BB&T Corp. posted a 26% drop in fourth-quarter net income, as credit quality continued to erode and its loan-loss provision nearly tripled.

The regional bank, which received $3.1 billion from the U.S. Treasury under the Troubled Asset Relief Program, reported net income of $305 million, or 51 cents a share, down from $411 million, or 75 cents a share, a year earlier. The latest quarter included a $528 million credit loss provision and restructuring-related charges as well as tax and securities gains.

Revenue rose 9% to $1.87 billion.

Analysts surveyed by Thomson Reuters were looking for earnings, excluding items, of 47 cents a share on revenue of $1.88 billion.

"The year 2008 was very challenging and credit deterioration remains a significant concern," said Chief Executive Kelly S. King.

Regional banks such as BB&T had been considered more insulated from credit-market woes because they often hold their loans in portfolios and use more conservative underwriting standards. But results have been affected by the credit crisis and mortgage meltdown. As Regions Financial Corp. Chairman and Chief Executive Dowd Ritter noted Tuesday, "There is no quick fix" for credit-quality issues "plaguing the entire financial-services industry."

BB&T's fourth-quarter nonperforming assets, or loans in danger of going bad, rose to 1.34% from 1.20% in the third quarter. Net charge-offs — loans the bank doesn't think are collectible — came to 1.29%, up from 1% in the third quarter.

"While it is difficult to know the full extent of the economic downturn and the resulting impact on BB&T's credit quality, we expect further increases in nonperforming assets and net charge-offs into 2009," King said.

Last week, Moody's Investors Service lowered its credit rating outlook on BB&T, citing continuing deterioration of East Coast real-estate markets and the effects of the recession on customers. BB&T's real-estate portfolio is heavily invested in the better-performing states of North Carolina and Virginia, but falling real-estate prices could put the bank under further pressure, Moody's noted.

Subscribe Now

Access to authoritative analysis and perspective and our data-driven report series.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.