Truist Financial Corp (TFC) 2007 Q4 法說會逐字稿

Greetings ladies and gentlemen, and welcome to the BB&T Corp fourth quarter 2007 earnings conference call.

At this time, all participants are in a listen-only mode.

A brief question and answer session will follow the formal presentation.

(OPERATOR INSTRUCTIONS) As a reminder, this conference is being recorded.

It is now my pleasure to introduce your host, Ms.

Tamera Gjesdal, Senior Vice President for Investor Relations for BB&T Corp.

Thank you.

Ms.

Gjesdal, you may begin.

Good morning, everyone, and thank you, Diego.

And thanks to all of our listeners for joining us today.

This call is being broadcast on the internet from our web site at BBT.com/investor.

Whether you're joining us this morning by webcast or by dialing in directly, we are very pleased to have you with us.

As is our normal practice, we have with us today John Allison our Chairman and Chief Executive Officer, and Chris Henson, Chief Finance Officer, who will review the fourth quarter results of 2007 as well as provide a look ahead.

After John and Chris have made their remarks we will pause to have Diego come back on the line and explain how those who have dialed into the call may participate in the question and answer 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 in the Company's SEC filings, including but not limited to the Company's report on form 10-K for the year ended December 31st, 2006.

Copies of this document may be obtained by contacting the Company or the SEC.

And now it is my pleasure to introduce our Chairman and CEO John Allison.

Thank you, Tamera.

Good morning and thank you all for joining us.

Areas I would like to discuss would be the financial results for the fourth quarter of 2007 and for the year.

My primary focus will be on credit quality, which is, obviously, the big issue.

I'll share with you a few thoughts on mergers and acquisition and a few thoughts about the future.

Chris will give you an in-depth look at a number of issues, especially our margins, and then after that we'll have time for Q&A.

For the quarter, or GAAP net net income was 411 million and that was up 63.7%.

Part primarily because last year we had a series of nonrecurring charges related to taxes and security restructuring.

Our operating earnings were 415 million, down 6.1%.

GAAP diluted EPS was $0.75 up 63% operating diluted EPS $0.75 down 7.4%.

The $0.75 was below the consensus estimate of $0.78, however the range on the consensus, I don't think I've ever seen it this wide was $0.67 to $0.88, so I don't know whether there was a consensus.

To the degree that we missed the consensus estimate was driven by a higher level of loan loss provision, which we'll talk about in a minute.

Our returns on a cash basis were 137 ROA and cash ROE of 24.03.

For the year we actually had a pretty good year -- a very good year in light of the kind of environment we were in.

GAAP net income for the year was 1.734 billion up 13.5%.

Operating earnings were 1.749 billion up 2.5%.

GAAP diluted EPS $3.14 up 11.7%.

Operating diluted EPS $3.17, up 1%.

Cash EPS $3.29, up about 1%.

Cash ROA of 1.50 and cash ROE of 26.82.

Very good returns.

It's our 26th consecutive year of record operating earnings.

And I think having record performance in this environment is something we're certainly pleased with.

If you look at the factors driving the earnings, we're very encouraged with the fact that our margin improved, although it only improved slightly from 3.45 to 3.46, which I believe it's important that it stopped falling and Chris is going to share with you some insights into that.

non-interest income, had a pretty strong fourth quarter relative to the third.

If you take out purchases and MSRs and nonrecurring items, kind of core, non-interest income third to fourth annualized up 24.7%, fourth to fourth up 4.6% and year-to-date 5.8%.

Our single biggest driver in non-interest income is insurance commissions.

Fourth to fourth up 2.7, annualized link up 24.1, year-to-date up 4.8%.

Those are really excellent resulted compared to the industry, commercial insurance rates have been falling 10 to 15, 20% and yet we've had internal revenue growth, we've had the fastest internal growth rate of any of the ten largest brokers in the U.S., and had the most productive sales force in the industry.

Service charges on deposit accounts fourth to fourth up 16.1% annualized link 22.7%.

Year-to-date 9.2%.

We've developed a good bit of momentum in our service charge revenues.

A lot of it is NSF fees and some different pricing strategies, but also because we're opening a fair number of new accounts.

Nondeposit fees and commissions, which are basically debit and credit card fees, fourth to fourth up 13.8, annualized link 9.2%, year to date 12%.

Nice momentum in that business.

Investment banking, fourth to fourth up 10.5%.

Down 18% from the third annualized but up year-to-date 7.5%.

A lot of that driven by our retail brokerage operations (inaudible).

Trust revenues, we were pretty pleased with.

We've had several years of flat revenues in the trust business.

Fourth to fourth trust revenues were up 7.7%, 19.8% annualized link, and year-to-date 5.2%, so we're getting momentum there.

Mortgage banking excluding mortgage serving rights fourth to fourth was essentially flat, up 62% annualized link and 3.2% year-to-date.

We had very strong mortgage production in the fourth quarter.

It didn't turn into revenues because of volatility in some accounting factors but we think it will turn into revenue in 2008.

Our fourth quarter production was 3.2 billion, compared to 2.5 billion in the fourth quarter 2006.

Given how much the market has shrank, obviously we're moving market shares significantly.

We're a very traditional kind of bread and butter mortgage originator.

What has happened in the market is actually very favorable for us and we expect a pretty healthy growth rate in mortgage revenues in 2008.

Other income has been a challenge.

Fourth to fourth is down 34%.

I understand year-to-date 13%, a good bit of that is capital markets related activities.

We had capital market losses of about 17 million in the fourth quarter and about 33 million year-to-date.

Those are actually small numbers, given the size of our business, but they have a marginal effect on EPS growth, and we do not think we'll have those losses in the future because we've exited a number of those businesses.

Our fee income ratio continued to improve up to 41.7% against the long term goal of 45.

Non-interest expenses is an excellent story.

We did have an annualized increase in the third to fourth quarter, which Chris will explain to you.

But, fourth to fourth we're down 1%, if you take out purchases, and year-to-date we're down 0.7%, which is a real success story, and Chris will give you some more insight into that.

We were very pleased with loan growth.

Again, if you take out purchases, securitizations and leverage leases, and look at the growth rate the third to fourth, and kind of compare that to the momentum, strong commercial loan growth up 10.9%, direct retail 2.7, sales finance 2.4, a lot of that is seasonality, revolving credit, very strong, 16.8, mortgage up 8.3%.

