BB&T Corp. reported Thursday an 88 percent increase in net income to $391 million for the fourth quarter.
It was the bank’s best quarterly profit performance in 3½ years.
Diluted earnings were up 25 cents to 55 cents. The average earnings forecast was 52 cents by analysts surveyed by Zacks Investment Research.
The sharp quarterly gain in profit came from a mixture of loan growth and significant improvements in its loan portfolio.
Those performances helped offset a $31 million decrease in revenue from check-card fees. That decline was expected given the changes in how much large banks can receive from debit-card interchange fees.
For the full year, BB&T has net income of $1.29 billion, up 58 percent. Diluted earnings were up 67 cents to $1.83.
Kelly King, chairman and chief executive of BB&T, called the fiscal year performance “outstanding considering the challenges facing the economy and financial-services industry. We met essentially all of our strategic objectives, and are successfully emerging from the credit cycle.”
Revenue from loans was up 71.3 percent in the fourth quarter to $1.18 billion.
“We are very optimistic about our loan growth, as production pipelines remain robust,” King said.
Revenue from fees was down 4.4 percent to $922 million, primarily reflecting the lower check-card fees.
Its provision for loan losses dropped 57.7 percent from a year ago to $272 million. That improvement had a direct bottom-line impact on its profits.
Nonperforming assets were down 17 percent to $2.45 billion compared with the third quarter. Net charge-offs were down 6 percent to $393 million compared with the third quarter.
“We announced last quarter an effort to drive foreclosed property balances lower by implementing a more aggressive disposition strategy,” King said.
That initiative reduced its other real-estate owned (OREO) balance by $414 million during the quarter, which represented 80 percent of the nonperforming assets reduction.
“Given our strong momentum in growing revenues, loans and deposits, combined with our outlook for significantly lower credit costs and focus on efficiency, we are very optimistic about 2012,” King said.
Robert Patten, an analyst with Morgan Keegan, said he expects BB&T to carry its loan-growth momentum over into 2012 with “better-than-peer” revenue growth.
“Despite the higher OREO-related costs during the fourth quarter as a result of the bulk nonperforming assets sale, we believe management outlook on gradually improving credit costs through 2012 should allay investor concerns with regards to asset quality-related issues and risk of an unexpected rise in credit costs over the coming quarters.”
Kevin St. Pierre, an analyst with Bernstein Research, said he views management’s projection of below $100 million OREO expense per quarter as “a positive for forward earnings estimates.”
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