A sale of

Visa

(V) - Get Report

stock softened the blow for

BB&T's

(BBT) - Get Report

second-quarter results, though the regional bank is still struggling with its exposure to declining housing markets through the South.

BB&T said Thursday that its earnings declined 6.6% last quarter to $428 million, or 78 cents per share, from $458 million, or 83 cents per share, a year earlier. Excluding gains for special items like the Visa stock sale, the Winston-Salem, N.C.-based bank earned $377 million, or 69 cents per share.

Results still topped Wall Street expectations of 68 cents per share in profit, according to Thomson Reuters.

BB&T shares shot 5.1%, to $25.76 in recent trading.

More of the company's loans went bad during the quarter, due to challenges in the Georgia, Florida and Washington, D.C., housing markets while credit losses continued to accelerate.

BB&T's nonperforming assets comprised 0.95% of total assets, up from 0.33% a year earlier and 0.73% at the end of the first quarter. Similarly, BB&T charged off 0.72% of average loans and leases, up from 0.35% a year ago and 0.54% the previous quarter.

The company also boosted its provision for credit losses to $330 million, up $242 million from the year-ago period.

Still, the company's net interest income increased 11% to $1.1 billion and management expects "continued expansion of net interest margin" through the rest of 2008. BB&T also generated more income from fee-based business like insurance, service charges, mortgage banking and commissions.

"While we continue to be affected by the challenges of the current credit cycle," said Chairman and CEO John Allison, "the encouraging news is that our core operations are producing solid results."