Specialized lending was down 3% but that's basically in our AFCO-KFO premium finance business, where, as premium prices have fallen, that business has shrank, if you take that out it was up about 3.2%.

And total growth without purchases was 7.6% if you take out AFCO-KFO it was about 8%.

If you look at fourth to fourth as a comparison, commercial 7.6% compared to the 10.9 third to fourth so we've developed some momentum in commercial.

Direct retail was actually a little bit better.

Fourth to fourth is 1.7, third to fourth, 2.7, et cetera.

Sales finance is, again, a seasonal business, up 7.5%.

Fourth to fourth, revolving credit 13.6.

Mortgage 11.3.

We're portfoloing less of our mortgage production because Freds have improved in the Freddy Fannie market, we're [sending] the high percentage to that market.

Specialized lending has slowed considerably compared to what it was doing.

Fourth to fourth is up 14.2% but our consumer finance business and our specialized lending area have all slowed down reflecting the economy and also maybe we're being a little tighter in terms of credit standards.

So if you look through the lending businesses collectively, really strong fourth quarter.

Particularly strong commercial C&I growth.

I think some of the companies are coming our of the capital market, some of the larger banks are facing some other challenges.

We have a lot of momentum in the C&I lending business.

Did see some improvement in direct retail.

Not strong but at least some improvement in the direct retail business.

Credit card business continues to do very well based on client relationships.

Very strong production in our mortgage -- our specialized lending businesses have slowed down some.

So good quarter in terms of production from the loan side.

Looking at deposit growth has slowed for us partly by the market and partly by our own intent.

No interest bearing deposits fourth to fourth down 3.2%, annualized link down 6.2%.

Year-to-date 2.7% down.

Basically, what we're seeing is our clients are using up their liquidity and I think that's what is happening there.

Our client deposits, all of these again without purchases, fourth to fourth up 4.1, annualized link 1.3%, year-to-date 6.5.

Total deposits 5.3%, fourth to fourth annualized link 4.9, year-to-date 5.7.

We've consciously become less aggressive in CD price.

In fact, the CD pricing makes no sense to us.

What is going on in the mark the place.

We think we can come back and be more aggressive when rates come down.

So we backed a little away from the CD pricing and we do expect the market to correct at sometime in the future.

And so that's impacted our deposit growth.

But if you look at our deposit growth year-to-date, overall it's still been very strong given the economic environment.

Let's talk about asset quality.

Clearly asset quality is the primary issue to focus on.

I'll talk about the overall results and then give you a more in-depth look at our various portfolio segments.

In terms of nonperformers they did increase from 547 million to 697 million from the third to fourth quarter, and that's a percentage -- ratio increase from 0.42 at the end of the third quarter to 0.52 at the end of the fourth quarter.

We also did have an increase in our 90 day past dues that both reflect an increase in 90 day past dues, for real, and also a little bit of accounting changes where we align with the FFIEC standards, where we had been actually more conservative in the standards and the regulators wanted us to align up with the standards, which raised our 90 day numbers.

It actually probably reduced the amount of nonperformers increase slightly.

There was some trade off so you can add those two numbers together.

Still the nonperforming numbers we think are excellent at 0.52% of total assets.

That's an excellent nonperforming number in the market we're -- environment we're in.

charge offs for the quarter were 111 million, that was up from 90 million in the third quarter.

As the percentage of loans increased from 0.40 to 0.48 taking out specialized lending it increases from 0.23 to 0.28, however a 0.28 loss ratio is good in specialized lending in this environment we think is very good and are very pleased with that result.

Year-to-date we charged off 338 million which is a loss ratio of 0.38 compared to 0.27 last year.

If you take out specialized lending the loss ratio for the year was 0.21 compared to 0.14 last year, so it was up from last year but still very good results in terms of losses for the year.

In the quarter, we did provision 184 million compared to $111 million in charge offs, so we increased the division by $73 million.

Year-to-date we charged off -- we provisioned -- excuse me, 448 million charged off 338 million so we added $110 million to the provision during the year.

Our coverage ratios are down some but they still remain strong.

We have got 2.29 times charge offs, that's means we have 2.25 years worth of charge offs in our loan loss reserves and our reserves to non-accruing loans is still 2 to 1, so strong coverage ratios.

We raised the reserve from the end of the third quarter from 104 to 110, so a fairly substantial increase in the loan to loss reserve.

Obviously we believe that this is an appropriate loan loss reserve level, given what is happening in the economy and our market area, and the trends we're seeing in our loan portfolio.

We've had a long term strategy to take losses when they occur, which is inflected in our loan loss reserve position.

The primary concern that we've heard expressed in the market is about residential construction and development lending.

We have provided some supplemental information with the earnings press release in that regard.

For those of you that have the press release, I would just refer you to the last page.

It's kind of page two in the supplemental study and and make some comments about that.

Our primary focal area that we've heard most about is construction, development lending, residential construction development lending.

We have a total residential acquisition development construction loan portfolio of $8.725 billion.

One thing you'll note that we do very little condo lending and we got burned doing that years ago so we are very small condo lender.

And condos traditionally have the big problems at this point in the cycle.

You'll also notice how diversified and granular we are.

Average loan size is $427,000 and the average client relationship is $1.137 million, so we're very granular.

Our acquisition development construction loan portfolio is 9.5% of total loans.

It's interesting to look at the performance ratios from a quality perspective at year end.

We had 1.30 non-accruals, which is obviously higher than it used to be but still a fairly low number, and our gross charge offs, we do not have net charge offs by category, but our gross charge offs for the year were 0.21.

That's a very good number.

We also show you the diversification by states.

Our biggest concentration is in North Carolina followed by Georgia, Virginia and then Florida.

The two markets we have the biggest challenges in, you can see, are in Georgia, which is basically Atlanta and in Florida.

One comment, you see the biggest problems, really, where we have any size is in Florida.

Florida represents about 10% of our residential construction development lending portfolio, which itself is 9.5% of our total loan portfolio, so Florida residential construction and development lending represents less than 1% of our total loan portfolio.

And I would just reiterate that because I think that's the market where the biggest challenges are.

Florida represents less than 1% of our total loan portfolio in terms of residential construction and development lending.

We are also a pretty large other commercial real estate lender, and this is where we have, what I call the non single-family portfolio.

It primarily consists of office buildings, hotels, warehouses, apartments, rental houses,shopping centers, non residential -- non single-family residential construction related kind of lending.

These are generally completed properties.

