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Mortgage slowdown hits BB&T earnings

Just misses with 1Q net income of $501M

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BB&T Corp. (BBT) just missed estimates, reporting first quarter 2014 net income of $501 million, an increase of 139% compared to $210 million earned in the first quarter of 2013. The prior year's results were reduced by a tax-related adjustment totaling $281 million.

First quarter earnings produced an annualized return on average assets of 1.29% and an annualized return on average common shareholders' equity of 9.87%. The return on average tangible common equity for the first quarter was 15.81%.

Following a trend in first quarter earnings for banks thus far, BBT saw a serious decline in mortgage activity.

Mortgage banking income was down $26 million driven by lower residential and commercial loan production.

"Our results for the first quarter were solid in light of normal seasonality. Insurance revenues were very strong for the quarter, credit results continued to improve and expenses were down $53 million compared with last quarter, reflecting improving expense control," said chairman and CEO Kelly King. "Commercial loan growth was strong, particularly commercial real estate lending for income producing properties. Consistent with industry trends, mortgage banking income declined as originations were down from last year's record levels.

"Average loans grew modestly at 0.9% on an annualized basis this quarter, impacted by seasonality and a substantial decline in mortgage activity," said King. "We experienced improvement in commercial lending, with commercial real estate loans for income producing properties increasing 10.6% and average construction and development loans up 3.5%. Sales finance, largely prime automobile lending, grew an annualized 7.3%, while mortgage and direct retail were flat on a combined basis. We expect improving growth in the second quarter with more seasonal strength driving our portfolios.”

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