Greetings, ladies and gentlemen, and welcome to the BB&T Corporation Third Quarter 2016 Earnings Conference. Currently, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. As a reminder, this event is being recorded. It is now my pleasure to introduce your host, Alan Greer of Investor Relations for BB&T Corporation.

Thank you, LeAnn, and good morning, everyone. Thanks to all of our listeners for joining us today. With me are Kelly King, our Chairman and Chief Executive Officer, and Daryl Bible, our Chief Financial Officer, who will review the results for the third quarter and provide some thoughts for next quarter. We also have other members of our executive management team who are with us to participate in the Q&A session. Chris Henson, our Chief Operating Officer; Clarke Starnes, our Chief Risk Officer; and Ricky Brown, our Community Banking President. We will be referencing a slide presentation during today’s comments. A copy of the presentation, as well as our earnings release and supplemental financial information, are available on our Web site. Let me remind you that BB&T does not provide public earnings 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. Please refer to the cautionary statements regarding forward-looking information in our presentation and our SEC filings. Please also note that our presentation includes certain non-GAAP disclosures. Please refer to page two and the appendix of our presentation for the appropriate reconciliations to GAAP. At this time, I'll turn it over to Kelly.

Thanks, Alan. Good morning everybody, and thanks to joining our call. So overall, I think we had a very strong performance quarter. We have record quarterly earnings, and we did complete a few strategic agreements which will benefit future quarters, which I’ll describe. Have net income of $599 million, which is up 21.7% versus 2015, and 42.7% annualized versus second quarter ’16. Our diluted EPS was $0.73, up 14% versus the third and up 42% annualized versus the second. And if you just -- which I will cover again if you adjust EPS, it totaled $0.76 excluding merger-related and restructuring charges on a few other items on slide four. GAAP ROA, ROE and ROTCE were 1.15%, 8.87% and 15.20%, which I think reverse filing in this environment. Taxable-equivalent revenues totaled $2.8 billion, up 13.1% versus third of ’15 and 3.9% versus the second quarter ’16 on annualized basis. I’m very pleased that our net interest margin declined only 2 basis-points to 3.39%, and our core net interest margin increased to 3.17%, and Daryl will give you a lot more color on that just a little bit. Our GAAP efficiency ratio improved to 61.7% versus 65.4% in the second quarter of ’16. Our adjusted efficiency ratio improved to 58.7% versus 59.6% in the second quarter. Importantly, non-interest expenses were $1.7 billion, a decrease of 19% versus second quarter annualized. Average loans and leases held for investment totaled $141.3 billion in the third quarter, which was up just slightly compared to the second quarter. We do continue to have significant run-off in our residential mortgage portfolio and prime auto based on some very clear strategic decisions that we have made. Actually though we had a respect 2.2% annual growth. And so I think it's pretty good, consistent with the economic growth, and…

Thank you, Kelly and good morning everyone. Today, I am going to talk about credit quality, net interest margin, fee income, non-interest expense, capital and our segment results. Turning to slide seven, overall, we had a really good quarter with regard to credit quality. Net charge-offs totaled $130 million, up 9 basis-points from last quarter. This is mostly driven by expected seasonality in our retail portfolios, as well as returning to more normalized levels after a very low charge-off quarter. Loans 30 to 89 days past due increased $66 million, or 7.2%; again, mostly due to seasonality in our consumer related portfolios. NPAs decreased 4.9% to 38 basis-points. Excluding energy, NPAs have improved steadily in recent quarters. Looking ahead to the fourth quarter, we expect NPAs to remain in a similar range. We also expect net charge-offs to be in a range of 35 to 45 basis-points, assuming no unexpected deterioration in the economy. Continuing on slide eight, our energy portfolio totaled $1.3 billion, about 1% of total loans. Outstanding balances, total commitments, and non-accruals, all decreased from last quarter. And all non-performing borrowers are paying as grades. Allocated reserves increased to 11.5%. This is mostly due to the implementation of guidance from the recent shared national credit review that was received in early October. We continue to have good quality mix with less than 10% in oil-field services. Lastly, the reserve coverage per call, a very modest portfolio, rose to 13.7%. Turning to slide nine, our allowance coverage ratios remained strong at 2.91 times for net charge-offs and 2 times for NPLs. The allowance to loan ratio was 1.06%, flat compared to last quarter. Excluding the acquired portfolios, the allowance to loan ratio was 1.15%. So, our effective allowance coverage remained strong. As a reminder, our acquired loans have…