There obviously is some construction lending in this business, but it's mostly completed properties.

It is a average loan size of 433,000, average client size is 604,000, again, very granular.

It represents 10.7% of our total portfolio and our nonperforming at year end was only 0.37.

Very low number and charge offs 0.07.

We're seeing some deterioration in credit quality in this portfolio, but we're seeing it on a very low base, and at year end, 0.37 non-accruals is obviously a very low number, so we do not really, at this point, have any problems that are material in our other commercial real estate lending business.

Our total commercial real estate then is about $18.5 billion.

It's very granular and you can see it's gross charge offs for 2007 were only 0.13 and gross nonperformers or non-accruals were 0.81.

It is important to realize it is 18.5 billion because there is some confusion that seems to comes up fairly often.

We have a fairly large amount of loans that are secured by real estate where the risk is not real estate relate,d and that's important because the FDIC [call report] numbers are really misleading.

All the FDIC considers is collateral.

We have $10.2 billion in commercial and industrial loans which are secured by real estate.

This inflates the real estate category call reports to about $29 billion.

We're a very large small business, low, middle market lender and we often take real estate as collateral.

For example we might help a dentist open his practice, and he might buy a building for his own dental practice and buy the equipment and we take the building as collateral, or an engineer firm might want to buy a building to run it to operate it's firm in, and we take the building as collateral, or like manufacturing, we might be financing accounts receivable and inventory and we take the building as backup collateral.

So our total commercial real estate related risk is $18.5 billion of which 8.7 billion is construction and development risk, or 9.5% of our portfolio.

Another category that there had a been a lot of discussion about, and this is the page before, page one of the credit supplement if you're looking at the press release, relates to mortgage lending and also to home equity loans and lines.

Our mortgage lending portfolio is primarily a prime portfolio.

This is loans that we've actually portfolio'd.

$12.2 billion in prime loans.

Average size $187,000 against [my old] [grey] credit core of 720, almost all first and a loss ratio of 0.04.

Our [all a day] portfolio, interesting enough, actually has better credit scores at 734.

Again almost all first mortgages for all practical purposes and a gross charge off ratio of only 0.03.

We have a small construction perm portfolio where an individual buys a lot and then gets a builder to build on its lot, have a little higher loss ratio, 0.26, but very good performance numbers there.

We have a very small subprime portfolio, 0.6 of 1%, less than 1%, and it's what I call a traditional subprime portfolio.

It basically comes out of our Lendmark consumer finance subsidiary, which we've been in that business a long period of time, and they make traditional loans to high-risk borrower which is a legitimate market that has existed for a long period of time.

They didn't change their standards, it's a very traditional business.

It has a loss ratio of 0.78, which is higher than obviously the prime market but still a very good loss ratio.

If you look at the residential mortgage portfolio it is also diversified.

Our biggest concentration is North Carolina followed by Virginia.

We do have a fairly large residential first mortgage portfolio in Florida.

It represents about 14.9% of the residential first mortgages.

Remember however, that if you look at it as a percentage of our total portfolio, it's less than 3%.

We have a little higher non-accrual ratios there, 167, that's still not a very high number and very good loss ratios of 0.04 in that market.

Again it's an A grade loan portfolio.

The average loan to value, by the way, on our whole mortgage portfolio is 74%, so we have got a lot of equity, and the gross charge off ratios for the whole portfolio was 0.08.

That's a very good number.

Looking at our -- another area that there has been a lot of focus is on direct retail loans and we look at two categories, home equity loans and home equity lines.

We're not really a very big home equity line lender.

We have $4.5 billion.

All of our home equity lines are originated for clients in our banks branches where we have relationships with our clients.

The vast majority of the loans have loan to value of less than 80%.

We do some more than 80%, but they're typically less than loan to value than 80%.

Their small.

An average loan size of $32,000 and very high average scores of 757.

23% of them are first mortgages.

They have almost no non-accruals, 0.19 and a 0.26 charge ratio -- off ratio.

Home equity loans, these are what I would call traditional consumer loans.

What they typically are, are not loans for the purchase of a house, but where somebody may own a home and want to add a bathroom, or they own a home and they want to buy a car, and they think they can get a better interest rate using their home as collateral, and we might refinance the first and give enough money to buy a car.

They tend to be small loans.

Average loan size of $47,000.

Very good credit score, 724.

77% of them are first mortgages.

A very low non-accrual ratio, a 0.32 gross charge off ratio is a 0.29.

Also see they're very diversified by state.

In this case, the portfolios look a lot like our deposit portfolios.

A big concentration will come out of Virginia, South Carolina and Georgia.

If you look at both our mortgage business and our home equity loans, the home equity line business, I would really be surprised if we had any material problems in these businesses.

Going back and looking at residential construction and development lending, just a couple of comments.

This has been a core business for BB&T for over 30 years.

We've successfully weathered real estate shakeouts in the past on a number of occasions.

We only make loans in our markets where we understand the market, the builders, where know the builders, we very closely service the relationship, we've begin tightening our standards in the summer of 2005.

Our strategy, which has to happen before we get to this stage of the game is first to know the market, we really like markets with immigration of population and affordability.

For example, I'm a lot more worried about Florida than I am Atlanta, because Atlanta has very affordable housing and a very fast immigration rate.

We know our clients, we think character and net worth and experience are important.

We control very tightly the number of unsold units and we can see we very much diversified the risk.

In terms of what we're doing right now, we're putting a lot of intensity on servicing.

Making sure we do not over advance.

We are working with our clients.

We think that in the vast majority of places the projects are legitimate projects, it's just a timing issue and we're going to help them get through this tough cycle to the degree that is practical, we're going to work with them.

When a borrower cannot be helped, then we'll deal with our problems very aggressively and very rapidly.

We think the first loss is the best loss, so we'll do our best to help them through, but if it can't be done, if the project's not feasible we'll deal with it aggressively.

Let me discuss some other portfolio segments where there have been issues raised.

Although we are a very small, very small subprime residential lender, we have a subprime automobile finance subsidiary, regional acceptance.

Our regional acceptance has a portfolio of about 1.7 billion, which is 1.9% of our total loans, which is a small percentage of our lending business.

It did have a higher losses in the fourth quarter, they were up to about 9%.

It's normal loss ratio was high at 5 to 6%, but it was up a good bit.

Part of that was, we bought some portfolios and part of it was we're accepting higher loss ratios out of our traditional office origination.

