BB&T at Barclays Conference Notes

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Kelly King – Chairman and Chief Executive Officer

Loan growth lower because higher payoffs amid lower rate environment

“When we announced our second quarter earnings in July, things were actually moving at a pretty good pace, and we were more optimistic. So we had a higher guidance for loan growth at 1% to 3% from the third quarter. We’re now revising that to be slightly down for the third quarter. And here is why. So, obviously, you will not to see – not like to see average loan growth go down. But in this case, after analyzing, what happened is loan production, loan pipelines have continued. It’s just that in late July, early August, when we saw a material reduction in long-term rates, there was a huge spike in payoffs. And so that’s kind of an uncontrollable event.”

Not concerned about loan growth

“What I think the importance is, as rates begin to creep backup and as those payoffs exit the systems, you’ll see a more return to more kind of normalized loan growth in this period of time. So we’re not concerned about loan growth. We believe it will be steady and solid as we go forward. Hard to know exactly what it will be for the fourth quarter right now, because it’s hard to predict those level of payoffs. But certainly as we head into 2018, we think those payoffs will subside and we will continue to have a good solid loan growth.”

Main street is coming back

“Main Street is beginning to come back. When I travel around, I just completed my tour of our 26 regions, visiting with business people and our lenders in those marketplaces. I’ll tell you that small and medium-sized business people are much more confident, much more optimistic, they’re beginning to make replenishment type investments and that is beginning to cause more activity for us in that marketplace. ”

Digital is happening even faster than it was

“The digital focus is a really big deal today for all of us in banking. Frankly, it is changing really fast and a bit faster frankly than a few years ago. I might have guessed, but it is moving in a very, very fast and positive direction. The key there is for banks to be investing properly in their digital platform, in the digital marketing, and all aspects on digital interaction with our clients and BB&T is doing.”

Small business has been more optimistic since the election but still waiting to make expansion investments

“Consistently what I have found is, after the election they immediately became more optimistic and started moving towards investing what I call passive or replenish investment. These companies will tell you consistently that they have been driving folks with 350,000 miles, they’ve using 20 year old computers, and they just been scared to death laying, because all of the taxes, all the health reform, all the regulations are just in place. So after the election they became more optimistic, they started making replenishment, replacing their fleet, now they are not doing expansion or investment, yes they are not building expanding the plant, they are not adding a lot of new products and services. In that case, that – they are waiting on I think mostly tax reform. I think when you see tax reform, I personally believe will happen by the first quarter or so of next year, and I’m saying that will move then from just passive or replenishment investing to expansion oriented investment, which will call the GDP to kick up from the 2% kind of range to 2.75% to 3%.”