Earnings Edge Ahead at BB&T
Updated from 10:13 a.m. EDT
BB&T
(BBT) - Get Report
shares made healthy gains after the company reported higher first-quarter profit, better net interest margins and seemed to handle the mortgage meltdown better than some of its peers.
The Winston Salem, N.C.-based banking company's stock was adding 99 cents, or 3%, to $33.59 in recent trading.
BB&T profit rose 1.7% to $428 million, or 78 cents per share, last quarter from $421 million, or 77 cents per share, a year earlier. However, its operating earnings declined 5.6 % to $401 million, or 73 cents per share, when excluding $30 million in net gains from
Visa's
(V) - Get Report
initial public offering and other special charges.
Wall Street analysts had expected a profit of 73 cents per share, according to Thomson Financial. Those estimates typically exclude special items.
BB&T also said it will provide a higher dividend this year due to "very healthy capital levels" and that it is working to expand its insurance business. The company said it acquired Orlando-based
Burkey Risk Services
, Stamford, Ct.-based
Savannah Reinsurance Underwriting Management
, and two companies in Georgia,
Ott & Co.
and
Ramsay Title Group
.
Though BB&T is not in a position to acquire community banks, it is "aggressively looking" for other insurance-agency deals, CEO John Allison said in a conference call.
Still, the company was not entirely isolated from the turbulent mortgage and credit markets.
BB&T's portion of loans considered "nonperforming" rose to 0.73% from 0.52% at the end of 2007 and from 0.30% a year earlier. Nonperforming loans are delinquent or in default. The company also posted higher net charge-offs and boosted its provision for credit losses by $152 million from year-ago levels.
"We experienced significant credit deterioration during the first quarter," Allison said in a statement. He also predicted further increases in nonperforming assets and charge-offs, but said he expects them to be "manageable."
On the other hand, BB&T reported higher overall net interest margins -- 3.54%, compared with 3.46% at the end of last year. The company attributed the increase to "effective control" of liability costs as short-term interest rates declined.
UBS analyst Matthew O'Connor called BB&T's results "decent," given the operating environment. Other regional banks like
KeyCorp
(KEY) - Get Report
,
PNC Financial Services
(PNC) - Get Report
and
Comerica
(CMA) - Get Report
also reported results this week, with many posting profit declines and misses due to the mortgage and credit crisis.