BB&T has been purposefully reducing the size of certain loan portfolios, including residential mortgages and prime auto lending, and it showed in its latest quarterly results.

Total loans fell by 1.6% from a year earlier to $143 billion, the $220 billion-asset company said Thursday. Residential mortgages fell by 2% to $28.6 billion, and direct retail lending decreased slightly. Commercial-and-industrial lending increased by less than 1% to $52 billion.

The good news for the Winston-Salem, N.C., company was that its net interest margin widened by 9 basis points to 3.48%, helping push up net interest income by 2.3% to $1.6 billion.

The not-so-good news was that profits were virtually flat and revenue growth was lackluster.

Third-quarter net income available to shareholders fell by 0.3% to $597 million, or 74 cents a share — 4 cents short of the median analysts estimated compiled by FactSet Research Systems. Revenue increased by 1.4% to $2.8 billion.

Noninterest income rose by just 0.2% to $1.2 billion. Service charges on deposits rose by 7%, and bankcard fees increased by 9%. Those gains were largely offset by a 40% decline in mortgage banking income and a 13% decrease in insurance income.

Noninterest expense increased by 2% to $1.7 billion. Personnel expense rose by 18%, while outside IT service costs fell by 17%.

The loan-loss provision fell by 15% to $126 million. Nonperforming assets were down 20% to $680 million. BB&T said its loan-loss allowance included $35 million to cover the estimated impact of potential hurricane-related losses in its Florida and Texas markets.

A BB&T branch.
Bloomberg News

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