BB&T Corporation (NYSE:BBT) Q4 2018 Earnings Conference Call Transcript

Jan 17, 2019 • 08:00 am ET


BB&T Corporation (NYSE:BBT) Q4 2018 Earnings Conference Call Transcript


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Greetings, ladies and gentlemen, and welcome to the BB&T Corporation Fourth Quarter 2018 Earnings Conference Call. (Operator Instructions) As a reminder, this event is being recorded.

It is now my pleasure to introduce your host, Mr. Richard Baytosh of Investor Relations for BB&T Corporation. Please go ahead, sir.

Richard Baytosh

Thank you, Andrea, and good morning, everyone. Thanks to all of our listeners for joining us today. On today's call, we have Kelly King, our Chairman and CEO; and Daryl Bible, our CFO, who will review results for the fourth quarter and provide some thoughts for 2019.

We also have Chris Henson, our President and COO; and Clarke Starnes, our Chief Risk Officer, to participate in the Q&A session. We will be referencing a slide presentation during the call. A copy of the presentation as well as our earnings release and supplemental financial information are available on the BB&T website.

(Forward-Looking Cautionary Statements)

Please also note that our presentation includes certain non-GAAP disclosures. Please refer to Page 2 in the appendix of our presentation for the appropriate reconciliations to GAAP.

And now, I will turn it over to Kelly.

Kelly King

Thank you very much. Good morning, everybody, and thank you very much for joining our call. So we had a strong fourth quarter, and what I would call, a great year. The quarter had record revenues, very good expense control, improved loan growth, excellent asset quality and strong returns, and the year had a record $3.1 billion in earnings. GAAP net income was $754 million, up 22.8% versus the fourth quarter '17.

If you ex merger and restructuring charges, we had a record $813 million in income. Diluted EPS was $0.97, up 26%, but we made a lot of progress, which I'll refer to later, in our Disrupt to Thrive reconceptualization initiative, so we had a substantial restructuring charge this quarter. And so our adjusted diluted EPS was a record $1.05, up 25%. And our adjusted returns were very, very strong. ROA at 1.53%; return on common equity, 11.99%; and a very strong return on tangible common at 20.41%.

Taxable equivalent revenue was a record $3 billion, up 1.5% annualized versus the third, and that was really driven by good loan growth, NIM expansion, strong performance in insurance and investment banking. Loans held for investment averaged $147.5 billion was up a very strong relative to the environment, a very strong 3.6% annualized. Net interest margin increased 2 basis points, core net interest margin increased 3 basis points, both of which were better than we had expected.

Our adjusted efficiency ratio improved to 56.5% versus 57.3%, almost a whole point, creating very strong positive adjusted operating leverage. Adjusted noninterest expense totaled $1.7 billion, up slightly 0.6%, but I would point to you that for the whole year it was down slightly, which is what we had indicated at the beginning of the year. So we feel very good about our expense control.

We had outstanding asset quality yet again. Nonperforming ratio was 0.26%, a decrease