Thanks, Daryl. So as you’ve heard, we believe the quarter was an overall strong performance quarter. I would point out that our mergers are working really well, expenses are being rationalized market acceptance in all of our new markets is very, very good. And our Community Bank teams are executing extremely well in expense reduction and revenue productions. 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. And 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. So I think that’s a bit on deposit side. We did have several good strategic agreements that have helped future earnings. We continue our system investments. And I’ll point out, we did add three members to our executive management team. So, we feel good about where we are, and we, at BB&T, are building for the future. Now, I’ll turn it to Alan.

Thank you, Kelly. LeAnn, at this time, if you will come back on the line and explain how our listeners may participate in Q&A session.

Thank you [Operator Instructions]. And we’ll take our first question from Erika Najarian with Bank of America.

I just wanted to clarify the base for the expense run rate for next quarter. If I take out of course merger related and restructuring charges, as well as the FHA benefit and the charitable contribution, I get to base of $1.691 billion. Just want to make sure that was the right base, Daryl. And also, Kelly is it too early in the budgeting process to ask about progress on this level in 2017?

Yes, Erika, I think you’re spot on the $1.691 billion.

Yes, so it is early as you pointed out in budgeting process. But we’re being very, very intense about our expectations for next year. So, I am thinking as we look forward for next year for off of this base of expenses they’re kind of flattish. So we do not see a material increase and some opportunities with a slight decrease.

And my follow up question, Daryl, you mentioned an LCR of 122%. And also that you are going to offset some natural margin pressure next quarter with asset remixing. Other than the billion dollar in securities role offering next quarter, could you give us a little bit better sense on what those remixing strategies are?

It’s just our normal strategies of growing our loan book in specialized area as faster than the total loan book. So you have higher growth and higher earning assets from that side. On the funding side, we continue to get really strong growth in DDA, which is a free funding source which gives us positive. So I think we feel very confident that our core net interest margin will remain stable even with these low rates. The GAAP margin just has pressure coming down as our purchase accounting runs-offs over the next couple of years.

And our next question comes from John Mcdonald with Bernstein.

Daryl, just to follow-up on that. What’s your outlook on, in terms of NII dollars, the ability to grow all-in reported NII dollars in the fourth quarter when you think about what’s happening to the balance sheet and NIM?

So, I would say, you have the same number of days in the fourth quarter as you do in the third quarter. Net interest income dollars will be down from third quarter, mainly due to a little smaller balance sheet as we reduce our securities portfolio. But we’re really trying to optimize and get higher overall performance in the long run that set us up for 2017. We think where we want to position us that being more optimal in ’17. And so, I’d say dollar is probably down in that $20 and to $30 million range on a linked quarter basis.

Could you leverage a little bit on the puts and takes for the outlook for core NIM to be flat. You mentioned the December hike. Do you assume that LIBOR will start to move up in anticipation you’ll get some benefit in the fourth quarter from December hike?

LIBOR, as you know, moved up with money market change that happened this month. LIBOR will continue to probably stay at relatively high levels as we cross over year-end. So that benefits us as we have a lot of loans still tied to the LIBOR rate. We have I think three times more assets that we do funding and liability starts that’s to tied to LIBOR. So that should be a benefit for us. So I think we feel good. And in our forecast right now, we do have an increase in December. We aren’t really forecasting anything out ’17 right now, but we do have the increase in our forecast in mid-December.

