BB&T at Barclays Conference Notes

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%.”

BB&T 2Q17 Earnings Call Notes

Kelly King – Chairman and Chief Executive Officer

Main street continues to rebound

“I just want to mention to you again that Main Street continues to rebound. Our confidence is up. I’ve been in 23 of our 26 regions in the last few months. Every single region is reporting in terms of – and I’m talking to the people that are making the loans, everyone is talking about increased optimism on the part of small- and medium-sized businesses. Main Street, as I’ve talked about over the years, has been kind of dead in the water for the last seven or eight years.”

Using AI and robotics to reduce costs

“Finally, with regard to expenses, we are laser-focused on expenses. We have a number of expense initiatives. We are using, for example, artificial intelligence, AI, robotics and moving across our backroom. Just to give you a flavor for that, Daryl did a really nice job earlier this year in taking just one project, one smaller project where we have in the accounting area, account reconciliation one person with a computer, one software reconciling account that took two hours. We put robotics on top of that. And in a virtual period of time, the new robotics software could do it in 15 minutes. So we now have six or seven more substantial projects that we are moving through to further improve the case, after which we will be going enterprise-wide in terms of finding ways to take these repetitious activities and apply good digitization and artificial intelligence to find more efficient and effective ways to reduce our cost.”

Regulatory pressure is lifting

“We believe we have been through eight years of having to deal with an extreme amount of micro management regulatory pressure. We believe that is lifting. And we are going to be focusing on how to run our business based on what makes sense to us. And so I’m challenging everybody to go back and reconceptualize their business and, frankly, be prepared to run their businesses with less resources.”

Our current portfolio is clean as a whistle

“There are no credit issues. Our current portfolio is clean as a whistle. We just have these two portfolios, about $30 billion in mortgages and about $10 billion in auto, that are sub-optimizing in terms of performance. And so in a rising rate environment, you don’t exactly want to keep growing real fast your mortgage fixed rate portfolio, and I think everybody understands that. And the auto portfolio, we started 1.5 years so ago changing the nature of how we have our revenue-sharing arrangement with these dealers. We are an outlier in the industry, but it is a better, more consumer-friendly approach that we are taking.”

People are optimistic

“Everything we’re seeing in terms of commentary from the client, this is I’m getting from talking to our lenders. I’m getting it from talking to the business people. I’ve had 23 lunches where I’m sitting and talking to six to eight business people over the last few months. I’ve gotten this across our entire footprint. I’ve got a pretty good feel what the clients are directly saying. I’ve got a really good feel of what our production people are saying. And I’ve got a good feel for what the actual pipeline shows.

Can’t guarantee that Washington wont derail it but people not focusing on it. People are expecting a tax deal though

All of that is very, very positive. And can I guarantee that all the craziness in Washington will not derail that? No. But I’ll be honest with you as I’ve talked to business people out there, they’re not worried about all this craziness going on in Washington. They’re just focusing on growing their business. Now I will say I think they are expecting a tax reduction deal and, to a lesser degree, they’re counting on infrastructure. But if we get the tax reduction deal, they’ll continue.”

BB&T 1Q17 Earnings Call Notes

Kelly King – Chairman and Chief Executive Officer

Main street has been struggling for eight years

“I just want to make sure you understand with regard to Community Bank, this is a bit esoteric, but over the last eight years, Main Street has really struggled and we are primarily a Main Street lender. As you know, most of the growth in the market over the last several years has been by large companies who have been to a large capital type restructurings and have just paid it actively a very strong international market, which we don’t participate in, but relative to a lot of our competitors, we had a harder go of it, because our focus on Main Street. Now we believe Main Street is changing, which I will talk about in a moment and getting better and so if it does, if it does get better and you should expect to see BB&T’s loan potential do relatively better than many of our competitors who have been depending on the long growth coming from a lot of the largest corporations and their international exposure.”

Things are happening to improve the hard data

“Well, I think there is kind of the big – really big question for us all right now. First of all with regard to why has the increased optimism not yet shown up in hard data, that’s not pricing it all to me because remember a period of time, we’re going to have 90 or sort of days, and it takes a period of time for that optimism to translate into evaluating what kind of projects you’re going to do or you’re going to buy, et cetera. But as I said earlier, we are already seeing that. We are seeing actual hard data were clients are talking to us about expansions, I can loan requests for expansions, but frankly out of rate we haven’t seen in eight years so that’s why we said our community banks having it’s best production ever, it is happening for us on Main Street.”

If DC doesn’t do anything could that stop it?

” Now the question implicit in your question is, if they don’t do anything in Washington do that chill it could stop it. And the answer is obviously yes. If they make no progress in Washington at all then eventually that optimism will turn to pessimism and now return into the reduction and spending and that were return into has more economic growth, and is it do really do a badly business sort of capable of then all return into recession.”

