Moody's Downgrades BB&T Debt

The ratings firm downgraded BB&T while also complementing the bank's management.
By Philip van Doorn ,

NEW YORK (

TheStreet

) --

Moody's Investors Service

on Monday downgraded

BB&T Corp's

(BBT) - Get Report

senior debt to A2 from A1 and also lowered its rating for the Winston-Salem, N.C. lender's main banking subsidiary.

BB&T's shares were down 1% to $25.88 in late afternoon trading.

The ratings firm lowered its "unsupported bank financial strength rating" for

Branch Banking and Trust Company

to B-minus from B and its long-term deposit rating to A1 from Aa3.

Moody's affirmed its short-term ratings for the bank and the holding company at Prime-1, saying the outlook for both entities was stable.

The downgrades came despite the BB&T's continued profitability and strengthening capital ratios over the past three quarters, because of "a number of challenges that, combined, reflect a modestly weaker credit profile."

These challenges include the lender's "transition away from real estate," along with a greater reliance on wholesale funding than its peers and "credit costs from its historic commercial real estate concentration."

Moody's also said it had "observed that the pace of growth in several of BB&T's portfolios is above average when compared with most other large regional banks," and that "rapid growth in multiple asset classes at the same time can be difficult to manage," and exposes bondholders to incremental risk.

Moody's went on to say that BB&T "remains a comparatively well-managed franchise," outperforming "most of its Southeastern and regional bank peers by reporting positive earnings throughout the past few years," and that the company has "consistently strong capital, and a healthy level of pre-provision income relative to risk-weighted assets."

--

Written by Philip van Doorn in Jupiter, Fla.

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Philip W. van Doorn is a member of TheStreet's banking and finance team, commenting on industry and regulatory trends. He previously served as the senior analyst for TheStreet.com Ratings, responsible for assigning financial strength ratings to banks and savings and loan institutions. Mr. van Doorn previously served as a loan operations officer at Riverside National Bank in Fort Pierce, Fla., and as a credit analyst at the Federal Home Loan Bank of New York, where he monitored banks in New York, New Jersey and Puerto Rico. Mr. van Doorn has additional experience in the mutual fund and computer software industries. He holds a bachelor of science in business administration from Long Island University.

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