve
8
BB&T is Embracing Structural Changes That are
Significantly Impacting the Banking Industry
Technological
Capabilities
Regulatory
Requirements
Demographics
Economics
Client
Expectations
Non-traditional
Market Entrants
Fintech
Partnerships
Evolving Client and Market Participant
Experience
9
BB&T’s Risk Management Framework Is Evolving to Take
Advantage of These New Opportunities
New Technology and Expanded Ecosystems
Continuous Development
Enterprise Risk Transformation
Journey led,proposition based
products with
integrated risk and
controls
Secure data-driven
digital frameworks and monitoring
techniques to identify
and assess emerging
risks utilizing platform approaches
Updated and
integrated governance
operating models and practices to
enable and manage
continuous development risks
Risk management capability
transformation to
enable and manage
business transformation and new digital banking
10
Change Risk
Compliance Risk
Credit Risk
Cybersecurity Risk
Data Risk
Financial Crimes Risk
Fraud Risk
Privacy Risk
Reputation Risk
Strategic Risk
Technology Risk
Vendor Risk
Industry Innovation Introduces New and Emerging Risk
Considerations...
...and requires comprehensive evaluation and rigorous control programs
APIs
3rd Party
Aggregators
Open
Banking
4th Party
Vendor
Providers
Agile
Development
Public
Cloud
Faster
Payments
Fintech
Partnerships
RPA
11
Enhancing BB&T’s Risk and Control Programs
12
Prevalent in Nearly All Disrupt or Die Initiatives
Change
Risk
Vendor
Risk
▪ Changes in products/services/processes are
evaluated comprehensively to ensure risk is
managed within appetite
▪ Change risk management integrates risk
specialties and risk centers of excellence
▪ Iterative approach supports speed to market
▪ Increasing use of vendors to deliver new
products, services, and technologies
▪ Risks such as cyber and 4th party
concentrations require enhanced risk
management practices
Evaluation of proposed industry/shared utilities and consistent certification standards
▪ Risk Governance
▪ Cyber Security
▪ Operational Resilience
▪ Application Development
▪ Digital Strategy
▪ Data Governance
13
▪ Advanced Behavioral Analysis
▪ Biometric Authentication
▪ Data Tokenization
▪ Next Generation Data Protection
▪ Encryption
▪ Innovative Authentication Options
Digitization and Adoption of New Technologies Require
an Integrated View of Technology Risks
Established new independent Chief Technology Risk Officer role
Covert Sound-printing
Improve Detection
Capabilities
Align CapabilitiesAdvanced Link Analysis
14
A Paradigm Shift Is Required for Managing Financial
Crimes Related Risk
Machine LearningEnterprise Authentication
Data Enrichment
Robotic Process
Automation
Automated Transaction
Monitoring
Visual Metric Reporting
Integrated Case
Management
Robust Client Risk Scoring
Convergence and greater integration of BSA/AML, Fraud, and Cyber Threat programs
15
Compliance Risk Requires Continuous, Data Driven Surveillance and Monitoring Systems
▪ Technology enabled
surveillance allows
Compliance to be
more nimble to
support the pace
and degree of
change
▪ Heightened
awareness of privacy
risk comes with
digital, ‘always on’
products and
services
Implementation of new enterprise
GRC platform in progress
Board & Management
Oversight
Policies & Procedures
Training
Monitoring & Testing
Consumer Complaint Response
Risk Assessment
Reporting
▪ Culture and conduct risk are
significant issues in the financial
services industry
▪ BB&T’s long standing culture
demands high ethical standards
and is key to BB&T’s success
▪ Culture and Conduct Risk Committee
serves as a consolidation point for
existing efforts aimed at reputation
risk, sales practices risk, culture,
ethics, and conduct
Maintaining Strong Culture and Ethical Conduct is
Paramount to BB&T’s Success and Lowers Overall Risk Profile
16
Culture > Informs > Leadership > Drives > Engagement > Produces > Results
17
Maintaining Disciplined Approach to Credit Risk
Management While Executing on Opportunities
18
BB&T’s Consistent, Disciplined Approach to Credit Risk
Management...
