By Andrew R. Johnson and Josée Rose
BB&T Corp. reported a 6.1% increase in fourth-quarter
profit, which was helped by better results in its community-banking
segment and a gain on a business sale.
Regional banks like BB&T, which rely heavily on lending
income, have been pressured by muted loan demand and low interest
rates in recent years.
BB&T saw its revenue decline 6% in the quarter, though
Chairman and Chief Executive Kelly King struck an optimistic tone
Wednesday, forecasting a "meaningful increase" in loan growth this
year as economic conditions improve.
"We really believe that we are at a pivotal point in the
economy," Mr. King said on a conference call with analysts, adding
he is "more positive about where we are and where we're
going...than 120 days ago" due to improving economic data.
Overall, BB&T posted a profit of $537 million, or 75 cents a
share, compared with $506 million, or 71 cents a share, a year
earlier. Results include a gain of $19 million from the sale of a
consumer-lending unit.
Revenue declined 6% to $2.38 billion as net interest income fell
7.7% to $1.4 billion and noninterest income dropped 3.4% to $985
million
Analysts surveyed by Thomson Reuters had projected earnings of
71 cents a share on revenue of $2.37 billion.
The decrease in noninterest income came in large part because of
a $131 million decline in mortgage-banking income.
BB&T's net interest margin, its profit margin from lending
and investing, was 3.56% in the fourth quarter, compared with 3.84%
a year earlier and 3.68% in the prior quarter.
Mr. King said in a statement that the company's loan portfolio
"grew modestly," but noted it saw demand pick up in the second half
of the quarter.
BB&T's loan portfolio increased 1.1% from a year earlier to
$114.8 billion but was down 1.2% from the third quarter--a drop the
bank attributed to a consumer-lending unit it sold. That business
had about $500 million in loans.
Growing loans will continue to be tough due to heightened
competition among lenders "but we are optimistic as we head in to"
2014, Mr. King said. He said he expects loans to grow by 2% to 3%
in the current quarter.
Tepid loan growth and low interest rates have put added pressure
on banks to cut costs. BB&T made solid headway on this front in
the quarter, reducing its non-interest expenses to $1.46 billion, a
decline of 2.2% from a year earlier and down 4% from the previous
quarter.
Profit in the company's community-banking segment, by far its
largest, rose to $275 million from $212 million in the year-earlier
quarter.
Average loans and leases held for investment totaled $114.8
billion, up 1.1% from a year earlier and down slightly
sequentially.
Last month, BB&T reached a deal to buy 21 bank branches in
Texas from Citigroup Inc., building on the southeast regional
lender's expansion in the Lone Star state.
The company, which had been an active acquirer leading up to the
financial crisis, is keeping an eye out for other potential deals,
Mr. King said, noting the bank wants to be "conservative" with
respect to capital payouts to ensure it can seize on opportunities
that arise.
"I do think it's wise right now to keep some powder dry in terms
of potential opportunities, whether it's whole-bank deals or
partial bank deals," he said.
Josee Rose contributed to this article
Write to Andrew R. Johnson at andrewr.johnson@wsj.com
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