And the LIBOR sensitivity is on to one month, I assume, one month LIBOR?

Majority of our assets are tied to one month. Our liabilities are tied more towards three months and one month. But there is a mix.

And our next question comes from Matt O'Connor with Deutsche Bank.

Daryl, I was wondering if you could just elaborate a bit on why you expect securities to go down in 4Q. I guess we’ve seen some pickup in the long-term rates. So, I would have thought that maybe reinvestment yields are a little more appealing now than say three-six months ago?

I would say if we were to buy securities now, they still probably -- we’re very conservative in what we buy. We buy treasuries, agencies, MBS, so all high quality. The yields are still no more than 2%, probably in the high 1s. We do feel that, from a liquidity perspective, our securities portfolio can shrink a little bit. We also feel really good that that will set us up, I think, for a strong 2017. And we’ll have optimal opportunities that can higher performance numbers as things start to happen in ’17.

And then a question for, Kelly, just you mentioned there might be some opportunities for asset purchases from other banks. Just wondering if you could elaborate on that?

Matt, I think what you’re seeing is that everybody in this low environment taken a hard look at the structure of the balance sheets, and their ability to accumulate capital. And so like us, I think everybody is looking to risk adjusted return of asset starts business. So, if an institution has a relatively low capital base and not much growth opportunity, one of the best ways for them to improve their return on equity is to reduce certain assets. And so, if they have a particular asset that does, maybe they’re high and they’re mix in terms of their appetite with regard to that, they may chose to exit. We’ve seen some of that. It’s not a big deal out there, Matt, to be honest. But you’re seeing some of it, and we are continuously looking into the market to take advantage of any of those that come about. Because as I said, our strategy is to grow from the organic market what make sense. And then the settlement of that with other opportunities that allow us to get to some additional growth. And that’s one that we’ve had some success we’re doing this year and we think will have some success going forward.

And then just on the whole bank deals still other market there?

Yes, still lot of market.

And our next question comes from Kevin Barker with Piper Jaffray.

Thank you for taking my questions. I just want to follow-up in regard to your comments regarding the forward expenses. Kelly, I believe you mentioned that, that you expect them to be flattish, going into 2017. Is that on a operating number or is that on a total after taking into account the merger and restructuring charges during 2016?

Kevin, this is Daryl. I’ll answer. We really aren’t giving a whole lot of guidance for ’17 right now. We’ll give much more or better clarity as we get into January and finish our planning process. But with Erika’s question, our banks right now has a $1.691 billion. We expect that to be down a little bit this next quarter, call around 1%. And what Kelly said in ’17 is we’re going to try to hold that expense rate flat, maybe down a little bit. But we’re going to do our best with all the competing priorities to keep our expenses relatively flat for ’17. But we’ll give you more color as things get finalized in from our operating plan.

And then a follow-up on your strong mortgage banking quarter. How much of that, of the mark-up in your MSR, was hedged out and what was the net result of your higher MSR mark?

Yes, good question, Kevin. So we had $33 million in MSR valuation income, $18 million was that valuation adjustment to the MSR. And every now and then you have to update and soon your prepayment models and basically our asset valuation was lagging peers that we index and looking again. So we had to adjust our prepayment models, which have allowed us to take that $18 million into the valuation adjustment. So, if you take that out, we had good hedge performance of $15 million and that was just good performance in the TBAs that we had that we’re hedging.

Did that have to do with the fact that the 10 year moved slightly higher during the quarter even though 30 year mortgage rates went down during the third quarter?

We had benefit and the basis impact, yes.

And our next question comes from John Pancari with Evercore ISI.

Wanted to just see if you can give us a little bit more commentary around the loan growth expectation as you look into 2017, I know you’re not giving a lot of guidance there. But just I know you indicated the guidance for fourth quarter and Kelly I know you cautioned a little bit around some lacked demand mid-market commercial borrowers, et cetera. So, how do you think that plays out for ’17? And what type of general level of growth could we expect?

