BB&T 1Q15 Earnings Call Notes

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1.18% ROA but 9% ROE

Our fee income ratio is up to a very strong 45.8% versus 43.6% in the first quarter of 14. ROA was 1.18%, ROE was 9.05%, and important our return on tangible common was 14%. With regard to loans which I’ll give you a little bit more detail on in just a moment, excluding residential mortgage they did grow 5.4% which is pretty good in this environment. It was led by C&I, direct retail and sales finance.”

We think multi-family is overheated

“we are being careful in multifamily. We think it is kind of peaking, and so we are being careful in underwriting and certainly in some markets we have really curtailed lending, because we think it is overheated.”

Multi-family is improving, but kind of at a top. It’s not a problem today but we need to be careful

“The market we think in multifamily is improving, but again, we think it’s kind of at the top. So it’s not a problem today, but we just think we need to be careful where we’re going. We expect income producing to be seasonally stronger in the second which will be good.”

Prime auto is another area of concern

“We mentioned last time that this is an area also in prime auto where there’s a lot of money chasing these assets and spreads are getting to be really, really tight, so we are just not willing to take growth at unacceptable spreads. And so we can expect that to be a little slower in the second.”

I think the Fed is going to raise because they need to start moving away from zero

“I tell you what I personally think. I think the Fed is going to raise short-term rates in the June to September time frame in spite of all their rhetoric about the recent changes and so forth. The reason is because I think they believe they need to get started on moving off the zero-based level.

The economy is not great, but it’s not bad. They really need to begin getting to psychology for a movement in rates, because at some point you’ve got to get rates up so when you go down you have some cushion.”

It’s a very challenging environment to be a money lender

“everybody is experiencing the same environment Eric the interest rate you just alluded to has challenges in terms of technological costs going up a lot. Regulatory costs are going up, and you can’t beat that environment by making poor quality loans and low priced loans. It is a very challenging environment.”

It’s a cost control game, you need to add scale

“In to be honest, in this kind of environment it is a cost control game. You can’t do so much in – that looks like adding scale. Do as much as you can organically but you can’t push that because you might get scale and expenses but you lose it on net income as a provision. Our answer is mergers make more sense for us.”

A lot of competing sources for funds too

“Money from everywhere is – higher-yielding assets in the U.S. ensure enough in private equity funds and hedge funds and business development corporations, all kinds of factors out there competing with us – this environment is tougher than it was before.”

It’s really hard to say when an acquisition will close in this environment

“You know, this environment is a different environment than any other we have played in. In the old days you could predict with a lot of positioned exactly when things could occur. It’s really not that predictable today. As I said in the opening remarks we have a lot of confidence that will close in the second half. In all honestly at think it will close in the third quarter but I can’t be precise enough whether it is July or August, I just can’t be that precise.”

Deposit growth has been extremely strong for the industry

“Core deposits, they are strong for the industry. Our core deposits growth and community bank and corporate banking has been phenomenal. If you go back six or seven years ago, the percentage of DDA to our funding was in the midteens. We are now over 30% DDA funded. That is just a completely different BB&T.”