BB&T Posts Lower Profits After Repaying TARP Funds

Branch Banking and Trust’s (BBT: 24.60 -0.32%) Q209 profits were 50% lower than in Q208, after the bank became one of the first lenders allowed to repay the federal funds it received from the Troubled Asset Relief Program (TARP).

BB&T reported profits of $208m, or $0.20 per share, down from $428m in Q208.

The bank repurchased the preferred stock it sold to the Treasury Department for $3.134bn, and also made an additional $14m dividend payment.

In its report, BB&T also said it has reached an agreement to repurchase the warrant it issued to the Treasury in connection with the TARP investment for $67m cash. That transaction will be recorded in the firm’s Q309 report.

“Our successful results in the government’s stress test and our ability to repay the government’s TARP investment are significant achievements for BB&T,” BB&T president and CEO Kelly King said in a statement. “Removing this distraction frees our company to focus on serving our clients and strengthening our franchise for the opportunities that will be available as the economy improves. We are also very pleased to have reached a settlement with the Treasury on the warrant.”

BB&T said it originated $8.5bn in new mortgages, a record for the firm. However, it said its portfolio of non-performing assets, including consumer real estate, increased 27 bps as a percentage of total assets since Q109. The firm added delinquencies of 30 to 89 days were down in most portfolios, and 90 or more day delinquencies were down in all portfolios.

The bank also increased its loan loss fund to $701m, more than double the $330m it had in Q208. The increase is in anticipation of continued housing-related credit losses, which BB&T said are concentrated in Georgia, Florida and metro Washington, DC.

Write to Austin Kilgore.