Interestingly enough, the expectation right now is that our losses will improve a little bit next year because we've worked through these purchase portfolios versus the fourth quarter.

But we still think they'll run at about a 7.5% pace, which is higher than the normal 5 to 6% but better than the fourth quarter.

Interesting point on this business, the break-even point on the losses in regional acceptance is 10.25%, and that's because the average rate is 20%.

So due to the small size and the very wide spreads, while we might make a little less money on regional acceptance, it's very unlikely regional acceptance will have a material negative impact on our earnings, it could be a small drag but that's not the mathematics of the business.

Other portfolios where concerns have been expressed in the market are the credit card and auto finance sales finance business.

We have an A-grade credit card portfolio.

Practically all of our credit cards are to our client base where we have relationships with the clients.

We have excellent loss ratio versus the industry.

Actually we -- while we expect our losses to rise in this economic environment, we think the difference between us and the industry will actually get bigger because we underwrite an A-grade portfolio in the credit card business.

We also have a very strong sales finance business which is primarily focused on automobiles.

We have the number one market share of banks in our footprint.

Our approach to this business is a very traditional manner.

We're primarily providing financing to dealers who's are bank customers, not all of them but many of them.

We're an experienced -- we use experienced lenders and we use a judgmental process, and that's a difference in kind to many of the people that are having trouble in this industry.

The banks that have problems are score card lenders and score cards that have too short of histories are where you're going to have problems.

And the same kind of thing is happening in the mortgage business.

We use judgmental lenders, experienced people.

We're primarily an A-grade lender.

Again, losses are likely to increase in the sales finance business reflecting the market but we think the difference between us and the industry will actually get bigger.

You will do relatively better in this kind of environment.

Probably the best aspect of our asset quality is that we either totally didn't do, or only did on a very small scale, the type of risks that have so significantly negatively impacted many large financial institutions.

Our total trading losses in 2007 were about 33 million, which is 33 million but very small relative to our size.

We have a small exposure to CMBS and RMBS and we practically eliminated those positions.

We've done a very extensive review looking for this type of risk, and we do not have any, and in addition our bond portfolio is a very traditional, very low credit risk portfolio.

In fact we had actually had a gain yesterday -- as of yesterday in the bond portfolio.

In summary, residential construction and development lending is a core business for us, it is where our risk is focused, we're good at it, but this is objectively a difficult market, excluding residential construction and development lending, while there is always risk in any type of lending, and losses will rise if the economy is weak, we're conservative and likely to have better loss experience than competitors in these other businesses.

Leaving credit quality and refocusing a minute on overall results.

It's interesting to look at our core financial performance exclusive of credit quality and capital market disruptions.

In the fourth quarter of 2006 our operating EPS was $0.81.

If we simply held our loan loss reserve at flat at 1.04 and not had the capital market losses of 17 million in the fourth quarter, our operating earnings per share would have been $0.84 in the fourth quarter of 2007, up 3.8%.

Obviously credit quality is a primary issue, but it's encouraging that the rest of our business is doing fairly well.

A couple of quick comments on mergers and acquisition, because there are a lot of questions of the years regarding mergers and acquisitions.

We are, for all practical purposes, out of the community bank acquisition business.

We have been approached by a number of community banks, but with our own stock price being what it is, and with our concerned about real estate exposure, we're simply not looking for community bank acquisitions at the present time.

We are, however, looking for opportunities to acquire insurance agencies.

This is a tough time in the ind industry but a great time for us in the sense that we have the, we think, a far superior model.

As I mentioned earlier, we have the best internal growth rate in the insurance industry and the most productive of the ten largest agencies.

You will hopefully see us do some more insurance sales acquisitions, they'll typically be small agencies, we're particularly looking for what I call niche acquisitions.

We like managing general underwriters in particular.

We just announced an acquisition in that regard in Connecticut.

What we like about that business is we do not take the insurance risk.

There should be no confusion about that.

But we do do the underwriting, and by doing the underwriting we have the expertise that really gives us higher margins and more profitability in the business.

So hopefully you'll see more niche insurance acquisitions.

With a great deal of trepidation I'll share a few thoughts about the future.

First, just a reminder, we do not make forward earnings projections and anything I say about the future may be wrong, in fact, probably anything I say about the future right now will be wrong.

In our planning process we use the blue chip consensus forecast, which is, at the at the end of December, was projecting a 40% probability of a recession.

My own instinct from being in this business a long time is that a probability of recession might be higher than that, might be 50% or higher.

I happen to think that housing has a little bit of ways to go in terms of values declining, probably 5 to 10% during the first half of this year.

However I do suspect that the housing will be recovering by this time next year.

And I also say with confidence that housing prices will be higher three years from now than they are today.

Although in a few markets where there was such vast appreciation it may take 17 years before they get back to where they were at the peak levels.

The Fed will likely be forced to aggressively cut interest rates in this kind of environment.

As we discussed before, we've intentionally created a negative interest rate GAAP in our balance sheet to at least partially hedge against real estate exposure, and we should benefit some, at least, from the falling rates which Chris will talk to you about.

I suspect 2008 will be a challenging year for the economy and the banking industry.

However, for what it's worth, I think the economy and the industry will be recovering by the third or fourth quarter of 2008 and 2009 will be a pretty good year.

We certainly expect our nonperforming assets to continue to rise reflecting challenges in the real estate market and the economy.

We also expect loan losses to rise.

Our guess, and it really is a guess, is that our net charge offs in 2008 will be in the 0.50 to 0.60 range.

We have been talking about 0.40 to 0.50 in '07, which we actually did a little bit better than, but we think we'll be higher in charge offs in 2008.

While the short-term challenges are very real, I'm confident BB&T is a solid and conservative financial institution and we will do well relative to the industry and come out of the correction process even stronger.

With that said, let me turn it over to Chris to give you some insights in a number of areas.

Thanks, John.

Good morning.

I would also like to welcome you all to the call, and I'm going to speak to you briefly, as usual, about net interest income, margin, non-interest expenses, taxes and capital.

First looking at net interest income based on operating earnings.

If you look at linked quarter, earning assets were up 5.4% adjusted for purchases.

It generated 1.8 billion in net interest income, which was 6.1% annualized increase over linked quarter adjusted for purchases.

Looking at common quarter, earning assets were up a healthy 7.3% adjusted for purchases.

Again generated 1.8 billion, and was a 1.3% decrease over prior year adjusted for purchases.

Looking at year-to-date.

