A tax charge slashed BB&T's (BBT) first-quarter profit in half.

The Winston-Salem, N.C., company announced Thursday that it earned $210 million in the first quarter, compared with $431 million a year earlier, as it took a $281 million charge related to a tax dispute with the Internal Revenue Service. Per-share earnings of 29 cents were 2 cents below the expectation of analysts polled by Bloomberg.

The $281 million tax charge relates to a dispute with the IRS over foreign tax credits it claimed from Structured Trust Advantage Repackaged Securities transactions. BB&T said in February it would take the charge, after the U.S. Tax Court ruled against BNY Mellon (BK) in a similar case. No ruling has been issued in BB&T's case, in which the company is seeking to recover $892 million it paid the IRS in 2010.

Excluding the tax charge, BB&T's profit increased 14% compared with the first quarter of 2012, because of improved credit quality and a rise in fee and insurance income.

Noninterest income rose 15%, to $1 billion. Insurance income rose 35%, to $365 million, as the acquisition of insurance wholesaler Crump Group in April 2012 added $78 million of quarterly revenue. Card fees and service charges also rose.

Provision for loan losses fell 11%, to $1.8 billion, while net chargeoffs fell 18%, to $275 million. Nonperforming assets declined 37%, to $1.4 billion, or 0.8% of BB&T's $181 billion of total assets.

BB&T's net interest income was unchanged compared with the first quarter of 2012, at $1.5 billion, because of lower loan yields and a tightening of the net interest margin by 17 basis points, to 3.76%.

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