BB&T Earnings Call Insights: Loan Growth Expectations and New Branch Openings
Loan Growth Expectations
Jefferson Harralson – Keefe, Bruyette & Woods: Thanks for my first question. I want to ask about the 2% to 4% loan growth expectation for our 2013. Can you talk with a mix of that little bit, how does the mortgage portfolio. I know at this year you were maybe substituting in some mortgages and replacing securities portfolio this year. Is that something reverse going to happen next year and within that 2% to 4% where you think C&I comes out?
Kelly S. King – Chairman and CEO: Last year, for much of the year, meaningful part of our growth was in holding mortgages because frankly, early part of the year make sense because of the rates as rates declined later in the year didn’t make sense. So we’ve started doing that. So that you’ve seen little bit of downward pressure on total loan growth because of that, you’ll see positive growth in this year in terms of C&I, in terms of sales finance, specialized lendings will be strong, CRE is going to be (comer) in terms of this year. So it is going to be a pretty broad-based and diversified. I think it will overall be very positive in terms of profitability because that kind of growth in this kind of market, given our discipline in terms of structure and price is really good growth.
Jefferson Harralson – Keefe, Bruyette & Woods: From a follow-up, I just want to ask a mortgage question. How should I think about the huge mortgage origination volumes and how much extra profitability that’s given you now, (let’s say), risk to come out later in the year? I see the mortgage segment profitability sitting there that seems to also include the loans on the balance sheet, but with kind of record gains on sales and second originations, how should we think about how that plays out and the potential impact for you guys as kind of mortgage plays out next year?
Kelly S. King – Chairman and CEO: I will give you part of this and Daryl will give you some color in terms of the spreads. So basically our overall production is really strong. I mean we had $8.5 billion in fourth quarter, up from a very strong third quarter, best ever. We think based on our pipeline and our marketing efforts that kind of continues at least into first part of the year. You might see a little pressure on margins. So let me – Daryl will explain that to you.
Daryl N. Bible – Sr. EVP and CFO: If you looked at our overall margin or spreads in fourth quarter, they were 229; that’s actually down from 240 in the third quarter. Our mix of business was 35%; retail 65% correspondent in the fourth quarter. I think as you look out into next year, if you assume a similar mix, we expect volumes to be relatively strong compared to this past year, but probably a little bit tighter margins on retail. I mean, our margins at retail now for over 400 points; now probably that gets in a 300 point range and correspondents were in the low 100s and that probably goes under 100.
New Branch Openings
Craig Siegenthaler – Credit Suisse: First question just on branch openings in Texas, I’m wondering how has your overall kind of view of M&A changed maybe over the last six months and also are there other states maybe like Tennessee where you consider doing organic expansion opportunities?
Kelly S. King – Chairman and CEO: So our strategy with regard to M&A has not changed in terms of what we would like to do, it’s just that they are not really willing sellers out there, at a price that we willing to pay. So our strategy in Texas is simply to say that we believe we can build out our Texas operation on a commercial basis, de novo, now you really cannot do that perfectly and retailer took a hundred years. So we were still very much – we’re interested in acquisitions that particularly cover retail space in Texas. So our Texas 30 branch strategy does not say we’re not interested in brand acquisitions in Texas, it simply says, we’re not going to sit back and run our business waiting for what other people do. We can’t control what other people do to have their own strategies and we respect that, we’re going to run our business. So we know we can build out Texas on a commercial basis very, very effectively and we believe that we can do that in other markets as well. Ricky you may want to comment on that.
Ricky K. Brown – SEVP, President Community Banking: Kelly I would 100% agree. We do think with the momentum that we’ve had in Texas since we’ve been there three years ago that we can take this commercial strategies that we’re talking about, making workforce, we’re very excited about the 30 locations that we got. We got them in a lesser cost than what we originally looked at. We’re having good success in hiring. We got a good pipeline of people that are ready to join BB&T. They enjoy working for BB&T. They see the brand is our differentiated brand. We feel very good about our opening schedule, we’ll have couple of these now opened in next couple weeks with all of them will be opened by midyear and the expectation is that we’ll hit the ground running and do very, very well, so we’re excited about this strategy and as Kelly said we’re still looking for other opportunities, but this means that we move forward in assets deal.
Craig Siegenthaler – Credit Suisse: Kelly, just my follow-up here, you mentioned real briefly on some of the risk involved in leveraged loan growth, the same your competitors are putting on but you guys are avoiding. Can you provide a little more commentary on the types of leverage loans you’re referring to and maybe what type of banks are adding these loans?
Kelly S. King – Chairman and CEO: Let me let Clarke comment on that Craig, I think he can do a better job on that.
Clarke R. Starnes III – Sr. EVP and Chief Risk Officer: Craig, if you look at the production statistics, big part of the market growth right now in the C&I space is leveraged finance and a lot of it’s around the low rate environment, so what we see is primarily M&A-driven dividend and recap type structure drawing a lot of that growth. We see both large banks and similar regional peers actively participating in that market and we just feel like that outside our risk appetite, so we have purposely avoided the majority of that and continue to stick to our long-term underwriting standards even in the middle market space, so again it’s very prevalent right now, fourth quarter was a record origination quarter for the leverage finance market.
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