Earning assets were up 6.7% adjusted for purchases and generated 3.948 billion.

Again a 1.1% decrease over prior year adjusted for purchases.

As John said, we look at the margin on operating earnings.

We had a 1 basis point increase in net interest margin.

Up from 3.45 in the third to 3.46 in the fourth as we had mentioned last call.

It would be in the relatively kind of stable range.

On a common quarter basis, we were down 24 basis points from fourth a year ago, '06, from 3.70 down to 3.46, fourth '07, and by the year, on a year-to-date basis, we were down 22 basis points from 3.74 year-to-date' 06 to 3.52 year-to-date '07.

And during the fourth quarter, as John pointed out, we did remain liability sensitive and operated, I think, effectively in that manner.

Experienced healthy growth in the balance sheet, in what I would term extremely difficult marketing conditions.

While we did continue to experience an increase in non-accruals and an unfavorable change in the asset mix, and what I mean by that is, we are continuing to book declining percentage of higher yielding assets such as commercial real estate and direct retail loans, while booking increase percentage of lower yielding assets, such as C&I loans and mortgage loans, however we were well positioned to benefit from the falling interest rate environment which allowed us to maintain the stable margin.

Our client deposit growth, however, did slow in the quarter as a result of clients using liquidity.

As a result, our funding mix shifted to a higher cost funding.

And that I think is continuing, total interest liability costs were well under control during the quarter.

If you look at the yields and rate chart, kind of just take a look at the link quarter comparison, you can see that total earning assets were actually down 16 basis points but total interest bearing liability costs were down even more at 22 basis points.

So link quarter we had a spread improvement of about 6 basis points.

And you can see also the securities portfolio again performed well.

Overall with yields moving up 6 basis points.

A lot of loan yields were really declining as the driver was 43 basis point reduction in commercial loans.

As I mentioned, total interest bearing liability costs declined significantly during the quarter driven by big declines in other interest bearing Fed funds and other borrowings and also other client deposits, so I think we've exhibited pretty good deposit pricing decisioning and control during the quarter.

In fact, the rates for all deposit and funding categories declined during the fourth quarter, 2007.

So I guess in summary, really the main driver of the 1 basis point improvement was simply just the decrease in overall interest bearing liability costs.

Kind of looking forward, as John pointed out, we do use the blue chip consensus as well as looking at the forward curve.

And based on that, we believe the margin will remain relatively stable in the first quarter with potential for upside during the balance of the year.

Obviously, that is contingent on a number of things but we think we're well positioned for that to happen on the last portion of '08.

I'll shift into non-interest expensed.

We're very pleased with our expense control on a year-to-date basis versus a target expense growth goal that you remember us talking about a year ago this time of 4% for the year '07 after adjusted for purchases.

During the fourth quarter non-interest expenses adjusted for purchases increased on a link quarter but decreased both on common quarter basis by the 1% and then on a year-to-date basis by 0.7%.

In fact we did achieve positive operating leverage when comparing the full year, 2007, for the full year of 2006, and maintain strong operating efficiency as evidenced by the cash basis efficiency ratio of 51.6 that was achieved during the year.

Also I think its interesting to note that during the full year 2007, excluding acquisitions, we reduced [FTEs] by 504 and still added 33 net new branch offices.

So been very focused during the year on expense control and will remain so as we kind of move into '08.

Drilling down a little bit more detail, if you first look at link quarter, as I said, we were up 16.3% annualized over link adjusted for purchase acquisitions, and looking at the detail, total non-interest expenses again, adjusted for purchases, were up 37 million and it's really driven by two categories, occupancy and equipment expense and other operating expense.

Frankly, the occupancy and equipment is no surprise.

It's primarily a result of increase lease expense due to the opening of the new De Novo offices.

Other operating expenses are really several items.

One increase in advertising, we spent some money advertising our number one J.D.

Power ranking around mortgage servicing, also increase in other marketing expense, and we had slight increase in operating charge offs as well as increases in additional license and maintenance fees for D.P.

software, some legal fees and then some increase in professional fees which really is in support of our international outsourcing program.

So that is kind of a look at a link quarter.

If you look at common quarter, you can see that we were actually 1% -- experienced a 1% decrease over the prior year adjusted for purchases.

The detail there is total non-interest expense line was down 9 million or the 1%.

It was driven exclusively by reduction in personnel costs.

That came in the form of reduced incentives and insurance, wealth management, the banking network and also a reduction in executive incentive comp program.

Also had reduction in pension plan expanse and then just a small change in market value due to [Rabbi Trust].

On a year-to-date basis, we had a 0.7% decrease over prior year purchases and finished the year well ahead of our 4% target.

As I mentioned, I think just an overall strong performance on a year-to-date basis.

Real pleased with it.

And, look at the drivers there.

The non-expense line was down 27 million adjusted for purchases driven by personnel and other operating, and some of the similar kind of items.

Personnel were down in insurance incentives and also reduction in banking network incentives as well as more reduction in pension plan expense.

And looking at detail of other operating there are really two areas.

We experienced a decline in advertising as a result of our branding campaign and also in operating charge offs as well.

So that's a look at the detail of the various views.

Also wanted to give you a brief progress update on our expense savings for the recent acquisitions, the bank acquisitions.

First, First Citizens, we had, as a reminder, targeted savings of $7.5 million, and you might recall we converted First Citizens in the November of '06.

Savings to date is actually 7.6 million.

So we have achieved our savings and 1.9 of that was generated in the fourth quarter.

So we will not be reporting on First Citizens going forward given we have achieved our rate of savings there.

Coastal Financial targeted savings was 27 million.

You might recall we converted Coastal in August of '07.

Our savings to date there is 11.7 million, and we incurred 6.4 million of the savings in the fourth quarter, 2007.

Looking briefly at taxes, just wanted to comment on the effective tax rate.

First, on a reported basis, for the fourth quarter of 2007, our effective tax rate was 29.5, and that did include a $7 million credit to the provision for income taxes related to leverage leases, when we were refining the tax by year, we were able to recapture 7 million of the 139 million that we had reserved in the fourth quarter of 2006, and then likely to see little dribbles of that as we move forward in future years.

Effective tax rate on operating basis actually declined from third quarter of 2003 of -- third quarter of 2007, excuse me, of 32.83 to 30.83 in the fourth quarter of '07, and that included a small $3 million a year in true up.

