Although BB&T's management has a solid reputation and has been working diligently to streamline the bank's operations, I didn't believe BB&T had enough oomph to be an outperformer. Plus, it didn't help that the bank posted an 8% decline in pre-provision net revenue (PPNR) in the April quarter. PPNR is the financial sector's equivalent of operating income.
The 8% decline in PPNR told me that although progress was being made, BB&T management was under pressure to heighten more cost-cutting measures. Last but not least, the April quarter also revealed signs of struggle in both residential and commercial lending.
With these issues at hand, I didn't go out of my way to fully endorse shares of BB&T ahead of the bank's second-quarter earnings report. My recommending the stock as a "hold" turned out to be a good call. While I'm still not ready to buy this stock at these levels, I'm willing to concede that progress is being made.
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