BB&T's credit will be up and down over the next few quarters, following news that the bank plans to sell more than $1 billion in loans in order to dispose of some bad assets, Kelly King, chairman & CEO of BB&T told CNBC on Wednesday.
"You will see lumpiness in our charge offs, but that won't directly affect earnings," he said. "We think our earnings will be relatively normalized for this period of time as we work through this process even though we will be disposing of more assets and even though our charge off will go up and down more."
BB&T, one of three regional banks that remained profitable during the financial crisis, saw its stock take a 4 percent hit after the loan announcement.
"It [the selloff] was a little bit of a surprise," King said. "We actually telegraphed this in the second-quarter when we started more of an aggressive asset disposition strategy."
U.S. banks have taken on about two-thirds of loan charge offs expected to arise from the worst recession since the Great Depression, according to Moody's Investor Services. The banks will take on $744 billion of loan charge offs between 2008 and 2011, according to a Moody's report from earlier this month.
Since BB&T underwrites more conservatively, King pointed out, it had anticipated it would do so later in the cycle. Meanwhile, the bank's peers had "lower quality assets" and therefore had to dispose of their assets earlier, he said.
The company has put "feelers" in the market for its loans to get a sense of their value, he went on to say.
"When we move these loans through the process from the original client balance all the way through the final sale, the market is between 40-45 percent," said King. "In other words, we receive 60 cents on the dollar. We think that this current $1 billion or so that we are going to be moving will probably be marked for on a similar amount."