BB&T 3Q15 Earnings Call Notes

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Spreads continue to tighten

“the spreads in the marketplace continue to tighten. I keep asking our lending folks when is it going to get better and they say, well, as of yesterday it hadn’t gotten better.”

Tech platform a tool to reduce attrition

“we see this as a big opportunity to reduce attrition. So if we can get our existing clients to put more of their financial lives on our application integrate with more products, we get them to be stickier and attrition goes down.”

I keep waiting for the C&I market to turn but it hasn’t yet

“I mean that market, I keep waiting for it to turn because, as I just alluded to, everybody has got some capital out there and so at some point the industry really had to turn on this, but it hasn’t turned yet and so this – I think what’s happening, John, is that, everybody is struggling with the fact that the economy is growing slowly, expenses are going up, and you naturally think that growing loans is the way out of that trap, But, we’ve kind of concluded that that growing loans just by growing loans is not a good strategy and so, yes, we will be very careful in that marketplace and based on today’s pricing, you would not expect to see that grow at a very fast pace.”

Prepared to cross the $250B in asset threshold

“as we approach that $250 billion level, we will just have to be pretty clear that we’ve got lined up opportunities that will get us pretty meaningfully over that in the not too distant future. So, Gerard, if the $250 billion is not as big a deal as lot of people think it is, it does have OCI implication, it does have some advanced approaches implications. But other than that, we are already being regulated that if we were over $250 billion. So, it’s under the guides of our good practices and so we are making all the efforts to methodically move to be prepared from a regulatory perspective to go past $250 billion.”

Insurance is good today but it is the type of business that can go bad

“Good as insurance is, we are not going to grow it so fast as a percentage of our business because there could be scenario where insurance gets really bad. In fact, it’s not as good today as it was ten years ago at certain points because of little bit softer market and we think that will be changing going forward.”

Pricing in the insurance space could turn fast

“insurance companies which of course drives the pricing, they are very competitive like banks are in terms of pricing and all, but in my view, when this thing pivots, this is going to pivot sharply for two reasons, one is, these companies have been accreting capital but they’ve also been having reductions in yields on securities. And so they are very yield-dependent on securities and so they have second win on their securities portfolio and so, pretty soon they will be pressured to get their rates up to get some decent turn on capital. And then the other thing is, they are doing what I call the insurance version of reserve releasing and they have not had any losses for a long time and so they are having reasonably good profitability because of the no losses.”

We’re at the bottom with regard to provisioning because people will have to build for growth

“I think, we have seen the bottom with regard to credit quality. We are at the bottom while some may or may not started building yet – I think in the next quarter or so you will see that, because I think, the building actually occurs as a function of when you think you are at the bottom and where they are in terms of asset ratios. But we are at the bottom, you see a little bouncing around probably in my view over the next few quarters. I don’t expect quality to deteriorate substantially over the next several quarters. But, just the mathematics is that, with the bottoming, people are going to have to transition from releasing to building for growth. I don’t think you’ll have to see a lot of building for deterioration in credit quality for the next several quarters, but you will have to be because of growth.”