John, this is Clarke Stanes. I’ll take that. Basically fact is Kelly mentioned our production was actually pretty good for the third quarter, not substantially different than what we have seen year-to-date. They’ll be challenged with headwinds for the pay-off. So, assuming those pipelines continue to stay strong. And to Kelly’s point, if we see some more clarity around political side of things, we may see more activity as we go into next year. But our view is we believe we can produce reasonable growth within our risk appetite around GDP plus 1% or 2%. So, given where you think the economy is going to grow, we think that we can grow a little bit faster than that. But we don’t certainly believe we can -- its preview for us to get it well beyond that.

And then my follow-up is around the efficiency ratio. Again, I know you’re somewhat regarded on what type of expense guidance you give us. But how can we think about the efficiency ratio for 2017, borrowing any moves by the Fed? I know you’re around 60% currently. Is it fair to assume that we can get to the high 50s without a move from the Fed? Thanks.

When we got through the planning process, we always have our business lines planned positive operating leverage. We want them to stay within the risk appetite of what they’re trying to accomplish. So, we’re going to have a plan that puts the other positive operating leverage. So, hopefully, we will be able to generate and give improvement on efficiency. But we’re really aren’t guiding to any specific number. It's really going to depend on the execution and what the market will allow us and what we can grow from a revenue perspective. So we can control expenses. As Kelly said, we will be very tough on expenses and do what we think is right for the long-term benefit of our Company and our shareholders.

And I’ll take our next question from Ryan Nash with Goldman Sachs.

Hi. Good morning, Kelly. Good morning, Daryl. Maybe, same question on a different topic. Kelly, maybe can you talk a little bit about the recent Tarullo speech, does it at all change the way you think about excess capital? And I guess, in addition, at this point, you’re under 250 and hence no longer subject to the qualitative component. However, over the next few years, you would likely pass this. So, does this at all change the way you have thought about surpassing 250 million? I know historically you talked about a large strategic action would probably be likely. But you’ve obviously made comments that that’s of the table for now. So, just interested in what you thought of the speech and how you’re thinking about excess cap -- how you’re thinking about passing 250 million?

Ryan, I think to go the speech it was very consistent with what he’s been saying really for last two to three years. He’d been I think appropriately moving to adjust some of the initial Fed criteria around CCAR. He clearly I think believe that CCAR process needs to be much tougher on the large systems versus large regional like BB&T. And so, I think he speak simply to some degree he codified his movement in that direction. But from our point of view, frankly, it does not change a lot, because we have a robust CCAR process. We’re not going to dismantle it just because we wanted 250 million, that wouldn’t make any sense. Number one, the way we’re doing CCAR today, we actually benefit from it. We think it's a healthy process. And so, we would continue basically as it is in any way instead of drop there the whole requirements. But certainly we wouldn’t drop it and they have to pick it back up if we did it strategically, it would put us out to 250 million. So, it was encouraging and that I think the signal is that the intensity of change with regard to really banks under I think 500 billion is just not going to increase. In fact, this is -- it's kind of stable. And as he said, the intensity of additional increased scrutiny is on the SIFIs, so that relatively is good news for us.

Maybe just quickly sticking with the loan growth theme. Can you just maybe give us some comments around what you’re saying in commercial real estate, particularly in multi-family and office where we’ve heard some cautious comments on some of your peers, and what your expectations for growth there going forward? Thanks.

Ryan, this is Clarke again. Certainly, we are being more cautious in the CRE sector. The two areas that we’re most cautious in right now is multi-family, because we believe that market may have peak or is peaking. There is a lot of projects in the pipeline. They’re going to affect potentially absorption of vacancy and those sorts of things. So we’re very careful to make sure we don’t create a new concentration there in. We’ll see some issues market-by-market. They will remain -- you see some of those symptoms. The other area is hospitality. We think that’s also had a peak in likely to potentially have some over-capacity as we move forward. So what I’m seeing is others sensing the same thing. And it is, the underwriting has clearly tightened and pricing increased for those that are still active in that space. But I think all the banks are being more cautious.

