Regional bank

BB&T

(BBT) - Get Report

said Wednesday that it would raise its dividend in an environment where many financial firms are cautious about increasing their payouts.

With capital scarce and the U.S. economy in recession, companies have faced increased speculation that they may have to cut their dividends to preserve cash.

BB&T looks like an exception. The North Carolina-based firm said Tuesday evening it would pay a first-quarter 2009 dividend of 47 cents a share, up from 46 cents paid a year ago. BB&T will issue the dividend on Feb. 2 to shareholders of record as of Jan. 9.

The bank received a $3.1 billion preferred equity investment through the Treasury Department's $700 billion Troubled Asset Relief Program, or TARP, which requires banks receiving investments to secure government approval before increasing their dividends. BB&T announced it would accept the TARP investment on Oct. 27.

But BB&T spokesperson A. C. McGraw said that the bank wasn't required to get permission, because the dividend was not raised above payouts in the second, third and fourth quarters of 2008. In each of those quarters, BB&T paid out 47 cents a share.

McGraw also pointed out that BB&T's board meets annually in between the first and second quarter to determine dividend payouts for the year. As such, BB&T's year-over-year dividend increase for the coming quarter would have been determined before the bank joined the TARP program.

Treasury spokeswoman Jennifer Zuccarelli said that BB&T didn't require government permission to increase the dividend, because the TARP restriction governs increases from the most recent quarter, not year-over-year increases.

BB&T's dividend raise comes as many other banks are scaling back their dividends to preserve capital -- or to conform to requirements imposed by their participation in the TARP.

Fellow regional bank and fellow TARP participant

Fifth Third Bancorp

(FITB) - Get Report

said late Tuesday it was cutting its fourth-quarter dividend to a penny from 15 cents in the third quarter. The bank cited the difficult environment as reason for the cut.

Other TARP participants face stringent dividend restrictions.

Citigroup

(C) - Get Report

, for example, is

prohibited

from distributing more than a penny a share for the next three years without prior government approval. The restriction came on the heels of a

$20 billion cash infusion

from the Treasury on Nov. 23. On Jan. 31, Citi paid a quarterly dividend of 32 cents.

BB&T shares were up 3% at $30.58 in recent trading.