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BB&T increases time deposits by 40% to fund robust loan growth

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BB&T increases time deposits by 40% to fund robust loan growth

BB&T Corp. reported strong loan growth figures in the 2018 fourth quarter while a challenging deposit landscape pushed the bank to significantly increase its time deposits.

Chairman and CEO Kelly King said both developments were indicative of strength in the "Main Street" economy despite the negative sentiment around trade wars and the government shutdown.

The bank reported a 3.6% annualized increase from the previous quarter in average loans held for investment. Management reported growth in the commercial-and-industrial segment and in equipment finance and indirect auto lending.

"We're seeing strong growth in industrials and energy, consumer discretionary, and information technology," King said during the bank's earnings call. "On Main Street, it's very much across the board, and it's not driven by [commercial real estate loans]. I mean, the CRE is actually soft because we're being very tight in the underwriting."

At the same time, the bank's deposits struggled, with King calling it a "challenging quarter" for deposits. While the bank saw an overall increase in total deposits, it reported a 3.2% annualized decrease from the third quarter in noninterest-bearing deposits. King said this was due to a similar phenomenon that drove the company's loan growth.

"Companies are putting money to work, and from an economic point of view, we view that as very good news. We did support our loan growth with additional focus on time deposits, and we have plenty room to grow those deposits," King said.

On an annualized basis, the bank's time deposits increased 39.5% sequentially in the 2018 fourth quarter. The bank's cost of total deposits increased 9 basis points quarter over quarter.

Regarding some broader economic concerns emanating from trade disputes and the government shutdown, King said the bank is unconcerned.

"We think the trade talk is going to be winding down over the next two or three months; the government shutdown will be figured out," King said. "And Brexit, it's hard to figure, but we don't think, at least for us, that has a material impact on our business."