Po
rtfolio
Ma
na
ge
me
nt E
lem
en
ts
Alignment of
Vision / Mission / Values
with consistent risk
appetite
Conservative,
transaction
based
underwriting
Client selection
and long-
standing
relationships
Prudent risk
appetite and
risk selection
Disciplined
account
servicing and
portfolio
management
0%
2%
4%
6%
8%
10%
12%
14%
Net Charge-Off (NCO) %
19
...Drives Consistent Loan Portfolio Outperformance; Especially Critical During Latter Stages of an Economic
Cycle
– Similarity in performance / increasing ‘herd’ mentality
– Fixation with loan and revenue growth
– Loosening underwriting standards
– When costly credit mistakes tend to be made
0.0%
0.5%
1.0%
1.5%
2.0%
2.5%
3.0%
3.5%
BB&T Range of Peer results
Latter Stage Cycle Credit Dynamics
Tightening of peer
performance
occurred at ‘peak’
of last cycle
All-time
tightest
range for
peers
Tightening of peer
performance
occurred at ‘peak’
of last cycleNo peer
above
50bps
post Q3
2015
Source: S&P Global, regulatory reports
Peers include CFG, CMA FITB, WFC, HBAN, KEY, MTB, PNC, RF, STI, USB and ZION
Risk Adjusted Loan Yield % (Yield – NCO)
Peer Average
20
Target Portfolio Mix Guides Diversified, Profitable Growth
4% 3%
11%15% 18%
23%
37%40%8%
12%11%
34%
27% 25%21%
4% 3%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
20
07
Q1
20
18
Q3
Ta
rge
t
Government Consumer Other
C&I + OORE CRE IPP
Consumer RE CRE ADC
BB&T Loan Mix Comparison
Consumer Other
Indirect Retail,
Wealth, Bankcard
Commercial
Real Estate
IPP and ADC
Consumer Real
Estate
Mortgage, HELOC
Government
Loan
Category
Growth to Achieve
Target MixRationale
Through-the-Cycle
Earnings and
Returns
Variability
Resiliency
Diversification
MetricImpact of Achieving Target Mix
C&I + OORE
Corporate Banking,
Community Banking,
Floorplan, Leasing,
Premium Finance
Source: S&P Global, regulatory reports
21
Comprehensive Limits Framework…
Retail Business
Unit Limits
▪ Concentration Limits – Enforce diversification, control concentration risk; guides progress towards target mix
▪ Internal Lending Limits - Enforce granularity, control idiosyncratic risk
CRE Property
Type LimitsC&I Sector Limits Super Sector
Limits
Loan Category
Limits
Single Name Limits Single Project Limits
22
Community
Bank 21%
Corporate
Banking 11%
Gov't Finance
3%
Equip. Finance
2%
Prem. Finance
2%
Dealer Floor
Plan 1%
MWL 1%
Comm. Equip.
Capital 1%Commercial
Bankcard 1%
CRE IPP 10%CRE C&D 3%
Grandbridge
1%
Resi.
Mortgage
21%
Direct Retail
8%
Dealer
Finance - Auto
4%
DF - Rec
Lending 1%
RAC 4%
Sheffield Retail
3%
Bankcard -
Retail 2%
North Carolina 18%
Florida
11%
Virginia 9%
Pennsylvania 8%
Georgia 7%Texas 7%
Maryland 6%
South Carolina 5%
California 3%
Kentucky 2%
Tennessee 2%
Other 22%
Note: Based on EOP balances 9/30/2018 excluding purchase credit impaired loans; C&I includes Leasing
Source: Company reports, regulatory reports
Portfolio balances in each state in the Other category are under 2% of the total
Total Loan Portfolio by Geography
…Enforces Diversification of Total Loan Portfolio by
Business Unit Loan Type and Geography
Total Loan Portfolio by Loan Type
Total: $146B
C&I $63B
CRE $22B
Mortgage $31B
Retail $31B
23
Mining and
O&G
Extraction 2%Utilities 2%
Construction
2%
Manufacturing
10%
Wholesale
4%
Retail 7%
Transportation
and WH 3%
Finance 8%
Real estate
3%Scientific
services 2%
Administrative
and waste
mgmt 2%Education
services 3%
Healthcare 8%
Hospitality
and food
svcs 1%
Other
services
(except
public
admin) 2%
Public admin 7%
Owner
occupied
23%
Not classified
8%
Agriculture
1%
C&I Portfolios Are Well-Diversified and
Client-Focused – $62.5B*
▪ Centered around Community Bank
relationships
– Average funded C&I loan < $1MM
– SNCs = 9.8% of total loan outstandings
▪ Diversification and granularity:
– Top 20 relationship commitments are only 35% of TCE
– Covariant risks further monitored and managed at super-sector levels
▪ Disciplined client selection avoids:
– Leveraged loan transactions only 0.7% of total loans
– Second-lien structures
– Term loan B tranches
– Loans to fund dividend recaps and share repurchases
– Bridge financing
– Fully underwritten syndication risk
*Includes Bankcard Commercial, Equipment Finance, Premium Finance, Sheffield Commercial, and Commercial Equipment Capital
Chart excludes Bankcard Commercial not classified includes Premium Finance and Lease Financing
Note: Based on EOP balances 09/30/2018 excluding purchase credit impaired loans
C&I Sectors
24
Multifamily
18%
Industrial
13%
Retail
24%
Office
20%
Hotel
14%
Single
Family
11%
▪ Direct lending to relationship-oriented sponsors
▪ Very granular portfolio:
– Average CRE loan < $2 million
– Largest single CRE loan < $70MM
– Top 20 commitments = 6.2% of TCE
– Top 10 MSAs combined < 40% of total CRE
loans