Companies want to invest and need to invest

“But here is the reason that the resiliency of the activity in the marketplace will be stronger than you might think. Remember that eight plus years these companies have not been investing. They’re using 20 year old computers. They’re driving trucks of 300,000 plus miles. At some point regardless of how frugal you want to believe you can’t got a replacement of few computer and buy few trucks. And then the other thing is kind of a psychology and that is after feeling bad and conservative and not invest in fair reviews [ph] you kind of want to invest. So number one, they need to invest, number two, they want to invest. So that’s why you’re seeing this really little excitement out there today.”

I would be worried if we do’t have progress by the end of the year

” I don’t think it will wine immediately, but by the end of the year let’s say if there’s been no positive movement on taxes regulation, healthcare and all that combined then I will be very worried to be honest. And so my message to Congress which I sent chance I get is, there’s a lot riding on them get their right together and you know we’re talking about a future for our kids and our grandkids, we have a wonderful opportunity here to grow this country at much faster pace and shame on them if they don’t execute.”

BB&T 4Q16 Earnings Call Notes

Kelly King

Meaningful investment in the second third and fourth quarter

” we actually are very optimistic about the economy going forward. It will take a little while for it to get going, but look we are going to have lower taxes, less regulation. It’s really a big deal. Optimism is up. I have been talking a lot to clients and to our RPs, regional presidents in the last several weeks, including yesterday, and clearly, CEOs optimistic. They are making plans to invest and we really think this is going to kick into a meaningful improvement in investment and job growth as we head into the second and third and fourth quarter.”

The message is consistent that businesses are gearing up to invest

“So Gerard, it’s actually very broad-based. In fact, I did a survey, because I was going to the Goldman Conference back here a few weeks ago and I did a survey from all of our 26 Presidents across our entire 15 states and asked them to talk to a few of their clients to see what they were thinking, because I like to write real-time feedback and their feedback was absolutely consistent across the board that everybody was optimistic. They were making plans to invest. And it’s exactly what we thought, new drugs, new computers, some expansions. I met with some regional Presidents in person yesterday and got a real current update and the message was very, very consistent. They gave me a number of anecdotes in terms of individual companies that were already requesting loans to buy trucks to expand their plan to expand their inventory, etcetera. So it is, in fact, happening. It’s across the footprint. It is what I would call Main Street America, which was exactly where we play the best.”

You could have 3-4% GDP growth in 2018

“Yes. I think GDP will ramp from the 2% kind of range to 3% to 4%. I don’t think it will get to 3% to 4% for this full year. It may be getting to 3% to 4% by the end of the year on a run rate, but if you get to ‘18, I think you have got very good chance of a 3% to 4% kind of run rate for the entire year. So it will be a building year in terms of GDP, it will be a building year in terms of loan growth and so the whole year of ‘17 won’t be as strong as the whole year of ‘18 will be.”

Daryl Bible

Short term rates should get close to 3%

“If you listen to Chairman, Yellen’s speech yesterday, she is clearly in the camp that she thinks short-term rates should get up close to 3%. Whether that gets fair enough, we will see, but it’s definitely going higher. We will see what happens to the longer end of the curve.”

BB&T 3Q16 Earnings Call Notes

BB&T Corp’s (BBT) CEO Kelly King on Q3 2016 Results

Companies are terming out their borrowing

“we like all the others did experienced higher pay-offs in our commercial area in the quarter. Frankly, a lot of good quality loans have just been refied out into the market, because of, I think, participants expectations that rates are going up, so they have gone out and taken advantage of long-term loan markets. That’s not a long-term change in terms of the commercial lending productivity. It’s just a temporary increase in pay-offs.”

Loan growth still very challenged

“Loan growth in today’s market to be honest is just very, very challenged. Still, Daryl indicated we do expect our loan growth to be in the 1% to 3% range as we look forward to the fourth quarter. And that’s going to be based, we think, probably somewhat lower levels of pay-offs. And we keep looking at possibilities of asset purchases from some other institutions that are rationalizing their balance sheet. So, when you put it all together, we think that we’ll be in the 1% to 3% range.”