Looking at effective tax rate going forward, we would anticipate for first quarter effective tax rate in the 31 to 32% range and then in the 32 to 33% range for the full year of 2008.

Looking at capital, really no changes to report to you in overall capital strategy during the quarter.

Overall capital position remains very strong.

Equity to total assets at the end of the period did strong at 9.5%.

And looking at the risk based capital the end of period, tier one was down slightly from the third of 9.3 to 9.1 in the fourth, and total risk based capital was down slightly 14.5 to 14.3 in the fourth.

And just want to underscore, our risk based capital ratios are higher than our tier average, our average of our pier group consistently quarter in quarter out.

Leverage capital was down slightly from the third at 7.3% to 7.2 in the fourth, well above our target of 7%, and finally tangible equity was at 5.6, slightly above our target of 5.5%.

Looking at share repurchases for the full year 2007, we did repurchase 7 million shares for 254 million for the year.

And then looking forward, we're not currently repurchasing shares or in the market, but just will say, constantly reevaluating our position based on the market and capitol projections, so we'll keep an eye on that as we move forward.

Also like to point out as a reminder, our first quarter dividend was $0.46, it represents a 9.5% increase over the prior year quarter.

And then finally, just wanted to mention that given our strong capital position and sort of where we see our current projections, we do anticipate increasing our cash dividend in 2008.

Well, Diego, that concludes my comments.

Thank you, Chris.

Before we move to the question and answer segment of this conference call, I'll ask that we use the same process as we have in the past to give fair access to all participants.

Due to heavy participation on our call today, I would ask that you limit your question to one primary inquiry and one follow-up.

If you have further questions, please reenter the queue so that others may have an opportunity to participate.

And now I will ask our operator Diego to come back on the line and explain how to submit your questions.

Thank you.

Ladies and gentlemen, we will now be conducting a question and answer session.

(OPERATOR INSTRUCTIONS) Our first question comes from Kevin Fitzsimmons with Sandler O'Neill.

Please state your question.

Good morning, everyone.

Good morning.

John, you made a number of comments on credit quality and how you feel the reserve is adequate and you took the -- obviously took the provision up this quarter.

But given what we saw in terms of increases in nonperformers, given the pretty high growth in 90-day past due, which you said partly reflected some accounting, but in giving what we've seen from a lot of your peers, just that a lot of the peers took the opportunity to preannounce, and really ratchet their reserve up, and I guess what I'm wondering, on one hand you all were one of the few banks that didn't preannounce and I guess should be commended for that, and what looks like underlying is a pretty decent quarter, but what I wonder is, when we're coming out of this quarter is BB&T going to end up looking like you have one of the lower reserve to loan ratios?

And how do you wrestle with that decision of credit is obviously deteriorating, investors are not necessarily focused on quarterly earnings, they're looking for capital and reserve strength.

Should I take this opportunity to really ratchet the reserve up even more so than what I think is adequate right now?

And if you could just reconcile that thinking for us?

Well, Kevin, it's interesting.

There are accounting rules, and we try to do what the accountants tell you you're supposed to do.

We try to do it right.

And based on the information that we had, we raised our reserves the way we thought we were supposed to based on the accounting rules.

Now obviously, if the economy does worse than we expect, and we have more problems than we expect, we'll have to raise our reserves accordingly.

But as I understand what the SEC requires, you're not supposed to just dump a whole bunch of money in reserves and come back and recapture them some day in the future, that's exactly what the SEC is trying to prevent and so we really took a very careful look at where we were.

Now this is a very volatile environment and we might have been wrong in terms of where we are.

I don't want to -- I'm not not going to say we could've been wrong, we could have, but based on the facts that we have, the numbers are we still have very good coverage in non-accruals, we have very good coverage in charge offs.

We certainly have had some rise in nonperformance, we think that will continue, we did what they thought was right in terms of the accounting rules for the reserves and obviously think they're adequate.

Could they rise during 2008?

Possibly.

And, it probably would, if the economy -- certainly will rise if the economy is weak or if we go into a recession.

So I -- we just really tried to follow what we understand the accounting rules to be and not to follow our peer group.

And since we hadn't done any of the more dramatic things, it looks like a lot of people had pretty dramatic negative events and they threw in extra loan loss reserves, I guess, around those events, we do not think that's the way the accounting system is supposed to work, and of course we didn't have the dramatic negatives to deal with either.

But I mean if it gets -- set loan loss reserves is part science and part judgmental and we just used our best judgment about what was right for us.

Okay.

So I mean I guess in your view, it's -- part of it is the relative absence on your part of some of these real negative events, but maybe part of it is, do you think you may be a little bit more on optimistic on the economy than some people are and maybe depending how that plays out you might have to adjust?

I don't know how to judge at (inaudible) optimism.

We think it's about 50/50 that we'll have a recession and it could be that we have to raise our reserves doing it.

Certainly, if the economy goes into a recession we'll have to raise our reserves during the course of the year.

But you have to make the call based on the best information you have at the time.

And so we did raise our reserve fairly materially and we added over 100 million extra during the course of the year.

So it's a judgment call.

And also we were just trying to play by the rules as we understand them.

Okay.

All right, understood.

Thanks, John.

Yes, sir.

Our next question comes from Nancy Bush with NAB Research, please state your question.

Hi, John.

Hi.

A couple of questions.

Number one, the trading loss in the fourth quarter, I believe you said was $17 million and that the year-to-date trading losses were 33.

17 is not a huge number but it's a big chunk for you guys, you can just elaborate on that a little bit, please?

It was basically CMBS and RMBS.

We had small portfolios that we liquidated, got out of those portfolios and we took $17 million in losses to get rid of them.

Okay.

And we do not have any -- we have a tiny bit of CMBS left.

We basically exited the businesses.

On regional acceptance, as I recall, a number of years ago, we were having the same conversations that we're having now, as far as high losses, although I think at that time it was right after you had acquired them or just a couple of years after you acquired them and you were still getting accounting policies et cetera in line.

What about now?

You made a comment about your company being a very conservative company, et cetera, et cetera, do you really need regional acceptance in the specialized lending businesses?

Well they've produced very high returns in the interim period.

They do have volatility in them.

They are regional acceptance is a very small portion of our portfolio, less than 2%.

I actually -- it's interesting, I don't perceive regional acceptance as to be particularly risky.

I think it has a fairly predictable range of losses and there will be times when you make more profit and times you make less profit in the business.

And this is one of the times you make less profit in the business.

