BB&T Profits Lifted by Higher Interest Rates

By Austen Hufford 

BB&T Corp. said profit in its latest quarter increased 8%, helped by higher interest rates and despite setting aside more money to cover potential loan losses stemming from energy.

Earnings results beat Wall Street expectations.

The Winston-Salem, N.C.-based lender reported earnings of $527 million, up from $488 million a year earlier. Per-share profit was flat at 67 cents as the number of shares outstanding grew 8.2%. Excluding certain items, earnings per share were 69 cents. Revenue grew 10% to $2.58 billion.

Analysts polled by Thomson Reuters projected adjusted profit of 64 cents a share on $2.58 billion in revenue.

The regional bank has been making a string of recent deals. Earlier this month, it closed its $1.8 billion purchase of Pennsylvania-based National Penn Bancshares Inc. as well as a $500 million deal to acquire U.S. wholesale insurance broker Swett & Crawford.

Net interest income rose to $1.57 billion from $1.35 billion a year earlier. Net interest margin, a key profitability measure, rose from a year earlier. That gauge, which is closely tied to interest rates, came in at 3.43%, up from 3.33% in the same quarter last year and from the 3.35% in the previous quarter. The company cited the increase in interest rates and stable deposit costs.

Revenue from fees increased 1.9% to $1.02 billion as the bank saw securities gains and better FDIC loss share, which offset declines in income insurance income and mortgage banking income. Expenses, meanwhile, increased 8.6% because of a jump in merger-related expenses.

A higher provision for potential loan losses also bit into the bottom line. BB&T set aside $182 million for credit losses, up from $105 million a year earlier.

Some lenders have been increasing loan loss reserves as the sharp decline in energy prices threatens related loans. The current quarter's provision included about $28 million in excess of charge-offs related to energy and $30 million of energy-related charge-offs.

Shares in the company, up 11% in the past three months, were inactive in premarket trading.

Write to Austen Hufford at [e-mail]

(END) Dow Jones Newswires

April 21, 2016 07:02 ET (11:02 GMT)

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