By Lisa Beilfuss And Rachel Louise Ensign
BB&T Corp. said its profit grew in the second quarter as its
revenue and average total loans edged higher, though a key measure
of lending profitability narrowed.
The Winston-Salem, N.C., bank, one of the southeast's largest
lenders, reported net income of $491 million before paying out
preferred dividends, up from $461 million a year earlier. On a
per-share basis, earnings rose to 62 cents from 58 cents.
Excluding merger-related charges and a loss on the sale of a
business, earnings were 69 cents a share.
Revenue rose 1.3% to $2.4 billion.
Analysts were looking for 69 cents in earnings per share and
$2.4 billion in revenue.
Net interest margin, an important measure of lending
profitability largely tied to interest rates, slid to 3.27% in the
quarter from 3.43% a year earlier and 3.33% in the first quarter.
Still, the decline was less than some analysts expected and the
bank attributed to down-tick to lower interest rates on new loans
and runoff of loans acquired from the Federal Deposit Insurance
Corp.
BB&T's chief financial officer said last quarter that he
expects the bank's acquisitions of Bank of Kentucky Financial Corp.
and Susquehanna Bancshares Inc. to bolster net interest income. On
Thursday, Chief Executive Kelly King said the Bank of Kentucky
transaction contributed $146 million in average loans during the
quarter. Average loans rose 3.9% from a year earlier.
Mr. King has said more deals could be on the horizon for the
bank, a stance that stands out at a time when other banks are
largely staying on the M&A sidelines over regulatory
concerns.
Second-quarter results were driven by strength in fee-based
businesses, Mr. King said Thursday. Like other regional banks
dealing with the effects of low interest rates, the lender has in
recent years invested in noninterest income businesses. In the
latest quarter, mortgage banking income swung to a profit and
noninterest income in the segment surged 51% on higher volume,
bucking quarterly industry trends. Noninterest income from
investment-banking profit increased 17.4% during the quarter.
However, in BB&T's insurance business--its biggest source of
noninterest income and what the bank has called its biggest "fee
opportunity"--net income fell to $53 million from $57 million.
Community banking profit, meanwhile, the bulk of BB&T's
bottom line, rose 6.8% to $234 million.
Noninterest expenses increased 6.4% to $1.7 billion, due to an
early extinguishment of debt, higher compensation costs and
merger-related charges. The company's efficiency ratio, which
measures costs against revenue, inched up to 59.2% from 58.4%.
BB&T has said it expected its efficiency ratio at about 57%
into 2016.
Shares in the company, trading at their best levels since the
run up to the financial crisis, were inactive premarket.
Write to Lisa Beilfuss at lisa.beilfuss@wsj.com and Rachel
Louise Ensign at rachel.ensign@wsj.com
Access Investor Kit for BB&T Corp.
Visit
http://www.companyspotlight.com/partner?cp_code=P479&isin=US0549371070