But it's a pretty -- it's a very diversified business and you have lots of small loans in the business.

We could consider exiting the business.

Now would not be a good time to exit it because you couldn't get what -- you would get a very depressed price relative what it's long-term profitability is.

It's consistently producing economic profit of over 20%.

In fact way over 20% over the years.

It's just in the cyclical downturn and it's just a small part of our business.

All right.

Thank you.

Yes ma'am.

Our next question comes from Matthew O'Connor with UBS.

Please state your question.

High, guys.

Good morning.

If I could ask a big picture question in terms of how BB&T can take advantage of the current environment?

And I think we all appreciate letting your capital build and not using it to buyback stock with a lot of uncertainty ,and not issuing stocks to do community bank deals at this point, but at the same time, you have a tough time providing good opportunities you might be able to provide years and years of return, so how just do you think about that conceptionally and are there other areas that you're looking to take advantage of where we are right now.

I think that's a very good question.

It's very tempting for example to buy a bunch of our stock back, because we think it's significantly undervalued, but on the other hand, if you do need extra capital in today's world it's very, very expensive to get, so we're passing on that at least in the interim, seeing how that goes.

I do believe that there will be some acquisition opportunities on the other side of the cycle.

I think community bank prices will finally get rational, because I think there are going to be some real challenges for community banking, and I think we'll have some opportunities when it becomes clear where the commercial real estate market is in, and we hope and we'll see that we'll have a little better currency to make some acquisitions with.

The one area that we are focusing on is in the insurance agency business, and it's not a big bit because of the size of the agencies, but we do really want to take advantage of the opportunity now in that market, and we're going looking for, and hopefully you'll see a fair large number -- a fairly large number of niche acquisitions in the insurance brokerage business.

But it's an interesting concept.

And I do think that there will be a point where there may be some opportunities, but I just think it's too early to call the ball in the kind of environment we're in.

There is too much uncertainty.

Thanks.

I appreciate that.

And just my follow-up question.

A little bit more numbers oriented, as you're guiding to -- or guessing the credit cost might be in the 50 to 60 basis point range if there's not a recession.

In guess in terms of where that could go if there's a recession?

It just depends on how bad of a recession it is.

I think if it's just a mild recession, we would probably stay within the 50 to 60 basis point range.

If it's a serious recession it would obviously be higher.

I don't know how to guess that without kind of trying to really think about how deep the recession would be, how much it would affect our core markets.

If you look at the statistics, our core markets in the Carolinas and Virginias are still doing pretty well.

The problems we're having more in Atlanta and Florida.

And we're still having pretty healthy immigration of population into our core markets.

We didn't have the crazy appreciation in real estate that happened in some of the other markets, so I tend to be fairly optimistic that those markets will be less impacted by an economic correction than the nation as a whole.

But again, it depends on how severe of a correction you actually get.

Okay.

Thank you.

Yes, sir.

Our next question comes from Todd Hagerman with Credit Suisse.

Please state your question.

Good morning, everybody.

Good morning.

Just, John, following along those same lines, just looking at your residential construction portfolio, non-accrual loans, for the most part, turning above 1% today, gross charge offs between 20 and 30 basis points, I mean historically for BB&T if we go back to 1990, or given your comments on the housing outlook in terms of further price declines, where do you think that those loss rates could trend?

And what is your sensitivity now telling you?

Their obviously going to trend up.

Exactly where they're going, I don't know.

My guess is that the residential correction and development loss ratios will go up into the 0.50 to even potentially as high as 0.75 loss ratios.

I don't think they'll be any worse than that unless we have a much deeper recession and much longer than at least the economists anticipate at this point in time.

The nonperforming ratios tend to move up more than the loss ratios because we're a secured lender.

A lot of people we deal with have extra assets and net worth and we get that as part of this process, and you end up owning property and then are able to liquidate it over some period of time without that big of a losses.

So, yes, I would just be guessing on where the nonperforming ratio would go.

So just to clarify, I mean, I don't know if you can just recall back to 1990 for BB&T where the loss rates went on the commercial real estate portfolio?

And then, just to clarify your comment, 0.50 to 0.75, I'm assuming -- does that incorporate kind of management's expectation in terms for the 10 to 15% decline in home values just broadly speaking?

Yes.

Of course I said more like 5 to 10% decline in home values from here.

Or excuse me.

Yes, 5 to 10%.

Yes it would incorporate that and probably the best thing to do would be to get you to call Chris with that number for the '90s.

I don't really know it off the top of my head and I do not think we've got it easily available.

Do you, Chris?

I don't have a number for that.

We just do not really know the answer right now.

Fair enough.

I appreciate the comments.

Yes, sir.

Our next question comes from David Pringle with Felt Point Research.

Please, state your question.

Good morning.

Good morning.

I would like to thank you very much for the additional disclosure this quarter.

It's quite helpful.

Great.

I think you were saying that your weaker markets are Florida and Atlanta.

Yes.

Just aside from the construction, which is going to do what it's going to do, are you seeing in those weaker markets any fallout on the consumer side or the commercial real estate side?

Not in Atlanta.

In fact Atlanta is doing, except for residential construction and development, for our business Atlanta is very strong.

Very strong.

Florida has slowed and we haven't seen any material deterioration in credit quality outside of residential construction and development but we don't have a big portfolio outside of that in Florida.

So you probably would get better information from somebody that has got a bigger portfolio than we do in the Florida market for outside of residential construction development.

How about something like up here in Maryland or Virginia?

It has not weakened materially yet.

The only place, if you looked at the numbers, it's a quirky, it's a small amount, but the West Virginia shows up as a high level of residential development construction project as a percentage is a small number, but the reason for that is the West Virginia panhandle which is kind of the metro D.C.

market where there seems to be more economic disruption, it would be the peripheral of metro D.C.

But outside of that peripheral area, our business is very strong in metro D.C.

And we're not having a material rise in consumer problems or sales finance problems in that market area.

Or commercial real estate.

Or commercial real estate.

No, we're not.

And Dennis, a follow-up, you know these bond insurers that are just melting down, you guys have any exposure to the [handbacks] and magics and mediums of the world?

We have some bonds where they have -- where we have their guarantees.

But we underwrote the bonds ourselves and we do not have -- where we have the exposure is basically in municipal bonds.

And we basically have all rated bonds in the pens of the [AM-back] guarantees.

So we feel like if all those guys went broke it would not pose a material -- it would be a very small risk for us, because the underlying bonds are not mortgages in general, they're municipalities that have very good credit ratings independent of the guarantees.

