Thursday, January 20, 2011

BB&T Corp. (NYSE: BBT): Q4 Earnings Preview 2010

BB&T Corp. (NYSE: BBT) is scheduled to release its fourth-quarter earnings before the opening bell on Friday, January 21, 2011. Analysts, on average, expect the company to report earnings of 26 cents per share on revenue of $2.21 billion. In the year ago period, the company reported earnings of 27 cents cents per share on revenue of $2.29 billion.

BB&T Corporation operates as the financial holding company for Branch Banking and Trust Company that provides banking and trust services to small and mid-size businesses, public agencies, local governments, and individuals in the United States. As of September 30, 2010, the company has more than $157.2 billion in assets. The company operates approximately 1,800 financial centers in 12 states and Washington, D.C., and offers a full range of consumer and commercial banking, securities brokerage, asset management, mortgage and insurance products and services. BB&T was one of the few U.S. banks that had reported profit throughout the financial crisis. Thus the company was not actually having any problem with its NPAs.

In the preceding third quarter, the Winston-Salem, North Carolina-based company's net income was $210 million or $0.30 per share, compared with $152 million or $0.23 per share last year. Analysts, on average, expected the company to report earnings of $0.26 per share in the third quarter. BB&T experienced an increase in lending during the third quarter of 2010, generating $18.4 billion in originations for the quarter, compared with $17.5 billion during the second quarter of 2010. The improved lending results included growth in all non-real estate portfolios, as management continues to focus on diversifying the loan portfolio.

In December, BB&T Corp.’s senior debt and long-term deposit ratings were downgraded by Moody's Investors Service, the ratings arm of Moody's Corp., as a result of concerns related to the company’s weaker credit profile.

Last month, BB&T Corp's chief executive Kelly King said that he wants his company to be among the first U.S. banks to raise its dividend in 2011. As the financial crisis peaked in 2008, the largest U.S. banks, including BB&T, slashed their dividends as part of the government's bailout aid requirements. The large U.S. banks will have to undergo another round of stress tests securing approval from the Federal Reserve to increase their dividends or buy back shares. In fact, all 19 banks that were subject to the stress tests in 2009 had submitted their capital plan to the Fed recently. All the 19 banks, including big names such as JPMorgan, Bank of America Corp. (NYSE: BAC), Wells Fargo & Company (NYSE: WFC) and Goldman Sachs Group Inc. (NYSE: GS) will have to demonstrate that they have adequate capital to address potential losses over the next two years under various scenarios. These are mainly a precautionary measure amid economic recovery. Also, CEO King said recently that the bank will not need to raise capital to comply with new industry requirements, known as the Basel III rules.

In terms of stock performance, BB&T Corp. shares are down nearly 3 percent over the past year.

Full Disclosure: None.
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