Deal, Stock Costs Weigh on BB&T in 3Q

BB&T's third-quarter earnings dipped from midyear after it incurred costs from buying BankAtlantic and issued preferred stock.

The Winston-Salem, N.C., company's net income available to shareholders fell 8% from the second quarter but rose 28% from a year earlier, to $469 million. BB&T said that costs associated with its purchase of BankAtlantic in Fort Lauderdale, Fla., totaled $43 million during the third quarter.

Profits were also weighed down by $25 million in preferred stock dividends that BB&T paid The company issued $1.2 billion of noncumulative perpetual preferred stock during the quarter, which increased its total risk-based capital ratio to 14% from 13.5% a quarter earlier.

Other trends were encouraging. Revenue edged up 1% from the second quarter and rose 16% from a year earlier, to $2.5 billion.

Net interest income rose 4% from the second quarter and 6% from a year earlier, to $1.2 billion. Noninterest income was flat from the second quarter but rose 40% from a year earlier, to $963 million.

Total loans increased 3% from the second quarter and 9% from a year earlier, to $117.6 billion. The loan growth "was led by our lending subsidiaries, residential mortgage loans, C&I loans and sales finance loans," Kelly King, BB&T's chairman and chief executive, said in a press release.

The loan growth helped offset ongoing contraction in the company's net interest margin; its NIM shrank 1 basis point from the second quarter and 15 basis points from a year earlier.

Noninterest expenses rose 7% from the second quarter and 8% from a year earlier, to $1.5 billion. The company said the increase was largely a result of its acquisitions of BankAtlantic and an insurance agency.

Credit quality continued to improve. The $182 billion-asset company's provision fell 11% from the second quarter and 2% from a year earlier, to $244 million. Nonperforming assets fell 9% from the second quarter and 42% from a year earlier, to $1.7 billion. Also, net chargeoffs declined by 14% from the second quarter and 28% from a year earlier, to $336 million.