BB&T Corp.'s quarterly results will put to the test the industry equivalent of man versus nature — whether a company can post a profit despite double-digit unemployment in its biggest market.

The $152 billion-asset Winston-Salem, N.C., banking company has been a standout in recent quarters, reporting profits as other large regional banks have stumbled. It has long attributed its outperformance to conservative underwriting and a willingness to shun the more exotic loans that became prevalent in recent years.

Many observers believe, however, that the North Carolina economy could begin to catch up to BB&T in its first-quarter results. Unemployment in the state hit 10.7% in February, according to the most recent data from the state's Employment Security Commission, and this tops the nation's 8.5% rate for March.

Kevin Fitzsimmons, an analyst at Sandler O'Neill & Partners LP, said the company's strength and resiliency in its own backyard will garner considerable attention from Wall Street. "A lot of people expect that North Carolina will not hold up as well as it did last year," he said. "That is an area of concern."

David Darst, an analyst at First Horizon National Corp.'s FTN Midwest Securities Corp., agreed that "pressure is mounting" in the form of unemployment and more consumer losses. "BB&T focuses on a balanced portfolio of consumer and commercial loans, so from that perspective they won't be immune," he said.

"The consumer looks very weak and will look a lot weaker in the second quarter," added Jeff Davis, the director of research at Howe Barnes Hoefer & Arnett.

North Carolina remains BB&T's biggest market on a number of fronts, accounting for more than one-quarter of its deposits and 24% of the branch network, according to data released last fall by the Federal Deposit Insurance Corp. The same can be said for its consumer exposure; the state accounted for one-fourth of its $17.5 billion residential mortgage portfolio and 35% of its $14.4 billion home equity book at Dec. 31.

So far these loans have held up relatively well. At yearend about 1% of its mortgages in North Carolina were on nonaccrual status, less than half the rate for the entire portfolio. Home equity nonaccruals in North Carolina made up 0.54% of the company's book, slightly less than the companywide average of 0.6%.

Efforts to reach the company were unsuccessful, but BB&T for the most part has noted the underlying strength of its home state, which has endured painful unemployment in the past from retrenchment in textiles and tobacco. The latest hit is coming from Wachovia Corp.'s sale to Wells Fargo & Co. and expected layoffs, as well as with Bank of America Corp.'s plans to cut up to 35,000 jobs companywide.

Kelly King, BB&T's chief executive, has touted the state's overall resilience, saying in February that, other than the coast and Charlotte, "I don't think it will be a precipitous, major decline" in terms of profitability. "North Carolina will have some deterioration, but it is not going to fall off the cliff."

At least one of BB&T's large peers in the Southeast expects to report a profit this time around.

C. Dowd Ritter, the chairman, president and chief executive at Regions Financial Corp., told investors at Thursday's annual meeting that the company would report a first-quarter profit Tuesday. The $146.2 billion-asset Birmingham, Ala., company lost $6.2 billion in the fourth quarter after taking a hefty goodwill impairment charge.

Wall Street for the most part still believes BB&T has what it takes to remain profitable. Analysts on average expect the company to earn 33 cents a share in the first quarter, according to Thomson Reuters.

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