Market is likely to get better after elections

” frankly, I expect much of an impact on the fourth quarter. But here in next year, I think the market is likely to get better, once we get through post elections. Part of what is going on in the third quarter and in turn that this kind of slowed down that everybody has talked about is there is just a lot of anxiety. I saw report a couple of days ago that 60%, or slightly less, but about 60% of the market it is really, really anxious about the elections. And I suppose we quite understand that. And so I think when all this subsides, however it goes, it will be less uncertainty and less anxiety, I think that will in still a bit more confidence then people will be a little bit more willing to invest, and make acquisitions and borrow money. ”

Clarke Starnes

Rate hike probably wont have much impact on NIM

The rate hike is so late in December. It’s not going to have a big material impact. You’re getting the LIBOR benefit just crossing over year-end. So, I wouldn’t view that as material and we might be off a basis point. But you could be up a basis-point in core margin. So, it’s pretty much a non-issue for fourth quarter.

BB&T 2Q16 Earnings Call Notes

BB&T (BBT) Kelly S. King on Q2 2016 Results

We’re focusing on expenses at a more intense rate

“I do want to reinforce that we are intensely focused on expenses. We’ve been focusing for a number of years, as you heard me describe about reconceptualization of our business, that continues, but I would say to you, it continues at a much more intense rate.”

The economy is relatively slow, yield curve will be flat for a period of time

” The economy is relatively slow. We project a relatively low flat yield curve for a period of time. And as a result, we are accelerating our focus on expense reductions.”

The economy is ok, Brexit is over exaggerated

“Speaking of the economy, we think the economy is okay, still growing at about 2% to 2.5%. It’s been an interesting six months as we came out of the first of the year when everybody thought the world was coming to an end with changes in China and so forth, and then it settled down, more recently everybody has gotten very, very excited about Brexit. We think the Brexit change is serious, but it’s been over exaggerated in terms of its impact on the world and certainly on us.”

Pre crisis we were running at 15% ROE, normalized we think that falls to 13% based on increased capital and 11.5% based on the economy

” Pre-crisis we and the other good banks were operating at about 15%. You got to start from kind of the top. Way I think about it is about 2% kind of right off the top because of higher capital. And then, you’ve got about 1% to 1.5%, which is just the economy, margins, et cetera, and then the difference really is in increased regulatory costs and some technological cost. So from the capital point of view, we’re going to continue to try to manage our capital efficiently, but it’s going to stay high compared to past period. So that 2% at least for the short run is kind of non-retrievable, but that gets us to, say, 13%. So the 1% to 1.5% in terms of economy, obviously, can come back, and come back quickly, depending on the growth rates in the economy and the margins. ”

I think the flat rate scenario is overstated

“I personally think the flat rate scenario that everybody projecting is overstated. The underlying strength of our economy is not great, but it’s good. Fed, I believe, clearly knows they need to raise rates, and I think they will the minute they see a window, which could still easily happen at least one rate increase towards the fall.”

Investing in technology is about getting to scale and being more efficient

” And then the whole thing about regulatory and technological cost is about becoming efficient; scale is part of that, and then they just need to settle in that we have put into place.”

I think we can definitely be in the 10% range

“I frankly think in the bottom line, Gerard, that it’s a material change, and that over the next couple of years, I certainly think we’ll be in the 10% range over the next couple of years, and covering cost of capital. I don’t have any concerns about that. From 10% to 12% or 13% is more difficult, as I’ve described, and somewhat circumstantial based on what’s going on in the world, but we will be in the top tier of the performing banks based on the then existing circumstances.”

Remember that the efficiency ratio is a ratio

“I know everybody likes to be hyper-focused on the efficiency ratio, and we’re willing to talk about it. But remember that it is a ratio, and so we have a lot of visibility in terms of the numerator, but we don’t have as much visibility in terms of the denominator, that is revenues. Obviously if we did nothing today with our expenses, and the economy got better and margins got better, our efficiency ratio would go down. I mean, you wouldn’t give us any credit for that, but that’s what would happen.”

Not doing M&A until they right size what they’ve already got

” Our shareholders understand we are not going to do M&A, until we feel good about executing on what we already have invested in. Recall we bought $35 billion worth of assets over the last year and a half, and we got plenty of work to do to right size that, and get the returns for our shareholders. So I think where we are, I think this is where we’re going to be, and is just really that simple.”

Daryl N. Bible – Chief Financial Officer & Senior Executive Vice President

Excluding energy, NPAs are stable

“NPAs decreased 1.9% to 40 basis points, with the majority of the loan portfolio showing improvement. If you look at the graph, excluding energy, NPAs have improved steadily in recent quarters.”

BB&T 1Q16 Earnings Call Notes

BB&T (BBT) Kelly S. King on Q1 2016 Results

Economy is good but not great

“just a couple of comments about the economy. It is what I would call good but not great. It’s okay. It’s rocking along about like it’s been rocking along, 2% to 2.5%. It’ll vary a little bit quarter-to-quarter. But we, the United States economy is on a sustained 2% to 2.5% kind of growth pattern. And it will stay that way in my humble opinion for a good while.”

