BB&T Reports Lower 3Q Earnings on Tax Adjustment, Lending Woes

BB&T (BBT) reported lower quarterly earnings, as a large tax adjustment overshadowed the Winston-Salem, N.C., company's struggles to boost net interest income.

The $181 billion-asset company's earnings fell 51% from the second quarter and 43% from a year earlier, to $268 million. Excluding the previously announced tax adjustment, which reflected a court loss last month, BB&T's earnings were still lower than those of the second quarter and slightly higher than the third quarter of 2012.

Net interest income was flat from the second quarter and down 4% from a year earlier, at $1.52 billion. The loan portfolio grew nominally during the third quarter, totaling $118.6 billion at Sept. 30. Deposit levels fell 3% from the third quarter and 2% from a year earlier, to $127.5 billion.

The net interest margin compressed 2 basis points from the second quarter and 26 basis points from a year earlier, to 3.68%.

Noninterest income fell 13% from the second quarter and 6% from a year earlier, to $905 million, largely because of declines in mortgage lending. Fees from mortgage activity fell 45% from the second quarter and 120% from a year earlier, to $117 million.

BB&T's executives had warned about a meltdown in mortgages earlier in the quarter. On Thursday, management emphasized efforts to keep costs in check during a difficult operating environment.

"We are pleased with this performance given the slower economic growth this quarter," Kelly King, BB&T's chairman and chief executive, said in a press release Thursday. "We are working to reduce noninterest expenses and improve efficiency."

Credit quality improved. The loan-loss provision fell 45% from the second quarter and 62% from a year earlier, to $92 million.

Noninterest expenses fell 2% from the second quarter and 4% from a year earlier, to $1.5 billion. Personnel expense fell 18% from the second quarter, to $805 million.