Loan losses help push down BB&T profit
BB&T Corp., the second best-performing stock in the KBW Bank Index this year, said third-quarter profit declined 19 percent as more home builders and developers stopped paying their debts.
Net income fell to $358 million, or 65 cents a share, from $444 million, or 80 cents, a year earlier, the Winston-Salem-based lender said Thursday.
Operating earnings were 64 cents a share, missing the 66-cent average estimate of 23 analysts surveyed by Bloomberg.
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BB&T set aside $364 million in reserves for loan losses as defaults rose from real estate lending in Georgia, Florida and the Washington, D.C., area.
BB&T expects to sell preferred shares as part of the federal government's plan to inject $250 billion in capital into U.S. banks, partly due to pressure from regulators, CEO John Allison said in a conference call. “This is a relatively inexpensive way to raise capital,” he said.
Allison, who will be succeeded by Chief Operating Officer Kelly King in January, criticized the U.S. Treasury's $700 billion bank rescue plan in a letter last month to Congress. The market should be allowed to eliminate weaker competitors, he said in an August interview.
The program isn't likely to aid healthy banks, Allison said.
While the capital will improve liquidity, Allison said he was concerned and amazed that regulators' plans failed to focus on reversing the slide in residential real-estate prices. “Some form of tax credit is needed to stabilize the residential real-estate market,” he said.
Appraisers claim blacklisting by Countrywide
Countrywide Financial Corp., the mortgage company bought by Bank of America Corp., was sued by Idaho appraisers who claim the lender pressured them to produce inaccurate reports.
The complaint, which was filed Thursday in federal court in Seattle, claims appraisers who didn't use home valuation methods benefiting Countrywide were denied work from the mortgage lender, said Steve Berman, a lawyer for the appraisers.
The plaintiffs seek class-action status for more than 2,500 appraisers in the U.S. and claim “several hundred million dollars” in damages from Bank of America, Berman said.
“If you were an honest appraiser and wanted to follow industry standards, and Countrywide disagreed with that, they would have you blacklisted, which meant that mortgage brokers would not use you as an appraiser,” Berman said in a phone interview.
“It was the death knell for the business.”
Scott Silvestri, a spokesman for Charlotte- based Bank of America, didn't immediately return a call seeking comment.
First Citizens holding financial open houses
A dozen First Citizens Bank branches in Mecklenburg, Iredell, Union and Cabarrus counties will hold special open houses 9 a.m.-1 p.m. Saturday for customers with questions about their finances, in light of the current economic conditions.
For more information, check with a nearby branch, go online and visit firstcitizens.com or call 888-323-4732.