evolving our differentiated model: community banking ... · evolving our differentiated model:...
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Evolving Our Differentiated Model:
Community Banking – CommercialDavid WeaverPresident, 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
execution
23
Leveraging 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
3
Community Banking – Commercial Structure
The Community Banking structure supports our client-centric strategy
Benefits of our 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
▪ 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
▪ Gives voice to the client
▪ Local, visible leadership
▪ Local decision making
▪ Builds partnerships across the bank
▪ Geographic diversification
4
Client Focus through Dedicated Segment Coverage
Client Segments
Branch
Small
BusinessCommercial
Regional
CorporateLarge
Corporate
Small
Business
Revenue < $1MM
Revenue
$1-5MM
Revenue
$5-75MM
Revenue
$75-500MM
Revenue $500MM+
Managed
by:
# of
Households:
Market
Leaders
Small Business
SpecialistsCommercial
Relationship
Managers
Regional
Corporate
Bankers
Capital
Markets
Corporate
Bankers
83,000 7,50057,500
Community Bank Commercial
As of 09/30/2018
CRE
Revenue
$15-500MM
8,800
CRE
Bankers
Diversification Drives Revenue and Net Income
YTD as of 09/30/2018
Revenue Diversification by Segment Net Income Mix by Segment
Community Banking –Retail &
Consumer Finance
43%
*Total segments excluding Other, Treasury & Corporate
Community Banking –Retail &
Consumer
Finance44%
Community
Banking –Commercial
23%
Insurance Holdings & Premium Finance
16%
Financial Services &
Commercial Finance
17%
5
Community Banking –
Commercial 33%
Financial Services &
Commercial Finance
17%
Insurance Holdings & Premium Finance
7%
C&I and
Owner
Occupied
39.0%
CRE IPP
29.3%
C&I Tax
Free, ABL,
Other
19.9%
CRE
Construction
and Dev
8.4%
Dealer Floor
Plan
3.4%
Provides BB&T With Diversified Balance Sheet and
Noninterest Income Growth
Noninterest
Bearing
58.1%
Money
Market,
Savings,
Time
27.4%
Interest
Checking
14.5%
Dealer
Floor Plan
1.0%
Deposit Mix
Loan Mix
Based on Segment reporting for period ended 09/30/2018
Deposit revenue represents funds transfer pricing (FTP) credits; excludes FTP debits for nonearning assets 6
Noninterest Income 15.6%
C&I Loans 16.2%
Noninterest-bearing deposits
37.9%CRE Loans
15.1%
Interest-bearingdeposits
14.2%
Segment Revenue Mix
7
Community Banking – Commercial Financial Results($ in billions)
$49.0
$51.5$52.5
$40.0
$45.0
$50.0
$55.0
2016 2017 YTD 2018
Average Total Loans62% C&I / 38% CRE
$1.14
$1.40
$1.65
$0.00
$1.00
$2.00
2016 2017 2018 est
Pre-Provision Net Revenues*
$32.0
$34.4 $34.5
$20.0
$30.0
$40.0
2016 2017 YTD 2018
Average Noninterest-bearing DDA58% of total deposits
* 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 09/30/2018
2018 estimated is 09/30/2018 annualized
New Loan Production
$15.70
$18.69$17.54
$0.00
$10.00
$20.00
2016 2017 2018 est
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Community Banking – Commercial Financial Results($ in billions)
$0.39$0.42 $0.43
$0.00
$0.25
$0.50
2016 2017 2018 est
Noninterest Income Revenues (TE)
Pre-Tax Income
$2.45$2.60 $2.68
$0.00
$1.00
$2.00
$3.00
2016 2017 2018 est
$1.14$1.28
$1.48
$0.00
$0.50
$1.00
$1.50
$2.00
2016 2017 2018 est
2018 estimated is 09/30/2018 annualized
*Reflects segment accounting change implemented mid-year 2017
**Headcount includes production and production support associates only
52.0%
45.1%
37.8%
0.0%
20.0%
40.0%
60.0%
2016 2017 YTD 2018
Efficiency Ratio*
Reduced
headcount by
225 (12%) in
last 2 years**
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Community Banking – Commercial Credit Quality
0.10%
0.05%
0.03%
0.00%
0.05%
0.10%
0.15%
2016 2017 9/30/2018
Past Due Loans / Total Loans Net Charge-offs / Average Loans
Nonperforming Loans / Total Loans
2018 net charge-offs annualized
Past due and nonperforming loan percentages calculated based on quarterly average balances
0.85%
0.72%
0.57%
0.00%
0.50%
1.00%
2016 2017 9/30/2018
0.04%
0.06% 0.06%
0.00%
0.05%
0.10%
2016 2017 YTD 2018
10
Community Banking – Commercial Model
Focusing on
our Clients
Supporting our
Associates
Improving our
Communities
Driving Value
for our
Shareholders
▪ 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
▪ Lighthouse Projects
▪ Financial Wellness and Knowledge
▪ Small Business Administration (SBA)
▪ BB&T Leadership Institute
▪ Upholding strong credit and risk management cultures
▪ Focusing on productivity and process improvement
▪ Delivering strong revenue and growth
▪ Unwavering expense discipline
▪ We are client-service oriented
▪ We believe in relationships
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It Starts With the Client
Source: Greenwich Associates
Received 24Greenwich Excellence
Awards for
overall satisfaction and
outstanding client
service in 2017
How are we doing?
