BB&T Corp., the third-biggest bank based in North Carolina, said Thursday that second-quarter profits declined 6.6 percent on mounting losses on loans to homebuilders and developers.
Earnings fell to $428 million, or 78 cents a share, from $458 million, or 83 cents, a year earlier, the Winston-Salem-based bank said.
BB&T more than tripled the amount it set aside for future loan losses, mainly involving builders and developers in Georgia, Florida and the Washington, D.C., metro area. While chief executive John Allison avoided major expansion in Florida compared with some rivals, the bank cited its business there as a key reason for its rising credit costs.
“BB&T has been very clear on where they think their problem exposures are,” said Ralph Cole IV, senior vice president of research at Ferguson Wellman Capital Management Inc. in Portland, Ore., which bought 485,080 BB&T shares this year.
BB&T boosted its provision for credit losses to $330 million from $88 million in the year-earlier period. About 16 percent of BB&T's home-equity loans and nearly a third of its residential construction loans are in Georgia and Florida, Merrill Lynch & Co. analyst Edward Najarian said in a June 20 report.
“While we continue to be affected by the challenges of the current credit cycle, the encouraging news is that our core operations are producing solid results,” Allison said in a statement.