BB&T at Barclays Conference Notes

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Kelly King – Chairman and Chief Executive Officer

No material trend changes in credit but we are at such a low level

“we think that energy is not an issue for us in terms of credit metrics in general. We generally count of it at the bottom. We were back kind of pre-crisis levels and as such you should expect credit in terms of trends, sudden index [indiscernible] but don’t be surprised to see some ups and downs from a quarter to a quarter just because we are at such a low level now it doesn’t take much to have a little bump up or a little bump down, so, but we don’t see any material trend changes with regard to credit as we look forward.”

Greatest challenge is to manage growth against euphoria

“The greatest challenge in credit to be honest is to manage the growth so that you don’t get caught up in the euphoria of getting growth at the expense of taking too much risk and frankly there’s a lot of risk taking going on in the industry today and we’re trying to be very, very careful.”

The best way to mess up a bank in the long term is to mess it up on credit

“we don’t get as fast the loan growth of some as a result of that but we feel more comfortable with that because this is a long-term game. If you’ve been in as long as I have you realize that the best way to mess up a bank in the long-term is mess it up on credit and we try to be very careful with regard to that.”

Capital is so precious that you have to grow in the right areas

“This is really a time in banking where you got to really, really focus on your balance sheet because capital is very precious, having going up a lot liquidity is very high and so you really have to be careful about which assets you hold and which assets you grow and so we’re trying to grow obviously ones that have a best, better risk reward relationship and so we’re growing our commercial other”

Deposit pricing should lag rate increase

” Lot of talk I think about going forward in terms of when and if rates go up what will happen to deposits. We think our deposits are relatively sticky. We guess we will have a lot of really volatile deposits and frankly I personally think that as we see rates rise you’re going to see some lag in terms of deposit pricing on the banking space and that will give some lift in terms of margin as we go forward.”

You have to ask yourself how fast do you really want us to grow

‘6% to 8% and a 2% kind of real GDP environment pretty good and you got to ask yourself the question how hard do you want to push that.”

The environment is growing about 2%–maybe a little faster for larger companies

” If you dramatically change your loan growth in this environment I would strongly suggest you are probably taking much risk. It is just not available in the market. I travelled to markets all the time, I did it just yesterday, I am talking about business leaders and the market is growth at about 2%. We will see what the Fed wants to say tomorrow and all, but the real world when you talk to people is growing about 2% is going faster in the larger companies going slower in main stream, it’s not going to change dramatically until hopefully we get into next year, we have an election and get stronger leadership in Washington”

The industry needs to consolidate

” when an industry needs to consolidate, which ours clearly does, we have 6,800 banks, it clearly needs to consolidate particularly in an environment we are in and so when it’s available to be consolidated, when it makes more sense in terms of how to run a business better it’s the right thing to try to do. ”

Buybacks are lowest on our priority list

” we say the best way to pull capital is a) organic growth, b) a good solid state of dividend policy, c) appropriately priced structured M&A and then buyback. The buybacks are fluid decision. Buybacks should be based on the internal return on the investment. There is no difference in our view and looking at a buyback versus buying the bank versus investing in a new product. It’s all the same logic we are investing your capital with respective return.”

There has been too much risk taking going on around the country

“the one area that I’m particularly concerned about is multifamily. We don’t have a bubble yet but we have an impending bubble. The rate of investment in multifamily is quite substantial and if it stays at that pace, we will create a bubble in multifamily. So my advice to builders and others is because on the cusp of the time to begin to slow down meaningfully. Across not only the southeast but across the country, there has been too much risk taking and my view would regard to leverage lending. I think we’ve been rather than creating new cash flows mainly new factories and new products and services, we’ve been spending a lot of time recapitalizing businesses through levered buyouts and that’s long term – that’s not the healthiest thing for the country. And so I think there has been a bit too much risk being taken in those areas. So I would single out leverage lending and multifamily.”