BB&T CEO King Says Skittish Market Leads to Slow Loan Growth

Kelly King, chief executive officer of BB&T Corp. (BBT), said lending has slowed at North Carolina’s second-largest bank due to seasonal sluggishness and a “skittish” market.

“Loan growth is challenging now,” King, 64, said today at an investor conference in Boston sponsored by Citigroup Inc. “The market is very skittish,” and the political turmoil in Washington over tax-and-spending issues “is frankly leaving the business community very unsure,” he said.

BB&T, based in Winston-Salem, expects loan growth of 2 percent to 4 percent next quarter compared with the current period as “seasonal headwinds,” decline, King said. Higher rates reduced the bank’s mortgage warehouse business, which involves lines of credit to smaller lenders, he said.

“There’s a huge pent-up demand in the business community,” King said. “We could see a really big boom in growth the next several years.”

King said he expects net interest margin, or the difference between what a bank pays for deposits and charges for loans, to be in the mid-3.70 percent range this quarter, then decline at a “modest pace” at the end of the year. The firm’s NIM at Dec. 31 was 3.87, according to data compiled by Bloomberg.

Lending is also slowing at Minneapolis-based U.S. Bancorp, according to CEO Richard Davis. He said loans could increase at “the bottom” of the 1 percent to 1.5 percent range the firm forecasts for this quarter.

“We’re just not seeing the kind of robustness we might’ve hoped to have as the quarter starts to age,” Davis, 55, said today at the Boston conference.

BB&T fell 1.7 percent to $30.60 at 1:55 p.m. in New York and U.S. Bancorp slid 1.1 percent. The shares have gained 5.2 percent and 6.2 percent, respectively, this year.

To contact the reporter on this story: Elizabeth Dexheimer in New York at edexheimer@bloomberg.net

To contact the editor responsible for this story: Rick Green at rgreen18@bloomberg.net