We see no practical possibility of recession because there is pent up demand for continuing investment

“We see no practical possibilities of recession, notwithstanding the fact there’s been a lot of conversation about that. And the reason is because we think there is a very, very strong solid pent-up need for continuing investment. When I talk to business people, they’re investing in a way that I call passive investment. That is to say, they’re not excited enough about the future to go out and make major expansions and so forth. But they’re driving trucks that have 250,000 miles on it. They got ten-year old equipment, and so stuff just wears out. And so, that’s why you have to keep investing.”

Made a decision to be in the energy business. Oil more likely to be at $50 than $30

“So we made a decision, Betsy, some time ago to be a long-term player in the energy market. We are not going to change that long-term strategy. Energy is an important business for the country, for the world and for us. We enter into relationships on a very conservative selection basis and a conservative underwriting basis. Obviously everybody is really energized about – no pun intended – about concerns about energy now. But – and we’re taking it very seriously. And we’re marking our book really aggressively and all that. But look, I think there’s a much higher chance that oil will be at $50 by the end of this year than $30. And I think over the long term, the energy business still will be a really good business.”

Not focusing on bank or insurance M&A anymore

“I’m not trying to say that we wouldn’t dare do any tiny little bitty something. But as a practical matter, we are just not focusing on M&A now in insurance or bank, which is our two primary areas. The truth is we just got a lot going on in both of them. We’ve just (47:31). And there’s a time to buy, and there’s time to run. And the last 24 months was a time to buy, because the times were right. There was a window for us, and there was some really good opportunities. And we’re really happy about what we did. And now is the time to take time and to adjust what we’ve done and run it really, really well and get the benefit for the benefit of our shareholder.”

BB&T 4Q15 Earnings Call Notes

Kelly King

C&I lending is very competitive but spreads are flattening out

“C&I lending was mostly in large participations as it was in previous quarters, so it’s very competitive, spreads are tight, but the spreads are flattening out. So that’s a good sign’

We think there’s a lot of overreaction going on

“Just a comment with regard to the overall economy, because that obviously impacts the loan production. There’s been a lot written and said over the last few weeks about the issues in the stock market. We believe there’s a lot of overreaction going on. It’s like you woke up January 2nd, all of a sudden everybody decided the world’s falling apart and we reject that. We don’t see any fundamental structural changes between the first part of December and the first part of January. The world just doesn’t happen that fast.’

Lower oil is stimulative

“Obviously a huge confluence of negative psychology going on, but we’re trying to look past that. So what we focus on is the fact that yes, oil is down and that is a factor in terms of the oil space, but oil is overall really stimulative. It’s stimulative to consumers. It’s stimulative to businesses. It’s stimulative to airlines. Oil is stimulative”

We don’t think the economy is tanking but it is slow steady as you go

“while we don’t think the economy’s tanking, we don’t think it’s going to be super robust either. It’s kind of a slow, steady as you go activity. ”

Seeing cap rates in these ranges:

“you’re seeing cap rates in the multifamily space in the 4 to 5.5 range rate properties, office would be in the 5.75 to 7.75 retail, down as low with 6, industrials low as 550, hospitality down to 6.”

Younger generations still want to see branches

“when you talk to Xers and Yers and the lineal’s they will still tell you that one of the top two preference items in terms of selecting a bank is the convenience of a branch. Fact is, people still want to be able to go into a branch and see somebody to have a complex product or have a problem and there is a little bit of just pure psychology that we’re eyed by the branch and that’s where are money is and it makes me feel good.”

Our company was built with a lot of mergers of small community banks which got funding from CDs

“you’ll recall that our company was built with a lot of mergers of small community banks and thrifts that had a huge portion of their funding from CDs. And so as we layer in these acquisitions, we’re constantly in a process of rationalizing those deposit structures because a good portion of those CD portfolios that we inherit each time are really, really price sensitive portfolios. And as we bring the pricing more in line with our normal pricing, a fair amount of those CD portfolios tend to exit.”

Daryl Bible

Credit quality remains very strong

“Our credit quality remains very strong.”

We don’t win many deals in real estate because we’re underwriting on expected long term cap rates

” We’ve said for several quarters as you know that the competition in the whole at CRE space has been very difficult. And that’s been really low cap rates being used and high advance rates. And so we’ve maintained our steady conservative underwriting. For example, everybody’s underwriting on these low cap rates. We underwrite on long term expected normal cap rates and that makes a big difference, how much you advance. So, we look at a lot of deals, we don’t get them, but we’re fine with that. We’re just not going to violate our risk appetite to get volume in that space”

BB&T 3Q15 Earnings Call Notes

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.”

BB&T at Barclays Conference Notes

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.”