I hope the folks at BB&T (NYSE: BBT) aren't offended that I keep labeling them "boring," because I truly mean it as a compliment. The management team understands what it's doing, knows the business, and doesn't try to grow at any cost.
In fact, this bank has been through quite a lot. Based out of Winston-Salem, N.C., this company has seen major regional industries such as tobacco, textiles, and furniture get hammered. Yet the bank is still here and still growing -- helped along, no doubt, by industrial and population growth in the southeastern United States.
For the third quarter, net income grew by around 7% as the company coupled strong non-interest income with solid mid-single-digit net interest income growth. Cost control is still very much in force, and the company's efficiency ratio improved over the previous quarter. Although the company's annualized return on assets dipped very slightly from the year-ago level, return on equity rose very slightly.
Average loans outstanding grew by more than 7%, and the company saw continued solid performance in the commercial loan market. While loans outstanding continue to grow, credit quality is still excellent, and non-performing assets fell to 0.28%. I would think that this number will probably go up in the future or at least not improve much -- it's just hard for me to imagine how the quality numbers can get much better.
Unlike many other banks, BB&T is actually growing its deposit base faster than its loan business. For the quarter, average deposits grew by just more than 8%. Nevertheless, the bank is getting pinched by the yield curve, and the net interest margin fell from 4.07% last year to 3.88% in this quarter. While members of management certainly acknowledged that a flatter or inverted yield curve would hurt the business, they don't see that as especially likely, and their projections call for a fairly stable margin in the immediate future.
Management is actively looking for new acquisitions. Frankly, I think that's a good thing. Management would like to acquire more insurance agencies as well as community banks with less than $15 billion in assets. Fortunately for shareholders, history (and current commentary) suggests that the company won't overpay just for the sake of adding more assets and growth.
With all that in mind, I'm still a fan of this boring old bank in North Carolina.
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Fool contributor Stephen Simpson has no financial interest in any stocks mentioned (that means he's neither long nor short the shares).
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