And we’ll take our next question from Ken Houston with Jefferies.

The question on your long-term debt and you FHL book, you have foreign change billion of pretty high class of staff underneath. And I was just wondering in terms of as you’re kind of cleaning up some of the income statement and look out. Is there any opportunity to do some calls there and what would that entail if you were able to do that, would it be just able to be retired? Or could you just take a charge and move on, that’s everything?

Ken, we are constantly looking at our balance sheet, and always try to optimize our balance sheet. And what we are aware of what we have on our balance sheet on the long-term debt side. And potentially there could be some that we would evaluate as we enter into ’17. No decision has been made. Nothing is final. But obviously there is potential opportunity there to maybe improve run rate and improve efficiency and returns.

And second just in terms of -- now that’s what is in the numbers, I saw in the business line that it said that there really wasn’t much organic growth. Can you just give us an update on the insurance business and help us understand the new run rate seasonality and just kind of what the organic growth outlook is for the insurance business? Thanks.

Sure, Ken. It’s Chris. I think, first off, is going very, very well. We are getting all the expenses of the synergies that we thought we would. We’re probably half-way through that process, so the conversion will occur in February. But you’re following us right in the organic growth, primarily due to pricing and excess capital in the market. It is generally in the 1% range. The fact if you look at us year-to-date, we would be growing right on 1%. And there are several factors, pricing is one. And if you look at the mix of businesses that we are in, the pure property and casualty business is probably down in the 1% to 2%. But the cap property, which is through our AmRisc business is probably down in the 15% to 20%. So on balance, we’re probably down 4% to 5%. Existing client growth, however, is up. We actually saw the new business growth in the third quarter, which I would assume would be abnormal in the industry today, I think that speaks well to the revenue we’re saying that we’ve build over the years. And then you are likely to see our performance based payments, which is really based on your -- on account how you perform with your underwriters. The recent storm is really not large enough to create increases in pricing because there is so much excess capital. On the other hand it does part us just a little bit, it won’t be significant on our performance payment. So run-rate, going forward, is think as we really put the business together, we’ve got chance to continue to be positive and potentially accelerate if we get any economic pick-up. But I’d say it's in that sort of 1 to 2% range, looking forward

And our next question comes from Steve Moss with FBR.

Just wondering -- most of my questions have been asked. But I do want to follow-up on the investment securities balances. I was wondering if the 4Q 16 level you expect will be a good run rate for 2017, or if we should expect further declines?

Steve, this is Daryl. I would say we’ll continuing to run down we’ll probably average our securities down another $2 billion give or take from where they were. So they were down about $1 billion linked-quarter, second to third, and maybe down about $2 billion linked quarter from third to fourth.

And then with regard to investment banking and brokerage fees, it was pretty stable quarter-over-quarter despite the closure of capital markets business. Wondering if you could quantify that, and the outlook for that business for the investment banking business?

This is Chris. I can take that. You’re right. We did shut that down. Although, we’re actually continuing to move forward in the M&A. And I would expect next quarter to be up slightly, maybe a 1% to 2% range until we digest all that and then accelerate from there.

And our next question comes from Matt Burnell with Wells Fargo Securities.

Good morning, guys. This is Jason Harbes, Matt’s team. So I guess I just had a question on the expense guidance. So, the 1% decline, I think, you quantified. It sounds like that will roughly offset the anticipated decline in the spread income this quarter. And then with fees relatively flat, it should be relatively flat EPS in Q4, I guess is what the outlook is telling us. But just had a question on the credit guidance. So with the relatively stable net charge-offs and the expectation that you’ll need to start provisioning for growth. Is there, just mechanically, any guidance, I guess, you can give us and how do think about the rate of reserve build for the anticipated loan growth?

