BB&T Corporation (NYSE:BBT) Q4 2017 Earnings Conference Call Transcript

Jan 18, 2018 • 08:00 am ET

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BB&T Corporation (NYSE:BBT) Q4 2017 Earnings Conference Call Transcript

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Executive
Kelly S. King

income. Our linked quarter revenues were up 7.4%, which reflected strong insurance, which is somewhat seasonal, typically seasonal and other fee business income. Now, net interest margin did decrease 5 basis points as expected.

Our core margin decreased 4 basis points, all again as expected. Recall that our actual, absolute margins are still relatively high, some of the highest in the peer group. Our fee income ratio was 42.7%, up 41.4%, so it continues to be very, very strong. Our GAAP efficiency ratio was 64.7%, but importantly, our adjusted efficiency ratio improved to 57.2% from 58.3% in the third and I would point out that's the best adjusted efficiency ratio we've had in three years. So we've been saying that we have plateaued and we'll begin to see our efficiency ratio come down, that is in fact materializing.

Also, I would point out that our adjusted non-interest expenses totaled $1.697 billion, which was a decrease of 0.2% annualized versus the third quarter. Not a huge decrease, but a decrease, so, a turn as we've indicated. Credit quality was fantastic. NPAs declined another 7.8% from a very, very low level. Charge-offs were 36 basis points versus 35 in the third quarter and 42 on a like quarter, so a really nice improvement in credit quality. We did complete $371 million in share repurchase and we did do a $53 million all de minimis purchase, which is allowed under CCAR. If you're tracking in the deck and on Page 4, we just wanted to share some of the detail in terms of some of the changes we made with regard to the tax reform benefit. You probably saw we did increase our charitable contribution by $100 million on pretax, which will be invested over time into our communities.

We did reevaluate our deferred income taxes, investments in affordable housing projects. That was a plus $43 million on a tax basis. We did do one-time bonuses for associates, which we were happy about, which was $36 million pretax or $23 million after tax. We did have a total of -- therefore the net impact of tax reform items of $43 million after tax, which is $0.05 a share dilutive to our GAAP number. Our merger related and restructuring charges was $14 million, which is $0.02. So, if you look at that $0.07, that our earnings per share was diluted because of the tax changes and the restructuring charges that reoccurred during that quarter.

If you look at Page 5, just kind of a bigger chart, but that's just ahead of you, if you want to dig into these changes, you can very easily see how the personnel expense and the merger related charges and revaluations and the donations, all figured in just fine, I'm explaining how you got from $0.77 to $0.84 from our perspective. If you look at Page 6, I would just point out we had a really good performance relative to our data. We get checkmarks in all the areas.