BB & T CEO Discusses Q4 2010 Earnings Call Transcript

BB & T (BBT)

Q4 2010 Earnings Call

January 21, 2011 8:00 am ET

Executives

Clarke Starnes - Chief Risk Officer and Senior Executive Vice President

Daryl Bible - Chief Financial Officer and Senior Executive Vice President

Kelly King - Chairman, Chief Executive Officer, President, Member of Executive & Risk Management Committee, Chairman of Branch Banking & Trust Company and Chief Executive Officer of Branch Banking & Trust Company

Tamera Gjesdal - Senior Vice President of Investor Relations

Analysts

Adam Barkstrom - Sterne Agee & Leach Inc.

Matthew Burnell - Wells Fargo Securities, LLC

Craig Siegenthaler - Crédit Suisse AG

Kenneth Usdin - Jefferies & Company, Inc.

Brian Foran - Goldman Sachs

Robert Patten - Morgan Keegan & Company, Inc.

Christopher Marinac - FIG Partners, LLC

Gerard Cassidy - RBC Capital Markets, LLC

Presentation

Operator

Greetings, ladies and gentlemen, and welcome to the BB&T Corporation's Fourth Quarter Earnings 2010 Conference Call on Friday, January 21, 2010. [Operator Instructions] It is now my pleasure to introduce your host, Ms. Tamera Gjesdal, Senior Vice President of Investor Relations for BB&T Corporation. Thank you. You may begin, Tamera.

Tamera Gjesdal

Thank you, Yvonne, and good morning, everyone. Thanks to all of our listeners for joining us today. This call is being broadcast on the Internet from our website at bbt.com. We have with us today Kelly King, our Chairman and Chief Executive Officer; Daryl Bible, our Chief Financial Officer; and Clarke Starnes, our Chief Risk Officer, who will review the results for the fourth quarter of 2010, as well as provide a look ahead.

We will again be referencing a slide presentation during our remarks today. A copy of the presentation, as well as our earnings release and supplemental financial information is available on the BB&T website. After Kelly, Daryl and Clarke have made their remarks, we will pause to have Yvonne come back on the line and explain how those who have dialed in to the call may participate in the Q&A session.

Before we begin, let me make a few preliminary comments. BB&T does not make predictions or forecasts. However, there may be statements made during the course of this call that express management's intentions, beliefs or expectations. BB&T's actual results may differ materially from those contemplated by these forward-looking statements. Additional information concerning factors that could cause actual results to be materially different is contained on Slide 1 of our presentation and in the company's SEC filings.

Our presentation includes certain non-GAAP disclosures. Please refer to Page 2 and the appendix of our presentation for the appropriate reconciliations to GAAP. And now it is my pleasure to introduce our Chairman and Chief Executive Officer, Mr. Kelly King.

Kelly King

Thank you, Tamera, and good morning, everybody. Thanks for joining our call. We'll begin on Slide 3 and just an overall comment, I feel really good about the quarter. We start to have record revenues. We had across the board improvement in credit trends, which we'll discuss and really good progress in first time on our balance sheet.

I would also say that since the last quarter, I feel materially better about the overall economy. I based it on three factors. One, the election is being perceived very well and is instilling a level of confidence that we haven't seen in a couple of years. QE2, while being questioned by some, is certainly cumulative in the short term. And the tax deal that was raised at the end of the year brings a level of certainty to business people. So based on what we expected and based on recent conversations with business leaders, I'm measurably more optimistic as we look forward into the year from an economic point of view.

Looking at our highlights, we had record annual revenues, $9.4 billion, increase of 5.8% compared to last year. Pretax pre-provision, earnings were $3.6 billion. Importantly, our pretax pre-provision earnings were up 18.1% compounded over last 15 years, which we think is maybe the most important way to look at a company from a long-term point of view. We did have strong improvement in earnings. As you can see, our fourth quarter net income available to common shareholders was $208 million, up 12.4% compared to fourth quarter of '09.

For fourth quarter, EPS totaled $0.30, which was up 11.1%. 2010 net income for the year available to common was $816 million, up 11.9%. So good solid improvement relative to last year, and we feel good about that. We also feel good about improving loan growth. We think this is really important as we go forward. So we had annualized loans going on an annualized link-quarter basis. Just to give you a few metrics, 28.7% growth in mortgage; 6.9% growth in CNI, which as you know, is kind of a target for us; 6.3% growth in sales and 7.4% in revolving credit. So really, really good numbers specially relative to the economy as it existed in the fourth quarter.

We also made really good progress in our deposit area. Our non-interest-bearing deposits were up 18.3% on an annualized linked-quarter basis and importantly our total transaction accounted by this were up 19%. These are really, really strong numbers and demonstrates that our community banking model is really working.

I'm very pleased to report that our credit metrics improved across the board. Scott Cross is going to give you some real detail about that. But I would like to let you know that we sold in total about $600 million models in non-performing assets, $343 million in private loans and $249 million in OREO. So really good progress there. And even though the holidays is difficult to execute on contracts, we already have $125 million under contract for the first quarter. So that's very encouraging. We had across the board improvement in various credit metrics including declines in OREO, NPLs, TDRs, delinquent loans, NPL inflows and watch list loans. So really, really strong across the board improvement in our credit metrics.

So we'll move to Slide 4. We also try to point out to you some unusual items. We did have $99 million in security gains in the quarter, which is about a positive $0.09 per share. Quite a small amount of merger-related charges, only about $4 million. We did have in the area of losses and write-downs on loans sold or held for sale in connection with our NPA disposition strategy. We had $62 million negative here that was about $0.06 per share.

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