▪ CRE-ADC and IPP lending limits 50-80% of C&I limits, respectively
▪ Single project limits further reduced based on MSA and loan type
▪ Modest exposure to regional malls (<$100MM), seniors and student
▪ Disciplined loan sizing utilizes
conservative stressed interest rates and property-specific coverage ratios
▪ Avoid extended interest-only and non-recourse terms
CRE Portfolio is Intentionally Balanced
and Granular – $21.5B*
*Includes Grandbridge Real Estate Capital
Note: Based on EOP balances 09/30/2018 excluding purchase credit impaired loans
Well-Balanced by Sector
25
Full Spectrum National Auto Platform – $12.0B*
▪ Regional Acceptance Corporation (“RAC”) has provided consistent returns to
BB&T through the credit cycle since its acquisition in 1997
▪ Intensive underwriting process including client interview, employment/income verification and rigorous collateral assessment
Note: Based on EOP balances 09/30/2018 excluding purchase credit impaired loans
7.43%8.12% 8.31%
5.18%
4.06%4.59%
5.56%
6.89% 6.68%7.33% 7.40%
5.82%
0.00%
1.00%
2.00%
3.00%
4.00%
5.00%
6.00%
7.00%
8.00%
9.00%
10.00%
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
RAC - Subprime Dealer Finance
Portfolio View 9/30/2018 9/30/2017 9/30/2018 9/30/2017
Outstanding $'s (MM) $5.0B $4.0B $6.2B $7.8B
NCO (YTD) 5.82% 7.51% 0.19% 0.17%
Loan Margin 12.57% 14.67% 1.30% 1.24%
Orig
ina
tio
n M
etr
ics
Average Term 69 69 68 67
Max Term 72 72 75 75
Average DTI 35.9% 35.7% 31.9% 31.2%
Average FICO 564 560 743 751
Average LTV - Line3 104.5% 105.2% 97.4% 94.7%
▪ Auto Sector leadership is risk aware, data driven, and operational control minded
– Deliver best in class auto
finance program
– Avoid score only adverse
selection
Primary Auto Delivery Channels
RAC Loss History
26
▪ Average FICO 754
▪ Very diversified portfolio:
– No state greater than 19%
– Correspondent Lending provides geographic diversification
▪ Jumbo exposures support Wealth strategy
▪ Pre-crisis vintages less than 15% of the portfolio
Residential Mortgage and In-Bank
Direct Retail Lending – $42.4B*
CP
2%
Conforming
32%
DRL Loans
9%
Jumbo
55%
Affordable
& Others
2%
HELOC-1st
33%
HELOC-
2nd 39%
Other Real
Estate 6%
Securities
7%
Unsecured
6%
Other
Non-RE 9%
$11.6 Billion
▪ Average FICO 757
▪ Branch originated portfolio
▪ Primarily real estate secured (HELOC) with
originations under 85% LTV
▪ Wealth lending represents high growth segment
▪ Not participating in 3rd party unsecured lending
Based on EOP balances 09/30/2018, excluding loans held for sale and purchase credit impaired
Mortgage Direct Retail Lending
$30.8 Billion
27
▪ Average retail FICO 751
▪ 69% of Retail Bankcard
commitments have 4 or more Bank
products
▪ No active origination program for
subprime credit cards
▪ No national delivery of credit cards
to non-BB&T clients (no mass
solicitations)
Relationship Based Prime Bankcard Portfolio
Note: Based on EOP balances 9/30/2018 excluding purchase credit impaired loans
Retail
70%
Commercial
24%
Overdraft
6%
Bankcard by Segment
$3.1 Billion
BusinessOutstanding (Billions)
Description
Sheffield Financial $4.9B
▪ Manufacturer based small ticket
finance─ Powersports─ Outdoor power equipment─ Trailers
BB&T Equipment Finance $3.0B▪ Full range commercial equipment
finance
AFCO/CAFO $2.7B▪ Commercial insurance premium
finance
BB&T Recreational Lending $1.9B▪ Marine and Recreational Vehicle
finance
Grandbridge Real Estate Capital
$1.8B▪ National commercial real estate
finance and servicing
Commercial Equipment Capital
$1.1B▪ Small ticket commercial equipment
finance
28
Specialized Lending: High Margin, Prime Based,
Cycle Tested National Business Models Provide
Diversified Growth Opportunities – $15.4B
Note: Based on EOP balances 9/30/2018 excluding purchase credit impaired loans; Sheffield Commercial, Equipment Finance, Premium Finance, and Commercial Equipment Capital are
included in the total C&I balance, Grandbridge is included in total CRE balance
29
BB&T is Adapting Its Proven Approach to Credit Risk
Management to Execute on Current and Future
Opportunities
Maintaining disciplined, consistent approach to credit risk management
Creating seamless end-to-end credit
processes through innovation and
re-conceptualization
Investment bias for businesses with proven through-the-cycle results
Careful evaluation of alternative credit
origination and delivery areas
30
Risk Management:
Now More Critical Than Ever
31
Key Takeaways
1Consistent best in
class risk adjusted returns
New risks are
resulting fromindustry
innovations23
Adapting risk and
control programs
while taking
advantage of current and future
opportunities 4BB&T will maintain
its conservativethrough-the-
cycle approachto credit risk, with
a focus on
diversification
and granularity