BB&T Corp.’s goal for the third quarter is to accelerate slowing loan growth and continue to focus on prime auto loans “at a level which improves profitability and returns,” Chairman and Chief Executive Kelly King said on Tuesday at Barclays Global Financial Services Conference.
BB&T’s auto loan volumes — especially among prime borrowers — continue to decline with the company expecting “stabilization” by 2018, the company reported back in July in its second-quarter earnings.
“If you look at [total] loan growth, it’s been kind of interesting,” King said at the Barclays event. “… When we announced our second quarter earnings in July, things were actually moving at a pretty good pace, and we were more optimistic. We had a higher guidance for loan growth at 1% to 3% from the third quarter. We’re now revising that to be slightly down for the third quarter.”
The reason for the bank’s revision of its loan growth guidance is that “in late July, early August, when we saw a material reduction in long-term rates, there was a huge spike in payoffs and that’s kind of an uncontrollable event,” he said, referencing BB&T’s total portfolio.
As those payoffs exit the systems, loan growth is expected to normalize, “so we’re not concerned,” King said. “We believe it will be steady and solid as we go forward. It’s hard to know exactly what it will be for the fourth quarter right now, because it’s hard to predict those level of payoffs. But certainly as we head into 2018, we think those payoffs will subside and we will continue to have a good solid loan growth.”
The bank’s continued loan growth strategies are to grow more profitable loans with a better risk profile and “to continue to price prime auto loans at a level which improves profitability and returns,” according to BB&T’s presentation.
While BB&T did not detail its auto portfolio results during the Barclays event, the bank reported a 17.6% year-over-year drop in prime auto loans in its second-quarter earnings. Auto loan volumes overall decreased by 2.9% in 2Q17 versus the quarter prior.
BB&T does not breakout specific auto origination or outstandings numbers for a year over year comparison, but last year in full, the company held an auto portfolio of $16.5 billion on $8.3 billion in originations, according to Big Wheels Auto Finance 2017.
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