Jason, this is Clarke Starnes. I think we put it on our deck. We believe our reserve rates are pretty much more or less at the bottom given where we are at this stage of the cycle as we come through the crisis and rebuild portfolios they’re now seasoning. We’ve been in the benign economy. So, we would not anticipate our reserve rate to go lower. So the way we think about it is the likely impact on provision is NPOs plus enough reserve build to maintain dollars, to maintain that reserve rate that we have today. So, that’s how we’re thinking about it, at this point.

So keeping the reserve rate relatively stable over next few quarters, I guess, would be the expectation now, okay. And then just question on the core NIM expectation, I guess, the attribute relatively stable in Q4 assuming we got a rate hike in December. What will be the expectation if we didn’t get a rate hike?

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.

And we’ll take our next question from Terry McEvoy with Stephens.

I’ve got just a question for Kelly. Could you just talk about the strategy and optimal size of BB&T in Texas, your energy portfolio stabilized last quarter as is many in the industry we’ve seen a recovery in many of the Texas Bank stocks. So, are you comfortable with the size today and are you looking to grow if M&A is off the table, or is it more of a de novo strategy?

The energy portfolio is really, it's just a very small portion of our strategy in Texas. We review the energy portfolio as more of a national kind of a strategy. And I would expect it to continue to grow modestly as the overall industry continues to recover from the lower rates. With regard to Texas, in general, our acquisitions on the city branches, de novo branches, are growing extremely well. The Texas market overall is doing well. We’ll begin to see a little bit of softness in Houston around some multifamily knowledge which you might expect, nothing dramatic. But you’re beginning to see the effect of that a bit nowhere else really across Texas. So we’re gaining momentum substantially. We have about $7 billion or $8 billion operation in Texas which is strong with 14th in market share, up from 53rd in market share when we started in 2009. So, Texas is still growing about 1,000 people a day. So we’ll continue to grow faster than market in Texas. And continue to build out our franchise with de novo types of branch expansions. We will certainly, in the long-term, be in some acquisitions but that’s not a part of our strategy today. And our organic strategy is play very well. We love Texas, and Texas loves us. And so we’re having a lot of fun in Texas.

And then just a quick follow-up for Daryl. Will there be a merger and/or restructuring charges in the fourth quarter? And if so, do you know the estimated size?

I would say our merger related costs have probably been in the $20 million to $30 million. I mean, it’s pretty much phasing down. This might be the last quarter of any substance. We’re getting some little dribbles and drabs in maybe first part of ’17. But I’d say $20 million to $30 million fourth quarter.

And our next question comes from Christopher Marinac with FIG Partners.

I just want to circle back, sorry if you mention this earlier. With the other lending subsidiaries that had some growth this quarter, will that continue to grow? And I was just curious if the losses there are temporary or just the sign of a changing trend?

Chris, fourth quarter has probably tends to find seasonality in those particular platforms. And so the retail oriented platforms tend to have higher loss rates in the second half of the year, that define seasonality goes the other way in the first half of the year. You also get the same impact on the growth rates. So I think all-in-all fourth quarter represents more of a seasonal peak than it does a run rate.

And, Clarke, will the growth of that line mirror what you mentioned earlier for the overall portfolio relative to GDP plus a few percentage points?

No. I think it will be higher. They’re relatively small to the total of the bank. And there is some specialized niches where there is still more penetration opportunity to expand market share. So, I think we would expect those to grow higher than the bank rate.

At least, double...

Yes, probably double.

That concludes today’s question-and-answer session. Mr. Greer, at this time, I will turn the conference back to you for any additional or closing remarks.

Okay. Thank you, LeAnn. And thanks to everyone for joining us. If you have further questions today, please don’t hesitate to call Investor Relations team. And this concludes our call. We hope you have a good day.

And that does conclude today’s conference. Thank you for your participation. You may now disconnect.