BB&T has been
awarded 181 Small
Business and Middle
Market Banking awards from
Greenwich Associates
since 2009We do a great job serving
our clients based on
Greenwich resultsThrough 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
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
Build relationships founded on trust
Focus Integration Execution Trust
13
▪ 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
Key Differentiator: Financial Insights
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
15
The World Has Changed – We Must Change With It
▪ Use data to sharpen focus on the markets
and businesses to target with the most
relevant offers
▪ Improve product access, functionality
and flexibility
▪ Enable Relationship Manager productivity
through process efficiency and
automated insights
▪ Streamline and simplify processes through
digitization – ease of doing business is key!
▪ Rapidly evolve to meet ever increasing
client expectations
B a n k s t h a t t h r i v e w i l l :
16
How Do We Do This?
17
Client Experience
18
Strengthening Financial Insights
Enhance Content Deepen Financial Analysis
Capture Knowledge Create Client Profile
Automate Recommendations
Support Follow-Up
Benefits: ✓ More distinct client experience
✓ Positions banker as trusted advisor✓ Elevates banker quality✓ Improves consistency
Automated creation of presentations in 2018,
improving delivery from 400 per month to over 800per month since initial rollout in 2016
▪ News and social media
▪ External wallet data
▪ Capture what the banker learns
about the business in Salesforce
▪ Automate product
recommendations from client
profile
▪ Comparison to best in class
▪ Automated observations and
advice
▪ What-If modeling
▪ Aggregate client data from
multiple sources
▪ Provide to banker for better
preparation
▪ Generate follow-up reminders
▪ Prioritize future contacts
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Improving Ease of Doing Business
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
Ease of doing business remains a critical factor in driving satisfaction and loyalty
Implemented improvements to reduce time to
fulfill small loan requests from 28 days to 3 days!
Source: Greenwich Associates
20
Productivity
Prospecting to grow
households
0.5
1.0
Driving increased
calling activity
1.3
2.0
21
Optimizing Productivity
Executing the
BB&T
Leadership
Model and inspecting
what we expect
Adhering to
segmentation
Leveraging new incentive program to drive profitable
productivity
Optimizing delivery of Financial Insights & Leadership Institute
Driving deeper
penetration of core
commercial
products
Associates
Developing improved recruiting
& onboarding
Improving support resources
Enhancing sales &
credit training
Benefits: ✓ Efficiency
✓ Effectiveness
✓ Reduced
variability
Activity Sales Process
per RM per day
per RM per day
800
1,250
Delivered per month
22
Sales & Service Model Evolution
23
Optimizing Our Structure
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
Reconceptualizing the Small Business Delivery Model
Optimizing Market Structure
▪ 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 end-
to-end credit process redesign▪ Identify additional functions that
could be performed more efficiently
by a dedicated, centralized group
Benefits: ✓ Enhance growth in high opportunity markets
✓ Focus resources in growth markets
✓ Maximize profitability in maintain markets
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Differentiating Markets Based on Opportunity
Aligning guidance based on market
opportunity related to:▪ Performance Expectations
▪ Banker Portfolio Size
▪ Staffing Levels and Locations
Categorizing our markets
GROW M AINTAIN EXIT ENTER
25
Technology
26
Building an End-to-End Online Platform
Use Data to Automate
Recommendations & Advice
Augment data by collecting
information directly from clients through
online channels
Deliver prioritized contact prompts
to bankers
Present Recommendations &
Advice across channels
Complete Sales and Servicing
online or in person
Loop in Feedback to
inform the System over time
Learn & Refine
Learn & Refine Learn & Refine
Learn & Refine
Benefits:✓ Client
experience
✓ Efficiency
✓ Consistency
✓ Banker
confidence
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
28
Product Enhancements
29
▪ Loans
– 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
▪ Creating customized product suites
by industry based on common
usage
Improving Products
Our overarching goal is to enhance the Client Experience through improved functionality,
value, account opening processes, and account access
Operating DDA
Merchant Services
Small Business Online/Cash
Manager Online
Owner Occupied Real
EstateEquipment
Remote Deposit/
Treasury
Line of Credit
Veterinarian Practices
+59%
+15%
+33%
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
30
Evolve to Drive Performance
People Process Product
Focused on:▪ 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
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
execution
23
Leveraging 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