BB&T (NYSE: BBT) recently released 1Q 2007 figures. In those areas of operations affected by interest rates, the news is nothing to boast of. Net income for 1Q 2007 was $421 million, $0.77 per diluted share. This is down 2.5% from 1Q 2006. Shareholder equity also declined by 1% from 1Q 2006. BB&T CEO John Allison states that he is nonetheless pleased with BB&T's 1Q performance, given "a challenging interest rate environment and a slowing economy." Allison points out that BB&T still experienced both loan and deposit growth during 1Q 2007.
The upside of a slowing economy is that more people need to borrow more money, or need fee-earning services to help them move money around more efficiently. All of BB&T's noninterest income generating business units had a good quarter. Total non-interest income was up 7.2% to $652 million for the quarter. These units included insurance operations for property and casualty coverage, which experienced 11.9% growth to $197 milion, based mainly on higher insurance commissions. Revenue from trust administration services increased 8% to $40 million. Service charges for overdrafts were also a big money maker for BB&T, increasing over 5% to $138 million just for 1Q 2007. That's a lot of bouncing checks covered. Credit card related services increased almost 12% to $114 million for the quarter.
BB&T grew both organically and by acquisition during 1Q 2007. Average loans and leases increased 12.5%, $9.5 billion, to just shy of $85 billion for the quarter. Across the board, commercial loans and leases, as well as consumer mortgages and loans increased in size. BB&T also acquired AFCO Credit Corporation, with over $1 billion in its loan portfolio. Not everybody was trying to borrow more money. Average deposits, both commercial abd consumer, increased %11 to $82.5 billion. And BB&T is aggressively expanding its online banking services to capture even more deposits at a reduced cost. BB&T added over 5,000 new online banking accounts in 1Q alone.
Also during 1Q, BB&T bought Coastal Financial Corporation for $395 million. This will give BB&T numerous retail locations in the high-growth areas of the Carolinas, in addition to BB&T's 1,400 existing locations in 11 states. This far, the slowing economy has been good news for BB&T.
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Reader Comments (Page 1 of 1)
5-31-2007 @ 8:46PM
Dan Snyder said...
You are right when you said, "The upside of a slowing economy is that more people need to borrow more money."
However, certain groups of people need to borrow funds for a short amount of time and have assets to back up their borrowing. And when they are going to use the borrowed funds in order to make a profit, they are more willing to pay higher interest.
This discovery many years ago lead me to start the Association of Private Lenders. More people can profit by earning higher rates of return while keeping the security that their retirement savings requires.
There are always places to earn higher returns in every type of market. You just have to know where to look to find the niche.
5-31-2007 @ 9:44PM
Dan Snyder said...
I should have included where to get that niche information about earning higher returns with solid security. You can find information about the Association of Private Lenders at http://www.securityandreturns.com/private-lending/
Of course, you should invest in stocks, but you should also look at ways to diversify your portfolio without having to settle for lower returns. Stocks are not the only way to earn double-digit returns.