Bloomberg News

BB&T Profit Rises 74% as Provision for Credit Losses Falls

October 20, 2011

(Updates shares in last paragraph.)

Oct. 20 (Bloomberg) -- BB&T Corp., the ninth-largest U.S. bank by deposits, reported a 74 percent increase in third- quarter profit as provisions for bad loans declined.

Net income rose to $366 million, or 52 cents a share, from $210 million, or 30 cents, a year earlier, the Winston-Salem, North Carolina-based bank said today in a statement. The average estimate of 34 analysts surveyed by Bloomberg was for 50 cents. Provisions for credit losses fell 68 percent to $250 million.

BB&T, led by Chairman and Chief Executive Officer Kelly King, 63, slashed the amount set aside for credit losses in the first and second quarters to about half of last year’s level. King said in September that the bank will focus on expenses as a result of lower revenue caused by new U.S. rules, including the Federal Reserve’s capping of so-called debit-card swipe fees at 21 cents from an average of 44 cents.

“The increase was driven by significantly improved credit quality and improved net interest income,” King said in today’s statement. “All our leading indicators for loan growth are positive, with robust pipelines and solid momentum as we enter the fourth quarter.”

Total revenue fell $313 million to $2.1 billion from the year earlier. The decline was led by a 38 percent drop in non- interest income from last year. The bank reported a $39 million securities loss, compared with a $239 million gain in the year- earlier period. Mortgage-banking income declined 33 percent to $123 million.

Debit-Card Revenue

Net interest income rose to $1.42 billion in the third quarter from $1.31 billion a year earlier. The net interest margin, the difference between what a bank pays in deposits and charges for loans, remained flat at 4.09 percent from last year. It fell from 4.15 percent in the second quarter.

BB&T is “totally committed” to recapturing revenue lost from the cap on swipe-fees, King said on a conference call after results were announced. Chief Financial Officer Daryl Bible said fourth-quarter fee income will be “stronger” even with an estimated $35 million in lower revenue from debit-card fees.

Total loans and leases at Sept. 30 was $107.4 billion, up from $106 billion last year.

Net charge-offs fell 52 percent to $419 million in the third quarter from a year earlier. The allowance for credit losses decreased to $2.41 billion from $2.65 billion.

Tier 1 common equity ratio rose to 9.8 percent from 9 percent a year earlier.

BB&T rose 23 cents, or 1 percent, to $22.53 at 4:15 p.m. in New York. The shares have declined 14 percent this year.

--Editors: William Ahearn, Steve Dickson

To contact the reporter on this story: Laura Marcinek in New York at lmarcinek3@bloomberg.net.

To contact the editor responsible for this story: David Scheer at dscheer@bloomberg.net


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