BB&T Corp.'s first-quarter net income fell 26% despite $150 million of securities gains as credit quality continued to erode and loss provisions tripled.

President and Chief Executive Kelly S. King said the company expects "continued increases" in nonperforming loans amid "this difficult environment." But on a positive note, King also said the company saw "record" mortgage-banking production and "very strong growth" in commercial loans and low-cost client deposits.

In March, Standard & Poor's Ratings Service and Moody's Investors Service cited worries about the exposure of regional banks, including BB&T, to the real-estate market. Moody's suggested credit losses at BB&T could be higher than expected. Although S&P said the company hasn't been hurt as much as other lenders, it saw possible problems in BB&T's "large" loan book to regional home builders. The Southeast, particularly Florida, has seen home prices fall and surging foreclosures.

BB&T, which serves the mid-Atlantic and the Southeast, reported net income of $318 million, or 48 cents a share, down from $429 million, or 78 cents a share, a year earlier. A spokesman said 29% of the latest profit was due to securities gains. Analysts surveyed by Thomson Reuters were looking for earnings, excluding items, of 31 cents a share.

Credit-loss provisions surged to $676 million, while nonperforming assets, or loans in danger of going bad, rose to 1.92% from 1.34% in the fourth quarter and 0.72% a year earlier. Net charge-offs — loans the bank doesn't think are collectible — rose to 1.58% from 1.29% in the fourth quarter and 0.54% a year earlier. The increases were "generally within the range we expected," King said.

The company's tangible common equity ratio, which measures how much of a bank's hard assets its common shareholders actually own, rose to 5.7% from 5.3% in the fourth quarter Investors and analysts are looking closely at the number as they try to judge banks' financial health.

BB&T — the rare big bank yet to cut dividends to conserve cash — received $3.1 billion from the Treasury Department last fall under the Troubled Asset Relief Program. Its shares closed Thursday at $21.07 and were inactive premarket. The stock is down 23% this year.

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