We never really relied on the guarantees.

We may have relied on the guarantees on the pricing but we didn't do essentially anything that wasn't credit rated well by ourselves.

In general, frankly, we've never relied on Moody's or Standard and Poor's either to do credit ratings we've never had great confidence in not doing it ourselves, and we we've always underwritten our own standards.

That's proving well placed.

Thank you.

Yes, sir.

Our next question comes from Christopher Marinac with FIG Partners.

Please state your question.

Good afternoon, John and Chris.

Hi.

I wanted to ask about, I guess, your philosophy about the footprint.

You've always been true, John, to going into high-growth markets and being weary of jumping into markets with weaker demographics.

Is there a price in any individual transaction or opportunity that would, from a banking perspective, that would have you deferring to other slower growth areas?

I guess I hate to ever say never, but probably not.

Certainly not now.

It's very interesting, a lot of people -- we've done, and you can argue how you study markets, but we look at two factors, we look at the population growth rates and the market shares and we think you have a great franchise if you have a large market share of population -- with markets with superior population growth.

Based on those statistics the value of our franchise is second only to Wells Fargo.

Wells Fargo has better economics and demographics than we do, but we're second by that measure of performance in a different way, and we really don't want to dilute that.

The only time we ever make an exception to that is when we went to West Virginia where we got a whopping market share.

We believe you have large market shares in slower growth markets you can still make money if the competitive situation is rational.

So I -- you know, I don't ever want to say never, but we're certainly not thinking about pushing outside of our footprint at all right now and would -- and for a long time, I think we'll be focused on where we operate, really, because we like to have big market shares and the demographics in our markets overall are very good.

Very well.

Thank you very much.

Yes, sir.

Our next question comes from Greg [Catron] with Citigroup.

Please state your question.

Good morning, everyone.

Good morning.

I just had a question regarding the margin and maybe this is more for Chris.

Chris, you had stated the first quarter margin expectation was to kind of hold its own, and then you had a potential to see a rising margin in 2008, and I was just hoping to get a little additional color behind that in terms of maybe what kind of rate forecast you're using to view that?

And whether you expect low cost deposit growth to actually accelerate in that type of environment?

And what impact the Fed easing may have on you in terms of passing through that benefit to the deposit?

Okay.

Good question.

Yes, we use a combination of blue chip and implied forward curve.

I think the blue chip is currently down 50 basis points January, May, something like that and I think the forward curve is down 150 or more basis points.

So, yes, we're probably -- we're probably a blend of those two.

And in terms of what does that do for us going forward?

I think that we're liability sensitive, clearly, and I think it only helps us.

To the extent it gives us opportunity and positions us to be able to take advantage of an opportunity to the extent we can control the deposit costs.

And I think your point is sort of primary to the environment, and I think a lot of that depends on what the economy does, how much pressure it puts on competitors to drive rate -- deposit rates down further because of liquidity concerns, et cetera, and we have to pay attention to that.

So I think our ability to take advantage of the liability sensitivity that we have is directly related to the economy and liquidity concerns at other companies and how we have to react in response to those things.

But I think we have a really good upside potential, the back side of the year, especially, but certainly after the first quarter to be able to benefit but it's contingent on all of those items.

Great.

Thank you.

Sure.

Our next question comes from Harralson Jefferson with KBW.

Please state your question.

The question I was going to ask John on one of his favorite topics of mortgage accounting.

You have mortgage assets lengthening, but you have the cost of service probably increasing, and you've got the, probably some contingency risk increasing in the mortgage asset, mortgage servicing rights.

You can talk about the mortgage servicing rights and how you expect it to behave in 2008?

That's a great question.

We're really trying very hard to hedge the risk away in mortgage servicing rights.

It's very tricky.

I guess you implied, I wish they'd left the accounting like it used to be and you just did it on a cash basis.

It is a -- it's a tricky environment.

One of the things that is happening is we're experiencing a pretty big pickup in refinances, but at the same time not to relative to what you would expect where rates are.

Rates are really -- have really dropped pretty significantly for long-term mortgage loans, and you would expect the refinancing to be picking up even more, and the way the models work for, they're actually projecting faster refinance rates than are happening in the marketplace.

Now will the rates suddenly accelerate?

I think the reason you're seeing lower refinance rates is people have less equity, and it's harder to refinance, and they can't refinance and take cash out and they might be surprised to go in and get an appraised value that they can't refinance at all.

So we model that stuff as best you can possibly model it.

I feel like we're very close to being hedged, and that you won't -- you might see us make $5 million one quarter and lose $5 million on the mortgage servicing right, but I don't think you'll see anything material in the effect of income through a change in the mortgage service evaluation.

How about the effect of cost?

Can cost rise high enough because of more touches and higher loss rates to effect the valuation of of your MSR?

It's a very interesting statistic.

We are very -- we have the number -- we're ranked by J.D.

Powers as the best in America in service quality of our mortgage servicing operation.

And yet, our mortgage servicing costs, compared to the industry, is much better and it's much lower than our much bigger competitors.

And the reason is, and if you look at our mortgage portfolio, we just do not do risky mortgages, and the problems you have that a lot of these guys are having is once the quality starts to deteriorate then the cost goes up on the servicing side.

And a lot of these servicing operations are worth a lot less than it appears because now they've got big problems.

We're having higher collection ratios and higher past dues, but the numbers are still small, so the marginal increase in cost for us won't be significant unless something really weird happens based on -- because we just got an A-grade portfolio and you're just not having that big of a -- I saw a statistic the other day, and do not quote me exactly on this, but we've only done like 200 modifications out of all of the thousands of mortgages we have in our mortgage business, simply because we do not have the class of mortgage that tends to have that kind of problem.

Thanks a lot.

That's very helpful.

Yes, Sir.

Jefferson, I would also add our hedge performance net for the last three years has been positive between 4 and $9 million.

All right.

Thanks a lot.

Thank you.

Ladies and gentlemen there are no further questions at this time.

I'll turn the conference back over to management for closing comments.

Thank you for your questions today and we appreciate your participation in this teleconference.

If you need clarification on any of the information presented during this call, please call BB&T's Investor Relations department.

Thanks again, and have a good day.

Thank you.

Ladies and gentlemen, this does conclude's today's teleconference.

You may disconnect your lines at this time.

Thank you all for your participation.

All parties may disconnect now.