On Nov 20, 2014, we issued an updated research report on BB&T Corporation (BBT). This Winston-Salem, NC-based major regional bank remains focused on expanding its footprint organically in existing as well as new areas to aid revenue growth. Nevertheless, rising operating expenses continue to weigh on the bank’s financials.
BB&T reported third-quarter 2014 operating earnings of 71 cents per share on Oct 16, which came in line with the Zacks Consensus Estimate. The bottom line was a penny higher than the prior-year quarter figure.
Results were aided by a higher non-interest income, which was however, offset by rising expenses and a decline in net interest income. As of Sep 30, 2014, the company reported average deposits of $130.6 billion, up 2.1% year over year. Further, average loans and leases held for investment came in at $118.6 billion, up 3% from the year-ago quarter.
On Nov 12, BB&T announced a $2.5 billion deal to acquire Susquehanna Bancshares, Inc. in Lititz, PA so as to expand its footprint in the Mid-Atlantic region. A month ago, it inked a $363 million deal to buy the Crestview Hills, KY-based Bank of Kentucky Financial Corporation, in order to foray into the Northern Kentucky/Cincinnati market. Presently, the company aims at integration and completion of the already proposed acquisitions. It also intends to expand its footprint in Alabama, Texas and Pennsylvania through organic routes going forward.
Persistently rising operating expenses, however, remain a matter of concern for the company. During third-quarter 2014, operating expenses increased 5.8% year over year to $1.56 billion. Moreover, management does not foresee any reversal of this trend in the upcoming quarters.
Over the past 60 days, the Zacks Consensus Estimates for 2014 and 2015 declined 1.4% and 2.3% to $2.72 and $3.03, respectively.
BB&T currently carries a Zacks Rank #3 (Hold).
Some better-ranked banks include Enterprise Financial Services Corp. (EFSC), Bank of the Ozarks, Inc. (OZRK) and Associated Banc-Corp (ASBC). While Enterprise Financial Services sports a Zacks Rank #1 (Strong Buy), both Bank of the Ozarks and Associated Banc-Corp carry a Zacks Rank #2 (Buy).
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